Bitcoin Forum
December 10, 2016, 11:09:04 AM *
News: To be able to use the next phase of the beta forum software, please ensure that your email address is correct/functional.
 
   Home   Help Search Donate Login Register  
Pages: [1]
  Print  
Author Topic: The world's economy is a big, fat pyramid scheme  (Read 1094 times)
Aggro
Donator
Sr. Member
*
Offline Offline

Activity: 296



View Profile
November 29, 2011, 02:13:12 PM
 #1

Italy is now borrowing at 7%. The 3rd largest economy in Europe seems to be done. Outside of a very few such as Germany and France, the euro zone seems to be in dire straits, and at the brink of collapsing. Minister run desperately to avoid what in my opinion is the unavoidable:

http://www.usatoday.com/money/world/story/2011-11-29/euro-finance-ministers-meet/51458492/1

Seems fiat money cannot hold for much longer as it is. Some radical things will need to happen for the "real" world economy to reactivate, such as seriously redistributing the world's wealth from the rich back to the ever thinning middle class, not to mention the poor.

I would hold on to your coins, and your gold if I were you Smiley


Roberto
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
Hawker
Hero Member
*****
Offline Offline

Activity: 700



View Profile
November 29, 2011, 05:06:28 PM
 #2

Italy's problems are due to its lack of fiat money.  It gave up its own currency and is now paying the price.  To understand it, try to imagine if the US gave up the Dollar and adopted the Japanese Yen and had zero influence on Japanese monetary policy. 

ALPHA.
Jr. Member
*
Offline Offline

Activity: 42


View Profile
November 29, 2011, 06:14:11 PM
 #3

We don't need to redistribute wealth. We need to create wealth by lifting limits off of innovation. Pillaging the wealthy will only destroy incentive to produce. The fact is the median wealth for the average person only still continues to rise.

Again, it's not a zero-sum game.
MimiTheKid
Jr. Member
*
Offline Offline

Activity: 39


View Profile
November 30, 2011, 02:06:45 PM
 #4

Italy's problems are due to its lack of fiat money.  It gave up its own currency and is now paying the price.  To understand it, try to imagine if the US gave up the Dollar and adopted the Japanese Yen and had zero influence on Japanese monetary policy. 

The UK hasn't got the Euro and they have got pretty the same problem:
http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

The former currency of Austria was: "Schilling".
It was connected to the "Deutsche Mark" for decades. Nobody was able to change the exchange rate 1:7.
And nobody complained. Why? Because it secured the exchange rate to a very important partner and it kept the economy fit. It was one of the keys to a quite stable and successful economy.

Just printing money, doesn't make sense. It's really easy for the government to get rid of the debts. The tax-payers and the companies are getting the bill.
NghtRppr
Sr. Member
****
Offline Offline

Activity: 476


View Profile
November 30, 2011, 02:31:29 PM
 #5

Pillaging the wealthy will only destroy incentive to produce.

If you tax something, you get less of it. That's the idea behind those moralizing "sin" taxes. I guess being productive is a sin.
ultima
Member
**
Offline Offline

Activity: 96


View Profile
November 30, 2011, 02:43:47 PM
 #6

Italy's problems are due to its lack of fiat money.  It gave up its own currency and is now paying the price.  To understand it, try to imagine if the US gave up the Dollar and adopted the Japanese Yen and had zero influence on Japanese monetary policy.  

Having your own currency gives you an easy way out: print the money, and steal from everyone who holds it. Italy can't do it, because they have to face reality now instead of kicking the can down the road.

US will always be able to pay it's debt, the question is what will you be able to do with the money when you get it back.

Tell me, what is the difference between defaulting and not paying your creditors and paying your creditors in monopoly money?
Hawker
Hero Member
*****
Offline Offline

Activity: 700



View Profile
November 30, 2011, 02:46:02 PM
 #7

Italy's problems are due to its lack of fiat money.  It gave up its own currency and is now paying the price.  To understand it, try to imagine if the US gave up the Dollar and adopted the Japanese Yen and had zero influence on Japanese monetary policy. 

The UK hasn't got the Euro and they have got pretty the same problem:
http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/

The former currency of Austria was: "Schilling".
It was connected to the "Deutsche Mark" for decades. Nobody was able to change the exchange rate 1:7.
And nobody complained. Why? Because it secured the exchange rate to a very important partner and it kept the economy fit. It was one of the keys to a quite stable and successful economy.

Just printing money, doesn't make sense. It's really easy for the government to get rid of the debts. The tax-payers and the companies are getting the bill.


The UK national debt is only 62% and people pay to lend money to the UK.  For every £100 lent to the UK government for 1 year, you get £97 back as the inflation rate is way higher than the interest rate.

Your point about Austria is correct.  However, the same logic does not apply to places like Greece and Spain as they are not important partners of Germany.  

MimiTheKid
Jr. Member
*
Offline Offline

Activity: 39


View Profile
November 30, 2011, 04:06:58 PM
 #8

The UK national debt is only 62% and people pay to lend money to the UK.  For every £100 lent to the UK government for 1 year, you get £97 back as the inflation rate is way higher than the interest rate.

The 62%  are a nice number, the important line is the red one at
http://www.economicshelp.org/blog/334/uk-economy/uk-national-debt/ under "Debt including Financial sector intervention"

This is the amount, the government has to finance, and to cope with it. The banks with a huge profit can pay back the money. But these (most of them) banks are taking huge risks. So they are the "bank run"-candidates.

Your point about Austria is correct.  However, the same logic does not apply to places like Greece and Spain as they are not important partners of Germany. 
The really important partners are euro-zone-partners. It's the same.
The problem is, that the EU-money didn't cause changes in the economic structure.
Hawker
Hero Member
*****
Offline Offline

Activity: 700



View Profile
November 30, 2011, 05:17:49 PM
 #9

Total UK debt is about 500% of GDP but most of that is working capital for banks and earns profits.  In fact, its the last big export industry here and the government depends on it for tax revenues.

Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!