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Author Topic: Remove economic nonsense from home page  (Read 10949 times)
MoonShadow
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August 13, 2010, 11:37:07 PM
 #21


You have a utity-o-meter?



Yes, an educated mind.

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 You are sure I get 0 utility from having bitcoins? Your meter is broken.


The utility that I get from bitcoins, or from US dollars or Euros, is only in what I can trade them for.  They have no 'intrinsic' utility.  Not for me, and not for anyone else.  Feel free to try and come up with a use for currencies outside of their monetary trade uses.

The Romans used many things as money, besides gold and silver.  More popular than either of the traditional metals were salt and iron nails.  It should be obvious enough that both of those have utility beyond their uses as a medium of exchange.

As an aside, that is where we get the convention of sizing nails in "pennies" even though the actual metric is denoted in a small letter "d".  It was originally measured in 'denarius', the *official" standard silver coin of the Roman empire.  That alone should give one a clue as to how highly valued a simple iron nail was to the common Roman, since a normal nail for home construction is called a "16 penny"; and a man named Jesus from Nazarath was betrayed for 30 denarius, significantly less than the value of the three large nails used to pin that man to a dead tree.

I think that a great many people on this list would benefit from a book called, "Whatever Happened to Penny Candy?" by Ray Bradbury.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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MoonShadow
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August 13, 2010, 11:48:21 PM
 #22

In reality bitcoins are the first master planned scarce COMMODITY.


If there is no use for something outside of the context of a currency, then it is not a commodity.

Some days, typos seem like my first language. :-) But if your asking. All of my other languages are worse than English.


commodity |kəˈmäditē|
noun ( pl. -ties)
a raw material or primary agricultural product that can be bought and sold, such as copper or coffee.
• a useful or valuable thing, such as water or time.


If I can barter for it. It is a commodity. What I choose to do with it is up to me.



Pretty good up to this point, but it's become obvious to me that you still don't understand the difference between a barter system and a currency system.  Money 'evoloves' is any free society to permit an unknwn third party trade.  So that the chicken farmer does not have to negotiate with the baker to accept a trade in chickens.  The farmer can sell his extra chicken to the doctor, and then by some bread, then the baker can go get his checkup.  No two parties must need be aware of the third in order for the trade to occur.  The thing that is traded between all three parties is the currency.  It's not neccessary that this currency be a commodity, but historicly that is the case.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
Red
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August 14, 2010, 12:24:25 AM
 #23

Actually I was writing an example of third party trade but it was a lame example so I erases it. Yours was much better.

I think we are in "violent agreement" on the topic. :-)

I prefer my currency as an abstract accounting that, I feel, should not have commodity characteristics.

My best example is I don't think currency should increase in value as a result of demand. All commodity have this characteristic naturally.

Some feel differently and certainly commodity currencies have existed in the past but they died out. I think that is less conspiracy than a diminishing in utility compared to non-commodity based currencies.
MoonShadow
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August 14, 2010, 01:01:39 AM
 #24

Some feel differently and certainly commodity currencies have existed in the past but they died out.

They didn't die from natural causes, they were assasinated by edict.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
agaumoney
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August 14, 2010, 01:45:59 AM
 #25

You are wrong Smiley

You can not operate a fractional reserve bank using bitcoins, it's impossible by definition because you can lend only the money you actually own and no more. Fractional reserve system works such that you need only 10% reserve of actual money and you can create 90% out of thin air ...

You could, in theory, have fractional reserves of bitcoins, as with dollars. Banks don't create dollars (FDR notes) out of thin air, they create bank account balance out of thin air, and that's is counted as actual dollars in the economy.

Suppose some bank stores bitcoins. People would transfer their bitcoins to the bank and would have an account balance, that they could retrieve when needed. The bank could then lend part of this money without blocking your balance, thus creating fractional reserves.

And just HOW are you going to do that with bitcoins?  It's all nice to say "in theory" but in this case the theory has a huge hole so it is like saying "in theory gold is worthless because we could mine all the gold we want from other planets."

So, what is the hole in the fractional reserve bitcoin bank theory?

A "real" bank creates dollars and is allowed by the system to issue those new dollars into circulation.

But you cannot issue more bitcoins into circulation than you have.  You can only get bitcoins when they are created in the normal process either by you or transferred to you.  Therefore you will not be able to accept bitcoins on deposit and loan bitcoins unless you loan those coins that are on deposit.  If you loan them, they will not be on deposit any more and you cannot return them to the depositor.

In a way bitcoins are like gold.  If a bank accepted gold on deposit and all loans were made by gold going out of the bank, there would be no fractional reserve banking.  The fractions happen if a substitute is allowed to circulate instead of gold.  (E.g. warehouse receipts)  There are not yet (to my knowledge) any "warehouse receipts" for bitcoins, and hopefully nobody is stupid enough to take a promise for bitcoins in lieu of actual bitcoins.

Do you know of a substitute (a "warehouse receipt") for bitcoins that circulates equivalent to bitcoins?  If that substitute can be created more easily than bitcoins then you could have fractional reserve bitcoin banking.
agaumoney
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August 14, 2010, 01:53:47 AM
 #26

The details differ from country to country, but the general idea is like this.

First you get a banking license (i.e. permission from the government to be a bank), which is not easy.

Then, you get someone to deposit money with you. Let's say they deposit $10000.

If the legal fractional reserve is 10%, you can now lend out $90,000 (because you retain a reserve of 10% of the total money).

Truly this is nonsense.

If I have $10,000 from deposits, a 10% reserve means I need to reserve 10% of my deposits. So I must reserve $1,000. Therefore I can lend $9,000.

That $90,000 comes from the central bank as a "book entry for a loan" at the central bank's current rate of interest.

I already have the $9,000 on hand. It's already borrowed from the depositor. I don't need to ask the central bank for anything.

You could lend $9,000.  Ideally you put it into an account at your bank where now you have $19,000 on deposit and $9,000 on loan.  Now you can loan an addition $8,100.  Then you can loan $7,290.  Then you can loan $6,561.  Etc.  Sum up all those loans.  The initial $10,000 causes the creation of far more than $9,000.  It works the same way if there is more than one bank involved, as in that case it is "the banking system" creates all the new money in total, rather than just one bank where the initial deposit was made.

Or you could use the $10,000 as collateral to borrow from the central bank.  They will give you $100,000 to loan out.

Of course, all those numbers assume a 10% fractional reserve.  Currently in the U.S. the reserve requirement for savings accounts, certificates of deposit, etc. is 0% and for checking (demand) accounts it is 3%.  (Read the fine print on your savings account, they are required to warn you that withdrawals might be denied until convenient for the bank up to typically 30 days.)
Red
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August 14, 2010, 03:49:19 AM
 #27

You could lend $9,000.  Ideally you put it into an account at your bank where now you have $19,000 on deposit and $9,000 on loan.  Now you can loan an addition $8,100.  Then you can loan $7,290.  Then you can loan $6,561.  Etc.  Sum up all those loans.  The initial $10,000 causes the creation of far more than $9,000.  It works the same way if there is more than one bank involved, as in that case it is "the banking system" creates all the new money in total, rather than just one bank where the initial deposit was made.

Yay! this is actually coherent enough to address!

So the reason what you write sounds so obviously unsound, is you are only writing about HALF of a banking system.

Loans are barter. I give you something. You give me something.

When I loan someone $9,000 I take something worth $12,000 as collateral. That assures that the borrower has at least 30% "skin in the game". If his idea sucks, he loses more than he borrowed. Now that gives me two ways to win. If he pays me back, I get interest. If he doesn't pay me back, I claim the collateral and sell it. Think of it as loan insurance. It is what real bankers do instead of showing up and breaking the borrowers knee caps. It may be less fun, but it is more profitable.

If you look around, you will see lots of disreputable lenders offering collateralize loans they know people are "overly optimistic" about paying back. Pawnshops are an easy example. The same is done with use car loans.

Now, when the business man puts his $9,000 in my bank its because he needs to pay bills over time. He knows they will come up, but he doesn't need to spend the money now. He may not have to spend it at all if he has sufficient cash flow.

And when I lend that money out again, it's because I do have real value backing that loan. In this case collateral is a very valuable "claim check". If they don't pay, I claim the house, car, company, gold, tools, etc.

So I lend $8,100 and take $11,000 in collateral. If that person deposits the money with me, I can do it all again.

I have the money, its all cash. None of it was made up or came from the Fed.

If someone comes in and want more cash than I have on had, I can go to any other bank for a loan. I can use my collateral as collateral on that loan. It is perfectly sensible to do so.

If everyone requests their cash at once, all my collateral assets get pledged to other banks who happened to have more cash on hand. And that is still perfectly sensible. Because I now have no risk. I paid all my depositors off. The other banks have the risk so they hold the collateral.

Or I can simply sell my loans to an outside investor. They are investments guaranteed by collateral. And the best thing is, as the loan gets paid back the borrower's "skin in the game" increases. Since they have more to lose, they will work harder to make all payments. Who wants to lose a car for missing the last car payment?

Notice, in no case did I go running to the Fed. In most banking transactions the Fed is not required at all.

Where the fed is needed is when all your cash is out on loan, but there is still more opportunity to grow the economy.

Say I did your progression. I lent out all that money and took gobs and gobs more in collateral. Everything is going smoothly, people are making payments. But now I have no cash on hand available to loan.

Now say Fred comes in and has a great business ideal. He also has collateral to back the loan. The problem is I have no cash. So in this case I go to the bank where I can borrow money the cheapest. (sometimes the fed but most banks can't borrow there directly) So I borrow money, and pledge his collateral to back my loan. I do the paperwork, charge him more interest than the fed charges me. Everyone gets paid back.

There is no magic and no scamming.

Unless you SUCK AT BANKING! Which has happened recently. It is not a scam, it is a bunch of fucking morons who failed to do proper risk assessment or take proper collateral. They should all be lined up and SHOT for sucking so much at their one and only job. Most of the fault actually lies with so called "investors" who created a market by purchasing sets of prepackaged loans, without knowing what the fuck they were doing! It is really easy to create and run a hugely profitable business if you customers are fucking morons! And most of the "investors" who bought the loans were fucking morons. They'll claim the guys who packaged up the unvetted loans scammed them. But it is easy to scam a fucking moron.

----

By the way, EVERYTHING I wrote works for fractional reserve bitcoin or gold lending as well.

Stick that in your FAQ.  :-)

Or you could use the $10,000 as collateral to borrow from the central bank.  They will give you $100,000 to loan out.
This is unsupported. I doubt it is true. Central banks and/or collateral simply doesn't work like that.

Feel free to support this point if you want.

Of course, all those numbers assume a 10% fractional reserve.  Currently in the U.S. the reserve requirement for savings accounts, certificates of deposit, etc. is 0% and for checking (demand) accounts it is 3%.  (Read the fine print on your savings account, they are required to warn you that withdrawals might be denied until convenient for the bank up to typically 30 days.)
Changes in reserve percentages don't effect anything I said. If you have more cash on hand you lose the value that comes from lending it. But you save on time consuming interbank transactions to manage cash levels.

caveden
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August 14, 2010, 04:56:58 PM
 #28

Nothing has inherent value.  Wink

That's not true at all.  It seems too many people who post on these lists, do so under the pretense of understanding economic theories.

Gold has an "inherent" value, not because other people value it as a medium of exchange or a store of value, (a currency) but because it has real utility outside of this context.

No, value is not inherent. Value is attributed to things by people, subjectively.
Having a value is not an attribute of stuff. It's the "opinion" of people about stuff. And it may changes as people change their "opinion".

Read what I wrote right after:

Value is subjective, people give value to stuff, it's not part of stuff.
That's why you can not claim that someone that built an ugly building beside your house damaged your property by reducing its value, for example. The value of your house is not an inherent attribute of it.

And are you are seriously going to claim that a can of soup or a can of soda doesn't have an 'inherent' value?

No they don't, as anything else doesn't. It's people who value them.

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MoonShadow
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August 14, 2010, 07:58:39 PM
 #29



No, value is not inherent. Value is attributed to things by people, subjectively.
Having a value is not an attribute of stuff. It's the "opinion" of people about stuff. And it may changes as people change their "opinion".



Then we are arguing about the semantics of the word, "value" then.  Fair enough, I accept your point that value is in the eye of the beholder.  Would you accept that a can of soup or an iron nail both have an 'inherent utility' then?  At a minimum, they are both products that have an intended use.  I suppose our disagreement can be summed up with a jar of peanut butter to a starving person who is allergic to peanuts.  The jar of peanut butter has no 'inherent utility' to the allergic person, and therefore no 'inherent value' from his *solitary* perspective.  The jar of peanut butter can only be used in trade with someone who can consume it safely, but to the *other* guy; the jar of peanut butter does, indeed, have an 'inherent utility' and therefore an 'inherent value' from his perspectives.  It is the second guy (and all the other second guys within a given sphere of trade) that imparts an 'inherent value' upon the jar of peanut butter; but the first guy is (presumedly) aware of the jar's 'inherent utility/value' to others, so it has very much the same value to himself.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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August 15, 2010, 02:42:14 AM
 #30

Nothing has inherent value.  Wink

That's not true at all.  It seems too many people who post on these lists, do so under the pretense of understanding economic theories.

Gold has an "inherent" value, not because other people value it as a medium of exchange or a store of value, (a currency) but because it has real utility outside of this context.

No, value is not inherent. Value is attributed to things by people, subjectively.
Having a value is not an attribute of stuff. It's the "opinion" of people about stuff. And it may changes as people change their "opinion".

Read what I wrote right after:

Value is subjective, people give value to stuff, it's not part of stuff.
That's why you can not claim that someone that built an ugly building beside your house damaged your property by reducing its value, for example. The value of your house is not an inherent attribute of it.

And are you are seriously going to claim that a can of soup or a can of soda doesn't have an 'inherent' value?

No they don't, as anything else doesn't. It's people who value them.
Nothing has monetary value inherently. Inherent value is a measure of how much value it has to people in general. Air and water are essential, so they have high inherent value, but they're so abundant that they have low monetary value. Metals in general are less essential than air and water, but they have significant value to people in general, so their inherent value is also very high. Because metals are much more difficult to obtain, their monetary value is much higher than air and water.

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