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Peak Nonsense

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Peak Nonsense

Unread postby MonteQuest » Thu 07 Jun 2007, 18:02:10

mkwin wrote: The government deficit is a function of our monetary system - if the government runs a deficit the central bank creates the necessary funds out of thin air and gives them to the government. The government then spends the funds on what they need to. This money then enters the money system when the government buys goods and services leading to an increase of the money supply (and your right, inflation).


Good lord, man...I am the last person on this site who needs to be schooled on money creation. I think you need to read that thread. Somebody has to buy those govt bonds or securities. Currently, that is about $3 billion at day from China, Taiwan, Japan, and South Korea.

Who will buy those bonds with no assurance of a return in a declining energy world?

Most of the money creation takes place at the banks, not at the FED. Banks will not be making loans. We have the Great Depression to give us a trial run. Lots of goods and services, but no money due to no loans and the retirement of principal.

This time, it will be no goods and services and no money.

Energy does not create money. Money has no correlation to energy.


No correlation? Energy creates growth and growth creates money.
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Re: Peak Nonsense

Unread postby mkwin » Thu 07 Jun 2007, 18:09:45

MonteQuest wrote:
No correlation? Energy creates growth and growth creates money.


really??

http://en.wikipedia.org/wiki/Image:Comp ... supply.svg
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Re: Peak Nonsense

Unread postby MonteQuest » Thu 07 Jun 2007, 18:13:37

mkwin wrote: The ability to pay interest comes from the resources available. Obviously, if you have no job you can't pay the interest. However, interest can also come from sacrificing other expenditure to meet the payment. You use your vacation money or you’re to meet the payments. .


It matters not the source of the funds, paying the interest still requires the use of money.

Only the growth of loans can provide the money supply to facilitate that.

That is what a debt-based money system is all about. :roll:
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Re: Peak Nonsense

Unread postby MonteQuest » Thu 07 Jun 2007, 18:15:26

mkwin wrote:
MonteQuest wrote:
No correlation? Energy creates growth and growth creates money.


really??


Yes, really.

No growth=no loans=no new money.
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Re: Peak Nonsense

Unread postby mkwin » Thu 07 Jun 2007, 18:18:18

MonteQuest wrote:Good lord, man...I am the last person on this site who needs to be schooled on money creation. I think you need to read that thread. Somebody has to buy those govt bonds or securities. Currently, that is about $3 billion at day from China, Taiwan, Japan, and South Korea.

Who will buy those bonds with no assurance of a return in a declining energy world?

Most of the money creation takes place at the banks, not at the FED. Banks will not be making loans. We have the Great Depression to give us a trial run. Lots of goods and services, but no money due to no loans and the retirement of principal.



The government does not need a 'buyer' of debt. Once it's created it's held by the members of the central bank. In theory the government can create an infinite supply of money the problem is it causes debasement of the currency and hence inflation.

So while the collapse of commercial and private loans might have deflationary effects the overwhelming problem will be inflationary due to oil and government spending causing every good to inflate.

Your references to foreign debt relates not to government spending but the trade deficits with those countries.
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Re: Peak Nonsense

Unread postby mkwin » Thu 07 Jun 2007, 18:21:17

MonteQuest wrote:
mkwin wrote:
MonteQuest wrote:
No correlation? Energy creates growth and growth creates money.


really??


Yes, really.

No growth=no loans=no new money.


Do you not see there is no correlation between energy and money supply from that chart?
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Re: Peak Nonsense

Unread postby MonteQuest » Thu 07 Jun 2007, 18:47:42

mkwin wrote: The government does not need a 'buyer' of debt. Once it's created it's held by the members of the central bank.


You are on drugs! The countries I listed buy our debt in the form of govt securities that are printed when the money is created. Treasury securities are government bonds issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government. Individual investors, pension funds, mutual funds, insurance agencies, banks, foreign government central banks, can all buy the bonds, effectively loaning money to the treasury.

40% of our debt is held by the foreign central banks, mostly China.

http://www.treas.gov/tic/mfh.txt

What people fail to grasp is this: If the economy cannot grow (along with the money supply) due to a lack of available energy, the govt printing more money won't overcome this.

Why?

Because the energy will still not be there to facilitate the production of goods and services. It will drive inflation to no end, as the huge supply of money competes for fewer and fewer goods and sevices.

Money does not create energy.

It's like being broke and driving up to a gas station and finding them out of gas. Even if someone comes along and lends you $10 bucks, you still can't buy any gas.....
Last edited by MonteQuest on Thu 07 Jun 2007, 19:16:32, edited 4 times in total.
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Re: Peak Nonsense

Unread postby MonteQuest » Thu 07 Jun 2007, 18:53:00

mkwin wrote: Do you not see there is no correlation between energy and money supply from that chart?


You mean there is no corrrelation between the recent increase in money supply and the growth in energy, don't you?

Didn't we just talk about deriviatives?

40% of GDP growth has been financial speculation, not a growth in wages or real goods and services.

We have just been re-selling things already made by inflating their value to levels not supported by the fundamentals.
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Re: Peak Nonsense

Unread postby keehah » Thu 07 Jun 2007, 20:52:50

growth creates money.

Missing some important linkages though to be true with our fiat money.

Debt creates fiat money.

Growth is still critical though, as it keeps the illusion up that this debt will be repaid and all these dollar bills denoting debt owed are worth real goods.

Good intro to our current fiat money: I Want The Earth Plus 5%
http://www.relfe.com/plus_5_.html
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Re: Peak Nonsense

Unread postby mkwin » Fri 08 Jun 2007, 04:24:28

MonteQuest wrote:You are on drugs! The countries I listed buy our debt in the form of govt securities that are printed when the money is created. Treasury securities are government bonds issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government. Individual investors, pension funds, mutual funds, insurance agencies, banks, foreign government central banks, can all buy the bonds, effectively loaning money to the treasury.

40% of our debt is held by the foreign central banks, mostly China.

http://www.treas.gov/tic/mfh.txt

What people fail to grasp is this: If the economy cannot grow (along with the money supply) due to a lack of available energy, the govt printing more money won't overcome this.

Why?

Because the energy will still not be there to facilitate the production of goods and services. It will drive inflation to no end, as the huge supply of money competes for fewer and fewer goods and sevices.

Money does not create energy.



MQ -

Your getting deficit government spending mixed with the trade deficit situation. I'm not an expect on the foreign exchange market but I know the basics. Essentially the net inflow of Chinese goods to the US leads to US capital going to China (or other net exporters) and being exchanged for local currency. The central banks in these counties then exchanges the capital for bonds as opposed to selling the dollars - as this would result in downward pressure on the dollar. The hoarding of dollars by the Chinese is a mutually benefitial arrangement - The US don't want the dollar to fall and the Chinese don't want their exports to get more expensive and therefore lower their economic growth.

Governments around the world run deficit often. Even those with a positive trade surplus. If Tony Blair decides he wants to build a new nuclear missile system, and run a £200 billion deficit he does not have to ask the Chinese to put the money up.

The dollar is under a lot of pressure because of your current account deficit. However, your government debt isn't that bad - it's 65% of GDP, which is comparable to other developed economies including Germany (who run a trade surplus). Japanese public debt is 175% of GDP and they also run a surplus.

http://en.wikipedia.org/wiki/List_of_co ... ublic_debt

The bottom line is the central bank creates the capital and gives it to the government - it can then sell the bond on to an internal or external investor or retain the bond. No real money is required to create debt it comes out of thin air. They used to print money into existence, now they just press a button but doing so causes inflation and debasement of the currency.

And FYI derivatives have no effect on the money supply.
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Re: Peak Nonsense

Unread postby keehah » Fri 08 Jun 2007, 15:35:29

The bottom line is the central bank creates the capital and gives it to the government

That is what I was told as a 'kid'. When you take the time to understand the system and see past the purposeful delusions the truth in this era of fiat money:

The central bank creates debt and lends it to the government.

Now as long as we maintain this delusion that debt can continue to buy true wealth, that is durable goods, the game can continue. In fact the game of debt delusions has gone on for so long that the US government and people now owe:
Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
USA Today

The delusion was all this debt could be paid off if the economy keeps growing ever faster. What happens at 'Peak' Economy (brought on say by some Peak in resources required by the economy)? The delusions start to disappear.

Furthermore, what happens when the economy and supply of real wealth stops growing yet the debt supply keeps growing at 10% per year? M3 Graph

The central bank creates debt and lends it to the government.
Not a pretty 'bottom line' or foundation for an economy at a peak.
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Re: Peak Nonsense

Unread postby mkwin » Fri 08 Jun 2007, 18:27:26

keehah wrote:
The bottom line is the central bank creates the capital and gives it to the government

That is what I was told as a 'kid'. When you take the time to understand the system and see past the purposeful delusions the truth in this era of fiat money:



Including my degree and my own reading I’ve spent literary thousands of hours ‘taking the time’ to understand the system. However, this is a very complex unprecedented issue and despite the fact I have read many economics books, from Marx to Milton, I have no idea what will happen. When you get Alan Greenspan saying he doesn't understand what money is, you know it's a complex issue.

I'm not suggesting the monetary system we have is ideal and I certainly don't defend loose monetary policy. Personally, I believe the period after peak will see wide spread failure in the financial system.
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Re: Peak Nonsense

Unread postby mkwin » Fri 08 Jun 2007, 18:36:26

keehah wrote:[
Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.
USA Today



Yeah big figure - $59.1 trillion - but it's half the story. It's meaningless on its own, it's only worth comparing it to assets so you have a net figure.

JP Morgan Chase might have $1 trillion liabilities but they have $1.2 trillion in assets so the net asset value is $200 billion. I'm sure the net figure for the US as a whole is in the negative territory but its not $59 trillion!
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Enlightenment Now by Steven Pinker — don’t believe the false

Unread postby AdamB » Sat 17 Feb 2018, 19:54:43

Towards the end of this passionate book in praise of Enlightenment values the author sounds a defiant but plaintive note. “Persuasion by facts and logic, the most direct strategy,” Steven Pinker writes, “is not always futile.” You can almost hear the “despites” in his mind. Despite the widespread belief among fashionable intellectuals that emotions and tribal loyalties are more important and somehow more authentic than fact-based evidence. Despite the steady stream of news reports (this week including another mass school shooting) suggesting that chaos is eroding the edifice of order. It’s just as well that Pinker — among many other things a professor of psychology at Harvard — concludes that there is some point to logical persuasion, because he has spent several hundred pages using logical persuasion. He equips the reader with the information necessary to join in a defence of


Enlightenment Now by Steven Pinker — don’t believe the false doom-mongers
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Peak Nonsense

Unread postby aldente » Sat 20 Apr 2019, 03:26:17

Nonsense wrote:... everybody panic!

the usual basic mistake is to "conclude"
WRONG reaction !

we do not panic here - you seem to subconsciously shit in your pants however, boy !!!

This is a "math forum" after all - contemplating the Gauss Bell Curve and it's larger implications.

so - stay at it - maybe there is hope for you -

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Re: Peak Nonsense

Unread postby asg70 » Sat 20 Apr 2019, 15:56:44

Two posts ago was from 2007. One post before it was 2018. Bumping threads like this after long gaps is definitely nonsense.

HALL OF SHAME:
-Short welched on a bet and should be shunned.
-Frequent-flyers should not cry crocodile-tears over climate-change.
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