deflation; where did the money go?
RichD
which causes, or results from, recession.
My question is: where did the money go? We have seen
major inflation over the last 5 years (housing and commodities),
which is, as we know, a monetary phenomenon - the Fed has run
the printing press full blast, with their 'easy money' policy.
Now, bust follows boom, and prices fall... but the money is still
out there, yes/no? Demand should be constant, with boatloads
of bux chasing goods.... where are all the dollars? Hw can
general price level drop?
--
Rich
Michael Coburn
If you print up money and give it to people who already have more money
than they know what to do with, then these people will have even more
money that they have no use for. They have and will continue to use this
money to bribe the Congress to make damned sure that the Fed and the
elected government protects them and their control at the expense of the
rest of the economy.
The only way to approach this is to create money and give it to people
who actually will spend it. That causes people who have money to invest
it because if they don't do so then the inflation monster will get them.
Rich Uncle
returns
to the Fed.
=================================================
Rod Speed
> Supposedly, we are now descending experiencing deflation,.
No evidence of that yet.
> which causes, or results from, recession.
There isnt even a technical recession yet.
> My question is: where did the money go?
Same place it always goes when a bubble bursts.
> We have seen major inflation over the last 5 years (housing and commodities),
Much more with housing than with commoditys.
> which is, as we know, a monetary phenomenon
Its MUCH more complicated than that.
> - the Fed has run the printing press full blast,
Wrong.
> with their 'easy money' policy.
> Now, bust follows boom, and prices fall... but the money is still out there, yes/no?
Nope, quite a bit of it is just gone, with the significant drop in real estate and stock market prices.
> Demand should be constant,
It never is. Particularly when the mindless hysterics start running
around in ever decreasing circles claiming that the sky is falling.
> with boatloads of bux chasing goods....
Much less than there used to be, with the credit crunch.
> where are all the dollars?
Quite a few of them are gone, with the significant drop in real estate and stock market prices.
> Hw can general price level drop?
That happens when demand drops. Most obviously with commoditys.
Rod Speed
> On Sat, 29 Nov 2008 22:17:09 -0800, RichD wrote:
>
>> Supposedly, we are now descending experiencing deflation,. which
>> causes, or results from, recession.
>>
>> My question is: where did the money go? We have seen major inflation
>> over the last 5 years (housing and commodities), which is, as we
>> know, a monetary phenomenon - the Fed has run the printing press
>> full blast, with their 'easy money' policy.
>>
>> Now, bust follows boom, and prices fall... but the money is still out
>> there, yes/no? Demand should be constant, with boatloads of bux
>> chasing goods.... where are all the dollars? Hw can general price
>> level drop?
>
> If you print up money and give it to people who already have more
> money than they know what to do with, then these people will have
> even more money that they have no use for. They have and will
> continue to use this money to bribe the Congress to make damned sure
> that the Fed and the elected government protects them and their
> control at the expense of the rest of the economy.
Thanks for that completely superfluous proof that you have never ever had a fucking clue about anything at all, ever.
> The only way to approach this is to create money and give it to people
> who actually will spend it. That causes people who have money to
> invest it because if they don't do so then the inflation monster will
> get them.
Thanks for that completely superfluous proof that you have never ever had a fucking clue about anything at all, ever.
Andy Pandy
"RichD" <r_dela...@yahoo.com> wrote in message
news:a6edd516-45e7-4139...@d23g2000yqc.googlegroups.com...
Yes, the money is still there, but not in the hands of those likely to spend it.
Put simply, there are
a) people who have money but don't want/need to spend it yet, and
b) people who don't have money, but do want/need to spend.
Up until recently, it was easy for the b) group to spend the a) group's money.
The a's would put their money in the bank, and the bank would lend it to the
b's. High house prices enabled the b's to borrow money cheaply, especially since
the banks and rating agencies were stupid enough to think any loan secured
against a house was rock solid.
Now because of the credit crunch the banks need to recapitalise, and so the
money they are lending to the b's is drying up, therefore so is spending. Also
the b's have less to borrow against (lower equity in their houses).
So the money is the same, but it's not being transferred to those likely to
spend it in the same way as before.
--
Andy
Rich Uncle
==============================================
On Nov 30, 2:17 pm, RichD <r_delaney2...@yahoo.com> wrote:
...<snipped>...
Demand should be constant, ...
<snipped>...
> Rich
Rich Uncle
regarding the root of the subprime housing loans crisis?
Why do you housing as a monetary phenomenon? I think you think
to take into account the securitization and associated
collaterization
of mortgage-backed securities also.
Also, why do you regard commodity price increases over the last 5
years, if not the past decade, as a monetary phenomenon? Do you
mean there was no substantial increase in world-wide demand due
to economic development in other countries?
=================================================
On Nov 30, 2:17 pm, RichD <r_delaney2...@yahoo.com> wrote:
> ...<snipped>... We have seen
> major inflation over the last 5 years (housing and commodities),
> which is, as we know, a monetary phenomenon - the Fed has run
> the printing press full blast, with their 'easy money' policy.
> ...<snipped>...
> Rich
Michael Coburn
I don't normally react to the virus but this one is important enough to
make an exception. The virus is merely keeping the original post alive.
That post is of major importance. I will rephrase:
The only way to fight and end a depression is to create money and give it
to people who actually will spend it. This causes people who have money
to invest it because if they don't do so then the inflation monster will
get them. There is also the observation that money is out there to be
captured by those who will invest. Money is devalued by creating more of
it and injecting it at the bottom of the economy. The tax system must be
employed to control the objects of "investment". At some later time
(after the real estate market has stabilized) capital gains tax treatment
on real estate gains must be eliminated.
Michael Coburn
The virus is very active on posts that are rational.
Michael Coburn
> The money "printed" by the Fed is still out there if none of it returns
> to the Fed.
Unfortunately, it is controlled by people who would rather not spend it
and who already satisfy their desires by spending only a tiny, tiny
fraction of what is flowing in. The secret of restoring the economy is
to tax away a good amount of that flow and redistribute it to the bottom
of the economy in the form or stimulus. There is also the idea of
keeping capital gains tax rates lower than other income rates so as to
encourage investment as opposed to hoarding.
orang...@googlemail.com
there has been a very small amount of overall deflation. m3 has fallen
very very slightly, due to loans being repaid.
the trouble is people confuse asset prices falling with deflation. a
share falling in value from a hundred dollars one day to ten cents the
next is not deflation. there is still the same amount of money in
circulation. people's perception of how much the share is worth is all
that has changed.
I am much more worried about inflation. the monetary base is
increasing rapidly. output is falling. government deficits are huge.
Les Cargill
> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
>
>> The money "printed" by the Fed is still out there if none of it returns
>> to the Fed.
>
> Unfortunately, it is controlled by people who would rather not spend it
> and who already satisfy their desires by spending only a tiny, tiny
> fraction of what is flowing in. The secret of restoring the economy is
> to tax away a good amount of that flow and redistribute it to the bottom
> of the economy in the form or stimulus. There is also the idea of
> keeping capital gains tax rates lower than other income rates so as to
> encourage investment as opposed to hoarding.
>
We've had an abysmally low savings rate, something that has
allegedly "saved" us from the fate of Japan.
Would then a corollary of this observation be that a low savings
rate indicates a "maldistribution" of income? Of course, the
distribution of income isn't something that's under any
... rational control to begin with.... the Hayekian
point is that we're simply not smart enough to do this.
Also, nobody's talking about demographics - the Boomers
are retiring *now*.
>> ================================================= On Nov 30, 2:17 pm,
>> RichD <r_delaney2...@yahoo.com> wrote:
>>> Supposedly, we are now descending experiencing deflation,. which
>>> causes, or results from, recession.
>>>
>>> My question is: where did the money go? We have seen major inflation
>>> over the last 5 years (housing and commodities), which is, as we know,
>>> a monetary phenomenon - the Fed has run the printing press full blast,
>>> with their 'easy money' policy.
>>>
>>> Now, bust follows boom, and prices fall... but the money is still out
>>> there, yes/no? Demand should be constant, with boatloads of bux
>>> chasing goods.... where are all the dollars? Hw can general price
>>> level drop?
>>>
>>> --
>>> Rich
>
--
Les Cargill
Rich Uncle
have missed appreciating it properly (hope I'm not sounding like an
Eliza-type program).
A very interesting and valid point, Sir. Sounds similar to the
existence
of a liquidity trap.
Just to pour a little cold water, it could be that some of the people
who
would rather not spend it might be saving to a point when they feel
they
have enough for whatever they wish to spend on.
I'm not able to figure out what you mean by taxing away some of that
flow; could you kindly elaborate a little more on it, Sir?
===================================================
On Dec 1, 1:31 am, Michael Coburn <mik...@verizon.net> wrote:
>
> Unfortunately, it is controlled by people who would rather not spend it
> and who already satisfy their desires by spending only a tiny, tiny
> fraction of what is flowing in. The secret of restoring the economy is
> to tax away a good amount of that flow and redistribute it to the bottom
> of the economy in the form or stimulus. There is also the idea of
> keeping capital gains tax rates lower than other income rates so as to
> encourage investment as opposed to hoarding.
====================================================
> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
> > The money "printed" by the Fed is still out there if none of it returns
> > to the Fed.
> > =================================================
On Nov 30, 2:17 pm,
> > RichD <r_delaney2...@yahoo.com> wrote:
> >> Supposedly, we are now descending experiencing deflation,. which
> >> causes, or results from, recession.
>
> >> My question is: where did the money go? We have seen major inflation
> >> over the last 5 years (housing and commodities), which is, as we know,
> >> a monetary phenomenon - the Fed has run the printing press full blast,
> >> with their 'easy money' policy.
>
> >> Now, bust follows boom, and prices fall... but the money is still out
> >> there, yes/no? Demand should be constant, with boatloads of bux
> >> chasing goods.... where are all the dollars? Hw can general price
> >> level drop?
>
> >> --
> >> Rich- Hide quoted text -
>
> - Show quoted text -
orang...@googlemail.com
> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
> > The money "printed" by the Fed is still out there if none of it returns
> > to the Fed.
>
> Unfortunately, it is controlled by people who would rather not spend it
> and who already satisfy their desires by spending only a tiny, tiny
> fraction of what is flowing in. The secret of restoring the economy is
> to tax away a good amount of that flow and redistribute it to the bottom
> of the economy in the form or stimulus. There is also the idea of
> keeping capital gains tax rates lower than other income rates so as to
> encourage investment as opposed to hoarding.
>
People hoarding does not the problem. when someone deposits money in a
bank it does not just sit in a vault somewhere. the bank lends many
times the amount deposited to other people. nor is the problem banks
hoarding. banks are largely insolvent. having lent money they don't
have to people who can not pay them back, they have no money to hoard.
'stimulus' is a nonsense idea. some sectors of the economy are too
big, others too small. untill businesses in the oversized sectors are
allowed to fail and the resources they use liquidated the crisis will
continue. giving money to failing businesses only prolongs the
problem.
Rod Speed
>>>> Supposedly, we are now descending experiencing
>>>> deflation,. which causes, or results from, recession.
>>>> My question is: where did the money go? We have seen major
>>>> inflation over the last 5 years (housing and commodities), which
>>>> is, as we know, a monetary phenomenon - the Fed has run the
>>>> printing press full blast, with their 'easy money' policy.
>>>> Now, bust follows boom, and prices fall... but the money is still out there,
>>>> yes/no? Demand should be constant, with boatloads of bux chasing goods....
>>>> where are all the dollars? Hw can general price level drop?
>>> If you print up money and give it to people who already have more
>>> money than they know what to do with, then these people will have
>>> even more money that they have no use for. They have and will
>>> continue to use this money to bribe the Congress to make damned
>>> sure that the Fed and the elected government protects them and
>>> their control at the expense of the rest of the economy.
>> Thanks for that completely superfluous proof that you have
>> never ever had a fucking clue about anything at all, ever.
>>> The only way to approach this is to create money and give it to
>>> people who actually will spend it. That causes people who have
>>> money to invest it because if they don't do so then the inflation
>>> monster will get them.
>> Thanks for that completely superfluous proof that you have
>> never ever had a fucking clue about anything at all, ever.
<reams of your pathetic excuse for bullshit/lies flushed where they belong>
> I will rephrase:
> The only way to fight and end a depression is to create
> money and give it to people who actually will spend it.
Wrong. That isnt what happened with WW2.
> This causes people who have money to invest it because
> if they don't do so then the inflation monster will get them.
Thanks for that completely superfluous proof that you have
never ever had a fucking clue about anything at all, ever.
> There is also the observation that money is out there to be captured by those who will invest.
Thanks for that completely superfluous proof that you have
never ever had a fucking clue about anything at all, ever.
> Money is devalued by creating more of it and injecting it at the bottom of the economy.
Thanks for that completely superfluous proof that you have
never ever had a fucking clue about anything at all, ever.
> The tax system must be employed to control the objects of "investment".
Thanks for that completely superfluous proof that you have
never ever had a fucking clue about anything at all, ever.
> At some later time (after the real estate market has stabilized)
> capital gains tax treatment on real estate gains must be eliminated.
Thanks for that completely superfluous proof that you have
Rod Speed
> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
>
>> The money "printed" by the Fed is still out there if none of it
>> returns to the Fed.
>
> Unfortunately, it is controlled by people who would rather not spend
> it and who already satisfy their desires by spending only a tiny, tiny
> fraction of what is flowing in. The secret of restoring the economy
> is to tax away a good amount of that flow and redistribute it to the
> bottom of the economy in the form or stimulus. There is also the
> idea of keeping capital gains tax rates lower than other income
> rates so as to encourage investment as opposed to hoarding.
Thanks for that completely superfluous proof that you have
never ever had a fucking clue about anything at all, ever.
Rod Speed
You wouldnt know what a rational post was if it bit you on your lard arse.
Michael Coburn
> Michael Coburn wrote:
>> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
>>
>>> The money "printed" by the Fed is still out there if none of it
>>> returns to the Fed.
>>
>> Unfortunately, it is controlled by people who would rather not spend it
>> and who already satisfy their desires by spending only a tiny, tiny
>> fraction of what is flowing in. The secret of restoring the economy is
>> to tax away a good amount of that flow and redistribute it to the
>> bottom of the economy in the form or stimulus. There is also the idea
>> of keeping capital gains tax rates lower than other income rates so as
>> to encourage investment as opposed to hoarding.
>>
>>
> We've had an abysmally low savings rate, something that has allegedly
> "saved" us from the fate of Japan.
>
> Would then a corollary of this observation be that a low savings rate
> indicates a "maldistribution" of income? Of course, the distribution of
> income isn't something that's under any ... rational control to begin
> with.... the Hayekian point is that we're simply not smart enough to do
> this.
Well, Hayek wasn't smart enough.
> Also, nobody's talking about demographics - the Boomers are retiring
> *now*.
Why would people talk about the demographics? There is nothing that can
be done about it. It is as it is.
Sushi Fish
consumers doesn't spend, market lacks liquidity. Fed money sinks into
bad loan abyss, the market doesn't have as much money as it appears
when millions lost jobs. When there are goods w/ less buyers,
deflation is a mean to get rid of excess goods. After some period of
inflation, deflation happens as it happened in Japan
Michael Coburn
> It was good of you to repeat what you considered point; otherwise I'd
> have missed appreciating it properly (hope I'm not sounding like an
> Eliza-type program).
>
> A very interesting and valid point, Sir. Sounds similar to the
> existence
> of a liquidity trap.
>
> Just to pour a little cold water, it could be that some of the people
> who
> would rather not spend it might be saving to a point when they feel they
> have enough for whatever they wish to spend on.
A progressive income tax was actually conceived as a tax on "economic
rent" and was not actually intended to tax wages at the median. All
income taxation should be at or above the median wage and any taxation
close to the median wage should be at a low percentage. But leaving that
aside for now, Obama's plan to increase taxation on income above $250k
and to return that taxation to the level that existed in 1993 is an
example of "taxing away some of that flow" by an additional 3% or 4%. It
may be that such incomes would need to be "saved up" to buy a new yacht
or a vacation cabin near the ski slopes or perhaps a Leer Jet, but we
should not confuse this with saving for a down payment on the starter 3
bedroom in the burbs.
> I'm not able to figure out what you mean by taxing away some of that
> flow; could you kindly elaborate a little more on it, Sir?
I would add another tax bracket at $1M and another at $3M and each
bracket would be higher. Most people do not "earn" $1M a year. They
will not stop what they are doing because they are taxed more heavily.
That is the test that indicates that the income is unearned. If the
behavior of the payer of the tax or the prospective payer of the tax is
not altered by the existence of the tax then the income is unearned. The
payer will not alter his or her behavior because the "position" or the
"ownership" is the key to the realization of the income; not any actual
labor on the part of the person realizing the income. Such income is
called "economic rent".
More importantly, and in the case of very large incomes in excess of, say
$5M, the income is simply stored away in US government bonds. There is no
reason to risk any of this money.
http://www.greatervoice.org/essays/Money_For_Nothing.php
But it is important to keep "capital gains" and "dividends" tax rates
lower than the rates on income from bonds or (supposed) wages above $250k.
Michael Coburn
These are the opinion of a conservative that believes that there is some
limit to the amount of money and that huge incomes end up in a bank.
Both of these are false beliefs.
Michael Coburn
> Michael Coburn <mik...@verizon.net> wrote:
>> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
>>
>>> The money "printed" by the Fed is still out there if none of it
>>> returns to the Fed.
>>
>> Unfortunately, it is controlled by people who would rather not spend it
>> and who already satisfy their desires by spending only a tiny, tiny
>> fraction of what is flowing in. The secret of restoring the economy is
>> to tax away a good amount of that flow and redistribute it to the
>> bottom of the economy in the form or stimulus. There is also the idea
>> of keeping capital gains tax rates lower than other income rates so as
>> to encourage investment as opposed to hoarding.
>
> Thanks for that completely superfluous proof that you have never ever
> had a fucking clue about anything at all, ever.
Ahhhh!!! The seal of approval! :)
orang...@googlemail.com
clearly there is no limit to the amount of money a government can
print. but there is a limit to how much is being produced and
consumed.
and that huge incomes end up in a bank.
> Both of these are false beliefs.- Hide quoted text -
>
please explain what you believe people are hoarding. i assumed that by
hoarding you meant they were keeping their money in a bank as spending
or investing the money does not sound like hoarding to me.
Rod Speed
> Rich Uncle wrote
>> It was good of you to repeat what you considered point; otherwise I'd
>> have missed appreciating it properly (hope I'm not sounding like an
>> Eliza-type program).
>> A very interesting and valid point, Sir. Sounds similar to the
>> existence of a liquidity trap.
>> Just to pour a little cold water, it could be that some of the people who
>> would rather not spend it might be saving to a point when they feel
>> they have enough for whatever they wish to spend on.
> A progressive income tax was actually conceived as a tax on "economic
> rent" and was not actually intended to tax wages at the median.
Irrelevant to what it turned into.
> All income taxation should be at or above the median wage
Mindlessly silly. Those below the median wage should be paying for govt too.
> and any taxation close to the median wage should be at a low percentage.
Even sillier. That wouldnt raise anything like enough revenue for
modern first world govts and what the voters want them to do.
> But leaving that aside for now, Obama's plan to increase taxation on income
> above $250k and to return that taxation to the level that existed in 1993 is an
> example of "taxing away some of that flow" by an additional 3% or 4%.
So small a difference that it wont make any real difference, just equity.
> It may be that such incomes would need to be "saved up" to
> buy a new yacht or a vacation cabin near the ski slopes or
> perhaps a Leer Jet, but we should not confuse this with saving
> for a down payment on the starter 3 bedroom in the burbs.
Hardly anyone lives in starters.
>> I'm not able to figure out what you mean by taxing away some
>> of that flow; could you kindly elaborate a little more on it, Sir?
> I would add another tax bracket at $1M and
> another at $3M and each bracket would be higher.
You have always been completely irrelevant.
> Most people do not "earn" $1M a year. They will not stop
> what they are doing because they are taxed more heavily.
> That is the test that indicates that the income is unearned.
Like hell it does.
> If the behavior of the payer of the tax or the prospective payer of the tax
> is not altered by the existence of the tax then the income is unearned.
Gets sillier by the minute.
> The payer will not alter his or her behavior because the "position"
> or the "ownership" is the key to the realization of the income; not
> any actual labor on the part of the person realizing the income.
> Such income is called "economic rent".
In spades.
> More importantly, and in the case of very large incomes in excess of,
> say $5M, the income is simply stored away in US government bonds.
Hardly any of those are that stupid.
> There is no reason to risk any of this money.
> http://www.greatervoice.org/essays/Money_For_Nothing.php
Just more mindless bullshit.
> But it is important to keep "capital gains" and "dividends" tax rates lower
> than the rates on income from bonds or (supposed) wages above $250k.
Wota wanker.
Michael Coburn
If you buy a T-Bill you are putting money out of the reach of the normal
economy. That would be hoarding money. If you put it in a savings
account at the bank, that would be hoarding.
RogerDodger
<r_dela...@yahoo.com> wrote:
>Supposedly, we are now descending experiencing deflation,.
>which causes, or results from, recession.
>
>My question is: where did the money go? We have seen
>major inflation over the last 5 years (housing and commodities),
>which is, as we know, a monetary phenomenon - the Fed has run
>the printing press full blast, with their 'easy money' policy.
>
>Now, bust follows boom, and prices fall... but the money is still
>out there, yes/no? Demand should be constant, with boatloads
>of bux chasing goods.... where are all the dollars? Hw can
>general price level drop?
Say: "velocity"
The economy is an ongoing process, so what matters is not the quantity
of money but that quantity multiplied by the number of times it turns
over in a given time period -- its velocity.
As the classic equation puts it, MV=PQ: M (the quantity of money)
times V (velocity, the number of times it turns over) = P (price of
goods) times Q (quantity of goods produced)
Thus, it is easy to see that when M stays even if V plunges then
either prices must fall (deflation) or the quantity of goods produced
must fall (recession) or both.
V will fall if people, banks and businesses get scared of lending
money (the bank or other borrower may fail) and/or think they have to
pile up cash holdings rather than spend them to get through hard
times.
Then they proverbially put their money in their mattresses, so it
stops changing hands, so V falls.
If you want to see a picture of V plunging, take a look:
http://research.stlouisfed.org/fred2/series/MULT?cid=25
That's what produced the Great Depression with its 25% deflation, and
25% unemployment, because the Fed didn't counter it by increasing M.
If you want to see a picture of the Fed, after having learned that
lesson, increasing M to counter such a decline in V, take a look:
http://research.stlouisfed.org/fred2/series/BOGAMBNS?cid=124
The Fed is *literally* rolling out the printing presses right now-- it
just imported new currency printing presses from Switzerland to boost
its money-printing capacity and tie M to an upward rocket.
Rod Speed
Wrong when you consider what the govt does with that money.
> That would be hoarding money.
Wrong, as always.
> If you put it in a savings account at the bank, that would be hoarding.
Wrong, as always.
Rod Speed
Never ever could bullshit its way out of a wet paper bag.
No wonder it got the bums rush, right out the door.
Andy F.
"RichD" <r_dela...@yahoo.com> wrote in message
news:a6edd516-45e7-4139...@d23g2000yqc.googlegroups.com...
> which causes, or results from, recession.
>
> My question is: where did the money go? We have seen
> major inflation over the last 5 years (housing and commodities),
> which is, as we know, a monetary phenomenon - the Fed has run
> the printing press full blast, with their 'easy money' policy.
>
> Now, bust follows boom, and prices fall... but the money is still
> out there, yes/no? Demand should be constant, with boatloads
> of bux chasing goods.... where are all the dollars? Hw can
> general price level drop?
>
is created when a bank makes a loan, and it disappears when a loan is
repaid.
If the banks stop making loans, but people keep on paying their loans off,
then this could cause the money supply to contract.
Rich Uncle
Money in the form of Dollars is issued by the Fed either in the form
of Dollar notes
and coins, or in the form of credit amounts (presumably stored as lots
of numeric
digits in thememory of a computer somewhere) payable to banks.
According to
people who know better, adding more zeroes to those amounts can be
called 'The
Fed is printing money'.
Suppose for simplicity sake there is only one bank in town.
This bank has one trillion Dollars deposited by its first depositing
customer. At
this stage, the bank's book-keeping records show $1 trillion of money
as assets,
with a corresponding $1 trillion in deposits owing to depositor/s.
That's all.
Next, the bank gives a loans customer a line of credit of $1 trillion,
which that
loan customer utilise immediately by drawing up a $1 trillion check
that he uses
to that amount for some business purpose. When the payee presents the
check
to the bank, he is paid by the bank from the money deposited by the
depositor/s.
Because the line of credit has been used, the bank considers that it
has given a
loan of $1 trillion to the loan customer. So in the books, the bank
would only a
deposit of the original $1 trillion owing to the depositing customer,
with a
corresponding balance of $1 trillion owed to the bank by the loans
customer.
Now the bank has no money left.
Now, the bank is the only one in town. The payee deposits the $1
trillion back
into the bank. Now the books of the bank shows $1 trillion of money
together
with $1 trillion owed to the bank by the loans customer, making a
total of $2
trillion as assets; on the liabilities side, the bank acknowledges
the total amount
owing to depositors is now $2 trillion.
Suppose the bank repeats the same kind of loan transaction another 8
times with
different loan customers who all deposited the money back into the
bank. The
books will show there is $1 trillion of money together with $9
trillion owed to the
bank by the loans customers, making a total of $10 trillion as
assets; on the
liabilities side, the bank acknowledges the total amount owing to
depositors is
now $10 trillion.
In other words, $9 trillion worth of credit loans were created; the
same amount of
money changed hands 9 times. Just don't confuse credit with money.
===========================================================
On Dec 1, 10:25 am, "Andy F." <never.m...@tesco.net> wrote:
>
> Most of the money in the economy isn't created by the Fed but by banks.Money
> is created when a bank makes a loan, and it disappears when a loan is
> repaid.
>
> If the banks stop making loans, but people keep on paying their loans off,
> then this could cause the money supply to contract.
=======================================================
> "RichD" <r_delaney2...@yahoo.com> wrote in message
RogerDodger
wrote:
>
>"RichD" <r_dela...@yahoo.com> wrote in message
>news:a6edd516-45e7-4139...@d23g2000yqc.googlegroups.com...
>> Supposedly, we are now descending experiencing deflation,.
>> which causes, or results from, recession.
>>
>> My question is: where did the money go? We have seen
>> major inflation over the last 5 years (housing and commodities),
>> which is, as we know, a monetary phenomenon - the Fed has run
>> the printing press full blast, with their 'easy money' policy.
>>
>> Now, bust follows boom, and prices fall... but the money is still
>> out there, yes/no? Demand should be constant, with boatloads
>> of bux chasing goods.... where are all the dollars? Hw can
>> general price level drop?
>>
>Most of the money in the economy isn't created by the Fed but by banks.Money
>is created when a bank makes a loan,
Well, though this is often stated actually loans aren't counted in
money, deposits are counted as money. There is a difference.
M1= currency, travelers checks, demand deposits, checkable deposits.
M2= M1 + savings account deposits, time deposits, money funds.
No "loans" in there.
Now, if a loan amount is made in the form a check that is deposited,
then that deposit counts as money, but it's not the loan, it is the
deposit that counts.
Of course it's easy to make a loan that isn't deposited and doesn't
count as money: the bank just loans out cash that the recipient holds
or spends without depositing it, there is a loan but no money is
created.
Eg:
Mr. A has $10 in cash. That is $10 in the money supply.
Mr A then deposits that cash in bank. A then has a deposit of $10,
which is money, and the bank has $10 in cash, which is money.
Thus the money supply has grown to $20, due to the deposit, with no
loan.
Now the bank loans $8 of its cash to Mr B.
The money supply remains unchanged at $20: A's deposit of $10, +$2
cash held by the bank, plus $8 cash held by B.
A loan has been made but the money supply has not been increased.
Now say B decides to deposit $5 of his cash in the bank, the money
supply then grows to $25: A's deposit of $10, $2 cash held by A's
bank, $3 cash held by B, B's deposit of $5 at his bank, and the $5
cash held by B's bank ... the original $10 of cash plus $15 of
deposits.
No loan created any new money, the deposits created the new money.
The $8 loan to B did not itself create any money, but did facilitate
the creation of $5 of new money when B deposited that much of it in
his bank.
Of course it is true in the real world that if lending plunges
deposits will fall so the money supply will fall -- but it's not the
lending that creates the money, it the deposits, and there's not a 1-1
relation between them.
>and it disappears when a loan is repaid.
Not necessarily so.
In the situation above with $25 of money, $10 cash and $15 deposits,
say B's bank loans $4 cash to Mr C.
No new money is created, $4 cash just shifts from the bank's vault to
C's pocket.
A little while later C repays the loan to the bank, giving it $4 cash.
The loan is repaid -- no money disappears, deposits are unchanged,
cash is unchanged, the money supply is unchanged.
Loans are not money. Deposits are money.
>If the banks stop making loans, but people keep on paying their loans off,
>then this could cause the money supply to contract.
In the real practical world, yes, because a lot of loans will be
repaid by reducing deposit balances -- such as by reducing the balance
in your checking account.
But it is the reduction of the deposit balance that reduces the money
supply, not the disappearance of the loan.
There's is not a 1-1 correlation here either. If you pay off your
bank loan by giving the bank cash, the loan disappears but there is no
reduction in the money supply because your deposit balance is
unchanged and the amount of cash existent is unchanged as well.
Loans are not money.
Rich Uncle
agreement
with orthodox monetary economics definitions on what constitute
monetary
aggregates.
======================================================
On Dec 1, 4:29 pm, RogerDodger <n...@not-here.org> wrote:
==================================================
> >"RichD" <r_delaney2...@yahoo.com> wrote in message
> >news:a6edd516-45e7-4139...@d23g2000yqc.googlegroups.com...
> >> Supposedly, we are now descending experiencing deflation,.
> >> which causes, or results from, recession.
>
> >> My question is: where did the money go? We have seen
> >> major inflation over the last 5 years (housing and commodities),
> >> which is, as we know, a monetary phenomenon - the Fed has run
> >> the printing press full blast, with their 'easy money' policy.
>
> >> Now, bust follows boom, and prices fall... but the money is still
> >> out there, yes/no? Demand should be constant, with boatloads
> >> of bux chasing goods.... where are all the dollars? Hw can
> >> general price level drop?
M Holmes
> Supposedly, we are now descending experiencing deflation,.
> which causes, or results from, recession.
technically it's only disinflation as yet. However there are
debt-deflationary dynamics already operating in credit markets.
> My question is: where did the money go?
It's not cash that vanishes, it's credit. Think of it as 60 trillion of
credit having to be squeezed into 6 trillion of cash as people sell in
sundry markets to get out into cash. All that credit gradually vanishes
to the ether from whence it cam in the bubble, and it gets harder and
harder to get a loan, thus driving prices down further.
FoFP
--
The three schools of thought on the credit bubble:
1) Monetarist : You can borrow your way out of debt.
2) Keynesian : The government can borrow your way out of debt.
3) Austrian : You're in too much debt. Quit borrowing!
M Holmes
> please explain what you believe people are hoarding. i assumed that by
> hoarding you meant they were keeping their money in a bank as spending
> or investing the money does not sound like hoarding to me.
I'm hoarding gold. It's in a vault in Canada somewhere.
orang...@googlemail.com
> In uk.finance orangata...@googlemail.com <orangata...@googlemail.com> wrote:
>
> > please explain what you believe people are hoarding. i assumed that by
> > hoarding you meant they were keeping their money in a bank as spending
> > or investing the money does not sound like hoarding to me.
>
> I'm hoarding gold. It's in a vault in Canada somewhere.
>
then you spent your money and it is circulating in the economy. good
point though, with commodity money hoarding is possible!
orang...@googlemail.com
>
> - Show quoted text -
buying a tbill is financing government debt. if you buy a long term
treasury close to maturity you must buy it off someone, who then gets
your money. if you put the money in a bank it gets lent. in our system
savings and investment are the same thing.
RichD
> > Supposedly, we are now descending experiencing deflation,.
> > which causes, or results from, recession.
>
> > major inflation over the last 5 years (housing and
> > commodities), > which is, as we know, a monetary
> > phenomenon - the Fed has run the printing press full blast,
> > with their 'easy money' policy.
>
> > Now, bust follows boom, and prices fall... but the money is still
> > out there, yes/no? Demand should be constant, with
> > boatloads of bux chasing goods.... where are all the dollars?
>
> Yes, the money is still there, but not in the hands of those
> likely to spend it.
> Put simply, there are
>
> a) people who have money but don't want/need to spend it yet, and
>
> b) people who don't have money, but do want/need to spend.
>
> Up until recently, it was easy for the b) group to spend the
> a) group's money. The a's would put their money in the bank,
> and the bank would lend it to the b's. High house prices
> enabled the b's to borrow money cheaply,
>
> Now because of the credit crunch the banks need to
> recapitalise, and so the money they are lending to the
> b's is drying up, therefore so is spending. Also the
> b's have less to borrow against (lower equity in their houses).
>
> So the money is the same, but it's not being transferred to
> those likely to spend it in the same way as before.
ok,. so the amount of money (M3 or whatever)
hasn't changed, but no one wants to spend it..
But eventually, happy days will return,
and we'll all go on a shopping spree,
as those zillions pour out of the mattresses,
right?
So is there any protection, at the macro level
or individual level, against the post-bust inflation?
Will the dollar ineluctably go down the toilet?
--
Rich
RichD
> Perhaps you would like to refer to the following posting:-
>
> http://groups.google.com/group/soc.culture.usa/browse_thread/thread/7...
>
> regarding the root of the subprime housing loans crisis?
>
> Why do you housing as a monetary phenomenon?
A speculative boom driven by central bank
monetary policy.
> I think you think to take into account the securitization
> and associated collaterization
> of mortgage-backed securities also.
That's a corollary of the monetary phenomenon.
> Also, why do you regard commodity price increases
> over the last 5 years, if not the past decade, as a
> monetary phenomenon? Do you
> mean there was no substantial increase in world-wide
> demand due to economic development in other countries?
No. If there is true, i.e. wealth creation, economic
development worldwide, the goods and services
produced expand supply, at least equivalent to
the monetary expansion; hence no price inflation.
This is the rationale behind the dictum "inflation
is always a monetary phenomenon".
> > ...<snipped>... We have seen
> > major inflation over the last 5 years (housing and commodities),
> > which is, as we know, a monetary phenomenon - the Fed has run
> > the printing press full blast, with their 'easy money' policy.
--
Rich
Andy F.
term.In your example, the M2 money supply would be $10 trillion.
Bank balances are counted as 'money' because people can go out and spend
them just like they were cash.If there's too much bank credit chasing too
few goods, you can get inflation. Conversely, if there isn't enough bank
credit, the result can be deflation.
****************************************
"Rich Uncle" <milburnp...@gmail.com> wrote in message
news:ebdac989-f8c2-443c...@n33g2000pri.googlegroups.com...
Rod Speed
> Andy Pandy <spam8ti...@wonderful.spam.invalid> wrote
>>> Supposedly, we are now descending experiencing
>>> deflation, which causes, or results from, recession.
>> Put simply, there are
Plenty do, but dont have it to spend.
> But eventually, happy days will return,
Yep, they always do.
> and we'll all go on a shopping spree, as those
> zillions pour out of the mattresses, right?
There's fuck all in mattresses.
> So is there any protection, at the macro level
> or individual level, against the post-bust inflation?
Yep, you can put your money in inflation proof stuff.
> Will the dollar ineluctably go down the toilet?
Nope, its actually increased substantially recently.
Andy F.
"RogerDodger" <no...@not-here.org> wrote in message
news:7i57j4p8rcl28qmul...@4ax.com...
Rich Uncle
wheel-barrows available at Toys-R-Us are simply too small and
it's much more practical to add more zeroes with a card.
But so long as those magic charms continue to be printed on
the great American Dollar, there will always be enough Ivy
Leaguers to act with statesmanship and protect the interests of
America. Once some religious nut gets those pagan tokens
removed, there will be no guarantee the Roman circus will take
over before the great American Capitalist System has evolved to
the stage when the inevitable Communist Paradise can be
perfected, within limits, etc.
==============================================
On Dec 2, 8:40 am, RichD <r_delaney2...@yahoo.com> wrote:
>
> ok,. so the amount of money (M3 or whatever)
> hasn't changed, but no one wants to spend it..
>
> But eventually, happy days will return,
> and we'll all go on a shopping spree,
> as those zillions pour out of the mattresses,
> right?
>
> So is there any protection, at the macro level
> or individual level, against the post-bust inflation?
> Will the dollar ineluctably go down the toilet?
>
> --
> Rich
======================================
> On Nov 30, "Andy Pandy" <spam8ti...@wonderful.spam.invalid> wrote:
>
> > Yes, the money is still there, but not in the hands of those
> > likely to spend it.
> > Put simply, there are
>
> > a) people who have money but don't want/need to spend it yet, and
>
> > b) people who don't have money, but do want/need to spend.
>
> > Up until recently, it was easy for the b) group to spend the
> > a) group's money. The a's would put their money in the bank,
> > and the bank would lend it to the b's. High house prices
> > enabled the b's to borrow money cheaply,
>
> > Now because of the credit crunch the banks need to
> > recapitalise, and so the money they are lending to the
> > b's is drying up, therefore so is spending. Also the
> > b's have less to borrow against (lower equity in their houses).
>
> > So the money is the same, but it's not being transferred to
> > those likely to spend it in the same way as before.
===============================================
> > > Supposedly, we are now descending experiencing deflation,.
> > > which causes, or results from, recession.
>
> > > My question is: where did the money go? We have seen
> > > major inflation over the last 5 years (housing and
> > > commodities), > which is, as we know, a monetary
> > > phenomenon - the Fed has run the printing press full blast,
> > > with their 'easy money' policy.
>
> > > Now, bust follows boom, and prices fall... but the money is still
> > > out there, yes/no? Demand should be constant, with
> > > boatloads of bux chasing goods.... where are all the dollars?
> > > How can general price level drop?
- Hide quoted text -
Rich Uncle
M2
definitions and those of RogerDodger who posted the following:-
http://groups.google.com/group/sci.econ/msg/f7146492761083a5?hl=en
By his definition, M1 should be $11 trillion because his definition
does not
exclude currency holdings held by banks.
The modern definition as used by the Fed would exclude currency
holdings
held by banks, i.e., the same amount of $10 trillion as you have
mentioned.
Could you also confirm that by 'bank balances' you are refering to
bank
deposits held by depositing customers and not the cash held by the
bank
within its premises, Sir?
==========================================================
On Dec 2, 9:35 am, "Andy F." <never.m...@tesco.net> wrote:
> Bank credit _is_ money, at least according to some common definitions of the
> term.In your example, the M2 money supply would be $10 trillion.
>
> Bank balances are counted as 'money' because people can go out and spend
> them just like they were cash.If there's too much bank credit chasing too
> few goods, you can get inflation. Conversely, if there isn't enough bank
> credit, the result can be deflation.
>
> ****************************************
>
> "Rich Uncle" <milburnpennyb...@gmail.com> wrote in message
> > > general price level drop?- Hide quoted text -
orang...@googlemail.com
> On Mon, 1 Dec 2008 02:25:26 -0000, "Andy F." <never.m...@tesco.net>
> wrote:
>
>
>
> >"RichD" <r_delaney2...@yahoo.com> wrote in message
> >news:a6edd516-45e7-4139...@d23g2000yqc.googlegroups.com...
> >> Supposedly, we are now descending experiencing deflation,.
> >> which causes, or results from, recession.
>
> >> My question is: where did the money go? We have seen
> >> major inflation over the last 5 years (housing and commodities),
> >> which is, as we know, a monetary phenomenon - the Fed has run
> >> the printing press full blast, with their 'easy money' policy.
>
> >> Now, bust follows boom, and prices fall... but the money is still
> >> out there, yes/no? Demand should be constant, with boatloads
> >> of bux chasing goods.... where are all the dollars? Hw can
> >> general price level drop?
>
> >Most of the money in the economy isn't created by the Fed but by banks.Money
> >is created when a bank makes a loan,
>
> Well, though this is often stated actually loans aren't counted in
> money, deposits are counted as money. There is a difference.
>
> M1= currency, travelers checks, demand deposits, checkable deposits.
> M2= M1 + savings account deposits, time deposits, money funds.
>
> No "loans" in there.
there are several definitions of m1 and m2.
http://en.wikipedia.org/wiki/Money_supply
'Money creation
The process of fractional-reserve banking has a cumulative effect of
money creation by banks.[4] In short, there are two types of money in
a fractional-reserve banking system:[6][7][8]
central bank money (money created by the central bank regardless of
its form (banknotes, coins and electronic money loaned to commercial
banks))
commercial bank money (money created through loans in the banking
system) - sometimes referred to as chequebook money[9]
When a loan is funded with central bank money, new commercial bank
money is created. As a loan is paid back, the commercial bank money
disappears from existence.'
M Holmes
> But eventually, happy days will return,
> and we'll all go on a shopping spree,
> as those zillions pour out of the mattresses,
> right?
Yes and no. What follows deflationary busts are periods of slow but
steady growth and slow inflation. People generally eschew debt and save
for what they want, having been burned in the bust.
The return to the sort of period we had in the bubble won't happen for a
couple of generations. So shopping yes, spree, probably not.
Rich Uncle
of the
words 'a couple of generations' which works out to be near the 23rd
Century
was quite hard to swallow.
My old crystal ball tells me that when a bushman becomes king of the
hill,
an anti-bush pied piper will come all the way from an anti-bush tribe
in
Sweden to advise him how to print notes on toilet paper. Sometime in
the
third year of his reign, Dow 32000 and gold $4000 will be reached.
Sad to
say, the king becomes lame and rolls down the hill at the end of the
next
year like a duck egg.
=======================================================
On Dec 2, 6:56 pm, M Holmes <f...@holyrood.ed.ac.uk> wrote:
>
> Yes and no. What follows deflationary busts are periods of slow but
> steady growth and slow inflation. People generally eschew debt and save
> for what they want, having been burned in the bust.
>
> The return to the sort of period we had in the bubble won't happen for a
> couple of generations. So shopping yes, spree, probably not.
>
> FoFP
>
> --
> The three schools of thought on the credit bubble:
> 1) Monetarist : You can borrow your way out of debt.
> 2) Keynesian : The government can borrow your way out of debt.
> 3) Austrian : You're in too much debt. Quit borrowing!
=================================================
M Holmes
> I could ignore the mention of zillions by Rich D., Esq., but your use
> of the
> words 'a couple of generations' which works out to be near the 23rd
> Century
> was quite hard to swallow.
By a "generation" I mean 30 years - the age difference between
generations.
Search posts on uk.finance by "fofp" and "credit bubble" and you'll
probably find a reasonable explanation for why I think the credit cycles
repeat through the grandchildren. There will have been more than a few
of them between 2000 and now.
Cheers
FoFP
Han de Bruijn
Does it take approximately 30 years to forget tough lessons learned ?
Han de Bruijn
Rod Speed
> RichD <r_dela...@yahoo.com> wrote
>> But eventually, happy days will return, and
>> we'll all go on a shopping spree, as those
>> zillions pour out of the mattresses, right?
> Yes and no. What follows deflationary busts are periods of slow
> but steady growth and slow inflation. People generally eschew
> debt and save for what they want, having been burned in the bust.
> The return to the sort of period we had in the bubble won't happen for a couple of generations.
Thats just plain wrong. In the century before 1929, we saw much more frequent bubbles than that.
> So shopping yes, spree, probably not.
Have fun explaining the bubble of the late 20s which wasnt that
long after the previous recession. That was less than 10 years.
And it isnt even clear if we will see anything similar to the great depression
now, its MUCH more likely it will end up being just another recession with a
rather spectacular start to it now the govts have enough of a clue to realise
what is going on with a credit crunch and how to deal with that.
Rod Speed
Doesnt explain the frequency of bubbles in the century before 1929.
Rod Speed
> M Holmes wrote
>> Rich Uncle <milburnp...@gmail.com> wrote
>>> I could ignore the mention of zillions by Rich D., Esq., but your use of the
>>> words 'a couple of generations' which works out to be near the 23rd
>>> Century was quite hard to swallow.
>> By a "generation" I mean 30 years - the age difference between generations.
>> Search posts on uk.finance by "fofp" and "credit bubble" and you'll
>> probably find a reasonable explanation for why I think the credit
>> cycles repeat through the grandchildren. There will have been more
>> than a few of them between 2000 and now.
> Does it take approximately 30 years to forget tough lessons learned ?
Nothing like it. My father left school and started working during the great depression
and didnt have any problem with using credit when that was appropriate.
And the effects of the great depression where more severe for his country than were seen in the US.
M Holmes
Nope. It takes sixty or more. Long story short, people get to "credit
revulsion" in the debt-deflation and swear off debt for life. They raise
their kds to do tye same. For the next set of kids though, they'll start
borrowing just for mortgages or whatever. Later for them, or for their
kids, the last bust will just be ancient history. They'll start taking
debt for more things. Then eventually there'll be one particular asset
which they think always rises in price, and we're off to the races
again.
I have an article written for One magazine on this very subject. It's
too long for the paper edition, so it may go on the website:
M Holmes
> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>> RichD <r_dela...@yahoo.com> wrote
>>> But eventually, happy days will return, and
>>> we'll all go on a shopping spree, as those
>>> zillions pour out of the mattresses, right?
>> Yes and no. What follows deflationary busts are periods of slow
>> but steady growth and slow inflation. People generally eschew
>> debt and save for what they want, having been burned in the bust.
>> The return to the sort of period we had in the bubble won't happen
>> for a couple of generations.
> Thats just plain wrong. In the century before 1929, we saw much more
> frequent bubbles than that.
Which are you thinking of?
>> So shopping yes, spree, probably not.
> Have fun explaining the bubble of the late 20s which wasnt that long
> after the previous recession. That was less than 10 years.
Not every recession is the result of a bubble. There are normal
business cycle recessions between the debt-deflationary ones which end
the bubbles at the end of the credit cycle.
> And it isnt even clear if we will see anything similar to the great
> depression now,
It's already different to normal recessions inasmuch as it wasn't
started as a result of hiking interest rates to control an inflationary
boom. This one quite clearly features debt-deflation dynamics rather
than the normal inflationary one.
> its MUCH more likely it will end up being just another
> recession with a rather spectacular start to it
Not a chance.
> now the govts have
> enough of a clue to realise what is going on with a credit crunch and
> how to deal with that.
If you think the government knows what it's doing, you haven't been
paying close enough attention.
RogerDodger
<milburnp...@gmail.com> wrote:
>Hmm ... , there seems to be a slight discrepancy between your M1 and
>M2
>definitions and those of RogerDodger who posted the following:-
>
>http://groups.google.com/group/sci.econ/msg/f7146492761083a5?hl=en
You can get your definition from the Fed:
http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt
>...
RogerDodger
One can find all sorts of strange things on Wikipedia.
Not long ago that had a picture of Emperor Palpatine as the Pope.
That's why, although its OK to use to get a convenient lead on things,
before making a definitive claim one should consult a definitive
source. Like the Fed on the definition of M1 & M2.
http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt
But even looking at Wikipedia...
~~
M0: The total of all physical currency, plus accounts at the central
bank that can be exchanged for physical currency.
M1: M0 + those portions of M0 held as reserves or vault cash + the
amount in demand accounts ("checking" or "current" accounts).
M2: M1 + most savings accounts, money market accounts, and small
denomination time deposits (certificates of deposit of under
$100,000).
~~~
... one doesn't see the word "loans" in there, eh?
David Bernier
Does M2 or M3 include US dollars in off-shore banks, under some
conditions, (owned by US companies, people etc.)?
David Bernier
orang...@googlemail.com
you're talking about the kontratieff cycle? the average cycle is 54
years long but the lengths can vary.
Rod Speed
> Han de Bruijn <Han.de...@DTO.TUDelft.NL> wrote
>> M Holmes wrote:
>>> Rich Uncle <milburnp...@gmail.com> wrote
>>>> I could ignore the mention of zillions by Rich D., Esq., but your
>>>> use of the words 'a couple of generations' which works out to
>>>> be near the 23rd Century was quite hard to swallow.
>>> By a "generation" I mean 30 years - the age difference between generations.
>>> Search posts on uk.finance by "fofp" and "credit bubble" and you'll
>>> probably find a reasonable explanation for why I think the credit
>>> cycles repeat through the grandchildren. There will have been more
>>> than a few of them between 2000 and now.
>> Does it take approximately 30 years to forget tough lessons learned ?
> Nope. It takes sixty or more. Long story short, people
> get to "credit revulsion" in the debt-deflation and swear
> off debt for life. They raise their kds to do tye same.
That doesnt happen that much. If it did, we wouldnt have seen the risk of
credit cards in the 50s, much less than 60 years after the great depression.
> For the next set of kids though, they'll start borrowing just for mortgages or whatever.
That doesnt happen either.
> Later for them, or for their kids, the last bust will just be ancient history.
Thats only been true last century. In the century before 1929, there was a
MUCH higher number of busts, what they mostly called panics in those days.
> They'll start taking debt for more things.
It actually happened a lot quicker than you claim.
> Then eventually there'll be one particular asset which they
> think always rises in price, and we're off to the races again.
Plenty thought that about real estate much sooner than 60 years after the great depression.
> I have an article written for One magazine on this very subject.
The author(s) cant explain those basics above.
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>> RichD <r_dela...@yahoo.com> wrote
>>>> But eventually, happy days will return, and
>>>> we'll all go on a shopping spree, as those
>>>> zillions pour out of the mattresses, right?
>>> Yes and no. What follows deflationary busts are periods of slow
>>> but steady growth and slow inflation. People generally eschew
>>> debt and save for what they want, having been burned in the bust.
>>> The return to the sort of period we had in the bubble won't happen for a couple of generations.
>> Thats just plain wrong. In the century before 1929, we saw much more frequent bubbles than that.
> Which are you thinking of?
All of them.
http://en.wikipedia.org/wiki/List_of_recessions#Recessions_and_other_Economic_Crises
>>> So shopping yes, spree, probably not.
>> Have fun explaining the bubble of the late 20s which wasnt that
>> long after the previous recession. That was less than 10 years.
> Not every recession is the result of a bubble.
That one was.
> There are normal business cycle recessions between the debt-deflationary
> ones which end the bubbles at the end of the credit cycle.
Yes, but that wasnt just a normal business cycle recession.
>> And it isnt even clear if we will see anything similar to the great depression now,
> It's already different to normal recessions inasmuch as it wasn't started
> as a result of hiking interest rates to control an inflationary boom.
That isnt what happened with plenty in the last century.
> This one quite clearly features debt-deflation dynamics rather than the normal inflationary one.
We'll see...
>> its MUCH more likely it will end up being just another recession with a rather spectacular start to it
> Not a chance.
We'll see...
>> now the govts have enough of a clue to realise what is
>> going on with a credit crunch and how to deal with that.
> If you think the government knows what it's doing, you haven't been paying close enough attention.
They understand what they are doing MUCH better than they did in the early stages of the great depression.
In spades with how to avoid the worst downsides.
Andy F.
Hmm ... , there seems to be a slight discrepancy between your M1 and
M2
definitions and those of RogerDodger who posted the following:-
http://groups.google.com/group/sci.econ/msg/f7146492761083a5?hl=en
By his definition, M1 should be $11 trillion because his definition
does not
exclude currency holdings held by banks.
The modern definition as used by the Fed would exclude currency
holdings
held by banks, i.e., the same amount of $10 trillion as you have
mentioned.
**************************
It's only a trillion difference. that's small change these days.
********************************
Could you also confirm that by 'bank balances' you are refering to
bank
deposits held by depositing customers and not the cash held by the
bank
within its premises, Sir?
**************************************
Yes.
M Holmes
>> Han de Bruijn <Han.de...@DTO.TUDelft.NL> wrote
>>> M Holmes wrote:
>>>> Rich Uncle <milburnp...@gmail.com> wrote
>>>>> I could ignore the mention of zillions by Rich D., Esq., but your
>>>>> use of the words 'a couple of generations' which works out to be
>>>>> near the 23rd Century was quite hard to swallow.
>>>> By a "generation" I mean 30 years - the age difference between
>>>> generations.
>>>> Search posts on uk.finance by "fofp" and "credit bubble" and you'll
>>>> probably find a reasonable explanation for why I think the credit
>>>> cycles repeat through the grandchildren. There will have been more
>>>> than a few of them between 2000 and now.
>>> Does it take approximately 30 years to forget tough lessons learned
>>> ?
>> Nope. It takes sixty or more. Long story short, people get to
>> "credit revulsion" in the debt-deflation and swear off debt for life.
>> They raise their kds to do tye same.
> That doesnt happen that much. If it did, we wouldnt have seen the
> risk of credit cards in the 50s, much less than 60 years after the
> great depression.
Well, OK, there are always rich folks and even in the most extreme
bubbles, not all of the population takes part. In the 50's were credit
cards normal for the masses?
>> For the next set of kids though, they'll start borrowing just for
>> mortgages or whatever.
> That doesnt happen either.
>> Later for them, or for their kids, the last bust will just be ancient
>> history.
> Thats only been true last century. In the century before 1929, there
> was a MUCH higher number of busts, what they mostly called panics in
> those days.
Panic of 1837, Panic of 1873 were both significant bubbles. Which
others were you thinking of that were more or less national?
>> They'll start taking debt for more things.
> It actually happened a lot quicker than you claim.
I'm listening. What other nationalk bubbles have we seen between the
end of the 1929 bust and when this one got going in the early 1980's? I
can think of quite a few in other countries, but the UK or US?
>> Then eventually there'll be one particular asset which they think
>> always rises in price, and we're off to the races again.
> Plenty thought that about real estate much sooner than 60 years after
> the great depression.
The asset is chosen before the bubble gets started, largely because it
is seen during the inflation as being able to protect wealth from inflation.
The bubble though gets speculative during disinflation.
M Holmes
> you're talking about the kontratieff cycle? the average cycle is 54
> years long but the lengths can vary.
Yep, K-cycle, Schumpeter cycle, long credit cycle. A very good
explanation is given by Leigh Skene.
M Holmes
> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>> Rod Speed <rod.sp...@gmail.com> wrote
>>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>>> RichD <r_dela...@yahoo.com> wrote
>>>>> But eventually, happy days will return, and
>>>>> we'll all go on a shopping spree, as those
>>>>> zillions pour out of the mattresses, right?
>>>> Yes and no. What follows deflationary busts are periods of slow
>>>> but steady growth and slow inflation. People generally eschew
>>>> debt and save for what they want, having been burned in the bust.
>>>> The return to the sort of period we had in the bubble won't happen for a couple of generations.
>>> Thats just plain wrong. In the century before 1929, we saw much more frequent bubbles than that.
>> Which are you thinking of?
> All of them.
> http://en.wikipedia.org/wiki/List_of_recessions#Recessions_and_other_Economic_Crises
Not every recession there is a deflationary one, and not all are
preceded by credit bubbles.
>>>> So shopping yes, spree, probably not.
>>> Have fun explaining the bubble of the late 20s which wasnt that
>>> long after the previous recession. That was less than 10 years.
>> Not every recession is the result of a bubble.
> That one was.
Just as our 1990's recession was part of the current bubble. It's the
deflationary crash at the end that's the real worry though. The first
one is just an interruption.
>> There are normal business cycle recessions between the debt-deflationary
>> ones which end the bubbles at the end of the credit cycle.
> Yes, but that wasnt just a normal business cycle recession.
Beckman has argued that it was the primary recession in the same K-cycle
that resulted in the 1929 crash. What's the counterargument for it being
the same stocks bubble?
>>> And it isnt even clear if we will see anything similar to the great
>>> depression now,
>> It's already different to normal recessions inasmuch as it wasn't
>> started as a result of hiking interest rates to control an
>> inflationary boom.
> That isnt what happened with plenty in the last century.
That I do agree with. I have questions as to what difference having fiat
currency might make to these things.
>> This one quite clearly features debt-deflation dynamics rather than
>> the normal inflationary one.
> We'll see...
Fair enough.
>>> now the govts have enough of a clue to realise what is going on with
>>> a credit crunch and how to deal with that.
>> If you think the government knows what it's doing, you haven't been
>> paying close enough attention.
> They understand what they are doing MUCH better than they did in the
> early stages of the great depression.
> In spades with how to avoid the worst downsides.
I think they're throwing money away they'll need when this bottoms. The
thing that will make the most difference between now and the 1930's is
the welfare systems.
To the extent they simply delay the necessary restructuring of
production with demand, they'll prolonmg this and quite possibly make it
worse overall, as I suspect they did in Japan.
Rich Uncle
nowadays.
Could someone kindly elaborate on this? Thanks.
======================================================
On Dec 3, 8:50 am, M Holmes <f...@holyrood.ed.ac.uk> wrote:
...<snipped>...
> To the extent they simply delay the necessary restructuring of
> production with demand, they'll prolonmg this and quite possibly make it
> worse overall, as I suspect they did in Japan.
...<snipped>...
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>> Han de Bruijn <Han.de...@DTO.TUDelft.NL> wrote
>>>> M Holmes wrote:
>>>>> Rich Uncle <milburnp...@gmail.com> wrote
>>>>>> I could ignore the mention of zillions by Rich D., Esq., but your
>>>>>> use of the words 'a couple of generations' which works out to
>>>>>> be near the 23rd Century was quite hard to swallow.
>>>>> By a "generation" I mean 30 years - the age difference between generations.
>>>>> Search posts on uk.finance by "fofp" and "credit bubble" and
>>>>> you'll probably find a reasonable explanation for why I think the
>>>>> credit cycles repeat through the grandchildren. There will have
>>>>> been more than a few of them between 2000 and now.
>>>> Does it take approximately 30 years to forget tough lessons learned ?
>>> Nope. It takes sixty or more. Long story short, people get to
>>> "credit revulsion" in the debt-deflation and swear off debt for
>>> life. They raise their kds to do tye same.
>> That doesnt happen that much. If it did, we wouldnt have seen the rise of
>> credit cards in the 50s, much less than 60 years after the great depression.
> Well, OK, there are always rich folks and even in the
> most extreme bubbles, not all of the population takes part.
> In the 50's were credit cards normal for the masses?
Yep. In spades in the 60s.
>>> For the next set of kids though, they'll start borrowing just for mortgages or whatever.
>> That doesnt happen either.
>>> Later for them, or for their kids, the last bust will just be ancient history.
>> Thats only been true last century. In the century before 1929, there was
>> a MUCH higher number of busts, what they mostly called panics in those days.
> Panic of 1837, Panic of 1873 were both significant bubbles. Which
> others were you thinking of that were more or less national?
You said busts, not bubbles.
http://en.wikipedia.org/wiki/List_of_recessions#Recessions_and_other_Economic_Crises
>>> They'll start taking debt for more things.
>> It actually happened a lot quicker than you claim.
> I'm listening. What other nationalk bubbles have we seen between the
> end of the 1929 bust and when this one got going in the early 1980's?
> I can think of quite a few in other countries, but the UK or US?
You said busts, not bubbles.
http://en.wikipedia.org/wiki/List_of_recessions#Recessions_and_other_Economic_Crises
>>> Then eventually there'll be one particular asset which they
>>> think always rises in price, and we're off to the races again.
>> Plenty thought that about real estate much sooner than 60 years after the great depression.
> The asset is chosen before the bubble gets started, largely because it
> is seen during the inflation as being able to protect wealth from inflation.
Thats not what most bubbles are about.
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>> Rod Speed <rod.sp...@gmail.com> wrote
>>>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>>>> RichD <r_dela...@yahoo.com> wrote
>>>>>> But eventually, happy days will return, and
>>>>>> we'll all go on a shopping spree, as those
>>>>>> zillions pour out of the mattresses, right?
>>>>> Yes and no. What follows deflationary busts are periods of slow
>>>>> but steady growth and slow inflation. People generally eschew
>>>>> debt and save for what they want, having been burned in the bust.
>>>>> The return to the sort of period we had in the bubble won't happen for a couple of generations.
>>>> Thats just plain wrong. In the century before 1929, we saw much more frequent bubbles than that.
>>> Which are you thinking of?
>> All of them.
>> http://en.wikipedia.org/wiki/List_of_recessions#Recessions_and_other_Economic_Crises
> Not every recession there is a deflationary one, and not all are preceded by credit bubbles.
Didnt say they were, but they let the air out of that 2 generation claim very comprehensively indeed.
>>>>> So shopping yes, spree, probably not.
>>>> Have fun explaining the bubble of the late 20s which wasnt that
>>>> long after the previous recession. That was less than 10 years.
>>> Not every recession is the result of a bubble.
>> That one was.
> Just as our 1990's recession was part of the current bubble. It's the deflationary
> crash at the end that's the real worry though. The first one is just an interruption.
Irrelevant to the fact that there is nothing like 60 years between them.
>>> There are normal business cycle recessions between the debt-deflationary
>>> ones which end the bubbles at the end of the credit cycle.
>> Yes, but that wasnt just a normal business cycle recession.
> Beckman has argued that it was the primary recession
> in the same K-cycle that resulted in the 1929 crash.
Pity that cant explain the one that was much less than 60 years before that.
> What's the counterargument for it being the same stocks bubble?
Never said it was. What I said was that its nothing like 60 years.
>>>> And it isnt even clear if we will see anything similar to the great depression now,
>>> It's already different to normal recessions inasmuch as it wasn't started
>>> as a result of hiking interest rates to control an inflationary boom.
>> That isnt what happened with plenty in the last century.
> That I do agree with. I have questions as to what difference
> having fiat currency might make to these things.
Its got nothing much to do with fiat currency at all. Much more to do with successful
tweaking of the state of the economy to avoid another great depression or worse.
>>> This one quite clearly features debt-deflation dynamics rather than the normal inflationary one.
>> We'll see...
> Fair enough.
>>>> now the govts have enough of a clue to realise what is
>>>> going on with a credit crunch and how to deal with that.
>>> If you think the government knows what it's doing, you haven't been paying close enough attention.
>> They understand what they are doing MUCH better than they did in the early stages of the great depression.
>> In spades with how to avoid the worst downsides.
> I think they're throwing money away they'll need when this bottoms.
Not if they avoid another great depression or worse and just end up with another recession instead.
> The thing that will make the most difference between now and the 1930's is the welfare systems.
Yep, thats what I meant and said elsewhere.
> To the extent they simply delay the necessary restructuring of production with demand,
That isnt what its about with the renationalisation of Fanny and Freddy and the bailout of AIG.
> they'll prolonmg this and quite possibly make it worse overall, as I suspect they did in Japan.
Nope, Japan still continued to export fine until China ate its lunch very comprehensively
on the lower cost manufacturered goods, everything except cars and trucks etc.
Michael Coburn
> On 30 Nov, 23:40, Michael Coburn <mik...@verizon.net> wrote:
>> On Sun, 30 Nov 2008 14:28:48 -0800, orangata...@googlemail.com wrote:
>> > On 30 Nov, 21:54, Michael Coburn <mik...@verizon.net> wrote:
>> >> On Sun, 30 Nov 2008 10:31:00 -0800, orangata...@googlemail.com
>> >> wrote:
>> >> > On 30 Nov, 17:31, Michael Coburn <mik...@verizon.net> wrote:
>> >> >> On Sat, 29 Nov 2008 23:09:02 -0800, Rich Uncle wrote:
>> >> >> > The money "printed" by the Fed is still out there if none of it
>> >> >> > returns to the Fed.
>>
>> >> >> Unfortunately, it is controlled by people who would rather not
>> >> >> spend it and who already satisfy their desires by spending only a
>> >> >> tiny, tiny fraction of what is flowing in. The secret of
>> >> >> restoring the economy is to tax away a good amount of that flow
>> >> >> and redistribute it to the bottom of the economy in the form or
>> >> >> stimulus. There is also the idea of keeping capital gains tax
>> >> >> rates lower than other income rates so as to encourage investment
>> >> >> as opposed to hoarding.
>>
>> >> > People hoarding does not the problem. when someone deposits money
>> >> > in a bank it does not just sit in a vault somewhere. the bank
>> >> > lends many times the amount deposited to other people. nor is the
>> >> > problem banks hoarding. banks are largely insolvent. having lent
>> >> > money they don't have to people who can not pay them back, they
>> >> > have no money to hoard.
>>
>> >> > 'stimulus' is a nonsense idea. some sectors of the economy are too
>> >> > big, others too small. untill businesses in the oversized sectors
>> >> > are allowed to fail and the resources they use liquidated the
>> >> > crisis will continue. giving money to failing businesses only
>> >> > prolongs the problem.
>>
>> >> These are the opinion of a conservative that believes that there is
>> >> some limit to the amount of money
>>
>> > clearly there is no limit to the amount of money a government can
>> > print. but there is a limit to how much is being produced and
>> > consumed.
>>
>> > and that huge incomes end up in a bank.
>> >> Both of these are false beliefs.- Hide quoted text -
>>
>> > please explain what you believe people are hoarding. i assumed that
>> > by hoarding you meant they were keeping their money in a bank as
>> > spending or investing the money does not sound like hoarding to me.
>>
>> If you buy a T-Bill you are putting money out of the reach of the
>> normal economy. That would be hoarding money. If you put it in a
>> savings account at the bank, that would be hoarding.- Hide quoted text
>> -
>>
>> - Show quoted text -
>
> buying a tbill is financing government debt. if you buy a long term
> treasury close to maturity you must buy it off someone, who then gets
> your money. if you put the money in a bank it gets lent. in our system
> savings and investment are the same thing.
And up is down and the moon is made of green cheese.
Buying a T-Bill destroys money. That is a fact.
nebulous
"Rod Speed" <rod.sp...@gmail.com> wrote in message
news:6pmf0cF...@mid.individual.net...
>M Holmes <fo...@holyrood.ed.ac.uk> wrote
>
>> Well, OK, there are always rich folks and even in the
>> most extreme bubbles, not all of the population takes part.
>> In the 50's were credit cards normal for the masses?
>
> Yep. In spades in the 60s.
You're quite a bit out for the UK. Barclaycard only launched 1966
http://news.bbc.co.uk/1/hi/business/5109662.stm
Numbers and more importantly perhaps usage took a long time to build up.
I can't really find figures going back that far, but look at Graph 11 on
here, showing growth in credit card debt since 1994 only.
http://www.creditaction.org.uk/assets/PDF/whitepapers/squeezed-out.pdf
Neb
Rod Speed
Nothing even remotely resembling anything like a fact.
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>> Rod Speed <rod.sp...@gmail.com> wrote
>>>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>>>> Han de Bruijn <Han.de...@DTO.TUDelft.NL> wrote
>>>>>> M Holmes wrote:
>>>>>>> Rich Uncle <milburnp...@gmail.com> wrote
>>>>>>>> I could ignore the mention of zillions by Rich D., Esq., but your
>>>>>>>> use of the words 'a couple of generations' which works out to
>>>>>>>> be near the 23rd Century was quite hard to swallow.
>>>>>>> By a "generation" I mean 30 years - the age difference between generations.
>>>>>>> Search posts on uk.finance by "fofp" and "credit bubble" and
>>>>>>> you'll probably find a reasonable explanation for why I think the
>>>>>>> credit cycles repeat through the grandchildren. There will have
>>>>>>> been more than a few of them between 2000 and now.
>>>>>> Does it take approximately 30 years to forget tough lessons learned ?
>>>>> Nope. It takes sixty or more. Long story short, people get to
>>>>> "credit revulsion" in the debt-deflation and swear off debt for
>>>>> life. They raise their kds to do tye same.
>>>> That doesnt happen that much. If it did, we wouldnt have seen the rise of
>>>> credit cards in the 50s, much less than 60 years after the great depression.
>>> Well, OK, there are always rich folks and even in the
>>> most extreme bubbles, not all of the population takes part.
>>> In the 50's were credit cards normal for the masses?
>> Yep. In spades in the 60s.
> You're quite a bit out for the UK.
That soggy little island is completely irrelevant.
> Barclaycard only launched 1966
> http://news.bbc.co.uk/1/hi/business/5109662.stm
Still nothing even remotely like his 60 years since the great depression.
> Numbers and more importantly perhaps usage took a long time to build up.
Still nothing even remotely like his 60 years since the great depression.
> I can't really find figures going back that far, but look at Graph 11 on here, showing growth in credit card debt
> since 1994 only.
> http://www.creditaction.org.uk/assets/PDF/whitepapers/squeezed-out.pdf
Still nothing even remotely like his claim about behaviour taking 60 years since the great depression.
Michael Coburn
I would normally ignore your stupidity. But this one is important. When
the Government sells T-Bills the money is destroyed. When the government
buys T-Bills then money is placed into the economy. When government
taxes than money is destroyed and when government spends then money is
created. Those are the essential and inescapable facts of the fiat money
system. Whether the Virus likes these things or not is irrelevant.
Han de Bruijn
> I would normally ignore your stupidity. But this one is important. When
> the Government sells T-Bills the money is destroyed. When the government
> buys T-Bills then money is placed into the economy. When government
> taxes than money is destroyed and when government spends then money is
> created. Those are the essential and inescapable facts of the fiat money
> system. Whether the Virus likes these things or not is irrelevant.
I can hardly believe this theory of Fiat Money. Becaue there wouldn't be
enough money to circulate in the economy then. Am I wrong ?
Han de Bruijn
nebulous
You are posting in a UK group.
>
>> Barclaycard only launched 1966
>> http://news.bbc.co.uk/1/hi/business/5109662.stm
>
> Still nothing even remotely like his 60 years since the great depression.
I wasn't referring to his 60 years - I was referring to your erroneous
information about credit cards in the 50's.
snip>>>>>>>>>>>>>>>>>>>>>>>>
>
>> I can't really find figures going back that far, but look at Graph 11 on
>> here, showing growth in credit card debt since 1994 only.
>> http://www.creditaction.org.uk/assets/PDF/whitepapers/squeezed-out.pdf
>
> Still nothing even remotely like his claim about behaviour taking 60 years
> since the great depression.
So when was your depression then?
I show you a huge rise in credit card dept in the 90's and you are saying
that isn't 60 years after the great depresssion?
Neb
Rod Speed
You can keep making that stupid assertion till the cows come home if you like, changes nothing.
> When the government buys T-Bills then money is placed into the economy.
> When government taxes than money is destroyed
> and when government spends then money is created.
It isnt created and destroyed, its just moved to the govt and then moved out of govt again.
> Those are the essential and inescapable facts of the fiat money system.
You can keep making that stupid assertion till the cows come home if you like, changes nothing.
M Holmes
>>> That doesnt happen that much. If it did, we wouldnt have seen the
>>> rise of credit cards in the 50s, much less than 60 years after the
>>> great depression.
>> Well, OK, there are always rich folks and even in the most extreme
>> bubbles, not all of the population takes part. In the 50's were
>> credit cards normal for the masses?
> Yep. In spades in the 60s.
I'm certain that neither my parents, nor any of their friends had credit
crads in the 1960's. I recall them becoming a mass-market phenomenon no
earlier than the late 1970's.
>> Panic of 1837, Panic of 1873 were both significant bubbles. Which
>> others were you thinking of that were more or less national?
> You said busts, not bubbles.
Not every bust is a deflationary one. Nor does every deflationary one
follow a credit bubble. My contention is that deflationary busts
following a credit bubble are the markets for the end of the
generational credit cycle. The cycle itself though will be punctuated
with recessions.
>>>> Then eventually there'll be one particular asset which they think
>>>> always rises in price, and we're off to the races again.
>>> Plenty thought that about real estate much sooner than 60 years
>>> after the great depression.
>> The asset is chosen before the bubble gets started, largely because
>> it is seen during the inflation as being able to protect wealth from
>> inflation.
> Thats not what most bubbles are about.
The bubbles are not about protecting wealth from inflation. The primary
asset though (tulip bulbs, stocks, houses...) isn't chosen at random.
There has to be some proximate reason to believe that the object is not
only valuable, but will continue to rise in price. By the 1970's in the
US and UK, this was already true of housing, which was said to be the
best protection of wealth from inflation.
Once the bubble gets going though, the driver is the hope of making
money from trading the asset.
FoFP
M Holmes
> nowadays.
> Could someone kindly elaborate on this? Thanks.
See Mises.org
FoFP
Rod Speed
I am actually posting in a sci. group and someone included a crosspost to a uk group.
>>> Barclaycard only launched 1966
>>> http://news.bbc.co.uk/1/hi/business/5109662.stm
>> Still nothing even remotely like his 60 years since the great depression.
> I wasn't referring to his 60 years - I was referring to your erroneous information about credit cards in the 50's.
It isnt erroneous, its fact. And that fact blows a damned great hole in his claim about 60 years.
And credit card werent the only source of credit in that soggy little island in the 50s anyway.
> snip>>>>>>>>>>>>>>>>>>>>>>>>
>>> I can't really find figures going back that far, but look at Graph
>>> 11 on here, showing growth in credit card debt since 1994 only.
>>> http://www.creditaction.org.uk/assets/PDF/whitepapers/squeezed-out.pdf
>> Still nothing even remotely like his claim about behaviour taking 60 years since the great depression.
> So when was your depression then?
Plenty of what he claimed didnt happen till after 60 years from the great depression
has in fact happened well before that, even in that soggy little island.
> I show you a huge rise in credit card dept in the 90's and you are saying that isn't 60 years after the great
> depresssion?
Nope, I am saying that there was a hell of a lot of the use of credit long before the 90s even in that soggy little
island of yours.
So his silly claims about 60 years have blown up in his face and covered him with black stuff, very comprehensively
indeed.
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>> Rod Speed <rod.sp...@gmail.com> wrote
>>>> M Holmes <fo...@holyrood.ed.ac.uk> wrote
>>>>> Han de Bruijn <Han.de...@DTO.TUDelft.NL> wrote
>>>>>> M Holmes wrote:
>>>>>>> Rich Uncle <milburnp...@gmail.com> wrote
>>>>>>>> I could ignore the mention of zillions by Rich D., Esq., but
>>>>>>>> your use of the words 'a couple of generations' which works
>>>>>>>> out to be near the 23rd Century was quite hard to swallow.
>>>>>>> By a "generation" I mean 30 years - the age difference between generations.
>>>>>>> Search posts on uk.finance by "fofp" and "credit bubble" and
>>>>>>> you'll probably find a reasonable explanation for why I think the
>>>>>>> credit cycles repeat through the grandchildren. There will have
>>>>>>> been more than a few of them between 2000 and now.
>>>>>> Does it take approximately 30 years to forget tough lessons learned ?
>>>>> Nope. It takes sixty or more. Long story short, people get to
>>>>> "credit revulsion" in the debt-deflation and swear off debt for
>>>>> life. They raise their kds to do tye same.
>>>> That doesnt happen that much. If it did, we wouldnt have seen the rise of
>>>> credit cards in the 50s, much less than 60 years after the great depression.
>>> Well, OK, there are always rich folks and even in the most extreme
>>> bubbles, not all of the population takes part. In the 50's were
>>> credit cards normal for the masses?
>> Yep. In spades in the 60s.
> I'm certain that neither my parents, nor any of their friends had credit crads in the 1960's.
The technical term for that is 'pathetically inadequate sample'
I built my house quite literally with my own hands using a credit card in the 60s,
essentially because I was getting a better return on my capital in the stock market
than I was paying in interest and I was interested in seeing if it was possible to
build a house entirely on credit, with no cash up front from me. It turned out to
be completely effortless and financially well worth doing.
And both my parents had actually lived thru the great depression themselves,
and my father had in fact left school to work in a bank during the great depression.
> I recall them becoming a mass-market phenomenon no earlier than the late 1970's.
Thats still nothing like your 60 years even if that was true.
And credit cards werent the only source of credit in britain in the 60s anyway.
>>> Panic of 1837, Panic of 1873 were both significant bubbles.
>>> Which others were you thinking of that were more or less national?
>> You said busts, not bubbles.
> Not every bust is a deflationary one.
You didnt say deflationary either, you just said credit cycles.
> Nor does every deflationary one follow a credit bubble. My contention is that deflationary
> busts following a credit bubble are the markets for the end of the generational credit cycle.
Still doesnt explain what happened after the great depression with your 60 year claim.
There was a hell of a lot of use of credit in various forms much sooner than 60 years
after the end of the great depression, so your grandparents claim doesnt hold water.
> The cycle itself though will be punctuated with recessions.
There is no such 'cycle'
>>>>> Then eventually there'll be one particular asset which they
>>>>> think always rises in price, and we're off to the races again.
>>>> Plenty thought that about real estate much sooner than 60 years after the great depression.
>>> The asset is chosen before the bubble gets started, largely because it
>>> is seen during the inflation as being able to protect wealth from inflation.
>> Thats not what most bubbles are about.
> The bubbles are not about protecting wealth from inflation. The
> primary asset though (tulip bulbs, stocks, houses...) isn't chosen
> at random. There has to be some proximate reason to believe
> that the object is not only valuable, but will continue to rise in price.
Yes, but thats nothing like what you said previously.
> By the 1970's in the US and UK, this was already true of housing,
> which was said to be the best protection of wealth from inflation.
Thats an entirely separate matter from bubbles.
> Once the bubble gets going though, the driver is the hope of making money from trading the asset.
Precisely, so nothing like your previous.
nebulous
The whole thread was posted to uk.finance right from the beginning. You see
that line in Outlook Express that says newsgroups? That means you are
posting in both sci.econ (that has to be a contradiction in terms if ever
there was one!) and uk.finance.
>
>>>> Barclaycard only launched 1966
>>>> http://news.bbc.co.uk/1/hi/business/5109662.stm
>
>>> Still nothing even remotely like his 60 years since the great
>>> depression.
>
>> I wasn't referring to his 60 years - I was referring to your erroneous
>> information about credit cards in the 50's.
>
> It isnt erroneous, its fact. And that fact blows a damned great hole in
> his claim about 60 years.
>
> And credit card werent the only source of credit in that soggy little
> island in the 50s anyway.
They weren't the only source of credit in the 50's, in fact they weren't a
source of credit at all in the 50's. In the 50's many people were still
buying houses with cash and certainly not at 5 or 6 times income.
>
>> snip>>>>>>>>>>>>>>>>>>>>>>>>
>
>>>> I can't really find figures going back that far, but look at Graph
>>>> 11 on here, showing growth in credit card debt since 1994 only.
>>>> http://www.creditaction.org.uk/assets/PDF/whitepapers/squeezed-out.pdf
>
>>> Still nothing even remotely like his claim about behaviour taking 60
>>> years since the great depression.
>
>> So when was your depression then?
>
> Plenty of what he claimed didnt happen till after 60 years from the great
> depression
> has in fact happened well before that, even in that soggy little island.
>
>> I show you a huge rise in credit card dept in the 90's and you are saying
>> that isn't 60 years after the great depresssion?
>
> Nope, I am saying that there was a hell of a lot of the use of credit long
> before the 90s even in that soggy little island of yours.
>
> So his silly claims about 60 years have blown up in his face and covered
> him with black stuff, very comprehensively indeed.
Why are you so hung up on what he was saying? I'm picking holes pretty
comprehensively in what you are saying.
Of course there was a use of credit before the 90's, but the 90's was when
it really took off. I bought my first flat in the early 80's and had to show
a 2 year saving history with the building society before getting a mortgage.
Neb
Rich Uncle
between the govt. and the public, but in which case it's the Fed
that's
printing the money. I believe the NY Fed keeps an a/c for the govt.
to
credit the govt. forT-bills sold on behalf of the govt.
But it is your point that there may be not enough money that is sounds
most interesting. Could you kindly elaborate a little bit more on
that, Sir?
Thanks.
======================================================
On Dec 3, 7:41 pm, Han de Bruijn <Han.deBru...@DTO.TUDelft.NL> wrote:
>
> I can hardly believe this theory of Fiat Money. Becaue there wouldn't be
> enough money to circulate in the economy then. Am I wrong ?
>
> Han de Bruijn
======================================================
RogerDodger
<Han.de...@DTO.TUDelft.NL> wrote:
>Michael Coburn wrote:
>
>> I would normally ignore your stupidity. But this one is important. When
>> the Government sells T-Bills the money is destroyed. When the government
>> buys T-Bills then money is placed into the economy. When government
>> taxes than money is destroyed and when government spends then money is
>> created. Those are the essential and inescapable facts of the fiat money
>> system. Whether the Virus likes these things or not is irrelevant.
>
>I can hardly believe this theory of Fiat Money.
It's patent nonsense.
>Becaue there wouldn't be
>enough money to circulate in the economy then. Am I wrong ?
Yes, it's to the contrary.
The government chronically spends more than it taxes -- see "deficit
spending" to an accumulated national debt held by the public of $6.4
trillion so far.
Thus if that silly claim was true, the gov't would have created $6.4
trillion of money by its spending -- indeed "high power" money subject
to the multiplier -- and we'd be enjoying hyperinflation like the
Weimar Republic or Zimbabwe, pushing a wheelbarrow of cash to buy a
loaf of bread today or a stamp tomorrow.
Indeed, here's an emprical check on the claim:
From 3/98 to 6/01 the goverment ran a surplus of $600 billion, that is
it taxed more than it spent by $600 billion.
Thus, if the gov't taxing money destroys it and spending money creates
it as "essential and inescapable facts of the fiat money system", then
then so much taxing in excess of spending must have reduced the money
supply by $600 billion -- no small amount!
Instead, between those dates the monetary base increased by $55
billion and M1 increased by $64 billion.
That's a mere difference of around $660 billion from what the claim
demands.
The reality is that the US Treasury borrows to spend, just like
businesses and people do, and the money held in its accounts is
included in the money supply and counted on its books -- as any quick
look at the govt's books will show.
So that $6.4 trillion of money for which it issued T-bills and T-bonds
was borrowed and spent, i.e. circulated from private sector --> gov't
-- private sector, just as indeed taxes are.
"Circulate" does not equal "create".
When the Federal Reserve buys assets it injects money into the system,
and when it sells assets it removes money from the system. But that's
another story.
Perhaps the original poster will argue "Federal Reserve = government
as a synonym" but 'tis not so.
The Federal Reserve does not collect taxes.
The Social Security Adminstration collects taxes but does not create
and destroy money. The money it taxed that sits in its accounts is
counted in the money supply, because it *exists.*
>
>Han de Bruijn
orang...@googlemail.com
it's true. the us dollar is backed by government debt. for every
dollar bill the privatley owned federal reserve issues it buys a
dollar government bond. the bond must be repaid with interest.thus
there is more government debt than there is money in existence and the
debt can never be repaid.
this is how the privately owned federal reserve controlls the finances
of the united states. it dictates interest rates. it decides how much
inflation there will be. it can create booms and busts. no one can
trade without debt backed, federal reserve issued currency.
remind me, who does the bible say is the servent, the borrower or the
lender?
Rod Speed
Never said otherwise. I JUST commented on where I chose to read the thread.
> You see that line in Outlook Express that says newsgroups? That means you are posting in both sci.econ (that has to be
> a contradiction in terms if ever there was one!) and uk.finance.
What I said in different words.
>>>>> Barclaycard only launched 1966
>>>>> http://news.bbc.co.uk/1/hi/business/5109662.stm
>>>> Still nothing even remotely like his 60 years since the great depression.
>>> I wasn't referring to his 60 years - I was referring to your
>>> erroneous information about credit cards in the 50's.
>> It isnt erroneous, its fact. And that fact blows a damned great hole in his claim about 60 years.
>> And credit card werent the only source of credit in that soggy little island in the 50s anyway.
> They weren't the only source of credit in the 50's, in fact they weren't a source of credit at all in the 50's.
But there were other sources of credit available in the 50s and his claim was about credit in general, not
just credit cards, so he still has one hell of a problem with that 60 year claim even with that soggy little island.
> In the 50's many people were still buying houses with cash
Fuck all were in fact. And it isnt just the 50s that matter for his 60 year claim anyway.
> and certainly not at 5 or 6 times income.
Irrelevant to what is being discussed.
>>>>> I can't really find figures going back that far, but look at Graph
>>>>> 11 on here, showing growth in credit card debt since 1994 only.
>>>>> http://www.creditaction.org.uk/assets/PDF/whitepapers/squeezed-out.pdf
>>>> Still nothing even remotely like his claim about behaviour taking 60 years since the great depression.
>>> So when was your depression then?
>> Plenty of what he claimed didnt happen till after 60 years from the great depression has in fact happened well before
>> that, even in that soggy little island.
>>> I show you a huge rise in credit card dept in the 90's and you are saying that isn't 60 years after the great
>>> depresssion?
>> Nope, I am saying that there was a hell of a lot of the use of
>> credit long before the 90s even in that soggy little island of yours.
>> So his silly claims about 60 years have blown up in his face and covered him with black stuff, very comprehensively
>> indeed.
> Why are you so hung up on what he was saying?
Because it happens to be what I was discussing when you jumped
into the thread and made such a spectacular fool of yourself.
> I'm picking holes pretty comprehensively in what you are saying.
Like hell you are. The ONLY thing you have been able to quibble about is
whether credit cards were used much in the 50s in that soggy little island
and even someone as stupid as you should have noticed that even in that
soggy little island, there were other sources of credit available in the 50s
and that that is nothing even remotely resembling anything like 60 years
after the great depression, so the claim we happened to be discussing
about 60 years is clearly just plain wrong, even with that soggy little island.
> Of course there was a use of credit before the 90's, but the 90's was when it really took off.
Irrelevant to the evidence that blows a damned great hole in his claim about 60 years.
> I bought my first flat in the early 80's and had to show a 2 year saving history with the building society before
> getting a mortgage.
I bought mine in the 60s and while plenty did have that sort of requirement,
I chose to ignore that requirement myself because I was getting a much
better return on my savings than I was paying in interest.
And even your 80s blows a damned great hole in his claim about 60 years anyway.
Rich Uncle
budget surpluses, in the
govt.'s a/c with the NY Fed acting as its banker, the Treasury
Secretary might instruct
the Fed to purchase some Treasury Bonds in order to retire them.
Kindly correct me if
I am wrong.
And, by the way, under Section 13.3 of the Federal Reserve Bank Act,
the Fed can buy
with money other kinds of notes, etc. Must such money be backed by T.
bills or bonds,
too?
But isn't it also the case that T. bills and bonds monetised by the
Fed are considered
retired, i.e., cancelled. There is no need for the govt. to pay
interest to the Fed. Only
T. bill and bonds not yet monetized are considered outstanding.
=================================================================
On Dec 4, 7:53 am, "orangata...@googlemail.com"
<orangata...@googlemail.com> wrote:
>
> it's true. the us dollar is backed by government debt. for every
> dollar bill the privatley owned federal reserve issues it buys a
> dollar government bond. the bond must be repaid with interest.thus
> there is more government debt than there is money in existence and the
> debt can never be repaid.
>
> this is how the privately owned federal reserve controlls the finances
> of the united states. it dictates interest rates. it decides how much
> inflation there will be. it can create booms and busts. no one can
> trade without debt backed, federal reserve issued currency.
>
> remind me, who does the bible say is the servent, the borrower or the
> lender?
======================================================
> On 3 Dec, 11:41, Han de Bruijn <Han.deBru...@DTO.TUDelft.NL> wrote:
>
>
> > I can hardly believe this theory of Fiat Money. Becaue there wouldn't be
> > enough money to circulate in the economy then. Am I wrong ?
>
> > Han de Bruijn
====================================================
Michael Coburn
Why???
1. The total amount of fiat money (this includes government bonds and T-
bills that draw interest) is the difference between money that has been
"appropriated" and spent into the world by the elected government, and
the amount of money taken back from the world by taxation.
2. The total amount of money in the active money pool M3, is the amount
of money "appropriated" and spent into the world by the government
(includes the Fed and the elected government), and the money removed from
the active money pool by taxation or by the sale of government backed
binds and T-bills.
Michael Coburn
Then why is there a national debt of $10 trillion? HMMMMMMMM????
nebulous
You really don't understand how things work do you? You read the thread in
your house, or in an internet cafe or wherever - you don't read it in
sci.econ.
>
>> You see that line in Outlook Express that says newsgroups? That means you
>> are posting in both sci.econ (that has to be a contradiction in terms if
>> ever there was one!) and uk.finance.
>
> What I said in different words.
>
>>>>>> Barclaycard only launched 1966
>>>>>> http://news.bbc.co.uk/1/hi/business/5109662.stm
>
>>>>> Still nothing even remotely like his 60 years since the great
>>>>> depression.
>
>>>> I wasn't referring to his 60 years - I was referring to your
>>>> erroneous information about credit cards in the 50's.
>
>>> It isnt erroneous, its fact. And that fact blows a damned great hole in
>>> his claim about 60 years.
>
>>> And credit card werent the only source of credit in that soggy little
>>> island in the 50s anyway.
>
>> They weren't the only source of credit in the 50's, in fact they weren't
>> a source of credit at all in the 50's.
>
> But there were other sources of credit available in the 50s and his claim
> was about credit in general, not
> just credit cards, so he still has one hell of a problem with that 60 year
> claim even with that soggy little island.
>
>> In the 50's many people were still buying houses with cash
>
> Fuck all were in fact. And it isnt just the 50s that matter for his 60
> year claim anyway.
Yes they were. People of my Grandparents generation (born 1910) were
terrified of debt. My parents bought their house for cash in 1961. They
didn't know a single one of their friends who had a mortgage.
Many people were also renting. The growth in owner occupation only really
started in the 1950's
http://news.bbc.co.uk/1/hi/business/7242492.stm
>
>> and certainly not at 5 or 6 times income.
>
> Irrelevant to what is being discussed.
Of course it is relevant. It is relevant to the levels of indebtedness. We
don't need to just discuss how widely credit was available, but also how
wisely it was used to understand the recent bubble.
So this is what y'all get up to in a science group is it? You lose on the
facts and immediately resort to personal abuse?
Why do you refuse to answer when you regard the great depression to have
been? You keep telling me everything from the 50's to the 90's is nothing
like 60 years after the great depression- which is difficult to refute
because you wont tell me what you regard as being the key period.
>
>> Of course there was a use of credit before the 90's, but the 90's was
>> when it really took off.
>
> Irrelevant to the evidence that blows a damned great hole in his claim
> about 60 years.
>
>> I bought my first flat in the early 80's and had to show a 2 year saving
>> history with the building society before getting a mortgage.
>
> I bought mine in the 60s and while plenty did have that sort of
> requirement,
> I chose to ignore that requirement myself because I was getting a much
> better return on my savings than I was paying in interest.
>
> And even your 80s blows a damned great hole in his claim about 60 years
> anyway.
We have gone from a situation where my grandparents were terrified of debt
(Neither a borrower nor a lender be) to one where my parents were very
careful with it, to one where my generation have embraced it wholeheartedly.
It didn't just happen overnight, it gradually built up over a long period of
time. I can remember listening to a radio programme in the late 80's
discussing 100% mortgages that had just arrived. People were predicting
terrible things as a result of them. However they arrive, nothing bad
happens, the next group of people regard them as uncontroversial and they
invent something even riskier - like the 125% mortgage. Debt grew - slowly
and unspectacularly - often based around houses- through the 70's and 80's.
It really took off in the 90's and exploded in the 2000's- again largely
because of house prices.
Here you go. This done in 2006 should be clear enough to let even you see
what we are talking about:-
http://uk.youtube.com/watch?v=bl3Z6MXYe_4&feature=related
This is an extract of a research document about how the younger generation
are losing faith in financial services.
Neb
M Holmes
> Plenty of what he claimed didnt happen till after 60 years from the
> great depression has in fact happened well before that, even in that
> soggy little island.
>> I show you a huge rise in credit card dept in the 90's and you are
>> saying that isn't 60 years after the great depresssion?
> Nope, I am saying that there was a hell of a lot of the use of credit
> long before the 90s even in that soggy little island of yours.
But *NO* credit bubble until the mid-80's.
> So his silly claims about 60 years have blown up in his face and
> covered him with black stuff, very comprehensively indeed.
Well OK, if it'll make you feel better: yes, there were in fact some
people who took out credit before the credit bubble got started. Gee,
we'll all have to revise our idea that economic theories always apply to
everyone everywhere at exactly the appropriate second.
FoFP
M Holmes
>>>> Well, OK, there are always rich folks and even in the most extreme
>>>> bubbles, not all of the population takes part. In the 50's were
>>>> credit cards normal for the masses?
>>> Yep. In spades in the 60s.
>> I'm certain that neither my parents, nor any of their friends had
>> credit crads in the 1960's.
> The technical term for that is 'pathetically inadequate sample'
In fact the technical term is "Statistically insignificant sample".
> I built my house quite literally with my own hands using a credit card
> in the 60s, essentially because I was getting a better return on my
> capital in the stock market than I was paying in interest and I was
> interested in seeing if it was possible to build a house entirely on
> credit, with no cash up front from me. It turned out to be completely
> effortless and financially well worth doing.
Ah, your own sample has one person in it. See above.
FoFP
Rod Speed
Wrong, as always.
> You read the thread in your house, or in an internet cafe or wherever - you don't read it in sci.econ.
Never ever could bullshit its way out of a wet paper bag.
>>> You see that line in Outlook Express that says newsgroups? That means you are posting in both sci.econ (that has to
>>> be a
>>> contradiction in terms if ever there was one!) and uk.finance.
>> What I said in different words.
>>>>>>> Barclaycard only launched 1966
>>>>>>> http://news.bbc.co.uk/1/hi/business/5109662.stm
>>>>>> Still nothing even remotely like his 60 years since the great depression.
>>>>> I wasn't referring to his 60 years - I was referring to your
>>>>> erroneous information about credit cards in the 50's.
>>>> It isnt erroneous, its fact. And that fact blows a damned great hole in his claim about 60 years.
>>>> And credit card werent the only source of credit in that soggy little island in the 50s anyway.
>>> They weren't the only source of credit in the 50's, in fact they weren't a source of credit at all in the 50's.
>> But there were other sources of credit available in the 50s and his claim was about credit in general, not
>> just credit cards, so he still has one hell of a problem with that 60 year claim even with that soggy little island.
>>> In the 50's many people were still buying houses with cash
>> Fuck all were in fact. And it isnt just the 50s that matter for his 60 year claim anyway.
> Yes they were.
No they werent. Its completely trivial to check what was used to buy houses in the 50s in that soggy little island.
> People of my Grandparents generation (born 1910) were terrified of debt.
Pig ignorant lie. Plenty werent, including my parents that were born then.
> My parents bought their house for cash in 1961.
The technical term for that is 'pathetically inadequate sample'
> They didn't know a single one of their friends who had a mortgage.
The technical term for that is 'pathetically inadequate sample'
> Many people were also renting. The growth in owner occupation only really started in the 1950's
> http://news.bbc.co.uk/1/hi/business/7242492.stm
Still blows a great hole in his 60 year claim.
>>> and certainly not at 5 or 6 times income.
>> Irrelevant to what is being discussed.
> Of course it is relevant.
Nope.
> It is relevant to the levels of indebtedness.
Its still debt that he claimed wasnt seen with that generation.
> We don't need to just discuss how widely credit was available, but also how wisely it was used to understand the
> recent bubble.
What we were discussing was his claim that those of that generation didnt have any debt.
That is just plain wrong.
You're lying.
> and immediately resort to personal abuse?
Corse you never ever do anything like that yourself, eh ?
> Why do you refuse to answer when you regard the great depression to have been?
Because it doesnt matter. Clearly the 50s are nothing like more than 60 years after it.
> You keep telling me everything from the 50's to the 90's
> is nothing like 60 years after the great depression-
You're lying, again.
> which is difficult to refute because you wont tell me what you regard as being the key period.
The 50s are nothing even remotely resembling anything like 60 years after the
great depression, whenever its considered to have been. Neither are the 60s.
>>> Of course there was a use of credit before the 90's, but the 90's was when it really took off.
>> Irrelevant to the evidence that blows a damned great hole in his claim about 60 years.
>>> I bought my first flat in the early 80's and had to show a 2 year
>>> saving history with the building society before getting a mortgage.
>> I bought mine in the 60s and while plenty did have that sort of requirement,
>> I chose to ignore that requirement myself because I was getting a
>> much better return on my savings than I was paying in interest.
>> And even your 80s blows a damned great hole in his claim about 60 years anyway.
> We have gone from a situation where my grandparents were terrified of debt (Neither a borrower nor a lender be)
The technical term for that is 'pathetically inadequate sample'
> to one where my parents were very careful with it,
The technical term for that is 'pathetically inadequate sample'
I'm the same age as your parents and have never been.
Neither were my parents who lived thru the great depression themselves.
> to one where my generation have embraced
> it wholeheartedly. It didn't just happen overnight, it gradually built up over a long period of time.
Irrelevant to whether his 60 year claim is clearly just plain wrong.
> I can remember listening to a radio programme in the late 80's discussing 100% mortgages that had just arrived. People
> were predicting terrible things as a result of them. However they arrive, nothing bad happens, the next group of
> people regard them as uncontroversial and they invent something even riskier - like the 125% mortgage.
Irrelevant to whether his 60 year claim is clearly just plain wrong.
I never ever disputed that the use of debt has increased over time,
I JUST comment on his 60 years claim which is just plain wrong.
> Debt grew - slowly and unspectacularly - often based around houses- through the 70's and 80's.
Hordes borrowed for a hell of a lot more than just houses, including me.
I even borrowed to speculate on the stock market in the 60s and made a lot of money doing that.
> It really took off in the 90's and exploded in the 2000's- again largely because of house prices.
Irrelevant to whether his 60 year claim is clearly just plain wrong.
> Here you go. This done in 2006 should be clear enough to let even you see what we are talking about:-
> http://uk.youtube.com/watch?v=bl3Z6MXYe_4&feature=related
Irrelevant to whether his 60 year claim is clearly just plain wrong.
> This is an extract of a research document about how the younger generation are losing faith in financial services.
> http://www.reform.co.uk/moneystootighttomentionwilltheipodgenerationevertrustfinancialservices_210.php
Irrelevant to whether his 60 year claim is clearly just plain wrong.
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>> Plenty of what he claimed didnt happen till after 60 years from the great
>> depression has in fact happened well before that, even in that soggy little island.
>>> I show you a huge rise in credit card dept in the 90's and you
>>> are saying that isn't 60 years after the great depresssion?
>> Nope, I am saying that there was a hell of a lot of the use of credit
>> long before the 90s even in that soggy little island of yours.
> But *NO* credit bubble until the mid-80's.
Use of credit isnt the same thing as a credit bubble. There was plenty of use of credit in the 60s
and that is nothing even remotely resembling anything like 60 years after the great depression.
>> So his silly claims about 60 years have blown up in his face and
>> covered him with black stuff, very comprehensively indeed.
> Well OK, if it'll make you feel better: yes, there were in fact some
> people who took out credit before the credit bubble got started.
There was a hell of a lot of use of credit in the 60s, nothing even
remotely resembling anything like 60 years after the great depression.
And the reason for that is that the interest rates were quite low, so it was sensible to use credit in plenty of
situations.
I in fact physically built my own house entirely on credit at that time, didnt use a cent of my own money,
because I was earning a lot more on my money in the stock market than I was paying in interest on the credit.
And in fact I borrowed some money and used it to speculate on the stock market in the 60s too.
> Gee, we'll all have to revise our idea that economic theories always
> apply to everyone everywhere at exactly the appropriate second.
Never ever could bullshit its way out of a wet paper bag.
The extensive use of credit in the 60s was nothing even remotely resembling anything like 60 years after the great
depression.
Rod Speed
> Rod Speed <rod.sp...@gmail.com> wrote
>>>>> Well, OK, there are always rich folks and even in the
>>>>> most extreme bubbles, not all of the population takes part.
>>>>> In the 50's were credit cards normal for the masses?
>>>> Yep. In spades in the 60s.
>>> I'm certain that neither my parents, nor any of their friends had credit crads in the 1960's.
>> The technical term for that is 'pathetically inadequate sample'
> In fact the technical term is "Statistically insignificant sample".
That was a joke, Joyce.
>> I built my house quite literally with my own hands using a credit
>> card in the 60s, essentially because I was getting a better return
>> on my capital in the stock market than I was paying in interest
>> and I was interested in seeing if it was possible to build a house
>> entirely on credit, with no cash up front from me. It turned out
>> to be completely effortless and financially well worth doing.
> Ah, your own sample has one person in it. See above.
I wasnt the one claiming that it says anything about how society operated at that time.
Hardly anyone did anything like that then or now.
nebulous
Plenty may not have been but most were.
>
>> My parents bought their house for cash in 1961.
>
> The technical term for that is 'pathetically inadequate sample'
Like your sample of one - who built a house on debt?
>
>> They didn't know a single one of their friends who had a mortgage.
>
> The technical term for that is 'pathetically inadequate sample'
>
>> Many people were also renting. The growth in owner occupation only really
>> started in the 1950's
>
>> http://news.bbc.co.uk/1/hi/business/7242492.stm
>
> Still blows a great hole in his 60 year claim.
>
>>>> and certainly not at 5 or 6 times income.
>
>>> Irrelevant to what is being discussed.
>
>> Of course it is relevant.
>
> Nope.
>
>> It is relevant to the levels of indebtedness.
>
> Its still debt that he claimed wasnt seen with that generation.
I didn't see him say debt wasn't available then - anyway your fixation is
showing again- this started with your entirely false statements about credit
cards in the 50's
>
Very rarely. I'm a long way off it here - yet it seems your stock-in-trade.
I usually enjoy it when people start the invective because it shows they
have nothing else left.
>
>> Why do you refuse to answer when you regard the great depression to have
>> been?
>
> Because it doesnt matter. Clearly the 50s are nothing like more than 60
> years after it.
Either are the late 80's according to you.
>
>> You keep telling me everything from the 50's to the 90's
>> is nothing like 60 years after the great depression-
>
> You're lying, again.
>
>> which is difficult to refute because you wont tell me what you regard as
>> being the key period.
>
> The 50s are nothing even remotely resembling anything like 60 years after
> the
> great depression, whenever its considered to have been. Neither are the
> 60s.
>
>>>> Of course there was a use of credit before the 90's, but the 90's was
>>>> when it really took off.
>
>>> Irrelevant to the evidence that blows a damned great hole in his claim
>>> about 60 years.
>
>>>> I bought my first flat in the early 80's and had to show a 2 year
>>>> saving history with the building society before getting a mortgage.
>
>>> I bought mine in the 60s and while plenty did have that sort of
>>> requirement,
>>> I chose to ignore that requirement myself because I was getting a
>>> much better return on my savings than I was paying in interest.
>
>>> And even your 80s blows a damned great hole in his claim about 60 years
>>> anyway.
>
>> We have gone from a situation where my grandparents were terrified of
>> debt (Neither a borrower nor a lender be)
>
> The technical term for that is 'pathetically inadequate sample'
Actually its not - as has already been pointed out to you.
Nice way of showing the explosion in house prices that the bubble brought
though.
Neb
orang...@googlemail.com
> However, if there is a net credit position, probably due to large
> budget surpluses, in the
> govt.'s a/c with the NY Fed acting as its banker, the Treasury
> Secretary might instruct
> the Fed to purchase some Treasury Bonds in order to retire them.
> Kindly correct me if
> I am wrong.
>
the treasury cannot instruct the fed to do anything. nor can the
president. alan greenspan put it this way
'there is no other agency of government which can over-rule the
actions that we take.'
7.40 on this video. http://uk.youtube.com/watch?v=jkHm3sN_cdo
they go on to discuss president bush (41) blaming the fed's policys
for him not being re-elected.
> And, by the way, under Section 13.3 of the Federal Reserve Bank Act,
> the Fed can buy
> with money other kinds of notes, etc. Must such money be backed by T.
> bills or bonds,
> too?
>
maybe they can, but they don't. the federal reserve note is backed by
'the full faith and credit of the united states', which means t-bills.
(http://www.onpedia.com/dictionary/t-bill)
> But isn't it also the case that T. bills and bonds monetised by the
> Fed are considered
> retired, i.e., cancelled. There is no need for the govt. to pay
> interest to the Fed. Only
> T. bill and bonds not yet monetized are considered outstanding.
>
the fed is priavtely owned, so the fed's budget is not allocated by
the congress. instead it comes
'primarily from interest earned on U.S. government securities that the
Federal Reserve has acquired through open market operations.'
http://www.federalreserve.gov/newsevents/press/other/20060110a.htm
they spend as much as they like on private jets, champaign, huge
salaries and such then return whatever remains to the treasury. the
real profits could come from investments made with knowledge of future
fed decisions. not that i'm suggesting that a bank employee that is a
member of the fed board would divulge this infomarion to his bank
merely to make billions upon billions of dollars. they are much too
honest.
Rod Speed
>> Wrong, as always.
>>> Yes they were.
Another pig ignorant lie. Hardly any were.
>>> My parents bought their house for cash in 1961.
>> The technical term for that is 'pathetically inadequate sample'
> Like your sample of one - who built a house on debt?
I wasnt the one making stupid claims about what most were doing.
>>> They didn't know a single one of their friends who had a mortgage.
>> The technical term for that is 'pathetically inadequate sample'
>>> Many people were also renting. The growth in owner occupation only really started in the 1950's
>>> http://news.bbc.co.uk/1/hi/business/7242492.stm
>> Still blows a great hole in his 60 year claim.
>>>>> and certainly not at 5 or 6 times income.
>>>> Irrelevant to what is being discussed.
>>> Of course it is relevant.
>> Nope.
>>> It is relevant to the levels of indebtedness.
>> Its still debt that he claimed wasnt seen with that generation.
> I didn't see him say debt wasn't available then
He did make a stupid claim about 60 years which has blown up in his face and covered him in black stuff.
> - anyway your fixation is showing again- this started with your entirely false statements about credit cards in the
> 50's
It isnt false. And what as being discussed was the stupid 60 year claim,
and even someone as stupid as you should have noticed that there was
lots of use of credit cards even in that soggy little island of yours, LONG
before 60 years after the great depression. AND that credit cards werent
the only credit available in that soggy little island in the 50s eitheer.
>> You're lying.
> Very rarely.
Everyone can see you doing it in this thread.
> I'm a long way off it here
Everyone can see you are lying.
> - yet it seems your stock-in-trade. I usually enjoy it when people start the invective because it shows they have
> nothing else left.
Yep, you're clearly bereft.
>>> Why do you refuse to answer when you regard the great depression to have been?
>> Because it doesnt matter. Clearly the 50s are nothing like more than 60 years after it.
> Either are the late 80's according to you.
You're lying, again.
>>> You keep telling me everything from the 50's to the 90's
>>> is nothing like 60 years after the great depression-
>> You're lying, again.
>>> which is difficult to refute because you wont tell me what you regard as being the key period.
>> The 50s are nothing even remotely resembling anything like 60 years after the
>> great depression, whenever its considered to have been. Neither are the 60s.
>>>>> Of course there was a use of credit before the 90's, but the 90's was when it really took off.
>>>> Irrelevant to the evidence that blows a damned great hole in his claim about 60 years.
>>>>> I bought my first flat in the early 80's and had to show a 2 year
>>>>> saving history with the building society before getting a mortgage.
>>>> I bought mine in the 60s and while plenty did have that sort of requirement,
>>>> I chose to ignore that requirement myself because I was getting a
>>>> much better return on my savings than I was paying in interest.
>>>> And even your 80s blows a damned great hole in his claim about 60 years anyway.
>>> We have gone from a situation where my grandparents were terrified of debt (Neither a borrower nor a lender be)
>> The technical term for that is 'pathetically inadequate sample'
> Actually its not - as has already been pointed out to you.
Actually that was a joke, as I said.
nebulous
You're still not getting it are you?
There weren't any credit cards available in the 50's!
Where am I? The lack of civility has all been yours.
>
>> I'm a long way off it here
>
> Everyone can see you are lying.
>
>> - yet it seems your stock-in-trade. I usually enjoy it when people start
>> the invective because it shows they have nothing else left.
>
> Yep, you're clearly bereft.
>
>>>> Why do you refuse to answer when you regard the great depression to
>>>> have been?
>
>>> Because it doesnt matter. Clearly the 50s are nothing like more than 60
>>> years after it.
>
>> Either are the late 80's according to you.
>
> You're lying, again.
Try this message news:6pop4kF...@mid.individual.net...
your closing line says:-
"And even your 80s blows a damned great hole in his claim about 60 years
anyway."
If you are going to insist people are lying you really need to remember what
you said!
A joke that was so amusing you had to repeat it six times?
More cut and paste?
Neb
Rod Speed
>>>> Wrong, as always.
>>>>> Yes they were.
>>>>> http://news.bbc.co.uk/1/hi/business/7242492.stm
>>>> Nope.
Nothing to 'get'
> There weren't any credit cards available in the 50's!
Pig ignorant lie.
http://en.wikipedia.org/wiki/Credit_cards#History
And even someone as stupid as you should have noticed that there
were other sources of credit available in the 50s in that soggy little
island, even if that was before you were even born.
>>>> You're lying.
>>> Very rarely.
> Where am I?
In this thread.
> The lack of civility has all been yours.
Everyone can see you are lying.
>>> I'm a long way off it here
>> Everyone can see you are lying.
>>> - yet it seems your stock-in-trade. I usually enjoy it when people
>>> start the invective because it shows they have nothing else left.
>> Yep, you're clearly bereft.
>>>>> Why do you refuse to answer when you regard the great depression to have been?
>>>> Because it doesnt matter. Clearly the 50s are nothing like more than 60 years after it.
>>> Either are the late 80's according to you.
>> You're lying, again.
> Try this message news:6pop4kF...@mid.individual.net...
Doesnt say anything like that, liar.
> your closing line says:-
> "And even your 80s blows a damned great hole in his claim about 60 years anyway."
Still does, liar.
> If you are going to insist people are lying you really need to remember what you said!
Everyone can see for themselves that you are lying.
>>>>> You keep telling me everything from the 50's to the 90's
>>>>> is nothing like 60 years after the great depression-
>>>> You're lying, again.
>>>>> which is difficult to refute because you wont tell me what you regard as being the key period.
>>>> The 50s are nothing even remotely resembling anything like 60 years after the
>>>> great depression, whenever its considered to have been. Neither are the 60s.
>>>>>>> Of course there was a use of credit before the 90's, but the 90's was when it really took off.
>>>>>> Irrelevant to the evidence that blows a damned great hole in his claim about 60 years.
>>>>>>> I bought my first flat in the early 80's and had to show a 2 year saving history with the building society
>>>>>>> before getting a mortgage.
>>>>>> I bought mine in the 60s and while plenty did have that sort of requirement,
>>>>>> I chose to ignore that requirement myself because I was getting a
>>>>>> much better return on my savings than I was paying in interest.
>>>>>> And even your 80s blows a damned great hole in his claim about 60 years anyway.
>>>>> We have gone from a situation where my grandparents were
>>>>> terrified of debt (Neither a borrower nor a lender be)
>>>> The technical term for that is 'pathetically inadequate sample'
>>> Actually its not - as has already been pointed out to you.
>> Actually that was a joke, as I said.
> A joke that was so amusing you had to repeat it six times?
You're lying, as always.
> More cut and paste?
You dont qualify for anything more than that.
jean-francois
> Supposedly, we are now descending experiencing deflation,.
> which causes, or results from, recession.
>
> My question is: where did themoneygo? We have seen
> major inflation over the last 5 years (housing and commodities),
> which is, as we know, a monetary phenomenon - the Fed has run
> theprintingpress full blast, with their 'easymoney' policy.
>
> Now, bust follows boom, and prices fall... but themoneyis still
> out there, yes/no? Demand should be constant, with boatloads
> of bux chasing goods.... where are all the dollars? Hw can
> general price level drop?
>
> --
> Rich
A lot of the money was never there, people were expecting the price
of houses to climb always and they made a mistake and purchased with
money they never had, so things go back to their natural price.
Now if you talk about the recent tendency (2 months or so) where the
Fed is printing huge amounts of money at a fast pace, it is kept by
banks. There was a very good article on the Daily Reckoning website
recently, they named several US banks and quoted declarations from
their chairmans regarding aquisitions. Basically banks receive money
from the tax payers and they use 90% or so to acquire other, smaller
banks. This will push up the fees that you pay because there is now
less competition whis all those acquisition and the disparition of
smaller banks. Also they change the law so that if you purchase a
smaller bank you can also pay less or no tax on your profits since you
can count their bad loans (the smaller bank) and claim that your net
profits for the year are smaller than expected. The funny thing is
that you can do this operation with the tax payer's money.
jean-francois
> I don't normally react to the virus but this one is important enough to
> make an exception. The virus is merely keeping the original post alive.
> That post is of major importance. I will rephrase:
>
> The only way to fight and end a depression is to createmoneyand give it
> to people who actually will spend it. This causes people who havemoney
> to invest it because if they don't do so then the inflation monster will
> get them. There is also the observation thatmoneyis out there to be
Or let describe an hypothetical situation which is not so
different...
(Sorry for the syntax, French is my native tongue.)
Money is just a social contract between some individuals or groups of
individuals to exchange some hours of works against other hours of
work. Like the plumber/teacher who are promissing to offer X hours of
their work to a third party if some construction workers accept to
offer X hundreds of work right now and to build them a house.
Let say that I'm a plumber and that some farmer needs me to do a job
of 6 hours; he offers me a note (a contract) which says that I can
collect 40 dozens of eggs and 100 pints of milk in the comming years
for my work. But he doesn't need more than 6 hours of job from me.
Now I want a new car and the car maker does not want to exchange my
note because it's not enough. I will falsify the note and add a few
zeros so that I can offer 4000 dozens of eggs and 10000 pints of milks
that all the people involved in the process of car making can collect
latter on. I'm acting like a sperculator who cheat and falsely promiss
a reward to some pigeons who join a pyramide scheme, or someone who
claim that he can purchase debts because the people who have the debt
have a triple A rating and will pay me/them interest.
The present economic crisis stems from a growing number of lies that
were introduced in the system, false promises of a reward later on,
people who suddenly felt rich (artificial home prices or stock) and
who borrowed to purchase expensive goods that they didn't need so
much.
So the people involved in the process of making a car feel rich, they
accept to do overtime, cancel a weekend that they planned to take,
and if many people falsify their own notes, the car maker can borrow
to expand his business and hire people and lure them with higher
salaries ( workers who used to do computers, truck drivers who used
to deliver beer, farmers, former electricians) because making cars is
suddenly more lucrative than doing these other jobs. The car makers
will even create jobs because he needs to purchase equipment to build
his cars. Students who planned to become accountants will even change
their mind and borrow to become specialised workers in the car
industry.
Everybody feel richer and the economy is booming until the farmer
reject the note and claims that he never promised 10000 pints of milk
to anyone. Is it a solution to print extra notes and promiss the
farmer a yatch or 5 new tractors if he accept the falsidied note?
Money is just a medium, it has to be based on something. It must
represent what people are ready to give (hours of work) in exchange of
goods and services. If many people lied in the chain and a large
number exhanged in good faith a false promise that someone gave to
them there wil be several loosers, wether you like it or not. And
refusing to accept the truth and introducing an extra distorsion in
the system with extra notes won't cure the problem because money has
to represent something that exists, true promises based on something
else than thin air.
The problem is not one of money shortage, it is misallocation of
money, false promises, lies who introduced a distorsion and pushed
people to become skeptical regarding notes (loans, stoks, expected
profits). Such a distorsion needs to purge itself when people accept
that they lost something. Some people won, more people lost because
the capital/time was wasted. You cannot rebuild the transparency that
needs to back those billions of social contracts/notes with further
notes, or you can just postpone the resolution of the problem and make
it bigger.
> captured by those who will invest. Moneyis devalued by creating more of
> it and injecting it at the bottom of the economy. The tax system must be
> employed to control the objects of "investment". At some later time
> (after the real estate market has stabilized) capital gains tax treatment
> on real estate gains must be eliminated.- Hide quoted text -