copious.abundance wrote:Except that it's not shady characters with questionable motives managing the money supply, it's The People Taking Out Loans.
That's interesting. So whatever the Fed does with QE, reserve requirements, open market operations, etc. has absolutely no effect? Then what do they exist for? Silly me, here I thought they were influencing the
supply and
price(you know, interest rate) of money, which, If I was awake in econ 101, impacts the amount of
demand that can be met. I'm sure you've seen a chart like this, right?
You're changing the subject. You said demand for loans goes down when interest rates go up. This is false. BTW, real interest rates in the late 70's weren't actually much different from now, so your sarcasm at my mentioning that different period to today was misdirected.
OK, perhaps I should have said
real interest rates. So a more accurate statement would be when
real interest rates increase, loan demand goes down.
Actually, what they said was that it wasn't very
useful. Perhaps they are right - it wouldn't be the first government statistic discontinued due to irrelevance. FWIW, there are people who reconstruct M3 such as this person
here. Looking at the chart entitled "M3, longer term chart" about 1/4 down the page, you can see it's been bouncing up and down without any rhyme or reason for the past 3-4 years. So maybe they were right in declaring it useless. However, no doubt paranoid conspiracy theorist types will find any statistic the government ceases to publish as being part of some vast conspiracy to hide information from the public. Perhaps the fact they don't tablulate Switchboard Operators in the monthly job statistics anymore is part of some vast conspiracy!
Well, other people thought it was a useful measure, hence they attempt to continue to tabulate it as much as possible. And I think you misread your link. Looks to me like M3 is increasing (the green line).
And according to your link, it seems it is very useful, since they say just above: "Finally and to put M3 into proper perspective with inflation (as measured by CPPI), the M3 and M2 strong inflation link is virtually unquestionable."
Here we go
yet again! I wonder how many more times I'm going to have to provide a link to
this Wiki article.
From your wiki article: "Commercial bank lending then multiplies this base money through fractional reserve banking,"
What part of "fractional reserve banking is outlawed" don't you understand? Again, banks would function as
loan brokers, only lending money trusted to them for a time period with the express expectation of interest income, less the bank brokerage fee. Very similar to today's crowd sourced funding. On the other hand, demand accounts would be fully funded (your money is actually
in the bank) and a fee assessed for the safekeeping and check clearing functions the bank provides.
No "new money" required. Get it now?
OK, so no income tax would reduce the amount of time your average saver would finally save up enough money to buy a house 100% cash down (no loan) from about 10 years after they die, to about 10 years
before they die.
No wait - I take that back. Since you've told us
wages will be falling as well, it'll
still take until 10 years after they die to save up for a house anyway!
In the meantime, when your fantasy money system turns out to need even merely half the amount of loans that the money system now requires, those 50% of today's borrowers are going to find your deflation making the real cost of their loans go up, and you're still gonna have a helluva lot of really pissed off people, which means your system will last ... oh, I'll give it maybe 3 years. Tops. I wonder how many more times I'm going to end up pointing out that your system contains the seeds of its own destruction?
Of course, you're only focusing on the very unlikely event that somehow, someway, the federal government didn't spend enough into the economy to cover their expenditures and delayed the money creation for that period of time. How likely do you think those particular congress critters would last in the next election cycle? I really think you misunderstand the whole concept because you're so locked in to the current, fraudulent monetary system as evidenced by your opinion that banks would need "new money" under a government created money system (be it fiat or commodity money) where fractional reserve banking is outlawed as the fraud it is.
Oh, and without mortgage money, housing prices would be much, much less. Just in 2007-09, banks tightened their lending requirements, which is what drove housing prices down like 50%. Of course, this was after they loosened them so much that a rock could get a 100% mortgage with no income verification, which drove the prices higher and higher for several years.
Nah, bank lending policies don't influence housing prices, at least not in your dreams.
I don't think you could actually get your head around this particular concept, but your own system solves absolutely nothing. All you've done is reverse the problem you described above: Instead of perpetual loans creating perpetual inflation (both prices and wages), your system proposes no loans (or few loans) creating perpetual deflation (both prices and wages). Maybe when wages fall to zero, prices have also fallen to zero, and we're thus reduced to a hunter-gatherer society, it will finally dawn on you how silly your system was.
What the hell are you talking about? The Federal government would be creating new money every year in the budget process. Other than you can't seem to shake the bank's fraudulent money creation as debt, what part of the government creating and spending new money into the economy escapes you? It's been done before, Lincoln issued greenbacks, Congress issued script during the revolution, states did too. It's actually been going on for centuries.
BTW, in spite of its problems, debt can be a very good motivating factor. I pay $400/month in student loans, and will do so until the year I turn 65. You can be sure I would not be as productive a member of society if I didn't have that and other debts to pay off. Being debt-free is a great excuse to live a slacker's life ... which is another reason your proposed money system would reduce us to hunters and gatherers.
Gee, you sound like those religious people who claim that without "Thou shalt not kill", they'd be out there committing murder! So you wouldn't have pursued your career and increased your earnings without the impetus of student loan payments? Perhaps you should have reconsidered college and just went and lived under a rock then.
Interesting how you justify your own debt slavery. Did you ever consider deferring some of those other purchases until you had saved up enough, instead of going into debt for them?
And here's another question for you. I assume once you pay off your debt and maybe put some away for retirement, isn't your goal to sit back and be a slacker anyway?
Here's a little story I'd like you to read...
http://financialmentor.com/true-wealth/ ... anker/2422You're a bloody f-ing liar, dude. I'm 49 and remember the 70's quite well, thank you. Most people took out a loan for a car. Every car (all used) my father bought had had to take out a loan, and he had a good paying job.
The real price of airline tickets was much greater than it is now, and if people didn't borrow money for a Christmas vacation to Aunt Selma, it's because airplane tickets were too expensive to even bother borrowing money for.
Look dude, you think I'm some young naif who doesn't remember what your supposed "good old days" were like, but that's probably because you're getting senile and don't remember anymore what those days were actually like yourself.
No, I actually have a pretty good memory. My father bought a new car with cash every three years. He sold each old one privately, for cash. The people across the street who had a much less income sometimes bought my dad's car,
for cash. Sometimes they wanted the current car and asked my dad to wait another month to buy a new one so they'd have enough to buy the old one. He did. And personally, I worked at a minimum wage job one summer and saved enough to buy a 4 year old Cougar from my aunt (market price $800) for cash. And all my friends did the same.
And Aunt Selma lived down the block most of the time, anyway.
And I'm only 8 years older than you, and keep my mind flexible by constantly learning new things. So senility isn't on the menu for as long as I'm going to be alive, and if I do get Alzheimer's, I'm planning on doing some dangerously fatal things to hasten my body's death before my brain is too far gone.
How's this for memory: I recall you joined here as OilFinder in or around 2007. When there was an upgrade of the board, you were one of the clueless who couldn't sign onto their old ID and created OilFinder2. Since then, you managed to change your moniker to copious.abundance with the same posing history. And believe me, that information is a very, very, very small part of my life, so it's kind of amazing that I remember it.
BTW, How's those new discoveries going? I finally found that thread on back on page 4 of the PO discussion forum. Doesn't seem like you posted much. Is the abundance less than copious or what?
Just to put the kibosh on any more of your revisionist history, here's a chart of personal debt since 1948.
Please note that credit card debt (revolving debt) was virtually non-existent before 1970, and personal loans(non-revolving) were manageable. Per the chart, total debt went from less than $1000 per capita to today's over $10,000 (in 2010 dollars). But I guess to you that's a good thing. Can't have all those slackers enjoying life, we need to make them work harder and longer to pay off all that magically created bank debt!
"Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves" - Norm Franz