# Money, Power and Wall Street

Discussion in 'Business & Economics' started by Michael, May 4, 2012.

1. ### quadraphonicsBloodthirsty BarbarianValued Senior Member

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Not without taking major care to catalogue all of the various causes of any given event, and find substantive reasons to apportion blame, you can't.

More to the point, the way the gold standard worked was that whenever a nation needed to go to war, they'd suspend convertability (i.e., go off the gold standard) for the duration of the war, and then revive it afterward. That is part of the gold standard , properly understood - it doesn't allow governments to fund the level of expenditure demanded by war, and so it gets dropped in wartime and then picked up again afterwards. But the process of picking it back up afterwards can be long and wrenching.

If you think that the gold standard will prevent wars, you're crazy. All that happens is that the gold standard gets dropped for the war, and then there's a ton of long, painful dislocation involved in getting back on it. That's how the gold standard always worked, and it's one of the big reasons why it was done away with. There was never any possibility that governments would stick to the gold standard and forgo the ability to finance wars - they'd end up defeated and occupied if they tried that.

3. ### CarcanoValued Senior Member

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This is not the fault of the gold standard itself...but rather the fault of all competing nations to stay on it.

The nation with the most gullible population wins.

5. ### CarcanoValued Senior Member

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I believe that many wars were prevented throughout history by lack of funds, yes.

There have been eras of history when the public acceptance of paper money would have been unthinkable.

There have been eras of history when governments could not even borrow to finance a war...because there was no organized private banking system to borrow from.

7. ### Michael歌舞伎Valued Senior Member

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It's like religion with you people.

I tried to make the argument from first principles. But then what happens?Once you realize, Oh shit, if we define force as .... force, then income tax is.... immoral

Well, we can't have THAT. OK, then we have to move the goal post to having a debate on what exactly is the evolution of 'ownership'. What is the commons and what is private property. I expect that before it's said and done, there'll be no property at all. Not even your body!

Can you imagine that? Your own body. The labor of your body. The mind boggles. Maybe that won't belong to you either?

Don't get me wrong, I really do like those sorts of debates. But it shows the absolute commitment people have to the system they were raised in. If this were 1890, you guys would be equally diametrically opposed to Income Tax. Paper money backed by nothing but debt (which in turn is backed by the US Military) would be an abomination to you.

It's as close to a moral axiom as you could get: When someone initiates force against an innocent person, that is immoral. You can draw lines on a map and call it "America" or "Australia" or "Michigan" or whatever and say "We" this or "Fatherland" that - at the end of the day the present system is fundamentally immoral.

War is Peace,
Freedom is Slavery, and
Ignorance is Strength

:shrug:

AND you happily pass on massive debts to unborn Children and then have the gall to say it's moral?!?! I'm not sure where you derive your morals from, but debt slavery of the unborn is as immoral today as it's always been.

Ignorance is strength for the State and bliss for the Cattle. How many here understand fractional reserve lending intimately? Things will have to get much worse, and they will, before MAYBE people will pull their heads out and realize the Wizard is just a wrinkly old man standing behind a curtain. Ben Bernanke is an douche, as immoral as Krugman and as incompetent as Greenspan. Obama's not some god on mount high. He's an incompetent immoral douche, right along with Bush, Cheney, Romney, Clinton and etc... keep praying to them. It'd do that much good.

So, for now we can agree to one thing. We live in YOUR system. The debt is going to go higher. Economic realities be damned, it's an election year and so it's time to spend spend spend.... let's see how 2014 works for you.

8. ### Michael歌舞伎Valued Senior Member

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As an aside, people like me generally do even better than well in your system. I'm relatively highly skilled. So, when the government gets BIGGER than BIG, they generally like to hire people like me to work for it. As they're too stupid to know their right hand from their left. Totally incompetent would be a complement to them. They pay extremely well too. Lots of benefits. Great perks. Power. Money. AND why wouldn't they? It's not like they're spending their money. They're spending your money. Inflating it in promises and then offering YOU a tax break! Haa! A tax break!

As if you people would WANT a tax break. No No No.... you LOVE paying income tax, sales tax, state tax, property tax, water tax, carbon tax, tax on tax, etc.... yeah, I'm sure none of you ever think of writing off a single thing on your taxes. No way, why, THAT would be stealing *gosh* and we all know you guys don't steal. You're not immoral. You pay your way. Heck, you probably even donate money to the government when you feel you've had just too much good use of all those services you've been provided. AND aren't they just so great to boot! Yeah, and they're FREE, which is why they're soo soooooo great. Yeah, I'm sure you're all sending in money all the time in thanks for the wonderful services your government is providing you.

Me, I'd be more than happy to live in a moral world where the government is small, central banks no longer exist and people do not live as debt slaves to the banks and make much less - money isn't what creates happiness. I'm happy to pay my way. I'm happy to help other's when they need help. I don't feel any need of government in the least.

Last edited: May 10, 2012
9. ### SyzygysAs a mother, I am telling youValued Senior Member

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12,671
Any Scandinavian government, take your pick.

I agree it is rare, but you are also an idiot. If you believe no governments are responsible, then you should be an anarchist.

Anyhow, the conversation is over with you, I will tag you as nutcase....

10. ### CarcanoValued Senior Member

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6,865
No, thats how it worked out when Britain went back on the gold standard after WWI, specifically because Churchill decided to go back to the pre-war price in pounds per troy ounce...causing a long period of painful deflation.

It doesnt always happen this way.

Churchill wrote in his memoirs that this was the worst mistake of his career.

11. ### Michael歌舞伎Valued Senior Member

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Yes, and Communist Russia put a man in space... and so... what exactly? If we were in 1960 I suppose you'd be telling me how great Communism is.

Denmark aside, which has a lot oil, the other Scandinavian countries went through a financial upheaval 20 years ago.... and chose to do the opposite of Japan (who had the same problems at the same time). Their economies grew while Japan's stalled. Both have high tax and large social safety nets. Both had relatively homogenous populations.

What did the Scandinavians do differently? They let Capitalism and Free-Markets work. Soon they'll be wishing they didn't get into the ECB run Euro scam (and some didn't). Japan OTOH bailed out their banks and industries. Pretty much just like us. They then proceeded to go 200% GDP in debt and wipe 4 generations of Japanese off the map. But they saved a few banks... yeah... ayeiiii... eieie...eeeiiii.iii... *cough*

That aside, it really doesn't matter now does it. YOUR side has the numbers. We'll see how the next couple of years go.

What I'm surprised with is how vehemently you guys support bailing out Too-Big-Too-Fail banks and financing institutions when you know damn well you're being led like Cows to slaughter. JP Morgan, BofA, GoldmanSux, all these guys are walking right over the top of you and your there defending them with not only your lives BUT holding your children up as shields. I really have to say I'm shocked. I'd have thought you'd .... I don't know, maybe ... not want to be a debt Slave to the banks and their crooked politicians?

That's really odd to me. You can't feed the beast more money and expect a different result. The rich will continue to get richer and the poor will be poorer. The rich didn't set up this system so THEY would go broke! No, it is made to ensure they are bailed out and when they make bad bets the Fed is there to manipulate the market to set them right again. So called... smooth out the market. AKA: Don't let the rich and their massive investments loose money.

Last edited: May 10, 2012
12. ### milkweedValued Senior Member

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1,654
I missed part 4, but the above is what I took away from the first three parts.

Nothing has changed. Too big to fail is an illusion and after 3 years we are (in general) no better off politically or economically than at the end of 08. No heads rolled, no one is in jail.

http://www.npr.org/templates/story/story.php?storyId=111494514

13. ### joepistoleDeacon BluesValued Senior Member

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Now that is funny Michael, considering the source.

Let me remind you that you are the guy who has to ignore almost a century of data and reason to support your ideology/theology.

14. ### quadraphonicsBloodthirsty BarbarianValued Senior Member

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No, it's really not.

But I can see how it would look that way, to someone with a religious commitment to the gold standard like yourself.

What happened is that you failed horribly at making such an argument. All you demonstrated was that you don't have much grasp on how these principles relate to one another, or to reality.

Why is it that libertarians always want to start from scratch and rewrite philosophy? It's a huge waste of time.

Nobody has disagreed with that platitude.

Problem is that you don't seem to be able to apply it in a consistent, meaningful way. You seem to be shoehorning a bunch of misconceptions into "initiate" and "innocent."

I mean, really, how does this model of force being "initiated" against an "innocent" really apply to levying taxes in a democratic republic? You get the same vote as anyone else, and if you don't like the result you can organize to overturn it, or give up and leave. That's not like somebody mugging you on the street. You have a say in how the system works, and are free to leave if you really can't stand it. Nobody is forcing you to do anything. The fact that nobody agrees with your ideas, and so they don't get enacted by the government, doesn't mean that your rights are being violated. It just means that your ideas are bad.

It's telling how you will never respond substantively to even the most direct, vanilla question, but instead consistently retreat into self-serving platitudes and hollow condescension.

Not you; that much is clear.

15. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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23,198
I´m not much of a history buff, but think you have it just backwards. 4 or more hundred years ago there was no "private banking system" but there were some very rich people governments did borrow from to finance wars and other things. The Rothshilds I think did this perhaps for both sides in the French English conflicts.

Often these rich people had well protected vaults. They, for modest fee, let others store their gold coins, etc. in them and issued certificates stating the amount. For example Mr. A might have a signed and sealed with wax certificate for X units of currency. Rather than get X units out of the vault, to pay Mr. B, he just signed the certificate over to Mr. B (sort of like modern car titles have on the back place to put the name of the buyer you are selling your car to.)

This transfer of certificates was much more frequent that Mr. A getting his gold coins from the vault to give to Mr. B who did not want to keep them under his bed, but wanted them the back in the vault. It did not take the owner of the vault many years to realize that he could write a certificate for his own use, without putting and gold etc. in his vault as backing for that certificate (never would all the certificates be presented for redemption at same time) - that is the origin of fiat money a fractional reserve banking.

Soon governments realized they too could create money out of thin air, as Vault owner had been doing for years. - why should he benefit instead of the government, so they organized state banks, etc. and we still have them, fiat money, and faith that bank depositors will not all ask for the deposits back in cash the same day.

Basically my prediction of run on the dollar by Halloween, 2014, is a bet that with modern information spread to all, too many people will lean/ understand that they can not be paid, with currency of same value they deposited (especially in government bonds), if all ask for it at the same time. So many will try to get out before the others do.

16. ### quadraphonicsBloodthirsty BarbarianValued Senior Member

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??? I thought your predictions were based on China using its reserves to launch a currency war?

Your bank-run reasoning there applies to any fractional reserve banking system, so I'm not seeing why you single out the USA there or how you choose a particular date.

17. ### Billy TUse Sugar Cane Alcohol car FuelValued Senior Member

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23,198
Sort of yes, but the only significant currency war is the one US launched with near zero interest rates. (The term "currency war" was coined by Brazil´s Minister of Finance, when low-cost-to-borrow dollars began to flood into Brazil to take advantage of Brazil´s high (~14%) interest rates. With a surplus of dollars vs Brazilian Real, the dollars became cheap (or the Real became dear/ excessively valuable) - simple supply vs demand law.

The over valued Real made export of high-labor-cost, low-value-added good (like shoes) impossible - many jobs in Brazil were destroyed by the US´s currency war attack. - Its effort to devalue the dollar to boost its own exports. Brazil has started to fight back:
Read more of Brazil´s counter attack and some of the internal changes it forced at: http://www.sciforums.com/showpost.php?p=2932977&postcount=577 Understand why Pounança saving accounts were until last Friday preventing Brazil from cutting the basics interest rate (Called Selic) down more from the current 9%.

I have pointed out, many times over the years, that there will come a day when US is not much of the Chinese export market, and they have lower lowered the number of dollars held in their reserves (as they have been slowly for more than a year) when it will be to China´s long term advantage to destroy the dollar (Take one time loss but gain EVERY year saving on cost of imports with US & EU in depression and not much of a competitive bidder for the imports China needs.;However, if you go back and check, you will see "if dollar has not already collapsed" in many of these posts.

I may not have been adding that now bold qualifier as often now, as troubles in EU land have helped the dollar (the least ugly of the major currencies) remain stronger longer, so it seems more likely that China may trigger the run on the dollar. In last year or so, I have been noting that the RMB is almost every month making another small step towards becoming an international currency.

I have also noted that for 4 years now China is worlds largest producer of gold (about 40% more than #2 they admit, but quite possibly several times more as they do not tell true production). Plus for nearly a year China is also the world´s largest buyer of gold. They have enough now that they could start to issue interest-paying "gold back bonds" for central banks to hold in their reserves instead of some dollars now there. It would probably take many years for all dollars to be replaced by gold back bonds. China gets to control the number they issue each year.

That is one way China´RMB could become the alternative global currency, but I suspect that several of the oil producers will also want in on the action of paying for imports with printed paper, as US has done for several decades. I.e. OPEC and a few others could issue "X barrels of oil" BoO certificates, The BoO certificates will be in high demand instead of dollars which lose value, because the BoO certificates will increase in value every year.

I have never tried to tell which of several mechanisms will kill the dollar - just that it will suddenly (month or so) die in a run to get out. Borrowing more than a trillion dollars every year, with increasing baby boomers collecting SS, workers earning less in purchasing power (if not in nominal dollars) an ever smaller fraction of the potential work force actually working (and then more often at Big Mac Jobs), and the unavoidable, even by FED buying treasuries, rise in interest rates (acting on ever larger debt) is not sustainable. What can not be sustained will not be. - it is as simple as that.

You know that FED, not China or Japan, is already the largest holder of Treasury paper, do you not? They don´t even suggest that they can keep buying Treasury paper to hold interest rates down beyond mid 2014 - fits nicely with "run on the dollar on or before Halloween 2014" don´t you think?
Yes it does, but Euro, etc. will not crash - just have its value erode. It does not have a lot of confidence in it like the dollar does. Only the dollar can experience a sudden collapse in confidence - lose more than half its purchasing power in a month, as everyone tries to spend their dollars before the lose even more value.

I think I was lucky to set date of "on or before 31/10/14" way back when GWB still had almost two years more as POTUS, but I did some estimates back then of how much the Baby Boomers would have made much of their switch from peak earning (and tax pay paying) years to SS collectors, the growing health care cost for US, when the off the books cost of the two wars GWB started would start to hit Treasury, how long his destruction of wealth of middle class with tax relief for the wealthy (in an economy that is 2/3 consumer buying) could be denied by dipping into savings to avoid belt tightening. etc. and end of 2014 seemed to be about the limit. Halloween specifically was chosen as that is traditionally a scary time - and several crashes have occurred in October. ("animal spirits" wain as it gets cold it seems.)

Last edited by a moderator: May 11, 2012
18. ### Michael歌舞伎Valued Senior Member

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20,285
I'd like to return to the illogical fallacy in this premise that Central Banks are 'good'. I gave the example of Slavery. Imagine a Slave owner in the 1600s tell's you this: Show me a responsible government without Slavery. You failed to give me one example of a successful country without slavery.

So, we come to the same conclusion - Slavery today, Slavery tomorrow, Slavery Forever.

How do we make an argument against that? You can only make the moral argument. See, the logical argument for why we should end Slavery would sound NUTS to a 17th century slave owner (like I sound to you). Well, you see, in the future we're going to run automated machines on dinosaur juice navigated by satellites in space so only ONE man does the work of 10,000 slaves and while 95% of people now are starving and barely growing enough to eat, in the future we'll all be fat.

Who the hell would believe THAT argument in the 17th century? No one.

So, let's just watch as nations like Greece give up on Democracy in favor of being Farmed like Cattle by so-called "Technocrats" which in the past were called Aristocratic landlords. But hey, at least they get to drive a German made car. Of course, no more free time, no more time with kids - nope the State will raise them in Child 'Care' Supervision Facilities as both parents will be working to make those car payments.

19. ### Michael歌舞伎Valued Senior Member

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Why do we keep going back to first principles? Because it's obvious we've learned to live with some seriously f*cked up normality.

Q: If 5 men are on an island, and a woman washed ashore, and this little community 'votes' to make 'raping women legal', while it may make it legal it will always be immoral. You may THINK it's 'for the good of the tribe we rape the f*ck out of that woman' (and some societies still do treat women as property)... well too bad. It's immoral. Why is it immoral? Because you initiated force against an innocent person. She my look beautiful. So what? She's innocent.

Q: If 5 butt ugly women are on an island with a man, and an stunningly beautiful woman washes ashore. The woman realize the man now wants nothing to do with them. They decide to vote on mutilating the woman's body and face. Is that moral? NO! (and some societies do mutilate girls). It may be LEGAL, but it will forever be immoral.

Q: A nation of people vote to steal the money from one rich person. Is that moral? NO! Call it a tax or not - it's nor moral.

So? What do we do? Well, we create a society where wealth is not locked up in the handful of a few rich. We might be able to do this by creating and using our own currencies. See, as it stands now, 0.1% in relatively short order, have come to own almost ALL OF IT.

23. ### Michael歌舞伎Valued Senior Member

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But why? I think it's much more than just naivety. It's too visceral.

For example: Asguard started the thread with something like: I hope you're happy now Steve Jobs, YOU got his kidney! (referring to some idiot in Western China who sold his kidney to buy material things - one such thing was an iPad). Or quadraphonics tells me if I don't like the system, there's the door. Meanwhile the 0.1% own 80% of everything. The government sells Trillions of dollars worth of their children future labor to give them 'free roads'. The banks print Trillions of dollars in debt out of thin air. Fukushima is an great economic 'opportunity'.

Up is Down.
Left is Right.

Yeah, it's interesting.... I do think you're right. The Fed probably will try and print their way out of this economic catastrophe they created. People will end up paying \$100 for a load of bread (if they can get one). But things could go the other way. Obama is elected POTUS and they decide to raise interest rates. I mean, even they don't want to actually KILL their Cattle. Errr.... I should say, they don't want to burn down their own ranch. Killing Cattle they don't mind. As long as there's breed stock. I mean, if they NEED inflation, they can start another war, a much much bigger one. If Krugman has his way, it'll be with Aliens :bugeye: That way the bottom end can be cleared out as cannon fodder as well.

Either way it goes society will struggle on .... and at least they know that the Bankers are their Best Friends Forever and Big Brother loves them dearly.

Is freedom really that scary?

Last edited: May 13, 2012