Where has all the money in the world gone? • Hacker News Board

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

#111

Post by nhaehnle » Sat, Jun 23, 2012, 5:15 PM UTC

mtgx wrote: post #29

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…

But what happens if US has to print a lot of money all of the sudden? Won't they just wipe out a lot of value from most people's incomes, while also creating higher prices for products?

You have to explain why printing a lot of money would cause inflation in the first place.

What GP is saying is that if the owners of treasuries were unhappy with those treasuries and preferred holding on to cash, the government could just create that cash and nothing would change.

This would not change prices, since if the owners of treasuries just swapped those treasuries for cash, businesses would not see their demand increase, and nobody would have any reason to raise the prices they ask.

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

#112

Post by verra » Sat, Jun 23, 2012, 5:18 PM UTC

swalsh wrote: post #83

xtiy wrote: post #3

Watch Zeitgeist Moving Forward and you'd understand.

It is so easy to find just plain wrong information on the internet these days. The problem is people don't know what they can and cannot trust, so it continues to perpetuate itself even amongst more intelligent people.

Why don't you address the points in the movie instead of starting a personal attack?

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

#113

Post by nhaehnle » Sat, Jun 23, 2012, 5:19 PM UTC

jvm wrote: post #98

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…

Essentially, the 'money supply' is determined by the central bank, since they are the issuers of money.

It's not as simple as that. The amount of money in public circulation is largely determined by banks, because every loan given increases the amount of (electronic) money in circulation. The central bank then adjusts the amount of central bank money (reserves) by open market operations, but it does so defensively, to defend its interest rate target. So yes, with an interest rate target of essentially 0%, they can increase the amount of reserves out there, but this does not translate to more money in public circulation.

Modern Monetary Theory contains probably the best summaries of how this works.

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

#114

Post by zanny » Sat, Jun 23, 2012, 5:22 PM UTC

tempuser008 wrote: post #60

zanny wrote: post #20

Earlier quoted context omitted.

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 acquisitio…

Well said. I can't but wonder how the system evolved: The workers build, the scientists study & discover, the engineers design and improve, and everything they produce is sold for X amount of money while they are being paid Y amount of money. X - Y = P (profit) which goes to the capital owners who can spend it on the goods produced by the others without much participation at the production effort. Also I find it amaz…

The fruits of the labors of past generations are being filtered into 3 areas - the lowest common wage earner in the world that can do the grunt work the cheapest (Chinese, or Illegals, etc) the wealthy, who control all investment and funding, and governments that can freely tax and deficit all they want.

We don't "need" to work more. The USA produces a substantial excess of food, even past the excessive eating habits causing the obesity epidemic, and we sell electricity to Canada and Mexico since we are completely self sufficient there as well. Almost all of our electrical infrastructure is 40+ years old, grossly outdated, but the initial costs are effectively gone. The cost of power is just the million year old dead plants to make it.

The problem is we have no social construct to distribute these non-scares resources in any way but through exchanges that treat them as scarce. And we still have farmers toiling in fields and operators of power plants that need to be compensated for their labors.

The system really evolved to combat Communism. The powers that be ran with the propaganda wars of the 60's and turned the USA hyper-consumer with tons of debt to combat Russia's ideology. Everyone jumped on board because socialism and the "other" were irrationally dubbed wrong and thus we must do the opposite.

Also, food is becoming more expensive faster as the reality that only 1% of our population produces the resources we need to survive and prosper sets in. Make that 2%, 1% to make food and power and 1% to maintain infrastructure (poorly) and keep a functioning supply chain in place.

The rest of us? Effectively useless, and where we should be trying to invest the largest fraction of unbounded intellectual freedom to innovate and create in history to get us some freakin starships and immortality and super AI, we squander it with an outdated economic model that has millions sitting at desks twiddling thumbs or manning store counters because they have no choice if they want to eat and have a bed.

In the end, the best things we can aspire to are just not profitable enough for the system in place, so we wallow with a population grossly underutilized.

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

#115

Post by satu » Sat, Jun 23, 2012, 5:30 PM UTC

lsc wrote: post #107

bergie wrote: post #96

Earlier quoted context omitted.

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

For context, I'm an American; I've read a bit of history, and I have a very American perspective on the last two world wars; Like most people my age, both of my grandfathers fought in world war two, and like most people, I place more emotional weight on stories told me by family members than accounts written by people on the other side, so my view of European politics is biased in a certain direction, and I don't hav…

Europe, especially Margret Thatcher in Britain were very against German Unification... but in the end Unification was a victory for captitalism or communism... which was an important at the time.

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

#116

Post by mtgx » Sat, Jun 23, 2012, 5:31 PM UTC

nhaehnle wrote: post #111

mtgx wrote: post #29

Earlier quoted context omitted.

But what happens if US has to print a lot of money all of the sudden? Won't they just wipe out a lot of value from most people's incomes, while also creating higher prices for products?

You have to explain why printing a lot of money would cause inflation in the first place. What GP is saying is that if the owners of treasuries were unhappy with those treasuries and preferred holding on to cash, the government could just create that cash and nothing would change. This would not change prices, since if the owners of treasuries just swapped those treasuries for cash, businesses would not see their dem…

What do you mean nothing would change? If the Federal Reserve all of the sudden prints 10% of the dollars in existence to pay the US's debt, won't that devalue everyone else's salaries and such by around 10%?

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

#117

Post by bad_user » Sat, Jun 23, 2012, 5:44 PM UTC

lsc wrote: post #107

bergie wrote: post #96

Earlier quoted context omitted.

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

For context, I'm an American; I've read a bit of history, and I have a very American perspective on the last two world wars; Like most people my age, both of my grandfathers fought in world war two, and like most people, I place more emotional weight on stories told me by family members than accounts written by people on the other side, so my view of European politics is biased in a certain direction, and I don't hav…

I see a lot of admiration towards Germany because they recovered after 2 world wars + the fall of the Berlin Wall. On the whole Germans are hard-working and ingenious people and you can't help admiring them for that.

Quite the contrary, people in the European Union hope that Germany will bail out everybody. In my opinion this is unlikely and if I were a German citizen I would not agree to have myself and my family indebted because of the EU ... however I hope that they'll understand that together we are stronger.

The EU is already the biggest economy in the world and if it survives this crisis it will also be the strongest for years to come.

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

#118

Post by gasull » Sat, Jun 23, 2012, 5:54 PM UTC

edwardy20 wrote: post #101

ExpiredLink wrote: post #55

Earlier quoted context omitted.

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).

Considering the 10.3% unemployment rate in the EU right now, I doubt your fellow Europeans share the same viewpoint. ( http://epp.eurostat.ec.europa.eu/statistics_explained/index.... )

Real US unemployment is way larger than the official numbers:

http://www.shadowstats.com/alternate_data/unemployment-chart...

The numbers in the EU are also manipulated, but not by such a wide margin. When Europeans talk about unemployment, the statistic they're using is equivalent to the broadest US U6.

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

#119

Post by ExpiredLink » Sat, Jun 23, 2012, 6:02 PM UTC

edwardy20 wrote: post #101

ExpiredLink wrote: post #55

Earlier quoted context omitted.

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).

Considering the 10.3% unemployment rate in the EU right now, I doubt your fellow Europeans share the same viewpoint. ( http://epp.eurostat.ec.europa.eu/statistics_explained/index.... )

> Unemployment rate

> 2001: US 4,8; Euro area 8,1

> 2011: US 8,9; Euro area 10,2

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

#120

Post by ivankirigin » Sat, Jun 23, 2012, 6:18 PM UTC

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…

The debt is backed by real assets not represented in dollars. Those aren't just inherently valuable like gold, but the engines to create more value.

There also isn't a fixed pie. A software company can turn $1M in salaries into $10M in revenue. This isn't new debt, but new wealth.