Deflation on the doorstep
taxationi...@lycos.com
the heavy hand of government interference. I suppose it's because so
many economists receive a government paycheck; that makes them a
biased source.
The university environment seems to be poisonous to individual freedom
and common sense. Hopefully, the deflationary depression, caused by
the credit bubble and now credit crunch, will leave these statists
unemployed and unemployable.
sinister
<taxationi...@lycos.com> wrote in message
news:1183140323.2...@x35g2000prf.googlegroups.com...
Problem is that most people who espouse sentiments like yourself actually
love having the guvmint stuff money into your pockets:
http://geolib.com/essays/sullivan.dan/royallib.html
Davinchi
you can just tell from you email address what you think.
But in truth, only some taxation could ever possibly be
considered theft. In fact both theory and practice suggests
that taxes are a means of funding "public goods", large long
running capital projects, to maintain an organized
marketplace, and to provide a safety net.
examples are: civil defense, the interstate highway system,
the money supply (using money instead of barter), and
disaster relief (such as, say Katrina, mmmmmm bad example,
lets say literally - the Coast Guard saving millionaires
from their sinking yachts because they ran into a reef while
bombed on Johny Walker Red).
death and taxes my friend, death and taxes.
-=-
... "Esse Quam Videri" == "to be rather than to seem."
taxationi...@lycos.com
Grow up, peasant, and be an independent person. Or, keep paying your
extortion like a sucker.
Steve Campbell
> Grow up, peasant, and be an independent person. Or, keep paying your
On one hand, we get quite a bit for our taxes. The roads that I drive
on in the U.S. are passable, air travel is generally safe and
efficient, I'm not stepping over starving people when I walk through
most towns, the parks are clean and convenient, and when I go on
vacation all my stuff is still in my condo when I get back.
On the other hand, the government interferes in many ways where it
should not. Deflation won't happen because the government can (and
will) flood the economy with dollars, if necessary: a political
decision more than a well-planned action that makes the best economic
sense.
But the problem with refusing to pay taxes is that it will land you in
jail. And, as long as the western nations remain representative of the
will of the masses, taxation, manipulation, interference, and large-
scale, government-funded projects are inevitable.
Peter B. P.
> taxationi...@lycos.com wrote:
> > I am always amazed that supposedly intelligent people still support
> > the heavy hand of government interference. I suppose it's because so
> > many economists receive a government paycheck; that makes them a
> > biased source.
> > The university environment seems to be poisonous to individual freedom
> > and common sense. Hopefully, the deflationary depression, caused by
> > the credit bubble and now credit crunch, will leave these statists
> > unemployed and unemployable.
> >
>
> you can just tell from you email address what you think.
>
> But in truth, only some taxation could ever possibly be
> considered theft.
The most significant is the income tax, and that is also the one I take
most offense at. Other examples are taxes on businesses and taxes on
consumption, but they do not directly harm the individual, so they are
less damaging.
> In fact both theory and practice suggests
> that taxes are a means of funding "public goods", large long
> running capital projects, to maintain an organized
> marketplace, and to provide a safety net.
One problem is that this "safety net" has become a cobweb, in which the
socially disadvantaged are caught as eternal clients of the rules, the
political system. Here in Denmark approximately 66% of the workforce is
dependent on the state for their income, and approximately 50% of these
are on transfer payments. The rest are public employees.
(A particularly generate example is the Danish colony Greeland - there,
50% of the workforce are public employees.)
Not only does this passive support lower the productivity of society,
and thus the total prosperity, it also distorts democracy. What voter
would vote for "welfare" cuts, if he is himself fully dependent on
welfare handouts?
This is the triumph of the social democrats. Under the guise of
"welfare", they have cemented their political power.
>
> examples are: civil defense, the interstate highway system,
> the money supply (using money instead of barter), and
> disaster relief (such as, say Katrina, mmmmmm bad example,
> lets say literally - the Coast Guard saving millionaires
> from their sinking yachts because they ran into a reef while
> bombed on Johny Walker Red).
Before the 20th century, things like defense, judiciary, police,
infrastructure and other such essentials were handled by the state and
at the same time, the tax burden on society was at most around 10%.
In the USA today, it is just short of 30%. In Scandinavia, it is around
50%.
>
> death and taxes my friend, death and taxes.
Not acceptable.
--
regards , Peter B. P.
http://titancity.com/blog , http://macplanet.dk
"We don't dial 911 - we dial .357".
Peter B. P.
> On Jun 30, 11:06 am, taxationistheft2...@lycos.com wrote:
> > Grow up, peasant, and be an independent person. Or, keep paying your
> > extortion like a sucker.- Hide quoted text -
>
> On one hand, we get quite a bit for our taxes.
As a wise man said, you should be thankful that you do not get all that
you pay for in that regard!
> The roads that I drive
> on in the U.S. are passable, air travel is generally safe and
> efficient, I'm not stepping over starving people when I walk through
> most towns, the parks are clean and convenient, and when I go on
> vacation all my stuff is still in my condo when I get back.
>
> On the other hand, the government interferes in many ways where it
> should not. Deflation won't happen because the government can (and
> will) flood the economy with dollars, if necessary:
They are already doing it. WHy do you think the FED stopped publishing
the M3 number a few years ago?
> a political
> decision more than a well-planned action that makes the best economic
> sense.
>
> But the problem with refusing to pay taxes is that it will land you in
> jail. And, as long as the western nations remain representative of the
> will of the masses, taxation, manipulation, interference, and large-
> scale, government-funded projects are inevitable.
And that we must change.
taxationi...@lycos.com
they think they are on the side of good, when in reality, they are on
the side of evil.
They want thugs with badges and guns to hurt anyone who doesn't agree
with them. They are truly the enemy of all decent people.
Mark M.
Are you for the common good?
*Anarcissie*
> Steve Campbell <SteveCampb...@avicorcho.com> wrote:
> > On Jun 30, 11:06 am, taxationistheft2...@lycos.com wrote:
> > > Grow up, peasant, and be an independent person. Or, keep paying your
> > > extortion like a sucker.- Hide quoted text -
>
> > On one hand, we get quite a bit for our taxes.
>
> As a wise man said, you should be thankful that you do not get all that
> you pay for in that regard!
>
> > The roads that I drive
> > on in the U.S. are passable, air travel is generally safe and
> > efficient, I'm not stepping over starving people when I walk through
> > most towns, the parks are clean and convenient, and when I go on
> > vacation all my stuff is still in my condo when I get back.
>
> > On the other hand, the government interferes in many ways where it
> > should not. Deflation won't happen because the government can (and
> > will) flood the economy with dollars, if necessary:
>
> They are already doing it. WHy do you think the FED stopped publishing
> the M3 number a few years ago?
If, as Hummel suggests, most "money" is created by private
credit, then they won't be able to do this sort of thing
effectively except in limited cases (as when the 1987 stock
market crash was stopped by the provision of virtually
unlimited credit to certain traders). A truly widespread
deflation could not be handled in this way.
Andy F.
"*Anarcissie*" <anarc...@gmail.com> wrote in message
news:1183479720.6...@o61g2000hsh.googlegroups.com...
print.
The Trucker
>>On Wed, 04 Jul 2007 12:43:32 +0100, Andy F. wrote:
>> If, as Hummel suggests, most "money" is created by private
>> credit, then they won't be able to do this sort of thing
>> effectively except in limited cases (as when the 1987 stock
>> market crash was stopped by the provision of virtually
>> unlimited credit to certain traders). A truly widespread
>> deflation could not be handled in this way.
>>
>>
> Yes, it could. There isn't any limit to how many dollars the Fed could
> print.
I think the point being made here is that the Fed alone has no way to
"inject" the money where it is needed. Banks do not loan to people who
cannot repay the loan. It seems to me that we would need a citizen's
dividend sort of thing and in the current environment that can only be
done with a retroactive FICA tax cut. And that is not the Fed.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org
*Anarcissie*
> >> credit, then they won't be able to do this sort of thing
> >> effectively except in limited cases (as when the 1987 stock
> >> market crash was stopped by the provision of virtually
> >> unlimited credit to certain traders). A truly widespread
> >> deflation could not be handled in this way.
>
> >>On Wed, 04 Jul 2007 12:43:32 +0100, Andy F. wrote:
> > Yes, it could. There isn't any limit to how many dollars the Fed could
> > print.
>
> I think the point being made here is that the Fed alone has no way to
> "inject" the money where it is needed. Banks do not loan to people who
> cannot repay the loan. It seems to me that we would need a citizen's
> dividend sort of thing and in the current environment that can only be
> done with a retroactive FICA tax cut. And that is not the Fed.
Part of the issue is whether you believe Hummel, or have
some other theory. I take it "print", above, is metaphorical:
currency is unimportant. But what does the metaphor
stand for? According to Hummel, most of it is private
credit (private in the sense of non-governmental). Certain
people are empowered to create money based on their
belief in their ability to pay later. Poorer people can write
checks and buy on plastic; as you go up the economic
food chain, more credit possibilities open up. When the
Federal government salvaged the stock markets in 1987
it did not hand the specialists bundles of 100-dollar
bills but rather told them that it would back their credit.
This caused them to believe that they would be able to
pay for stock they bought even if they spent well
beyond their normal means. Once the word got around
other investors came back into the market and the
fall was arrested.
Of course, this action had other effects. Once
people begin to believe that the stock market will
not be allowed to crash, they are willing to make
much riskier investments, which perhaps led to
the dot-com boom and crash.
Credit money is different from fiat money in one
important respect: if people stop believing in fiat
money, inflation occurs (assuming there is plenty
of the fiat money around) because it takes more of
it to convince people to exchange goods or labor
for it. But if people stop believing in credit money,
it disappears, i.e. radical deflation could occur.
Handing everyone $1000 in the form of a Federal
check wouldn't change this -- or rather, its
effect would be highly unpredictable.
taxationi...@lycos.com
about by credit (debt) expansion. The alternative is only whether the
crisis should come sooner as the result of a voluntary abandonment of
further credit (debt) expansion, or later as a final and total
catastrophe of the currency system involved."- Ludwig von Mises
So much is dependent on real estate that deflation is assured when
real estate prices decline, as they are starting to now.
The Trucker
You seem to be missing the _cause_ of the deflation.
The example of the stock market is in no way the same
sort of thing as a deflation brought on by low wages.
It is low wages that are at the heart of the current
and any projected deflation. We have been devaluing
the dollar thus keeping wages at an apparent holding
point as cheaper offshore labor gives us "goods" at
low prices. But that does not work for land and gold
and oil. These things have little, if any, labor
component. The problem arises in the price of oil but
also in the price of housing and in the price of
health care which is a service as opposed to a
manufactured product. Price increases in these things
are seen to be "inflationary" as wages stagnate or fall
as compared to a "basket of goods". We have been in a
deflationary cycle for the last 7 years when "flation"
is measured in any sane way. Interest rate cuts will
and have dramatically increased the price of real estate
and copper and other _real_ commodities as well as stocks.
The way to arrest a deflation is to inject money at the
bottom. Injecting it in the stock market will do no
good. With all the effort at keeping interest rates low
the American economy has seen very little "investment" in
productive American capital (factories, power generation
equipment, power distribution, rail, etc.). The proper
answer is fiscal policy. Monetary policy cannot induce
people to invest; only to borrow and spend.
The Trucker
We have been in a state of classic internal deflation since 1999. The
reason that we appear to have "low inflation" is that while wages have
been trending downward (deflation), housing prices, oil, gold, copper and
other "real stuff" has been going up. The Fed likes to measure "flation"
as the price of a "basket of goods" in dollars. When that "basket of
goods" is made up of too much cheap (spelled slave labor) foreign imports
then the "flation" seems to be a "moderate inflation" (due to housing,
gasoline, and medical care). If wages had kept pace with gasoline prices
or housing prices or medical costs then we would see rampant INflation.
The bottom line is that it takes more hours of labor today to get to ones
retirement goals than it did 7 years ago. That is classic DEflation in
that labor is too cheap compared to asset prices.
*Anarcissie*
If Hummel's view is correct, you cannot "inject money"
to any broad target, because most money is privately
created. The Federal Government (or some other entity
with a lot of credit) can impart it to a small, well-defined
set of people like the specialists at the New York Stock
Exchange, but it can't do much about, say, the large
number of people whose income is below median, at
least it can't do anything _credible_. In fact attempting
such a move might reduce credit and therefore the
amount of money actually moving around.
Again, I'm just going by what Hummel seems to be
saying, which does seem to account better for the
phenomena then other things I've read or thought up.
*Anarcissie*
> ...
> We have been in a state of classic internal deflation since 1999. The
> reason that we appear to have "low inflation" is that while wages have
> been trending downward (deflation), housing prices, oil, gold, copper and
> other "real stuff" has been going up. The Fed likes to measure "flation"
> as the price of a "basket of goods" in dollars. When that "basket of
> goods" is made up of too much cheap (spelled slave labor) foreign imports
> then the "flation" seems to be a "moderate inflation" (due to housing,
> gasoline, and medical care). If wages had kept pace with gasoline prices
> or housing prices or medical costs then we would see rampant INflation.
> The bottom line is that it takes more hours of labor today to get to ones
> retirement goals than it did 7 years ago. That is classic DEflation in
> that labor is too cheap compared to asset prices.
So (if we continue to follow Hummel) we find that people will
issue credit for real estate, collectibles, stock, and certain
credentialed services like education and medical care, which
they will not issue for common labor (because if they did, the
price of common labor would rise sharply) or most consumer
goods. So what does that tell us, and does it predict anything?
It seems to me all the things I named with the possible
exception of medical care promise a future payoff in
proportion to cost, whereas labor and consumer goods
are used up almost immediately.
The Trucker
You read too much into what Hummel has to say. Surely you must understand
that Hummel sees the Fed as just one rung removed from the almighty. And
I suppose that so long as the United States has enough military power to
wipe any other nation off the face of the planet Hummel can get away with
his version of reality. But it actually takes more than just the banks
willing to loan. It takes a knowledge that the Fed, backed by the elected
government, simply will not allow a big bank to fail.
But having said all that the idea behind the stock market stuff and such
is that banks loan money for investments in real capital and that creates
economic activity and jobs. Then wages rise and that reduces or
eliminates the deflation. The problem with that scenario is that wages do
not rise when all the "labor" is being done somewhere else. Also Hummel
was and probably is still sane enough to be a keyenesian. You can't MAKE
people borrow money and spend it and you certainly can't make them invest
by lowering interest rates. The cleche' is "like pushing a string". Only
fiscal policy can arrest deflation. And that is what we have had for the
last 6 years. Government borrowing and spending that has, thus far, kept
the deflation monster penned up. But I've forgotten what your point was
in all this.
*Anarcissie*
I'm not interested in policy, because (as I said earlier in
this thread, I think) nothing I think, say or do will affect
policy in the slightest. I am just trying to figure out what
money is, that is, in the United States in July of 2007.
Several years ago I noticed that while there was a lot of
inflation going on in some areas (real estate, (in)securities,
collectibles, education and so on) there was not very much
in others (basic labor, consumer commodities and products).
The difference between the two realms is pretty clear: the
first is the realm of those who have a lot of money, and
the second, of those who don't. The fact that there wasn't
much inflation in the lower realm enabled the Federal
government and others to pretend that there was not
much inflation going on, whereas it was actually raging
(and still is, in some areas).
It seems to me that Hummel's ideas jibe better with
these phenomena than if one conceives of money as
commodity or fiat money. The rich will create big wads
of money for each other because they believe they can
pay it off somewhere down the road -- often, the
payoff is implicit in the purchase (as of real estate or
stocks). But there is no particular point in issuing
big credit to the Mexicans who sweep their sidewalks.
I am not sure what the deal is with foreign trade.
I don't know how all the junk we are importing from
China is really being paid for. I do know that in the
county I lived in several years ago, Chinese are
buying all the good real estate. Or at least that's
the rumor.
> But having said all that the idea behind the stock market stuff and such
> is that banks loan money for investments in real capital and that creates
> economic activity and jobs. Then wages rise and that reduces or
> eliminates the deflation. The problem with that scenario is that wages do
> not rise when all the "labor" is being done somewhere else. Also Hummel
> was and probably is still sane enough to be a keyenesian. You can't MAKE
> people borrow money and spend it and you certainly can't make them invest
> by lowering interest rates. The cleche' is "like pushing a string". Only
> fiscal policy can arrest deflation. And that is what we have had for the
> last 6 years. Government borrowing and spending that has, thus far, kept
> the deflation monster penned up. But I've forgotten what your point was
> in all this.
Greenspan greatly inflated the housing market with low interest
rates. He created a huge real estate bubble, and now the taxpayers
are supposed to bail out all the people who got taken in by it. But
wait, I'm think in fiat terms again.
The Trucker
There are two kinds of dollars that trade at parody but don't think they
are equal when it comes to power. The fiat money created by deficit
spending is much more powerful than the credit money created by banks.
> Several years ago I noticed that while there was a lot of
> inflation going on in some areas (real estate, (in)securities,
> collectibles, education and so on) there was not very much
> in others (basic labor, consumer commodities and products).
> The difference between the two realms is pretty clear: the
> first is the realm of those who have a lot of money, and
> the second, of those who don't.
Actually the difference is a little clearer than that. Most of the price
increases are in areas where there is little or no labor component. That
is to say that the price is not dependent upon wages (education may be an
exception but probably not as there is no way to offshore or outsource
MOST education and medical care). The point I am making here is that the
"commodities and goods" and the services (call centers) have been moved
offshore and the wages are much lower. SO these prices have fallen or
moderated.
> The fact that there wasn't
> much inflation in the lower realm enabled the Federal
> government and others to pretend that there was not
> much inflation going on, whereas it was actually raging
> (and still is, in some areas).
It depends on what you are looking at and where you are standing as to
whether you will see inflation or deflation.
> It seems to me that Hummel's ideas jibe better with
> these phenomena than if one conceives of money as
> commodity or fiat money. The rich will create big wads
> of money for each other because they believe they can
> pay it off somewhere down the road -- often, the
> payoff is implicit in the purchase (as of real estate or
> stocks). But there is no particular point in issuing
> big credit to the Mexicans who sweep their sidewalks.
The rich don't need credit and don't borrow. The middle class is the
bastion of the borrower and the banker's flock in all.
> I am not sure what the deal is with foreign trade.
> I don't know how all the junk we are importing from
> China is really being paid for. I do know that in the
> county I lived in several years ago, Chinese are
> buying all the good real estate. Or at least that's
> the rumor.
The goods are bought with fiat money (as possibly leveraged through the
banking system).
>> But having said all that the idea behind the stock market stuff and such
>> is that banks loan money for investments in real capital and that creates
>> economic activity and jobs. Then wages rise and that reduces or
>> eliminates the deflation. The problem with that scenario is that wages do
>> not rise when all the "labor" is being done somewhere else. Also Hummel
>> was and probably is still sane enough to be a keyenesian. You can't MAKE
>> people borrow money and spend it and you certainly can't make them invest
>> by lowering interest rates. The cleche' is "like pushing a string". Only
>> fiscal policy can arrest deflation. And that is what we have had for the
>> last 6 years. Government borrowing and spending that has, thus far, kept
>> the deflation monster penned up. But I've forgotten what your point was
>> in all this.
>
> Greenspan greatly inflated the housing market with low interest
> rates. He created a huge real estate bubble, and now the taxpayers
> are supposed to bail out all the people who got taken in by it. But
> wait, I'm think in fiat terms again.
Actually, you are thinking in commodity money terms in your last remark.
I laugh when I hear Bush remark about "make the tax cuts permanent" what
an absolutely ridiculous statement. The American government can create
dollars at will. And use those dollars to redeem all T-Bills and
government backed bonds. Taxes are equally fluid. But I am very serious
in what I am saying about the two kinds of dollars. There was, at one
time, commodity dollars that were backed by gold. That is now gone and we
have credit dollars and fiat dollars. That is what money is today.
*Anarcissie*
I don't see the fiat money. When the government spends
a billion dollars, it doesn't print up a billion dollars in currency,
it writes checks which everyone believes it will be willing and
able to cover. To keep that belief from faltering, it obtains
credit from other entities. Some of the motions of fiat
money are gone through, but the money isn't actually
there, even in fiat form.
> > Several years ago I noticed that while there was a lot of
> > inflation going on in some areas (real estate, (in)securities,
> > collectibles, education and so on) there was not very much
> > in others (basic labor, consumer commodities and products).
> > The difference between the two realms is pretty clear: the
> > first is the realm of those who have a lot of money, and
> > the second, of those who don't.
>
> Actually the difference is a little clearer than that. Most of the price
> increases are in areas where there is little or no labor component. That
> is to say that the price is not dependent upon wages (education may be an
> exception but probably not as there is no way to offshore or outsource
> MOST education and medical care). The point I am making here is that the
> "commodities and goods" and the services (call centers) have been moved
> offshore and the wages are much lower. SO these prices have fallen or
> moderated.
True. The value of money in the lower realm is related
to labor. One might say it is bound to labor for the
moment. If serious amounts of money began to flow
into the lower realm, the price of labor would rise and
we would observe inflation there. This has not been
allowed to happen, so that the government can go on
pretending that radical inflation has not taken place.
> > The fact that there wasn't
> > much inflation in the lower realm enabled the Federal
> > government and others to pretend that there was not
> > much inflation going on, whereas it was actually raging
> > (and still is, in some areas).
>
> It depends on what you are looking at and where you are standing as to
> whether you will see inflation or deflation.
I don't think there is much actual deflation in the
lower realm at this time -- it is more as if everything is
frozen. The basic labor rate is what you can get a
bunch of Mexicans standing on the street corner to work
for -- maybe four or five dollars an hour. It has been that
way for some time. It is beginning to be pushed up, I
believe, by the cost of rent, gasoline and food. At a
certain point working ceases to make sense and people
beg, borrow, scavenge or steal, or they go somewhere
else. Or die. So it will take more money to get them
to work.
Rents are going up because landlords can't be certain
of selling their properties at a profit, hence they must
try to pay the morgage and taxes from rent payments.
This is in turn due to loss of belief -- credit -- in the
housing market.
> > It seems to me that Hummel's ideas jibe better with
> > these phenomena than if one conceives of money as
> > commodity or fiat money. The rich will create big wads
> > of money for each other because they believe they can
> > pay it off somewhere down the road -- often, the
> > payoff is implicit in the purchase (as of real estate or
> > stocks). But there is no particular point in issuing
> > big credit to the Mexicans who sweep their sidewalks.
>
> The rich don't need credit and don't borrow. The middle class is the
> bastion of the borrower and the banker's flock in all.
This is not what I read about major projects like large
new buildings in big cities. Or even not-so-large ones.
If you have a million dollars in cash (fiat money or its
equivalent) it makes more sense to use it as the basis
of borrowing five or ten million more and investing it,
for instance in a much bigger building than you can
get for one million; you stand to make five or ten
times as much money. Where does the bank get the
credit to give to the borrower? From other people with
credit and from the government.
People who are said to "have fifty billion dollars" like
Bill Gates, or a mere five billion like George Soros, do
not actually have fifty or five billion dollars in currency
or anything resembling it -- usually, they have
investments which are evaluated to be worth that
much in rich people's inflated money.
> > I am not sure what the deal is with foreign trade.
> > I don't know how all the junk we are importing from
> > China is really being paid for. I do know that in the
> > county I lived in several years ago, Chinese are
> > buying all the good real estate. Or at least that's
> > the rumor.
>
> The goods are bought with fiat money (as possibly leveraged through the
> banking system).
Where is it?
> >> But having said all that the idea behind the stock market stuff and such
> >> is that banks loan money for investments in real capital and that creates
> >> economic activity and jobs. Then wages rise and that reduces or
> >> eliminates the deflation. The problem with that scenario is that wages do
> >> not rise when all the "labor" is being done somewhere else. Also Hummel
> >> was and probably is still sane enough to be a keyenesian. You can't MAKE
> >> people borrow money and spend it and you certainly can't make them invest
> >> by lowering interest rates. The cleche' is "like pushing a string". Only
> >> fiscal policy can arrest deflation. And that is what we have had for the
> >> last 6 years. Government borrowing and spending that has, thus far, kept
> >> the deflation monster penned up. But I've forgotten what your point was
> >> in all this.
I don't have a point. I'm trying to understand what money
is, at the moment, in the place where I live. Part of my
motivation is to predict what is going to happen to the
money -- I will make different moves based on whether
important inflation or deflation is more likely to occur with
respect to _my_ stash (which is nominally fiat money).
> > Greenspan greatly inflated the housing market with low interest
> > rates. He created a huge real estate bubble, and now the taxpayers
> > are supposed to bail out all the people who got taken in by it. But
> > wait, I'm think in fiat terms again.
>
> Actually, you are thinking in commodity money terms in your last remark.
> I laugh when I hear Bush remark about "make the tax cuts permanent" what
> an absolutely ridiculous statement. The American government can create
> dollars at will. And use those dollars to redeem all T-Bills and
> government backed bonds. Taxes are equally fluid. But I am very serious
> in what I am saying about the two kinds of dollars. There was, at one
> time, commodity dollars that were backed by gold. That is now gone and we
> have credit dollars and fiat dollars. That is what money is today.
There is an important difference between fiat and commodity
money, on the one hand, and credit money on the other. The
former can be inflated, but it can't easily disappear. Credit
money can vanish overnight.
The Trucker
You obviously do not understand what money is in the fiat sense. The fact
that no FRN's are created is totally irrelevant.
>> > Several years ago I noticed that while there was a lot of
>> > inflation going on in some areas (real estate, (in)securities,
>> > collectibles, education and so on) there was not very much
>> > in others (basic labor, consumer commodities and products).
>> > The difference between the two realms is pretty clear: the
>> > first is the realm of those who have a lot of money, and
>> > the second, of those who don't.
>>
>> Actually the difference is a little clearer than that. Most of the price
>> increases are in areas where there is little or no labor component. That
>> is to say that the price is not dependent upon wages (education may be an
>> exception but probably not as there is no way to offshore or outsource
>> MOST education and medical care). The point I am making here is that the
>> "commodities and goods" and the services (call centers) have been moved
>> offshore and the wages are much lower. SO these prices have fallen or
>> moderated.
>
> True. The value of money in the lower realm is related
> to labor. One might say it is bound to labor for the
> moment. If serious amounts of money began to flow
> into the lower realm, the price of labor would rise and
> we would observe inflation there. This has not been
> allowed to happen, so that the government can go on
> pretending that radical inflation has not taken place.
You really refuse to listen, don't you. You have your little pet theory
and will not abandon it no matter what reality smacks you in the face.
>> > The fact that there wasn't
>> > much inflation in the lower realm enabled the Federal
>> > government and others to pretend that there was not
>> > much inflation going on, whereas it was actually raging
>> > (and still is, in some areas).
>>
>> It depends on what you are looking at and where you are standing as to
>> whether you will see inflation or deflation.
>
> I don't think there is much actual deflation in the
> lower realm at this time -- it is more as if everything is
> frozen. The basic labor rate is what you can get a
> bunch of Mexicans standing on the street corner to work
> for -- maybe four or five dollars an hour. It has been that
> way for some time. It is beginning to be pushed up, I
> believe, by the cost of rent, gasoline and food. At a
> certain point working ceases to make sense and people
> beg, borrow, scavenge or steal, or they go somewhere
> else. Or die. So it will take more money to get them
> to work.
There is no "lower realm" but in your aristocratic pretense. There is
nothing with which any consumable or tool is ever realized but through the
effort of labor on the natural world. The cost of all things made is
labor. And all the rest is totally free. Man can disappear from this
planet for a thousand years and when he comes back there will be more
abundance than when he left. The idea that there is some special world
inhabited by "the upper realm" where no labor is required is a self
serving pretense on the part of those who seek to maintain and enhance
their positions of power.
> Rents are going up because landlords can't be certain of selling their
> properties at a profit, hence they must try to pay the morgage and taxes
> from rent payments. This is in turn due to loss of belief -- credit --
> in the housing market.
Rents are going up because our current government is in the rent
collection business. The Republican party and more and more the
Democratic party are dependent for their very existence on the rentiers of
the society. They maintain power through the collection of rent. Some of
the rent is spent on "schools of economics" that attempt to justify the
collection of rent and the authoritarian nature of "the upper realm".
In any decent dictionary, right next to the word "conspiracy" one should
find a picture of an elephant wearing a flag and a crucifix.
>> > It seems to me that Hummel's ideas jibe better with these phenomena
>> > than if one conceives of money as commodity or fiat money. The rich
>> > will create big wads of money for each other because they believe
>> > they can pay it off somewhere down the road -- often, the payoff is
>> > implicit in the purchase (as of real estate or stocks). But there is
>> > no particular point in issuing big credit to the Mexicans who sweep
>> > their sidewalks.
>>
>> The rich don't need credit and don't borrow. The middle class is the
>> bastion of the borrower and the banker's flock in all.
>
> This is not what I read about major projects like large new buildings in
> big cities. Or even not-so-large ones. If you have a million dollars in
> cash (fiat money or its equivalent) it makes more sense to use it as the
> basis of borrowing five or ten million more and investing it, for
> instance in a much bigger building than you can get for one million; you
> stand to make five or ten times as much money. Where does the bank get
> the credit to give to the borrower? From other people with credit and
> from the government.
NO. The million is a hedge against failure of the enterprise. The
rest of the supposed "money" comes from thin air. As the building rises
the workers are paid for their completion of small segments of the
building. The actual "goods" are provided by the labor of others who are
paid with the created money. These people either spend the money in turn
(signorage and fiat) or they return the money to the bank in their own
accounts. The bank draws interest on the money in its own vaults (so to
speak) and pays a much lower rate of interest to the newly created owners
of the money. The return of the money back into the banking system ends
the signorage and fiat phase but the loan still draws more interest than
the interest being paid to those who return it to the bank. Was there any
money actually created on this deal or is it just debt and credits on the
books of the banks?
> People who are said to "have fifty billion dollars" like Bill Gates, or
> a mere five billion like George Soros, do not actually have fifty or
> five billion dollars in currency or anything resembling it -- usually,
> they have investments which are evaluated to be worth that much in rich
> people's inflated money.
(snore)
>> > I am not sure what the deal is with foreign trade. I don't know how
>> > all the junk we are importing from China is really being paid for. I
>> > do know that in the county I lived in several years ago, Chinese are
>> > buying all the good real estate. Or at least that's the rumor.
>>
>> The goods are bought with fiat money (as possibly leveraged through the
>> banking system).
>
> Where is it?
It exists as interest bearing government backed securities in the Banks of
Japan and China, and in the bonds and T-bills owned by Americans.
>> >> But having said all that the idea behind the stock market stuff and
>> >> such is that banks loan money for investments in real capital and
>> >> that creates economic activity and jobs. Then wages rise and that
>> >> reduces or eliminates the deflation. The problem with that scenario
>> >> is that wages do not rise when all the "labor" is being done
>> >> somewhere else. Also Hummel was and probably is still sane enough
>> >> to be a keyenesian. You can't MAKE people borrow money and spend it
>> >> and you certainly can't make them invest by lowering interest rates.
>> >> The cleche' is "like pushing a string". Only fiscal policy can
>> >> arrest deflation. And that is what we have had for the last 6
>> >> years. Government borrowing and spending that has, thus far, kept
>> >> the deflation monster penned up. But I've forgotten what your point
>> >> was in all this.
>
> I don't have a point. I'm trying to understand what money is, at the
> moment, in the place where I live. Part of my motivation is to predict
> what is going to happen to the money -- I will make different moves
> based on whether important inflation or deflation is more likely to
> occur with respect to _my_ stash (which is nominally fiat money).
Yes. You have that part right at least. Your stash is indeed fiat money.
My own position is that dollars will slide further. America's militarism
assures it. If the world decides to use euros as the accounting for oil
the dollar is headed for the weeds very quickly.
>> > Greenspan greatly inflated the housing market with low interest
>> > rates. He created a huge real estate bubble, and now the taxpayers
>> > are supposed to bail out all the people who got taken in by it. But
>> > wait, I'm think in fiat terms again.
>>
>> Actually, you are thinking in commodity money terms in your last
>> remark. I laugh when I hear Bush remark about "make the tax cuts
>> permanent" what an absolutely ridiculous statement. The American
>> government can create dollars at will. And use those dollars to redeem
>> all T-Bills and government backed bonds. Taxes are equally fluid. But
>> I am very serious in what I am saying about the two kinds of dollars.
>> There was, at one time, commodity dollars that were backed by gold.
>> That is now gone and we have credit dollars and fiat dollars. That is
>> what money is today.
>
> There is an important difference between fiat and commodity money, on
> the one hand, and credit money on the other. The former can be
> inflated, but it can't easily disappear. Credit money can vanish
> overnight.
There is currently no such thing as "commodity money". There are
commodities and there is money. If you are uncomfortable with the fluid
nature of your dollars than you can easily buy futures contracts in gold,
silver, oil, or copper. Or you can buy land. But in every case you trade
the dollars for the commodity. They are different things from one another.
So quit confusing yourself with "commodity money". Money is a means by
which debt is accounted. T-Bills and other government backed securities
are money. The value of the money (how much labor and natural resource
"rights" it commands) is dependent upon the power of the issuer of the
money to assert that the money is legal tender for all debts public and
private. This assertion is backed by the reclamation of this money as
taxes and tribute. Bankers, however, do not assault those who do not pay
their debts. The bankers call on the government to enforce the contracts.
In the case of taxes or bank debt you pay with dollars or the government
will auction off your belongings and take the dough, perhaps giving some
of it to the banks if you are up to snuff on your tax liabilities. There
is actually only fiat money and credit.