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Where has all the money in the world gone?

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Re: Where has all the money in the world gone?

#11

Post by rfugger »

bokonist wrote: post #2

The fundamental problem is that the monetary systems of the modern world are all designed on the Wile E. Coyote principle. As long as you never look down, the system works. In the U.S. there is ~$14 trillion in government debt. There exists tens of trillion more in private debt. But only $2 trillion exists in bonafide, actual, real honest-to-goodness dollars (I'm including in that count accounts at the federal reserv…

There's always enough money to pay off all the debt, it just may not always have enough velocity.

Re: Where has all the money in the world gone?

#13

Post by ricardobeat »

If you have fun reading crazy whack conspiratorial blogs, this thread lead to a couple great ones:

- http://www.divinecosmos.com/start-here/davids-blog/995-lawsu...

- http://benjaminfulford.net/

I liked the two whackos interviewing one another:

    BF: They offered me at one point the job of Finance Minister of Japan.
    DW: Finance minister of Japan. Right.
    BF: They also, believe it or not, offered me General Electric and General Motors.
    DW: Like you would be the CEO, or something?
    BF: Yeah, and I guess the chief shareholder. The problem, of course,
        is I had to go along with their plan to kill four billion people.
        It’s the classic “sell your soul to the devil” situation.

Re: Where has all the money in the world gone?

#14

Post by sirclueless »

wavephorm wrote: post #4

When you learn how money really works, you begin to understand just how diabolical our entire socio-economic system is. Inflation, recessions, boom-bust, the stock market, fractional reserve banking, interest rates... it's all rigged, a giant shell game, and it boils down to an invisible whip that the rich use to keep people working for things they don't really need and to pay taxes for the sole purpose of perpetuati…

I don't know about you, but I have had down periods in my life, when I wasn't actually producing anything of value. If we actually used a barter economy then I would starve, or be reduced to sweating in a field growing plants. But since we live in a world where money is transferrable and credit is obtainable, I can weather those periods just fine and live in a decent house with air conditioning in the summer and heating in the winter.

The best evidence that people really like to have transferrable currencies is that they develop independently in just about every market in the world. For example, ancient Africans used Cowry shells. Players of the videogame Diablo 2 used a particular ring, the Stone of Jordan.

While there's certainly fraud and even systemic failure at times, it's hard not to appreciate all that liberal economics has done for our quality of life.

Re: Where has all the money in the world gone?

#15

Post by necubi »

WA wrote: post #9
bokonist wrote: post #2

The fundamental problem is that the monetary systems of the modern world are all designed on the Wile E. Coyote principle. As long as you never look down, the system works. In the U.S. there is ~$14 trillion in government debt. There exists tens of trillion more in private debt. But only $2 trillion exists in bonafide, actual, real honest-to-goodness dollars (I'm including in that count accounts at the federal reserv…

You ask how any of this debt can ever be repaid. But is this really what we want to achieve? Repay the debt? If money is, like in the reddit post, an IOU (or a certain unit of debt), then the idea is to balance out the amount of money (debt) with the growth of the economy. Too much and we got inflation. Too little and we cripple the economy. I'm very curious why debt should be repaid at all, care to explain? (Note: I…

It's not a matter of repaying the debt. It's a matter of being able to afford future debt. Sovereign debt is generally sold as bonds, which either pay interest or are sold at a discount. The question is: how much interest should they pay, or how large should the discount be?

Ultimately, bonds, like much else, are priced by the market. A $1000 bond is only worth $1000 if the issuer does not go bankrupt before the bond matures. Therefore, the bonds are discounted by some amount that correlates with how high investors think the risk is that it will be paid back in full.

A concrete example: Spanish 10-year notes. At the start of the year, investors demanded about 5% interest to account for the risk that the Spanish government would not be able to repay its debts. This means that for the Spanish government to raise €1000, it has to pay investors €50 every six months. However, this week that rose to 7%, effectively increasing the amount of debt the Spanish government must take on to raise the same amount of money.

This effect can create a death spiral (as we saw with Greece) where skittishness in the market raises the cost of borrowing, which unnerves investors even more.

So there's no way for investors to force the government to pay back all the debt. However, they can make it impossible to raise more money in the future.

Re: Where has all the money in the world gone?

#17

Post by [deleted] »

WA wrote: post #9
bokonist wrote: post #2

The fundamental problem is that the monetary systems of the modern world are all designed on the Wile E. Coyote principle. As long as you never look down, the system works. In the U.S. there is ~$14 trillion in government debt. There exists tens of trillion more in private debt. But only $2 trillion exists in bonafide, actual, real honest-to-goodness dollars (I'm including in that count accounts at the federal reserv…

You ask how any of this debt can ever be repaid. But is this really what we want to achieve? Repay the debt? If money is, like in the reddit post, an IOU (or a certain unit of debt), then the idea is to balance out the amount of money (debt) with the growth of the economy. Too much and we got inflation. Too little and we cripple the economy. I'm very curious why debt should be repaid at all, care to explain? (Note: I…

[deleted]

Re: Where has all the money in the world gone?

#19

Post by killerpopiller »

bokonist wrote: post #2

The fundamental problem is that the monetary systems of the modern world are all designed on the Wile E. Coyote principle. As long as you never look down, the system works. In the U.S. there is ~$14 trillion in government debt. There exists tens of trillion more in private debt. But only $2 trillion exists in bonafide, actual, real honest-to-goodness dollars (I'm including in that count accounts at the federal reserv…

imho you forgot to mention the key difference between US and Europe. The US can print money because there is still demand in buying $. This demand is an artificial one caused by the petro-$, the binding of every oil purchase to $. So everybody involved in oil trading has to purchase $ to purchase oil!

Iraq and Iran threatend to sell oil in €, for several reasons, they couldn't and didn't deliver, unfortunatly.

The BRICs countries establishing their own trading in other currencies than $. So this dominating role of the US will end long term.

Re: Where has all the money in the world gone?

#20

Post by zanny »

WA wrote: post #9
bokonist wrote: post #2

The fundamental problem is that the monetary systems of the modern world are all designed on the Wile E. Coyote principle. As long as you never look down, the system works. In the U.S. there is ~$14 trillion in government debt. There exists tens of trillion more in private debt. But only $2 trillion exists in bonafide, actual, real honest-to-goodness dollars (I'm including in that count accounts at the federal reserv…

You ask how any of this debt can ever be repaid. But is this really what we want to achieve? Repay the debt? If money is, like in the reddit post, an IOU (or a certain unit of debt), then the idea is to balance out the amount of money (debt) with the growth of the economy. Too much and we got inflation. Too little and we cripple the economy. I'm very curious why debt should be repaid at all, care to explain? (Note: I…

Here is the catch in the 21st century - we are creating debt in exchange for things that can create goods without human intervention.

The entire monetary system is built off the idea of trading goods and services that are the products of human labor. Things like automated assembly lines are a precursor - when we had 3d printing, you remove all human factors in the creation of goods besides the raw resource acquisition, and sufficiently advanced printers can also decompose trash into reusable pieces so you don't even need raw materials any more besides power.

All our financial woes and economic malnourishment is the product of this system, beneath government welfare overspending the budget, it is why corporations post record profits while laying off thousands and why all that money goes to the top of the management. When the actual consumable and usable goods are not produced by people, the sale of individual units breaks down.

Look no further than media. Media is an upfront cost of creation, but reproduction is free. The current system is so broken because it tries to charge per unit as if unit production has an associated cost, where the cost is the funding, not the distribution. That problem only gets worse as we automate everything more and more (automated cars replace drivers, 3d printers replace small scale manufacturing...).

That leads to a big one. Automated mining and farming. Fully, with no human intervention, where you can set off a robot with some pre-programmed track of land to till or dig and it will extract all the resources from that area for you. Once that happens everything goes out the window, because a single point of sale unit of production (plus maintinance, which then gets ursurped by the singularity making machines improve themselves) where once one of these machines is available, resources are no longer scarce.

And then money breaks down. Because when human effort is no longer involved in the day to day operations of goods production, there is no continuous "cost" involved anymore, in the terms the Reddit thread describes, or how most people interpret goods and labor.

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