Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Where has all the money in the world gone?

reddit.com

Post reply on HN
Print view View original

31–40 of 188 posts

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

#31

Post by gaius »

guynamedloren wrote: post #27

Very interesting explanation, but unless I missed something, the concluding statement is simply incorrect, which makes the whole thing wrong . > So now you're still growing apples, but instead of trading them for deer-haunches and shoes, you trade them for Loddars. So far, so good. Once again, you want some meat, except harvest time hasn't come yet so you don't have any Loddars to buy meat with. You call me up (cellp…

Well yes and no. You should read up on the different kinds of "money supply", referred to by pundits as M1, M2, etc etc.

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

#32

Post by lifeisstillgood »

Can I just ask a question

we produce money as a form of IOU against the future production of the economy, (apples).

This debt is really an increase in the money supply

each year the government borrows some more - increasing the supply by hopefully an accurate guess of future production

if it's a bridge I get it. Gov borrows 1 bn, builds a bridge, there is a new billion dollars worth of value in the economy

but apples? If I eat an apple and throw away the core do we then have to reduce the money supply by the price of an apple? When and how is this done?

I can see some of the value of the IOU I used to buy the apple hanging around in forms of greengrocer shops, farm worker jobs etc. But some of it really is now, gone

maybe I should have listened more carefully in economics lectures.

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

#33

Post by dimitar »

The question is wrong - the assumption is that the quantity of money has decreased, while purchases ("Aggregate demand") are the same. If fact its exactly the other way around.

Anyone who misses this fact is very unlikely to give a correct explanation. And the explanation is in an Econ 101 course.

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

#34

Post by calibraxis »

bgilroy26 wrote: post #8
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…

I thought US debt was backed by the military? The debt represents faith in the United States and the world-system as a whole. I think the only way this could collapse Wile E. Coyote style was if the trade routes in the Atlantic and the Pacific developed a huge problem with highwaymen and the US military couldn't lock it down.

Yeah, no country's going to compel the US to pay back its debt, given that the US probably spends about as much on the military as the rest of the world combined. Instead, they simply roll over the debt by buying more US Treasury IOUs. It looks far more like tribute to the military superpower, than the usual creditor-debtor relationship where the creditor dominates the debtor.

Of course, weak countries must pay their debts (even when a military dictatorship racks up odious debt), which is a lever to force them to ruin their societies through austerity programs.

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

#35

Post by SuperChihuahua »

CamperBob2 wrote: post #28
killerpopiller wrote: post #19

Earlier quoted context omitted.

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 BR…

So everybody involved in oil trading has to purchase $ to purchase oil! I don't really understand why this is considered so important. Big deal, so oil is priced in dollars. Say I have some Euros and want to buy €100 worth of oil. I trade the €100 for $X, buy $X worth of oil 100 microseconds later, and now I have the €100 worth of oil I wanted. What difference did it make to me if $X was $0.01 or $10,000? I'm trying…

But you need currency to buy oil. And the result is an "artificial" stronger dollar and a weaker euro - a different exchange rate - compared with if you could purchase oil in euro

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

#36

Post by mmaunder »

guynamedloren wrote: post #27

Very interesting explanation, but unless I missed something, the concluding statement is simply incorrect, which makes the whole thing wrong . > So now you're still growing apples, but instead of trading them for deer-haunches and shoes, you trade them for Loddars. So far, so good. Once again, you want some meat, except harvest time hasn't come yet so you don't have any Loddars to buy meat with. You call me up (cellp…

You wouldn't have been able to create Loddars if you said "Well the value of an IOU from the apple farmer has been established at this point so you can't just create a Loddar". But Loddars were created because money is an IOU for anything. And so you can create new money by creating a new IOU even though Loddars exist.

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

#37

Post by icandoitbetter »

sirclueless wrote: post #14
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 heat…

Is it impossible to imagine a system where fellow human beings would help you even if you didn't produce anything of value?

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

#38

Post by TeMPOraL »

mmaunder wrote: post #36
guynamedloren wrote: post #27

Very interesting explanation, but unless I missed something, the concluding statement is simply incorrect, which makes the whole thing wrong . > So now you're still growing apples, but instead of trading them for deer-haunches and shoes, you trade them for Loddars. So far, so good. Once again, you want some meat, except harvest time hasn't come yet so you don't have any Loddars to buy meat with. You call me up (cellp…

You wouldn't have been able to create Loddars if you said "Well the value of an IOU from the apple farmer has been established at this point so you can't just create a Loddar". But Loddars were created because money is an IOU for anything. And so you can create new money by creating a new IOU even though Loddars exist.

I keep wondering:

When you create this new IOU you basically start to repeat the process that resulted in Loddars in the first place; you could theoretically repeat it with the new IOU. Isn't it getting recursive? :).

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

#39

Post by d4nt »

lifeisstillgood wrote: post #32

Can I just ask a question we produce money as a form of IOU against the future production of the economy, (apples). This debt is really an increase in the money supply each year the government borrows some more - increasing the supply by hopefully an accurate guess of future production if it's a bridge I get it. Gov borrows 1 bn, builds a bridge, there is a new billion dollars worth of value in the economy but apples…

I think the apple was only ever valuable in the sense that it had some calories and could keep you alive a bit longer, long enough to keep on working a bit more and generating other forms of value for others.

Value is a very strange concept, if there were no people then apples would be of no value. If there were people but they all agreed they didn't want apples and weren't prepared to work for them then they wouldn't have any value. They value of apples is defined by how many other people want them and how hard they are prepared to work in return for them. When you eat an apple you stay alive and thereby increase the value of all future apples.

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

#40

Post by Atropos »

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…

Yeah Europe is stupid, if only our leaders were as wise as a random blogger! But please explain me this: EUR/USD started at 1,17 at inception and it is still at 1,26 now. US 10 year bond yield is 1,67420 and Germany's is 1,58100. US debt/gdp is around 101% and Germany's is 81,2%. Moreover the US has a huge trade deficit and Germany has a huge trade surplus.

To me the eurocrisis seems primarily a US/UK media thing...

Post reply on HN