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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?

#161

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…

> 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.

Sorry just noticed this. This is a common misperception. They have been using QE to create more money in public circulation now that interest rates are 0, and there's nothing ineffectual about that.

To see why this is possible, just consider the question, could the Fed create inflation at the 0-lower-bound by saying they will print money until they get it? The answer is clearly yes. Actually the Bank of Switzerland did that recently to set a Euro peg.

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

#162

Post by jackfoxy »

It's been a long time since I read it, but the top reply on Reddit reminds me of Human Action http://en.wikipedia.org/wiki/Human_Action (the wiki synopsis doesn't remind me at all of the book I read) by Ludwig von Mises http://en.wikipedia.org/wiki/Ludwig_von_Mises. Once somewhat influential I think the book has fallen into obscurity. My memory is von Mises constructed a rational economic system using a bottom up approach starting with human action, rather like the the Reddit poster attempts.

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

#163

Post by janardanyri »

gasull wrote: post #118
edwardy20 wrote: post #101

Earlier quoted context omitted.

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.

I'm severely distrustful of those stats and the zeal that surrounds them, generally long on ideology and short on rationale.

Let's poke at it a bit. Does "long-term discouraged worker" mean that if someone works for a few years in their 20s, experiences some obstacles in pursing their preferred career, and decides stay-at-home parenting is more to their liking anyway, are they now permanently "unemployed?" How do we recognize the difference between a detached person who's taken up sculpting and a desperate person living at wit's end?

Do you count as a "long-term discouraged academic" if you once made strides toward pursuing an academic career but strayed into industry? Do we have an economic crisis in the professional sports sector because millions of aspirants are being trained but over 90% of them ultimately can't find jobs playing baseball?

There may be some value in exploring how we define employment, but categorically calling those stats "real" and other stats "manipulated" trips my tinfoil detector, especially since I never see actual economists referencing this data.

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

#164

Post by lsc »

tempuser09 wrote: post #146
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…

As long as the EU union is governed in a democratic way (as it is now) there is no serious fear that we (the rest of EU) would be the political slaves of Germany. Economically speaking, the eastern half of Europe (Hungary, Slovakia, Romania, Bulgaria, Poland + the 3 Baltic states) is nearly in economic slavery to the French, German, Austrian, Dutch and Swedish financial elites already. So what was in danger to be los…

>I live in France now and there is no real fear here of anything (militarily speaking) cause they keep their Nukes warm and ready :D.

That made me chuckle. Yeah. France? My impression is that sometimes you are not so different from America as people think.

Oh yeah, speaking of nukes, last time I checked /everyone/ was stepping back from (civilian) nuclear power after the Japanese disaster. I know in the past France has been pretty dramatically pro-nuke; has this changed?

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

#165

Post by nhaehnle »

jvm wrote: post #161
nhaehnle wrote: post #113

Earlier quoted context omitted.

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…

> 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. Sorry just noticed this. This is a common misperception. They have been using QE to create more money in public circulation now that interest rates are 0, and there's nothing ineffectual about that. To see why this is possible, just consider the…

I guess it depends on what you mean by public circulation. QE was certainly effective in raising the amount of reserves, since that is what it is by definition. But reserves are only ever held by banks. The amount of money held by the non-bank public has not been changed significantly by QE.

As for targeting the money supply, you're right, they could do that, and in fact they did try it a few decades ago. The problem that was observed is that it created extreme volatility in the interest rate. The lesson learned from the experiment is that either the interest rate or the money supply has to be volatile, and there's general consensus that a volatile interest rate hurts the economy, whereas a volatile money supply has marginal effects at best.

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

#166

Post by losvedir »

davidgraeber wrote: post #140
planetguy wrote: post #81

Earlier quoted context omitted.

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 point that the morality of debt is based on the fact that it's a promise already appears on page 4. Similarly the very last paragraph, begins "What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence..." And so on. Might want to read more than "chunks" of a book before lecturing the world on what's not in it.

Cool, are you the author? If so, thanks for joining in on the discussion. I hadn't heard of your book before people brought it up on here, but I just added it to my Amazon wishlist and plan to get it soon.

The extent of my knowledge of your book (I'm assuming you are the author), is only what people are discussing here, but my quick impression was that the person you responded to characterized your view of debt pretty well.

He seems to have a mental image of "debt" as something that a loan shark puts you in so that he can break your legs afterwards, rather than the vast majority of the world's responsible debt arrangements which wind up beneficial to both parties.

planetguy said:

"He seems to have a mental image of "debt" as something that a loan shark puts you in so that he can break your legs afterwards, rather than the vast majority of the world's responsible debt arrangements which wind up beneficial to both parties."

This seems extremely in-line with what you just posted:

"What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence..."

This does strike me as needlessly negative, too, as many debts are mutually beneficial, no?

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

#167

Post by Evbn »

joe_the_user wrote: post #10
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…

As long as you never look down, the system works. Perhaps to nitpick - as long as enough people don't believe their neighbors believe that their neighbors are looking down, things are fine. If I personally look down, it is doesn't matter.

Yes. Money is a shared delusion.

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

#168

Post by CamperBob2 »

brandall10 wrote: post #159
CamperBob2 wrote: post #148

Earlier quoted context omitted.

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.

You don't think that what we call "consumerism" is just a Darwinian imperative? The idea that the guy with the most bling gets the most chicks is older than the ascent of Man, never mind Communism.

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

#169

Post by planetguy »

davidgraeber wrote: post #140
planetguy wrote: post #81

Earlier quoted context omitted.

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 point that the morality of debt is based on the fact that it's a promise already appears on page 4. Similarly the very last paragraph, begins "What is a debt, anyway? A debt is just the perversion of a promise. It is a promise corrupted by both math and violence..." And so on. Might want to read more than "chunks" of a book before lecturing the world on what's not in it.

Dave, Dave, don't be so defensive! I mean, I spend time googling for my name too, but I manage to resist the temptation to throw myself into any discussion of my work, it just comes across badly. I mean, I did go and buy a copy of your book, hardback too, and I did just go and give you a semi-positive review in which I heartily recommended large chunks of it. I really did enjoy quite a lot of it.

You're right, page 4 does mention the idea that a debt is a promise. But it's immediately pooh-poohed as an idea that's "dangerous because it's self-evident". And the last paragraph does call a debt a "promise corrupted by both math and violence", but it's not clear how anything is "corrupted" here. So yeah, you acknowledge this self-evident idea, but only to dismiss it without a proper argument.

Also while you're here (actually yours is exactly the kind of book that I read while wishing that I could argue with the author about certain points, so it really is a privilege to have you here and I hope that doesn't sound like a backhanded compliment), the other point I think you dismiss without enough of a fight is the idea that all human interactions are based on reciprocity. There is of course one counter-example, the child-parent relationship in which the parent is generally happy to give selflessly, but that's a special case which seems to be more-or-less hard-coded into our genes; our minds are programmed to give selflessly to our children since from our genes' point of view they're nearly equivalent to ourselves. Once we step outside the parent-child relationship, however, your other examples of non-reciprocal human behaviour (apart from outright theft, extortion and other forms of behaviour where one party isn't consenting) don't ring true. Two labourers working on the same project will, of course, pass each other hammers, but there is an expectation of reciprocity even in group work, as anyone who has ever worked in a group with someone not pulling their weight will know.

In conclusion, you've written an interesting history of debt, but I think you've started off with some kind of antipathy towards debt which has stopped you from really gaining a good perspective on it. I still don't understand the objection to the basic concept of debt: that if Alice has something and Bob needs it then Alice can lend Bob that thing and get it back in the future, for mutual benefit. I find that to be a glorious example of human interaction at its best. But then again, I've already paid off my mortgage.

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

#170

Post by brandall10 »

CamperBob2 wrote: post #168
brandall10 wrote: post #159

Earlier quoted context omitted.

"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.

You don't think that what we call "consumerism" is just a Darwinian imperative? The idea that the guy with the most bling gets the most chicks is older than the ascent of Man, never mind Communism.

To consume as in gaining resources that actually increase survival and replication value? Sure.

The kind of mass consumption spawned from the US that has people sitting in front of their TVs 6 hours a day on average, obsessed with celebrity, eating fast food, getting fat, buying and hoarding tons of junk they hardly even use, being seriously in debt, working jobs they hate to keep the cycle going... stuff that is actually deleterious to physical and emotional health? No. And that documentary brings context to how this mess came about.

Just give it the first 15 minutes and find out how one man behind one public event changed the perception of women smoking forever:

"Bernays staged the 1929 Easter parade in New York City, showing models holding lit Lucky Strike cigarettes, or "Torches of Freedom". After the historical public event, women started lighting up more than ever before. It was through Bernays that women's smoking habits started to become socially acceptable."

http://en.wikipedia.org/wiki/Edward_Bernays

This same man, the double nephew of Sigmund Freud, also coined the term PR and got his start as a propagandist for the Wilson administration during WWI.

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