Upton Sinclair

Infinite efficiency, ie. perpetual motion.

EDIT: Kind of on topic and maybe someone can justify it to me:

Someone borrows, say, a million dollars from a bank, the bank considers that loan an asset and invests it in stocks, borrower also invests the borrowed funds in the same stocks. Where is the stocks value?

Economics has always been politics, not science. From science perspective, since the value is all subjective, there is no standard in anything

This is especially true regarding money and banking, a 10 year old can understand better than economy professors: He would just copy his own money instead of singing IRR, NPV, CPI, GDP, M3, etc... And you see, FED is doing exactly the same thing

Standard economic vision does NOT claim (on the contrary) that money came before barter.  On the contrary.  Standard economic vision makes precious goods with a monetary function emerge FROM barter.  
Of course debt is also very old.  

As you say, in your quote: money emerges essentially in international trade, because there, honouring debt cannot be enforced, trust is absent and you need to have something you expect to be of value.

The Egyptians already used gold bars in the same way as the Sumerians used silver bars for international trade.  *that* is a monetary function that has nothing to do with IOU or with debt.  We are 3000 years BC here.

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


Economic growth fundamentally.

One thing you can ask Krugman if you got a chance.  Since QE is suppose to be used for asset purchases (overvalued homes most likely schemes of bankers, real estate investors, and appraisers) or for buying treasuries.  If QE is suppose to help the economy and the poor, why doesn't the federal reserve just write the people a check?

I think Krugman and the Federal Reserve can easily seen as a fraud.

Yes - specifically I want to understand why "infinite expansion" is necessary to his economic theory (as it doesn't seem to make much sense to me).

I still se a lot of bitcoiners still say "but... but... bitcoin crashed from $32 to $2 in 2011 and then recovered! don't worry folks everything's just fine! History will repeat itself and the cycle will go on forever and ever  "



Looks like my thread didn't do any good for those poor souls  
Can't help them, can't educate them  

Fair enough - but it is not that I can't be convinced that economic theory (in particular that of Keynes) is both rational and indeed useful so perhaps if my arrogant tone (which was actually meant to be more tongue in cheek) could be overlooked by someone who understands and would like to enlighten me then I am willing to be enlightened.

Where are the millionaires?  Some have already been burnt by bitcoin, while others who are aware of bitcoin are sitting on the sidelines waiting to see what will happen.

I do know a millionaire and his opinion of bitcoin is pretty low simply because his son was burnt by a BFL purchase gone bad.  While bitcoin itself is fine it does seem to attract more than its fair share of scammers and thieves.  It's funny how people who get scammed using USD$ or Euros don't blame the currency for the scam, yet that's what often happens with bitcoin. 

Existing power structure (goverment/institution) in place operates in a top down manner, of course they will favor and promote any scholars that view the same way.

Because this historical vision is the standard vision in economy.  So even if you put von Mises and Hayek on doubt, even Keynes, who is all in for state control and state money and so on, acknowledges this vision, it is a proof that this is not the product of an "emotional mind".  It is standard economic theory. 

https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

Graeber lays out the historical development of the idea of debt starting from the first recorded debt systems, in the Sumer civilization around 3500 BC. In this early form of borrowing and lending, farmers would often become so mired in debt that their children would be forced into debt peonage. Kings periodically canceled all debts. In ancient Israel, the resulting amnesty came to be known as the Law of Jubilee.

The author claims that debt and credit historically appeared before money, which itself appeared before barter. This is the opposite of the narrative given in standard economics texts dating back to Adam Smith. To support this, he cites numerous historical, ethnographic and archaeological studies. He also claims that the standard economics texts cite no evidence for suggesting that money came before barter, credit and debt, and he has seen no credible reports suggesting such.

The primary theme of the book is that excessive popular indebtedness has sometimes led to unrest, insurrection, and revolt.

He argues that credit systems originally developed as means of account long before the advent of coinage, which appeared around 600 BC. Credit can still be seen operating in non-monetary economies. Barter, on the other hand, seems primarily to have been used for limited exchanges between different societies that had infrequent contact and often were in a context of ritualized warfare.

Graeber suggests that economic life originally related to social currencies. These were closely related to routine non-market interactions within a community. This created an "everyday communism" based on mutual expectations and responsibilities among individuals. This type of economy is contrasted with exchange based on formal equality and reciprocity (but not necessarily leading to market relations) and hierarchy. The hierarchies in turn tended to institutionalize inequalities in customs and castes.

The great Axial Age civilizations (800–200 BC) began to use coins to quantify the economic values of portions of what Graeber calls "human economies". Graeber says these civilizations held a radically different conception of debt and social relations. These were based on the radical incalculability of human life and the constant creation and recreation of social bonds through gifts, marriages, and general sociability. The author postulates the growth of a "military–coinage–slave complex" around this time. These were enforced by mercenary armies that looted cities and cut human beings from their social context to work as slaves in Greece, Rome, and elsewhere. The extreme violence of the period marked by the rise of great empires in China, India, and the Mediterranean was, in this way, connected with the advent of large-scale slavery and the use of coins to pay soldiers. This was combined with obligations to pay taxes in currency: The obligation to pay taxes with money required people to engage in monetary transactions, often with very disadvantageous terms of trade. This typically increased debt and slavery.

At this time, great religions also spread, and the general questions of philosophical inquiry emerged on world history. These included discussions of debt and its relation to ethics (e.g., Plato's Republic).

When the great empires in Rome and India collapsed, the resulting checkerboard of small kingdoms and republics saw the gradual decline in standing armies and cities. This included the creation of hierarchical caste systems, the retreat of gold and silver to the temples and the abolition of slavery. Although hard currency was no longer used in everyday life, its use as a unit of account and credit continued in medieval Europe. Graeber insists that people in the Middle Ages in Europe continued to use the concept of money, even thought they no longer had the physical symbols. This contradicts the popular claims of economists that the Middle Ages saw the economy "revert to barter". During the Middle Ages more sophisticated financial instruments appeared. These included promissory notes and paper money (in China, where the empire managed to survive the collapse observed elsewhere), letters of credit, and cheques (in the Islamic world).[2]

The whole Government intervention scheme. Which is similar to Monetarism but these theories are like siblings, both are crap.

▪Keynesians just can't let prices drop, ever (which I`m partially supporting, however let me explain *).

▪Communist style central planning with Central banks and government treasury

▪They argue against wage decrese, even in a deflationary enviroment, breaking the laws of supply & demand.

▪They basically let the government overextend, and finance everything from debt, DEFICIT SPENDING.

▪They support fractional reserve banking with a backstop of taxpayer money.

▪Basically everything is cured with debt in this theory, they just cant let the market work alone they must intervene everywhere.

▪They are in denial of reality, they don't recognize economic cycles which have been proven already many times, and if a minor recession comes along they freak out and immediately intervene, instead of having a little more realistic tolerance and let the market sort out minor flaws.It's like if you raise a child full on medication, if he gets just a light cold, you immediately give him medication, well that child when will grow up, will 100% be allergic to everything. So in the same way, if you give too much intervention in the economy, it will become allergic to them and will stay in recession  

And many many more flaws...

Now let me explain the * part.

Ok there are some markets which prices should not drop, like the stock market, however there are dozens of others which should like: food,housing,oil,etc

You can't print oranges and bananas but you can print stocks, so why not just separate these markets from eachother and not use a common denominator, a common devalued currency to price them in?

So let the food market drop and make food accesible to poor people, and let the stock market rise to make business startups easier and investors and speculators to keep happy. There is no need to mix these different markets in the same group and enviroment...

Keeping house prices artificially high is inneficient. Supplying a few homebuilders with jobs to the detriment of all young homebuyers who can't afford to buy a house from savings, but only loans, is inneficient, stupid and will not make benefits to the economy.

For example you indebt all the 20 year olds with student loan and house mortgage, how will they be a productive members of the society with all this burden of them?

Millions of people indebted versus a few thousand people's job in the housing market, which one is more important?

So you see, Keynesianism is rotten from the inside, however the elastic principle is good, not because of Keynesianism but despite of it, because it has nothing to do with it.

First of all "dude" elasticity is a very sound system, after all the only law in economics is that of supply & demand, everything else is just built on that.

So if you think that the central bank is the absolute only one that can do it, then why are you even here?

So you find it absolutely impossible to decentralize it? It's a joke, everything that can be done,will be done, a few years ago people wouldn't even dream of electronic money, and now they all shop with credit cards like madman.

You must be a hardcore conservative if you think this way, but then again what are you doing here in a bitcoin community with is all about open mindedness?

No I was actually talking about any market, even a stock market, you dilute the shares to prevent bubbles from popping and you recall shares if your demand drops, or just increase the dividents, there are many methods, sometimes even a PR method can fix the price.

Look what I`m saying is that you have to think outside the box, Keynesianism is BS, I say that after 6 years of studying it and + 4 years on my own.

The "aha" moment takes a lot of time and study, I can tell you many PH.D.'s that are delusioned about it, so what is their diploma worth then?

Many Keynesianist got nobel prizes, did they deserved it? It can be debated. When you are a sheep in a pack of wolves, then it's hard to be taken seriously.

So give me your educated argument, and address my points from an objective view and then we can understand eachother better.

I guess this is why paper is expensive these days :-)
Taxes were very often collected not as money, but as commodities.  1/10 of the harvest and things like that.


Keynes was wrong, von Mises was wrong, Hayek was wrong, Rothbard was wrong, but one contested book writer is of course right :-)


You have to understand that debt and money are two different concepts.  Thinking they are the same is a fundamental error in reasoning.  
The fact that debt existed (which is most probably right, I have never studied that, but it sounds perfectly reasonable) is no proof that money rose from debt.


Sure :-)

But OK, if I have time I will give it a read.

The point is however, that in "international" trade, the concept of "IOU" doesn't mean much.  IOU is perfect in tight social circles.  Social control balances informal IOU.  But if you come with a ship full of amphora of wine for more than 1000 miles, you don't care about any IOU from the guy buying the wine.  You'll maybe never see him or his countrymen again.  You want something in return that is also accepted by people that have nothing to do with the countrymen of the wine merchant.  So his country, his king, his state, you don't care about.  You want something of value independent of that king and country, that you can trade for something in *your* country.  An IOU from a distant king and country, your fellow countrymen don't care about !

Please explain to me how is my Elastic Monetary Policy Theory equivalent to Keynesianism?

Because I cannot see the connections.

►Keynesianism is an immoral system where 1 Central Bank dictates the monetary policy, and skew it in the favor of the upper 1%, by creating money out of thin air with 0% fractional reserve systems ,which only the banks are allowed to use.


►My Elastic Monetary Policy, is more a decentralized one, which is supports market determined interest rates, that is interest rates pegged to supply & demand, without any corrupt skewing.Inflation is necessary, but not to ease government debt, of which is used by central banks. Inflation needs to be used to halt bubbles and speculators and increase liquidity in markets, and not to ease government debt.

That is the difference my friend, so by far this has nothing to do with Keynesian BS.

Obviously they are loans, but they use the tax money as the collateral, so if the loans default, the tax money is lost  

So it is a gift basically and a scam. As for the loan, its just money out of thin air, like the entire fractional reserve banking.

Yes I know what I`m talking about, but you are right ,this may be a little off topic  

Well all derivatives , not the main instruments, but the derivatives are there to mitigate risk.

For example a futures contract, which is just a derivative of a commodity or currency, is there to mitigate the risk of the producer and let traders hold their risk.

If a corn farm is afraid of the depreciation of their corns and thus to the loss of money, they can just make some corn futures at the current price while selling the corn later, to make sure he sells it profitable.

If the price of corn does go down then the traders who hold the risk will pay him, if not then he lost a bit of money, but atleast he can now sell his corns at a good price.

So basically the traders hold the risk in every market, but its not a forced risk, it is voluntary, everyone has to know their risk tolerance and not risk more that they can afford.

So a few traders lose, but the corn market gets saved, and the workers on the corn farm can keep their jobs, otherwise they would be fired because the corn farm would go bankrupt.

So basically a few unlucky traders sacrifice a little bit of their money to save a whole industry from volatility and collapse.

That is basically the role of derivatives.

But when the government starts to bail out wrecklessly them from taxpayer money, thats another story. Because traders voluntarly risked their money, but the taxpayer was forced to pay the taxes.Furthermore, the taxpayer is not even getting any benefit from it. Because the trader atleast has a chance to make money, but the taxpayer is permanently sentenced to lose money...

You see the difference?  

That's a way of saying that you've lost the argument I guess :-)

What I've shown you is some examples where states *used* the fact that precious metals were generally seen as value-carriers to base their state-decreed money on.  There were two simple ways to do that:
- make coins of the precious metal, of which the denomination corresponded in fact to the amount of metal (such as the Joachimsthaler, and the Spanish dollar).  The state stamp then simply certified the veracity of the amount and kind of metal.
- give out paper bills that are exchangeable for the precious metal (or at least are decreed to be potentially exchangeable).

MOST of the monetary history consists of *this* kind of state money.  As such, the state doesn't "impose value by authority" but *uses* market-determined value to base its state-based money on.

My argument was simple and straight-forward: if it were true that money got its value *solely* from the authority of the state (which is your statement) then no state would have gone through the difficulty of issuing money which is based upon precious metals.  They could have issued money by printing paper.   But historically, that didn't happen.  I was going to write, that never happened, but I'm in fact not sure that it didn't happen anywhere.

It is true that *today* fiat money is exactly that.  But fiat money usually (again, I was going to write always, but there may be exceptions) started out as precious-metal backed money and derived its value from the precious metal value that was of course solely given by the market.  It is after a century of "scam" that fiat lost his link to precious metals.  In many cases, the states intervened to FORBID other money.  The USA went as far as to forbid the holding of monetary gold !

But be careful to what I'm saying: I'm talking about the *historical* path, the one you claimed was mostly or always state-authority based.

I'm NOT saying that money HAS TO BE precious-metal based.  It doesn't have to.  State authority CAN introduce pure fiat money.  Only, I'm not aware of any fiat money that was historically issued that way (historically is "more than a century ago").  I'm not excluding that there were examples.  But all examples I know of, have an initial link to precious metals.

In fact, state money can indeed be issued, and can have value.  The state simply has to guarantee scarcity of the money.  Then it can, or cannot, be adopted by the market.   If moreover, the state makes laws that make it difficult or illegal to use free market money, such as precious metals, this can kick in the speculative cycle which turns an asset into money.  


I think you should get your historical facts right before claiming such statements.

BTW, here's an interesting piece of the Great Keynes himself about money:

http://encyclopedia-of-money.blogspot.fr/2012/10/phoenician-weight-standard.html