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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?

#91

Post by _delirium »

planetguy wrote: post #81
ap22213 wrote: post #78

I just finished David Graeber's "Debt", and it really enlightened me on this subject more than anything in that reddit thread. It's one of the most scholarly, informative, provocative books I've read in a very long time. I'm actually reading it a second time through, just to make sure I understand it all.

I've been reading large chunks of that and it's both good and bad. The good parts are where he sticks to his core strength of anthropology -- it's filled with fascinating descriptions of how commerce and law worked in various societies, ancient and modern, from the Irish monks who sat down and figured out the precise compensation that you need to pay if one of your bee stings another man [the regular price of the sti…

> the vast majority of the world's responsible debt arrangements which wind up beneficial to both parties.

This is the part where I think he actually is on pretty solid historical ground. Almost every society in history has had significant problems with, and a backlash against, at least certain kinds of debt, where it didn't really seem to be in the interest of both parties. They don't really seem like outlier cases. Most societies seem to have dealt with it by deciding that it's not actually good to require repayment in every circumstance, especially if the debt persists for a while. That's why you have things like the biblical Jubilee---periodic cancellation of all debts---in many societies.

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

#92

Post by wissler »

colanderman wrote: post #89
wissler wrote: post #7

Corral everyone into centralized monetary dictatorships, and this is what happens. What did you expect? It doesn't matter how you design the monetary system, what matters is that it's centralized -- a mandated system backed by SWAT teams. Create that, and you've just created a system that will inevitably result in sweeping financial destruction throughout the economy. What we need is the diversification a free market…

It doesn't matter how you design the monetary system, what matters is that it's centralized -- a mandated system backed by SWAT teams. Create that, and you've just created a system that will inevitably result in sweeping financial destruction throughout the economy. I don't follow. Can you elucidate how the first sentence leads to the second?

https://docs.google.com/file/d/0ByyIBJqJ0pDBZDAyY2FhODUtYTY0...

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

#93

Post by excuse-me »

Atropos wrote: post #54
adventureful wrote: post #42

Earlier quoted context omitted.

The EU crisis is absolutely not a US/UK media thing. Half the Eurozone is melting down, and requires trillions in bailouts from 'printed' Euros to bail them out. It's from decades of unpaid-for lifestyle choices, accumulated debt from Socialism (same thing America is choking on, we just spent more of our money on things like war, but that's a welfare program too for jobs and corporations). The US is in much worse sha…

At the moment only Greece (2,65% of eurozone gdp), Portugal (1,83%) and Ireland (1,82%) have received bailouts - which makes 6,3% not "half the Eurozone melting down". Spanish banks may get a €100b bankout aswell - big deal. But I agree with you on the source of the problem - socialism or uneconomic regulation. That is visible in the doing business rankings of the world bank ( http://www.doingbusiness.org/rankings ).…

How is California's debt looking these days?

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

#94

Post by excuse-me »

gnaritas wrote: post #88
potatolicious wrote: post #73

Earlier quoted context omitted.

I've noticed that socialism is definitely a pejorative term in the US - which dismays me as a socialist-leaning Canadian. It's like economic Godwin - call someone a socialist and effective discourse just kind of grinds to a halt. It's the modern "communism", without invoking the spirit of McCarthy.

It's a pejorative among conservatives, not among liberals.

Ironically that liberal is also pejorative in the USA

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

#95

Post by excuse-me »

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 if you want oil and you have the machine that prints $ you don't have to actually pay for the oil - you are buying it with treasury debt.

And since the producer can only sell oil in $ they have no choice but to lend to you - so oil in $ and owning the $ machine gives you a certain advantage over having to actually export somethign to balance our payments

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

#96

Post by bergie »

cstross wrote: post #61
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…

So that's why Europe is stuck. It adopted a monetary system that works when the government controls the currency, and adopted it in a situation where governments cannot print money. Minor nit: I believe they adopted the current monetary system in anticipation of future political union . Which was not unreasonable, extrapolating from the Franco-German steel and coal pact forward to the subsequent treaty system that cr…

Exactly, the original point of EU was to disincentivize France and Germany from going into yet another war on resources. Lots of other good (but sometimes confusing) structure has since been built on that foundation, but to me that original point is already enough for keeping the Union around.

Disclaimer: some of my current open source work is supported financially by the EU

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

#97

Post by bergie »

calibraxis wrote: post #25
sirclueless wrote: post #14

Earlier quoted context omitted.

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…

It actually turns out that barter is one of the founding myths of modern economics. Notice that economics books always have these invented stories of quaint towns (or savage tribes) of people in the same community bartering; they don't actually offer historical evidence. Turns out there is none. When people trade in a community, credit systems predate currencies, which predates barter. This is the opposite of the usu…

I was reading some artist biographies from the 1800s recently. What amazed me was the credit system that allowed them to work and travel nearly as freely a the modern hacker would do. Instead of credit cards you had a network of IOUs, which enabled the economy to keep going.

Of course much of that network got wiped out in the 30s recession.

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

#98

Post by jvm »

Here's my attempt, without talking about apples or anything:

Essentially, the 'money supply' is determined by the central bank, since they are the issuers of money. You can read on your US dollars that they are issued by the federal reserve. An excellent measure of the money supply is NGDP, since this is the number of dollars traded every year (that sort of quantifies how many dollars are available to be captured by working, trade, etc.). Unfortunately, in 2008, the US Fed decided to adopt an ultra-tight monetary policy, resulting in a severe drop-off in NGDP relative to previous trend (the worst since the Great Depression, graphs here: http://marketmonetarist.com/2012/06/19/guest-post-measuring-...)

It does not look like it will ever recover to the previous trend, so the money supply is much smaller than people would have expected before 2008. In theory, the nominal value of money shouldn't matter in the long run. However, since people before 2008 signed contracts (read, 30-year mortgages) anticipating a much higher aggregate money supply, this has triggered a shortfall in demand ever since, which has left our economy in the tank.

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

#99

Post by jvm »

ExpiredLink wrote: post #55
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…

Exchange rates Euro to USD: 10 years ago: 1 EUR = 0,95 USD today: 1 EUR = 1,3 USD As European I really like the 'Euro crisis'. I'd be pleased to get more of it. PS: What media has written about the financial crises since 2008 is mostly nonsense. In fact, we have seen a deep media crisis. Media is not able any more to give a remotely adequate picture of reality (not limited to financial aspects of course).

I hope you also enjoy the 25% unemployment in Spain...

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

#100

Post by jvm »

tocomment wrote: post #77
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…

Why is europes situation different than individual states in the us? They all issue debt in a currency they can't create and they generally do fine. Why can't we think of eu members like states of a larger country?

The US states, largely, have very little debt. Many of them have legally banned themselves from deficit spending.
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