Deflation arrives in the EU.

[Puppet]

This creates a system where total debt must always rise, but there are limits to the expansion of debt.

You mean the debt as a number expressed in an inflationary currency?  thats not a problem (and its not even true *) and there is no limit because the actual value of the debt, if adjusted for inflation,  doesnt have to keep rising.  It will only rise as long as the economy grows. Besides, we can create fiat money without interest. Or at least governments used to be able to do that. If you want to advocate for that, you can have reasonable arguments either way, but abolishing fiat money for something that can not adjust itself to economic realities is just silly.

* the interest can be paid back with actual economic growth without the money ever being created.

[Puppet]

Yet you are surrounded by ample evidence in the current era to the contrary. The debt-based monetary system has led to the obviously unsustainable position that all economic output, global GDP is now being consumed up by interest payments on outstanding debt,.

Thats nonsense. Interest rates and thus payments are lower than ever. Clearly we have a different problem. in fact we have many problems, not in the least dwindling oil supplies and an overcrowded planet that can not sustain this many humans, but if you think these problems will be magically solved by ditching our monetary system completely and replacing it with the electronic variant of what we had in the bronze age, then you are an idiot.

Bitcoin is far in advance of any monetary product on the market today

In some practical aspects yes, but the principle of a currency based on a rare commodity is no different than what we have had for millennia.

[marcus_of_augustus]

Yet you are surrounded by ample evidence in the current era to the contrary. The debt-based monetary system has led to the obviously unsustainable position that all economic output, global GDP is now being consumed up by interest payments on outstanding debt,.

Thats nonsense. Interest rates and thus payments are lower than ever ..... then you are an idiot.

Bitcoin is far in advance of any monetary product on the market today

In some practical aspects yes, but the principle of a currency based on a rare commodity is no different than what we have had for millennia.

Okay, name-calling tells me that is the end of the debate ... and you just run out of arguments I gather. So PUPPET who is pulling your strings I wonder? Are you against monetary freedom also like the other facists trolls that are showing up here lately?

.... bitcoin is no different than what has been around for millenia,  uh-huh, oh yeah, right, gotcha.

Monetary Freedom, welcome it into your socialist enclave today!

[ldrgn]

The debt-based monetary system has led to the obviously unsustainable position that all economic output, global GDP is now being consumed up by interest payments on outstanding debt, it is baked in to the mathematics of compounding interest.

No really, can you show us where "global GDP is being consumed up by interest payments on outstanding debt?"

[hashman]

 Economies need credit.   [...]

Does this mean economies need counterfeiting?  I'll loan you my car for an hour is that credit?  The bitcoin loan markets springing up are they credit? 

[Puppet]

Does this mean economies need counterfeiting?

Of course not.

I'll loan you my car for an hour is that credit?

Its certainly not tradeable credit, since I assume you wouldnt allow me to trade your car for something else that I want, but I guess you could look at it as a form of credit yes. Just one were we use trust instead of money. If I dont return your car, you will expect something in return, wont you? Like money.

The bitcoin loan markets springing up are they credit?  

Yep, and thats working wonderfully isnt it.

BTW, for all the die hard libertarians. Keep in mind fractional reserve banking was not invented by the government. It was invented by the market.

[Puppet]

No really, can you show us where "global GDP is being consumed up by interest payments on outstanding debt?"

I suspect he watched "money as debt" on youtube.
Its an interesting movie, but highly deceptive. Among other issues, they forget to mention at least one key aspect of our monetary system;  while its true interest money is not created like debt money is, its equally true that interest money is not destroyed when a debt is repaid, whereas the debt money is. And that is what balances the equation. All debts, including interest debts can theoretically be repaid. Of course, without debt, there would be no money and no trade (trade is what creates debt after all), so its not exactly desirable, but theoretically at least, possible. Money is just an accounting system to manage debt/trade.

[Puppet]

.... bitcoin is no different than what has been around for millenia,  uh-huh, oh yeah, right, gotcha.

So tell me, how is bitcoin fundamentally different than using gold or shells or feathers? Its just an electronic variant thats more practical in many ways, but in essence, its no different. They are just limited supply commodities that can be used as IOUs.. OTOH, fiat money is fundamentally different, it can be created and destroyed based on credit needs. you dont have to stop trading or resort to hand to hand barter just because you ran out of the commodity to represent the value of those trades.

Just imagine we would stop creating and destroying money. Banks and central banks will no longer create any currency, stop buying and selling government debt, banks only lend money that they actually have. Suddenly it looks a whole lot more like bitcoin doesnt it? It will do wonders for the economy!

[sublime5447]

This creates a system where total debt must always rise, but there are limits to the expansion of debt.

You mean the debt as a number expressed in an inflationary currency?  thats not a problem (and its not even true *) and there is no limit because the actual value of the debt, if adjusted for inflation,  doesnt have to keep rising.  It will only rise as long as the economy grows. Besides, we can create fiat money without interest. Or at least governments used to be able to do that. If you want to advocate for that, you can have reasonable arguments either way, but abolishing fiat money for something that can not adjust itself to economic realities is just silly.

* the interest can be paid back with actual economic growth without the money ever being created.
[/quote


Whether you factor in inflation or not the total debt must always grow. Our current system requires ever growing debt. Money is destroyed when people pay off or default on debt. This system doesnt allow for deflation. And yes if the economy is growing than previous debt plus interest could be paid back, but the only way for the economy to grow is to raise total debt. So it makes the problem even worse. The gap between P and P+I gets even larger. Look at a graph of total US debt from 71-today.

"*the interest can be paid back with actual economic growth without the money ever being created."

The only way to pay back P +I is if the payments to principle are made back available to the debtor as wages. In this way they can use the same dollars they paid to principle to pay toward interest. But there is nothing that says the the banks have to make the money back available to the debtor. There is also the problem of double lending from secondary lenders.

[Puppet]

Whether you factor in inflation or not the total debt must always grow. Our current system requires ever growing debt. Money is destroyed when people pay off or default on debt. This system doesnt allow for deflation.

Reread that paragraph, then scratch my head.

When money/debt is destroyed, and not replenished with fresh debt, that is deflation. So its built right in the financial system.  However you are correct that its not a good thing for the economy when money becomes increasingly scarce. With fiat money, in those cases governments at least have the option to create new money. So I struggle to see how bitcoin is an improvement over this.

And yes if the economy is growing than previous debt plus interest could be paid back,

Im glad you agree.

but the only way for the economy to grow is to raise total debt. So it makes the problem even worse.

Thats because you are assuming a problem were there isnt one.

The only way to pay back P +I is if the payments to principle are made back available to the debtor as wages. In this way they can use the same dollars they paid to principle to pay toward interest. But there is nothing that says the the banks have to make the money back available to the debtor.

As wages, or other spending by the bank, dividends to shareholders, or crucially, as interest on bank deposito's.  I guess "money as debt" forgot that little detail too?

There is also the problem of double lending from secondary lenders.

Which is a problem, why? And how does bitcoin solve it?

[sublime5447]

When money/debt is destroyed, and not replenished with fresh debt, that is deflation. So its built right in the financial system.  However you are correct that its not a good thing for the economy when money becomes increasingly scarce. With fiat money, in those cases governments at least have the option to create new money. So I struggle to see how bitcoin is an improvement over this.

Maybe I should have said that defaltion is possible but leads to depression. It creates a situation where less and less money is in circulation. Read Milton freedmen and Anna Schwarts on the causes of the great depression. Read Richard Duncan The new great depression, read Steve Keen economics debunked.
 
Ask japan about the limits of debt expansion.

The problem of double lending increases the gap between principle which is created and interest which is not. The two pools in money as debt with P and P+1 is correct but for more complicated reason than presented. 

http://www.youtube.com/watch?v=iquemUNNYY8
http://www.youtube.com/watch?v=THelXGcKQd0

[Puppet]

Ill leave the money as debt stuff for what it is, its been put in perspective and debunked too much already for me to waste time on.

But do tell me this: how does bitcoin, with its purely deflationary nature, solve any of this, rather than exacerbate it?

[sublime5447]

Sure it has. By who paul krugman?

http://paulgrignon.netfirms.com/MoneyasDebt/Analysis_of_Banking.html

[painlord2k]

The wrongest claim in this thread is, IMHO, that "the economy need credit [to grow]".
No, the economy do not need credit but saving.
Only when the economy allow people to save in the long term, the economy can grow in the long term.
What is saving? Is production not used immediately but stored to be used later for deferred consumption or investment.

If I have no saving I live insecure of the tomorrow.
This can be described from the simplest Robinson Crouse  economy to the most complex.
If I'm on an island alone and naked, I must gather food to live.
If I need to gather food for 6 hours (by hands), I could invest two more hours to harvest the materials to build a basket and another two hours to build the basket.
In this way my productivity is increased. Now I can transport food instead of eating it immediately.
I have used two hours I had saved for leisure and rest.
With this investment, I now are able to gather berries and keep them for later consumption. Now I'm able to save berries and not only time.
With the basket I'm able to keep the berries I gather and build a reserve of berries large enough to eat for a day without gathering.
If I use two hours more every day to gather more berries (eight hours instead of six) in three days I can stay a full day without gathering.
This "free day" I could rest or I could dedicate it to build a stick to help me gather 50% more berries in the same time (because I'm able to beat branches I was not able to reach without a stick).
Now I need three hours instead of six to gather what I need to eat in a day.

WHo gave me credit to increase my island economy? No one.
But I was able to save. And saving I was able to invest.

[Puppet]

Sure it has. By who paul krugman?

http://paulgrignon.netfirms.com/MoneyasDebt/Analysis_of_Banking.html

Doesnt the fact that i could deduct from your arguments that you got your "knowledge" from that cartoon, ring any alarm bells? Am I a psychic or could it be that I have heard and debunked this all too often already? Its always the same source.

Now I dont want to ridicule these movies too much, they are nifty cartoons and on some aspects they even explain some basic economical principles rather well, so its not all lies, but Paul Grignon does not understand our financial system, or if he does, he is doing a decent job deceiving you. I am tired of setting the record straight, the info is out there, educate yourself.

As for Paul Krugman, he may not always be right, and you can ridicule him all you want,  but its kinda ironic given that he is a nobel prize winning economist, rather than  a hippy artschool dropout cartoonist who's word on monetary policy you are taking for gospel instead:
http://paulgrignon.netfirms.com/MoonfireStudio/PAGES/info.htm

[sublime5447]

I knew this guy was sucking Paul krugmans dick. Neoclassical economist are retards who dont understand the role banks play in expanding the money supply. That is why Steve Keen handed him is ass in their debate.

http://www.youtube.com/watch?v=iWEq27Ai6ZU

[Puppet]

Im not sucking anything and Im not even aware Krugman ever commented on these cartoons, did he? You brought him up, I didnt.
Perhaps unlike you,  I like to think for myself rather than being spoon fed disinformation by anyone.
But since you brought up Krugman, Im just pointing out he has at least a tiny bit more credibility then your hillbilly cartoonist. Maybe next time you can point me to a simpsons clip to prove your point.

BTW, ROFL to that link. You call it a debate, but Krugman isnt even on it. And that guy that was on there, had already received a thorough trashing by some other guy who's clip you linked earlier. Seems like you cant make up your mind who to believe, i guess anyone is  credible as long as he rants against NCE. Even though no two of your hero's seem to agree on much amongst themselves. Why dont you try understanding the issues and make up your own mind?

[EndTheFed321]

the elites who are losing their wealth and status.

[/b]

I don`t think I or any of us will see that come true 

The Elites will make sure that bitcoin will be seen as

nothing more than a geeks new tech toy

[twolifeinexile]

No really, can you show us where "global GDP is being consumed up by interest payments on outstanding debt?"

I suspect he watched "money as debt" on youtube.
Its an interesting movie, but highly deceptive. Among other issues, they forget to mention at least one key aspect of our monetary system;  while its true interest money is not created like debt money is, its equally true that interest money is not destroyed when a debt is repaid, whereas the debt money is. And that is what balances the equation. All debts, including interest debts can theoretically be repaid. Of course, without debt, there would be no money and no trade (trade is what creates debt after all), so its not exactly desirable, but theoretically at least, possible. Money is just an accounting system to manage debt/trade.

Do not understand why you say "interest money is not destroyed when a debt is repaid" that "balance the equation", it looks like exactly the problem, interest money is not created by need to be repaid, so it has to be from the principle from some other debt. (Unless banks spend the interest ahead of the interest repaid, and that is how I see could balance the equation and which itself is awkward, since you spend ahead of getting paid, so bank itself is taking debt, which comes back to creating more debt to satisfying old debt).

[Puppet]

Do not understand why you say "interest money is not destroyed when a debt is repaid" that "balance the equation", it looks like exactly the problem, interest money is not created by need to be repaid, so it has to be from the principle from some other debt. (Unless banks spend the interest ahead of the interest repaid, and that is how I see could balance the equation and which itself is awkward, since you spend ahead of getting paid, so bank itself is taking debt, which comes back to creating more debt to satisfying old debt).

Assume i take out a loan to start a business. The interest on the loan represents a portion of the profits I expect to make from the loan. The interest money isnt created when i take the loan, but neither is it destroyed when I pay back the loan. Instead it will just be transferred from my customers to me and then back to the bank, its shareholders or deposito holders where it will remain even after my debt money is destroyed. The net result is no new debt whatsoever, just a transfer of existing money/debt from my customers to the people who bankrolled my enterprise.