when you run out of other people's money...

[johnyj]

To anyone who wants to understand what's happening to greece,
I would highly recommend reading or re-reading Warren Buffet's
classic article "squanderville vs. thriftville":

http://www.berkshirehathaway.com/letters/growing.pdf

That's an interesting article, aside from the nonsense regarding "import certificates". However, he glosses over the important point that "intergeneration inequities" are a result of the legitimization of aggression (specifically taxation) in the form of government. In short, it's the government of Squanderville which is in debt, not the people of Squanderville; but the government is going to take what it needs to pay off that debt involuntarily from the people living in the area, even though they may not be the same people as lived there and voiced their approval when the bonds were issued and thus have no legitimate responsibility to pay it off.

In a free market you can't inherit other people's debts. Any estate which has more debts than assets is simply in default, leaving nothing to be inherited. The next generation always starts out with a clean slate.

It's also interesting to see Buffet's view, he pointed out 16 hours of working, but how about those people can working 24 hours (by using automation and computer)? Would those guys buy out every thing? Or any other people have to work 24 hours to keep their deficit from growing?

This crazyness has to stop, no one should work more than 8 hours, and they should even reduce working hours to 4 to increase the employment rate. Robbing other people through hard working does not change the fact that it is still robbery

[johnyj]

This crazyness has to stop, no one should work more than 8 hours, and they should even reduce working hours to 4 to increase the employment rate. Robbing other people through hard working does not change the fact that it is still robbery

Are you some sort of commie, or are you being cynical ?

Both 

Actually it is not robbery, but allure, since the consumption is always voluntary. Allure others into spending future income and trap them into debt, typical credit card company's business

My point is that the consumption should not deviate from the production too much, otherwise there will be imbalances in the system. If someone suddenly increased their production by a great margin and their consumption did not increase at the same pace, then either their products will drop in value due to oversupply, or someone else is going to have a debt due to increased consumption

[johnyj]

Let's suppose the Greek really spent others money, then, how to prevent other people from spending your money?

A capture fish and sell them to market, B pick fruits and sell them to market, both of them use exchanged shells to buy other products. But from one day, B just buy everything with a long term loan without pick enough fruits, what will happen?

1. The price of fruits will rise due to reduced supply
2. C will produce fruits due to rising prices
3. Fruit price get back to normal
4. B can not produce fruits any more since now the competition is hard (C took his job)
5. B will live on loan and accumulate huge debt

Both A and C thought the money are created by them (or corresponding to wealth created by them), so they can think that B is spending their money, but the essential part is: B is consuming A and C's products without providing any valuable things in exchange. Although B provide money as exchange, he did not contribute to the amount of consumable wealth

How much B should provide in exchange, is very difficult to judge. It is not decided by B's labor, but mostly decided by A and C's desire (if Greece can provide lots of petroleum, it is no problem at all). So, as long as A and C desire money, B can pay them with money, A and C will feel satisfied

A want others to buy his products as much as possible, but on the other side, he will feel unfair if B just buy his products by printing money, this is essentially a moral question, not an accounting or economy question

So, if A can not do anything about B, the only way to prevent B from spending A's money is: A spend the money he earned immediately and exchange to consumable goods, thus he will make sure no one can have access to his labor. But that is also not very practical, due to none of the consumable goods can be kept for long, and transportation and liquidation for them is also troublesome

Then he will realize that if he would like to hold the value in goods form, he will immediately face lots of risk, so finally maybe he still prefer holding the currency, but he will try all he can to stop B from buying his labor with loaned money

So who is the most clever guy here, B of course. He spent big, lived a good life, and have lost his job, thus he has nothing to pay the debt, what the banks can do is only write off his debt and keep going forward. And IMO, since both A and C has earned enough money in this process, they will feel satisfied anyway, why should they blame B? Of course when they start to spend their savings, they will find out that there is not enough goods in the market, but that is many years later, and if that is the case, B will find a job and payback his debt

We need more country like Greece to raise up the GDP for those export based countries 

[johnyj]

-------------
WASHINGTON (MarketWatch) — Federal Reserve officials are considering a new type of quantitative easing that will attempt to boost the economy without accelerating inflation, according to a report published Wednesday.

Analysts said the new approach would allow the Fed to move despite high oil prices.

Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates, according to a story in The Wall Street Journal.

This “sterilized” quantitative easing, would use reverse-repurchase agreements to keep the money from flowing to bank reserves.
-------------

Why can't such measurement apply to Greece? The printed money is used to buy the debt, and that money is exclusively reserved for  finance the debt, it should not flow into the bank reserves, but make the banks' balance sheet much healthier: The toxic assets (or debt, or loss) are moved from bank's balance sheet into FED's balance sheet, so that banks can operate without worry

[Realpra]

You can't make debt just go away, as long as the government is using more than its earning you will have inflation - spending means SOMEONE is getting paid and THAT money goes to the market.

In time productive people will switch to BTC and other stuff and also try to avoid paying taxes.


In the end the leeches of the world are left with a lot of worthless paper.