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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?

#151

Post by keithpeter »

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 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."

I have used this analogy several times recently. Good to see it here.

http://www.youtube.com/watch?v=L6fhxL_Njyg

Paul Murphy and the Destroyers have another answer to the question, but localised to the original crash.

What I want to know is: does anyone rate the rating agencies? We now have a situation where some geezers in NY can issue a 'rating' on a whole country and cause that country extreme difficulty.

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

#152

Post by arethuza »

jvm wrote: post #100
tocomment wrote: post #77

Earlier quoted context omitted.

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.

But they do have huge pension liabilities which look like they will be pretty difficult to serve:

http://www.reuters.com/article/2011/10/24/usa-states-debt-id...

Also, aren't a lot of individual US cities in trouble?

http://news.sky.com/home/world-news/article/16135233

Michael Lewis (author of The Big Short) in his latest book "Boomerang" takes a tour of the places involved in the ongoing financial crisis: Iceland, Greece, Ireland, Germany (as a "victim") and, last but not least, California and the city of Vallejo.

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

#153

Post by rapala »

davvid wrote: post #131

It is mathematically impossible for all of the debt in the world to be repaid (without more debt, and it's this way by design). Money is debt, and debt is slavery. Shhh! You're not supposed to look behind the curtain.

If you red the reddit answer carefully, you would know that there never was enough money to pay the dept in the first place. That is the whole point of dept. You don't have enough money for something at the moment, so you borrow it and pay it back when you have accumulated the money.

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

#155

Post by johnchristopher »

satu wrote: post #115
lsc wrote: post #107

Earlier quoted context omitted.

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.

France (Mitterand) told Khöl (Germany) it wasn't the right time, maybe in ten years, to reunite or to tear the wall down. But it happened because there were already holes in Bulgaria the previous summer. Unification is more the symbol of the communism falldown than a capitalist victory.

Actually that was my political economy 101 course credo I took in uni.

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

#156

Post by koide »

wissler wrote: post #92
colanderman wrote: post #89

Earlier quoted context omitted.

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...

Could you illustrate the phrase below with some examples?

"anyone attempting to trade in truly non-dollar- denominated terms will eventually find themselves on the receiving end of a SWAT team."

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

#157

Post by bjornsing »

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 comparison between US and European credit worthiness is interesting. I think there might be an even simpler and more logical way to explain it: European countries can only tax future income while the US government can tax income in the past, at least that of those who cannot protect themselves against inflation.

Since the credit worthiness of a country ultimately depends on its ability to tax its citizens you will see a very different market response to the same debt level.

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

#158

Post by nradov »

A lot of the money essentially evaporated when borrowers defaulted on bank loans. Banks have the ability to temporarily create new money (subject to reserve requirements) by issuing a loan, and then that extra money is gradually retired as the borrower repays with interest. But when the borrower defaults the created money goes away all at once and reduces the bank's capital reserves, which in turn reduces the amount the bank can lend in the future.

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

#159

Post by brandall10 »

CamperBob2 wrote: post #148
zanny wrote: post #114

Earlier quoted context omitted.

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…

While I think you're way out in the ozone with the idea that consumerism evolved as a reaction to Communism, the rest of your post is really well-stated. Our political system is geared toward promoting the idea of near-zero unemployment, where the goal we really should be working towards is near 100% unemployment.

"While I think you're way out in the ozone with the idea that consumerism evolved as a reaction to Communism".

A few months back I would have said the same thing. Then I watched this: http://en.wikipedia.org/wiki/The_Century_of_the_Self

It actually appeared to start post WWI, just the Cold War accelerated the effect.

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

#160

Post by jvm »

nhaehnle wrote: post #113
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, t…

They may target interest rates, but they are perfectly welcome to target the money supply, they just choose not to.
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