Here Comes the Recession

[AM64]

The first reply was awesome

The "looters" comment took me back to Atlas Shrugged.

 

[NorthDallas40]

Times would be so much better if we had simply kept money as a medium of exchange instead of floating it and viewing it as a commodity. Imagine if we floated weights and measures like currency .... Well today we've again devalued the inch in relation to the meter - have fun building your bridge with imported steel - not that you knew exactly what x feet of imported steel beam was going to cost you anyway.

I’m not going to pretend to understand all the nuances of currency valuation and I was as shocked as the next person that inflation hasn’t skyrocketed as a result of the last 10 years of fiscal policy.

But on the point of currency, goods and services, and inflation it’s a fairly straight forward connection. If hard currency goes up significantly without a corresponding rise in GNP then inflation must follow as the available dollars pool to buy the same number of widgets just dramatically increased. And thus on a global scale your local currency devalues.

 

[AM64]

I’m not going to pretend to understand all the nuances of currency valuation and I was as shocked as the next person that inflation hasn’t skyrocketed as a result of the last 10 years of fiscal policy.

But on the point of currency, goods and services, and inflation it’s a fairly straight forward connection. If hard currency goes up significantly without a corresponding rise in GNP then inflation must follow as the available dollars pool to buy the same number of widgets just dramatically increased. And thus on a global scale your local currency devalues.

That part makes sense. It's the part about markets trading in currencies like they are trading in wheat or oil that bothers me.

 

[Rasputin_Vol]

Read the link. Only the Treasury “creates” money. The Fed loans money.

That idiot Tlaib’s plan to create more than twice as much money than exists today and devalue the currency.

The Fed does not “print money”

OK, techinically, you are right. The banks create money whenever they lend it out. That is how fractional reserve banking works.

 

[NorthDallas40]

OK, techinically, you are right. The banks create money whenever they lend it out. That is how fractional reserve banking works.

No they don’t create money. They just take on debt. It’s a net sum zero gain. If they actually did create money it wouldn’t be net sum zero the hard currency pool would increase.

 

[Rasputin_Vol]

But on the point of currency, goods and services, and inflation it’s a fairly straight forward connection. If hard currency goes up significantly without a corresponding rise in GNP then inflation must follow as the available dollars pool to buy the same number of widgets just dramatically increased. And thus on a global scale your local currency devalues.

The inflation you are looking for didn't hit Main Street while we were buying bread, bacon and eggs. The inflation (or flow of money) was put into the stock market, housing bubble, and student loans... just to name a few.

 

[Rasputin_Vol]

No they don’t create money. They just take on debt. It’s a net sum zero gain. If they actually did create money it wouldn’t be net sum zero the hard currency pool would increase.

That is how fractional reserve banking works. The banks can lend out as much as 10 times the amount of money for loans as they have in their actual reserves.

So if all a bank has is $100 in deposits, it can legally lend out $1000... and charge interest on that $1000. Now ask yourself, where will the money to pay the interest come from if the bank only created/lent out $1000?

 

[NorthDallas40]

The inflation you are looking for didn't hit Main Street while we were buying bread, bacon and eggs. The inflation (or flow of money) was put into the stock market, housing bubble, and student loans... just to name a few.

Not even going to comment on that other than to say inflation follows if hard currency pool increases when goods and services which the currency is used to procure remain fixed. That is the economic theory. Your anecdote is yours.

 

[Rasputin_Vol]

Read the link. Only the Treasury “creates” money. The Fed loans money.

The Treasury has to go to the Fed to borrow the money. Where does the Fed get its money?

 

[NorthDallas40]

That is how fractional reserve banking works. The banks can lend out as much as 10 times the amount of money for loans as they have in their actual reserves.

So if all a bank has is $100 in deposits, it can legally lend out $1000... and charge interest on that $1000. Now ask yourself, where will the money to pay the interest come from if the bank only created/lent out $1000?

I’m not arguing that. I understand it.

Are you aware how this all started? That idiot Tlaib proposed minting two $1T dollar coins with which to finance this government assistance program. That’s a horrible idea and was a horrible idea when Trump toyed around with it a while back.

Velo jumps in and gets over his head having no clue on what he’s talking about and continues to founder and make some kind of point.

 

[Rasputin_Vol]

Not even going to comment on that other than to say inflation follows if hard currency pool increases when goods and services which the currency is used to procure remain fixed. That is the economic theory. Your anecdote is yours.

I'm not trying to argue with you. I'm just trying to inform you. If you would just step back and really look at this, you would be rightfully outraged at the counterfeiting that is going on.

 

[NorthDallas40]

The Treasury has to go to the Fed to borrow the money. Where does the Fed get its money?

All money comes from the Treasury Ras. Hard currency. Money in circulation IE money supply /= the total hard currency.

The total amount of hard currency in existence is only a fractional part of the entire US debt in existence. It should scare the living hell out of any rational person.

 

[NorthDallas40]

I'm not trying to argue with you. I'm just trying to inform you. If you would just step back and really look at this, you would be rightfully outraged at the counterfeiting that is going on.

Read my last post. I see it already Ras.

 

[Rasputin_Vol]

I’m not arguing that. I understand it.

Are you aware how this all started? That idiot Tlaib proposed minting two $1T dollar coins with which to finance this government assistance program. That’s a horrible idea and was a horrible idea when Trump toyed around with it a while back.

Velo jumps in and gets over his head having no clue on what he’s talking about and continues to founder and make some kind of point.

Would it have been better if she had created $800 billion (TARP)?

 

[Rasputin_Vol]

All money comes from the Treasury Ras. Hard currency. Money in circulation IE money supply /= the total hard currency.

The total amount of hard currency in existence is only a fractional part of the entire US debt in existence. It should scare the living hell out of any rational person.

You keep saying hard currency (M1 supply). What about the electronic ones and zeroes in our banking accounts? Are you going to tell me that for each of the electronic dollars that are in those deposits that there is a corresponding paper dollar or coin somewhere in circulation?

And what about the dollars we have on credit cards? Where does that money come from?

 

[NorthDallas40]

You keep saying hard currency (M1 supply). What about the electronic ones and zeroes in our banking accounts? Are you going to tell me that for each of the electronic dollars that are in those deposits that there is a corresponding paper dollar or coin somewhere in circulation?

And what about the dollars we have on credit cards? Where does that money come from?

It’s in the investopedia link Ras. You’re heading down the same road as Velo.

A $10 dollar bill sits in front of me on the table. you want it. I have it. You agree to borrow it from me for X interest. I don’t give up my rights to it. Now $20.X total valuation is in play. But only one $10 bill still exists. Make sense?

 

[Rasputin_Vol]

It’s in the investopedia link Ras. You’re heading down the same road as Velo.

A $10 dollar bill sits in front of me on the table. you want it. I have it. You agree to borrow it from me for X interest. I don’t give up my rights to it. Now $20.X total valuation is in play. But only one $10 bill still exists. Make sense?

I'll play your game. If I borrow your $10 bill and it is the only one in existence, where will I get the money to pay you the interest on it?

 

[NorthDallas40]

I'll play your game. If I borrow your $10 bill and it is the only one in existence, where will I get the money to pay you the interest on it?

Not my problem it’s yours welcome to FIAT currency

I didn’t say it made sense Ras. It’s Economics so you have to use air quotes when you call it science anyway

 

[Rasputin_Vol]

It’s in the investopedia link Ras. You’re heading down the same road as Velo.

A $10 dollar bill sits in front of me on the table. you want it. I have it. You agree to borrow it from me for X interest. I don’t give up my rights to it. Now $20.X total valuation is in play. But only one $10 bill still exists. Make sense?

From your Investopedia link. Very first line:

The U.S. Treasury controls the printing of money in the United States. However, the Federal Reserve Bank has control of the money supply through its power to create credit with interest rates and reserve requirements.

Where does the Federal reserve get the money that it supplies the US Treasury?

 

[NorthDallas40]

Would it have been better if she had created $800 billion (TARP)?

Are you saying would it have been better to just use the Fed balance sheet Ponzi scheme we’ve been using for 10 years? Yes as the total hard currency amount would remain fixed for the fixed pool of goods and services im existence.

What she was trying to do was skirt the national debt limit ceiling. If this would have worked Bernake would have done it over a decade ago.

 

[NorthDallas40]

From your Investopedia link. Very first line:



Where does the Federal reserve get the money that it supplies the US Treasury?

Same quote Velo linked.

Money supply = money in circulation at any given time. That isn’t the same as the total currency pool.

 

[Rasputin_Vol]

Not my problem it’s yours welcome to FIAT currency

I didn’t say it made sense Ras. It’s Economics so you have to use air quotes when you call it science anyway

But wait... you acknowledge the problem here, right? Where does the money needed to pay the interest come from? Keep in mind, interest increase exponentially. So with each passing moment in time, that interest increases at a faster pace, which means that the money in existence needs to grow at a similar pace in order for there to be enough money circulating around to pay of the interest plus principle.

 

[Rasputin_Vol]

Are you saying would it have been better to just use the Fed balance sheet Ponzi scheme we’ve been using for 10 years? Yes as the total hard currency amount would remain fixed for the fixed pool of goods and services im existence.

What she was trying to do was skirt the national debt limit ceiling. If this would have worked Bernake would have done it over a decade ago.

Why are you hung up on this "hard currency" line? I don't understand what you are trying to accomplish with that. Our currency is made up of far more than just physical coins and bank notes.

 

[NorthDallas40]

But wait... you acknowledge the problem here, right? Where does the money needed to pay the interest come from? Keep in mind, interest increase exponentially. So with each passing moment in time, that interest increases at a faster pace, which means that the money in existence needs to grow at a similar pace in order for there to be enough money circulating around to pay of the interest plus principle.

No really. You’re hung up on equating debt with hard currency. I was too. Just focus on that simple example I provided on the $10 bill. That’s all I got.

As I said I am as shocked as anybody that inflation hasn’t come in spades. The excuse given by the Economists always seems to come back to that simple comparison I provided. From what I read anyway. Like I said ... “science”

 

[NorthDallas40]

Why are you hung up on this "hard currency" line? I don't understand what you are trying to accomplish with that. Our currency is made up of far more than just physical coins and bank notes.

Why are you hung up on rejecting it and continuing to assert that the Fed creates money when it has no such power.