?

2/3/2009 1:38:11 PM

from thine ass, thou shall pull thy moneys

2/3/2009 1:40:27 PM

money trees, duh

2/3/2009 1:41:25 PM

No, seriously, we need more of it as a country. We need more, and we need it to have more value.

How do we get it? Do we have to sell stuff to other countries?

2/3/2009 1:44:48 PM

Quote :

"We need more, and we need it to have more value. "

Even a money tree can't make both of those things happen at once.

2/3/2009 1:47:46 PM

Okay, how do we achieve one of those tasks?

2/3/2009 1:51:12 PM

How is babby formed?

2/3/2009 1:52:23 PM

Well if we have more money (like right now, with the printing presses set to "full blast") then it is worth less. I will also note that by constantly printing money to fix problems, we are shooting ourselves in the foot.

[Edited on February 3, 2009 at 1:53 PM. Reason : ]

2/3/2009 1:52:30 PM

that's a consequence of our government living beyond its means.


and accomplishing one of those goals is easy--you can just print or destroy money, depending on which one you want.

the only way to do both is to increase GDP, and that involves getting your ass to work, America.

2/3/2009 1:55:11 PM

^^I know that printing money is not a good solution. I've gotten that far.

But if we can't print it, how do we get more of it?

Money doesn't disappear from this country unless it was imaginary to begin with or unless it went to another country...right?

So has money disappeared? If so, can we get it back from the other countries? Is the money still here in the US, and people are hoarding it?

Where'd all the money go? How do we get it back? Was it imaginary money?

^How meaningful a measure is GDP? Why don't we just focus on that all the time?

[Edited on February 3, 2009 at 2:01 PM. Reason : sss]

2/3/2009 1:58:27 PM

Well, a lot of our money has gone overseas as we kept buying products from foreign nations. A lot of money was wasted as people bought overpriced products, like houses at the peak of the boom, only to have the final product drop off in value faster than a depreciating car.

As for getting more right now without devaluing the currency, that would require getting the economy restarted so people are actually producing something again, hopefully something that has more stable value that where we dumped all our money last time.

2/3/2009 2:05:51 PM

brid, we usually borrow the money from foreign countries/markets, mostly by buying up US bonds.(like this stim, which some say is only the FIRST step...good lord, will be borrowed and will top over a trillion once we pay the interest on the loan.)

Where this will become an issue is when other countries will be hurting and not have the capital to invest.. THEN we just start printing it.

If you think of the dollar as a share of stock or a rare baseball card. It has a certain value. Now when you create more stock or make a lot more of the baseball cards, the value that you are holding is now a lot less.

2/3/2009 2:09:14 PM

Quote :

"Money doesn't disappear from this country unless it was imaginary to begin"

It USED to be worth something. Now it's just pieces of paper.

What's the difference between a $1 bill and a $100 bill? Nothing, besides the extra zeroes at the end. It's all a mind game, since our money today isn't backed by anything.

Also:

[Edited on February 3, 2009 at 2:16 PM. Reason : ]

2/3/2009 2:09:55 PM

this comes under the study of Monetary Policy

http://en.wikipedia.org/wiki/Monetary_policy

I still do not understand it fully, but the basics of our system are governed under the concepts of Fractional-reserve banking

http://en.wikipedia.org/wiki/Fractional-reserve_banking

this link above even has a section called "Money Creation"

[Edited on February 3, 2009 at 2:35 PM. Reason : .]

2/3/2009 2:19:07 PM

i don't understand why gold or jewels are valuable either

2/3/2009 2:22:50 PM

I think you just blew Bridget's mind.

2/3/2009 2:22:51 PM

Quote :

"RedGuard: Well, a lot of our money has gone overseas as we kept buying products from foreign nations."

And people buy goods from overseas because they are cheaper because overseas businesses operate with less regulation, less taxes, and workers earn lower wages?

And we can't compete with those overseas businesses because our workers need higher wages in order to buy lots of cheap goods from overseas?

Is there a way for us to compete without lowering our standard of living to that of the countries with which we are competing?

Quote :

"RedGuard: A lot of money was wasted as people bought overpriced products, like houses at the peak of the boom, only to have the final product drop off in value faster than a depreciating car."

Makes me so angry.

Quote :

"RedGuard: As for getting more right now without devaluing the currency, that would require getting the economy restarted so people are actually producing something again, hopefully something that has more stable value that where we dumped all our money last time."

I choose this option. How do we do this?

Quote :

"CharlesHF: It's all a mind game, since our money today isn't backed by anything."

I'm gonna come out ignorant. If we back our money with something like gold, would that encourage another brutal bout of imperialism and environment raping?

2/3/2009 2:25:00 PM

gold and jewelery are valuable because they are pretty and rare

...

by reading the thread I'm getting the idea that BridgetSPK cares more about trade policy than monetary policy

this has little to do with "money creation" and more to do with international trade and macro-economics

[Edited on February 3, 2009 at 2:32 PM. Reason : .]

2/3/2009 2:27:15 PM

it comes from the trust that each of us puts in it, knowing that when I hand somebody a piece of paper with a 10 on it, I can get 10 dollars worth of goods or services.

2/3/2009 2:37:03 PM

that has about as much meaning as "the color green is green because I think it's green"

I know it's people's favorite response to "Why does money have value without the gold standard?", but it is completely shallow.

2/3/2009 2:39:04 PM

it's not shallow.
a bit esoteric, and was I being a bit tounge-in-cheek, sure.

but it's the truth. When people stop trusting in the value of those peices of paper, then it becomes worthless.

2/3/2009 2:43:38 PM

i've heard the pretty and rare explanation before, but i still don't get how it all started in the first place

guess it has something to do with the inner mechanics of monkey-man

2/3/2009 2:46:34 PM

DO YOU LIKE THE SHINY THINGS!

gold is easy stamped and used as a means of currency so...

2/3/2009 2:49:34 PM

yes yes i read all that

it's pretty, it's durable, doesn't tarnish, more portable than the bartering system, you can use it in yo teefs

but i guess you're on to something...it's easier to stamp a king's head on it than a seashell

[Edited on February 3, 2009 at 3:00 PM. Reason : +]

2/3/2009 2:56:18 PM

i think part of the trouble is the lack of belief of giving a shit about these things (gold and jewels) with respect to the time period you live in

jewels and precious metals are not as awesome as your sweet ass ride or kick ass computer system or LCD TV

they seem really kind of boring

but take all those things away and you still need to be able to present your status symbols

in comes glittery gems, fine threads, and precious metals in ages past

[Edited on February 3, 2009 at 3:37 PM. Reason : .]

2/3/2009 3:37:34 PM

Quote :

"And people buy goods from overseas because they are cheaper because overseas businesses operate with less regulation, less taxes, and workers earn lower wages? And we can't compete with those overseas businesses because our workers need higher wages in order to buy lots of cheap goods from overseas? Is there a way for us to compete without lowering our standard of living to that of the countries with which we are competing?"

This is where all the debate is. You have arguments of what the causes are and how to remedy the situation. For the causes, you have a variety of theories. Some would say that globalization has screwed America over, that free trade has hurt America's workers by making these cheaper pools of labor available to us. Others would say that its not free trade but that America gave up too much initially to other nations without demanding reciprocal market access. Some say American quality control is inferior, that American productivity is low though I would strongly debate that. There are domestic factors, things like pensions and health care that do add a tremendous overhead to American products that nations like China and India don't have to deal with; some would argue that we need to shift these burdens to the government so that companies can price cheaper.

As for other remedies, there was the whole theory of the "knowledge economy" where the United States had "outgrown" manufacturing and should focus instead of services. My father, an industrial engineer, would say that the United States can keep manufacturing if we would simply be more open to greater manufacturing modernization and production efficiencies. Some say we need to have a more flexible work force like the Swedes, with heavy doses of retraining; others would say this isn't possible given the sheer size of the United States. I'm sure I've missed other causes and effects as well; I just wanted to show the range.

In summary, lots of talking heads on the causes and remedies.

Quote :

"I choose this option. How do we do this?"

Yet another massive debate. If I knew, I would probably be writing policy memos for the President right now. We know what DOESN'T work right now with our first version of the bailouts that was trying to restart the stalled credit market. Congress believes that the 900 billion in government spending will do the trick. Some say we need to be more protectionist and start raising tariffs while others argue we should do the opposite. Others say tax cuts. Regardless, the government needs to restore confidence in the economy (even if the numbers don't pick up at first), and until it does that, the economy is going to continue its race to the bottom.

2/3/2009 3:52:30 PM

"any circulating medium of exchange, including coins, paper money, and demand deposits."

The first problem with money is that people come to internet boards or read CNN and then make 6th grade assumptions on what it is without doing any bit of research.

2/3/2009 4:20:38 PM

Even in this thread I'm pretty sure the issue is being overcomplicated.

The answer to the first question is that money comes from making something valuable in terms of goods or services. Whether or not something is valuable is determined by whether or not people will pay for it. How valuable it is is determined by how much people are willing to pay for it.

Of course, that system really only works well when consumers have good knowledge of available products -- ideally a perfect knowledge, but "ideal" generally implies "better, but unrealistic." Without that knowledge, people get defrauded, thinking they're buying something with X value when really they're getting something lesser. A lot of our recent economic processes came about from just that problem -- people were buying things they thought were more stable, more valuable than they really were. In all likelihood, they were fooling themselves just as they were being fooled; nonetheless, the problem was flawed knowledge.

The point of this part of my rant is that we, as a country, need to shift more towards producing things of actual (rather than pretend) value.

Quote :

"How meaningful a measure is GDP? Why don't we just focus on that all the time?"

It is meaningful on a national level. Of course, that doesn't do much good for individuals, who have widely differing shares in that GDP. And it has limited utility on the international scene, which is increasingly where economies live.

Quote :

"Well, a lot of our money has gone overseas as we kept buying products from foreign nations."

Not sure how far I agree with this. When we buy shit from China, we send them our money. Of course, that's money they could be spending on products from the United States. The problem isn't that we're buying stuff from them, it's that we're not making enough stuff that's good enough for them to want to buy from us.

Quote :

"Is there a way for us to compete without lowering our standard of living to that of the countries with which we are competing? "

Absolutely. Here it is:

1) Stop propping up industries that this country isn't suitable for or can't produce efficiently.
2) Focus our efforts on industries we are suitable for, and on
3) Retraining people and renovating facilities involved in #1.

Every year we spend huge sums of money on agriculture, specifically to keep prices up. This helps nobody but the farmers, and most of the farmers receiving the money are really enormous conglomerations that already have more money than God. Yeah, there are individual, private farmers being helped by the money, but not enough to be worth the price that we pay and the rest of the world pays.

We get rid of farm subsidies, it means cheaper food for us, a higher standard of living all over the world, and a very small number of Americans upset that they're no longer getting free money for doing nothing.

It's the same story for plenty of other industries that we just aren't suited for.

Follow the first two steps and you get a more productive economy. Then follow the third to rehabilitate what's left over from the old, suboptimally productive economy.

Probably more later, but as I understand it my posts are "too dense," and I'm sure I've crossed that line already here.

2/3/2009 4:41:25 PM

^ regarding #2, what industries are we suitable for?

There's no industry that the US can be the exclusive top-dog for more than 2 decades, if that.

I think the US has the highest creativity:technical expertise ratio, meaning companies like Microsoft and Apple are always going to be at home in the US, but you have western Europe coming up quickly in this area (the most amazing hacks always come out of Russia or Iceland nowadays, no Americans). And this industry doesn't rely on mass quantities of people, due to how computers work.

I can't see how we can possibly maintain our standard of living without using an iron fist to keep the rest of the world down, resorting to socialism (which is itself somewhat unstable in a vacuum), or making sure the rest of the world is able to increase their standard of living enough that there is not a huge difference between manufacturing it here or manufacturing it there.

2/3/2009 5:30:14 PM

money is a conduit/placeholder for value:

http://www.youtube.com/watch?v=EmxYZviAwak

2/3/2009 5:50:47 PM

Quote :

"If we back our money with something like gold, would that encourage another brutal bout of imperialism and environment raping?"

A fiat money system (money not backed by anything) is what allows countries to wage war on one another. They can create as much money out of nothing as they want. Gold restrains leaders from being able to afford a lot of military mayhem.

As far as the environment is concerned, government is the biggest rapist.

2/3/2009 7:22:37 PM

^ Until i melt my gold coin down and dilute it with nickel. The pimply faced clerk at Best Buy will not know the difference between my 21 carat gold coin and my 16 carat gold coin.

2/3/2009 7:59:09 PM

Money, even gold, isn't a "thing" really. It is a means of measuring value.


Without adding value, you can't increase long-term wealth. Period.

[Edited on February 3, 2009 at 8:37 PM. Reason : so what Grumpy and ssjamind said.]

2/3/2009 8:33:01 PM

Quote :

"The pimply faced clerk at Best Buy will not know the difference between my 21 carat gold coin and my 16 carat gold coin."

Is your argument that people won't trust U.S. gold and silver coins? We used gold and silver as money for more years than we've used fiat.

It's something the Congress is actually responsible for (as opposed to handing out condoms)...

Sec 8 Constitution:
To coin money, regulate the value thereof, and of foreign coin, and fix the Standard of Weights and Measures.

2/3/2009 10:33:28 PM

^I think he's trying to say that they'd be too easy to counterfeit... though I'm sure someone would think of measures to avoid that sort of thing. At first glance you'd think inked green slips of paper would be easy to reproduce, too, if you didn't live in a world that uses them constantly.

[Edited on February 3, 2009 at 10:40 PM. Reason : .]

2/3/2009 10:40:30 PM

For all practical purposes, credit is money. So, money comes from loans made by entities that only have to keep fractional reserves.



Whatever the gov physically prints is a minor source. What the gov loans is a major source. What private banks loan is a big source.

[Edited on February 3, 2009 at 11:21 PM. Reason : .]

2/3/2009 11:19:14 PM

Quote :

"A fiat money system (money not backed by anything) is what allows countries to wage war on one another. They can create as much money out of nothing as they want. Gold restrains leaders from being able to afford a lot of military mayhem."

Are you fucking serious, man? We waged war on each other for fucking ever with money based 0n (or straight-up made of) gold. Our desire to kill each other is not subject to currency.

2/3/2009 11:34:37 PM

Quote :

"^ Until i melt my gold coin down and dilute it with nickel. The pimply faced clerk at Best Buy will not know the difference between my 21 carat gold coin and my 16 carat gold coin."

You realize that shopkeepers had ways of detecting and dealing with this long before the advent of the intertubes, right? You know, like... scales? Density?

2/4/2009 12:46:30 AM

There's not enough gold in the entire world x100 to cover the net worth of the United States alone, let alone other countries. The government then would have to arbitrarily set a value for gold, as it did under the Gold standard.

Even if this economy further tanks for another two years and shrinks at 10 or even 15% during that time, it will still generate more wealth then all the aggregate years of economic growth under the gold standard.

2/4/2009 2:01:24 AM

buh

2/4/2009 2:11:31 AM

I vote we move to the golem standard.

2/4/2009 3:30:22 AM

2/4/2009 8:43:12 AM

also, this is on point:

Quote :

"For all practical purposes, credit is money. So, money comes from loans made by entities that only have to keep fractional reserves. Whatever the gov physically prints is a minor source. What the gov loans is a major source. What private banks loan is a big source."

additionally, this may officially be a fiat currency, but unofficially it has pegged itself to the commodity that it most naturally gravitates towards -- crude oil.

its going to be up to the smarter half of this country (and China as well) to lead the multi-decade decoupling of the US dollar from the petro-dollar.

2/4/2009 11:23:06 AM

http://www.youtube.com/watch?v=7o1fvZIF4oM&feature=related

2/4/2009 4:24:39 PM

Quote :

"The problem isn't that we're buying stuff from them, it's that we're not making enough stuff that's good enough for them to want to buy from us."

China is a special case. I have no doubt that the relatively poor Chinese factory owner selling goods to America would love to spend the money he earned on whatever America does make. However, he is not legally allowed to do so. He is required to use government banks to exchange currency and they keep a large portion of any currency exchanged to buy U.S. securities in the name of the Chinese government.

As such, if it were not for China's currency policy America would have a markedly smaller trade deficit. Should we care? China's activity is pushing down U.S. interest rates lower than they otherwise would be and freeing up large swaths of America's productive capacity to produce whatever the government wants to spend the money it borrowed on (which otherwise would be tied up producing goods for export to China).

While I deplore our Government's actions, there can be no objection to China's behavior since it has not harmed America in any way. The only harm we face is of our own making: our Government and our people chose to borrow so much.

2/4/2009 4:54:10 PM

China may be special, but there's nothing worthwhile to be done about it. Anything punitive we do to them would cost Americans money in higher costs, and might encourage the Chinese to punish us right back, further hurting us.

Still, China is a market for many American goods, and that market is so enormous that it's still good for us even after all the chicoms meddling.

2/4/2009 9:07:14 PM

Quote :

"We waged war on each other for fucking ever with money based 0n (or straight-up made of) gold."

Name me an American war where we didn't finance it through fiat money.
Revolutionary, Civil, WWI, WWII, Korea, Vietnam, Iraq

Quote :

"There's not enough gold in the entire world x100 to cover the net worth of the United States "

You're right, a major obstacle in returning to a gold standard is the vast quantity of fiat dollars out there laying claim to our 264 million ounces of gold. IT would have to be done gradually, perhaps by establishing a dual currency. One that would redeem a limited amount of gold over a certain time-frame -such as a five year treasury note payable in gold.

2/4/2009 11:00:45 PM

Price controls are bad. Government imposed price controls are always bad, whatever the price being set. As such, why are you advocating the Government impose price controls on the price of gold?

It doesn't work. Sure, you claim to have a history of a working gold standard, but look closer: that same era is chock full of severe depressions due to the artificial pegging of two unrelated commodies: gold and cash.

What we have now is better. Everything has a price, even money, and everyone understands what that means. There is no lie in the value of dollar, 1/904th of an ounce of gold. Calling the police whenever I try to sell a dollar for 1/905th of an ounce of gold would not make things better.

If you wish to use gold as your medium of exchange that is fine and even legal right now; just be sure to keep records and pay your taxes in dollars. But stop advocating for the regulation of gold markets.

2/4/2009 11:14:50 PM

Quote :

"pay your taxes in dollars."

yes, but dollars whose value is being driven into the dirt through gov't-caused inflation.

I'm not advocating tying the value of gold to the dollar. I could care less about fed. reserve notes. Get rid of them all. The auto dealer trades you a new car for an amount of gold. There need not have any "dollars" involved.

2/4/2009 11:44:44 PM

It is both easier to acquire and pass off fake gold as real gold, than fake money as real money.

I can't believe you're seriously (maybe you're not serious?) pining for a gold standard.

2/4/2009 11:56:10 PM