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Calling All Hackers: How money works (2024)

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Re: Calling All Hackers: How money works (2024)

#201

Post by eru »

littlestymaar wrote: post #196
eru wrote: post #170

Earlier quoted context omitted.

No, no, not at all. Communists can say "oh, it wasn't real communism." Classical liberalism and neoliberalism can make much stronger claims: a bit more neoliberalism (stochastically) gives you a bit more prosperity in the long run. You don't need the whole thing 100% to reap partial benefits. I say stochastically, because in the real world there's a lot of noise from other factors, of course. And in this case at hand…

> a bit more neoliberalism (stochastically) gives you a bit more prosperity in the long run. You don't need the whole thing 100% to reap partial benefits. Except in practice it always fail to materialize, neoliberalism has repeatedly been tried everywhere in the western world, resulting in decline instead of prosperity. And people blame the fact that not enough regulations were removed to justify why it failed. So ex…

> Except in practice it always fail to materialize, neoliberalism has repeatedly been tried everywhere in the western world, resulting in decline instead of prosperity.

Are we living in the same world?

All over the place, we see that more neoliberal places are richer than less neoliberal places. For example, Ireland is richer than Germany which is richer than Greece.

> As if the only difference was regulations, and not the fact that Canada was at that point part of the British Empire

You are right that there were more differences between them. Other people have done more extensive work on this, and I'm not doing it justice. The US had and has really asinine and heavy-handed financial regulation.

Their bans on branch banking are really something, too.

Re: Calling All Hackers: How money works (2024)

#202

Post by eru »

Dylan16807 wrote: post #172
eru wrote: post #171

Earlier quoted context omitted.

The current market price is about what it is worth _currently_. When your deposits are denominated in _current_ dollars, and that's what your customers can demand, then it doesn't matter that your expectation of how many dollars you are going to receive in 2035 is stable. It's about what our assets are worth right now, in case you need to liquidate them to satisfy withdrawal requests. If you can contrive your deposit…

This conversation was not about banks when the comparison came up, and when I talk about long term value I'm not talking about bank reserves. (And even if you argue a stablecoin is like a bank, it's one with an utterly massive reserve ratio.) If you're worried about short term value then you can use shorter term bonds if you want, whatever. It doesn't make a difference to the reason I brought it up in the first place…

What do you mean by long term value? The current market value is typically the best estimate we have for their long term value.

No one is talking about bank reserves. I'm talking about assets.

Re: Calling All Hackers: How money works (2024)

#203

Post by mothballed »

eru wrote: post #201
littlestymaar wrote: post #196

Earlier quoted context omitted.

> a bit more neoliberalism (stochastically) gives you a bit more prosperity in the long run. You don't need the whole thing 100% to reap partial benefits. Except in practice it always fail to materialize, neoliberalism has repeatedly been tried everywhere in the western world, resulting in decline instead of prosperity. And people blame the fact that not enough regulations were removed to justify why it failed. So ex…

> Except in practice it always fail to materialize, neoliberalism has repeatedly been tried everywhere in the western world, resulting in decline instead of prosperity. Are we living in the same world? All over the place, we see that more neoliberal places are richer than less neoliberal places. For example, Ireland is richer than Germany which is richer than Greece. > As if the only difference was regulations, and n…

Singapore and Lichtenstein are probably the richest by PPP and they are what I would describe as benevolent monarchies (at least under LKY it was) that have managed to implement classic liberal market policies precisely because they have suppressed some or many components of neoliberalist representative democracy.

LKY basically in a nutshell said 'you get the free market * because I fucking said so and I am smarter than all of you'. Weirdly Singaporeans were smart enough to realize LKY was a one in a million years kind of leader that actually both actually was smarter than everyone else AND was not corrupted to the point he poisoned the whole attempt. If he'd have sought out the populace to vote on his policies they would have done the same thing as most other places in asia and slowly vote more things to themselves in the name of welfare until their position as one of the freest financial markets in Asia was no longer the case.

* Well not for houses, but like half of Singapore is immigrants that can be taxed to pay for the other half's houses so it works out for them.

Re: Calling All Hackers: How money works (2024)

#204

Post by ratelimitsteve »

ipsento606 wrote: post #191
jjav wrote: post #183

Earlier quoted context omitted.

> mortgages which often come with an agreement that you won't pay it back within a number of years Not "often". Prepayment penalty mortgages can exist but I've never seen or talked to anyone who has seen one in practice. Some web searching suggests that only about 2% of home mortgages have prepayment penalty clauses.

> Some web searching suggests that only about 2% of home mortgages have prepayment penalty clauses. It's clear (to me) that you're talking about the US specifically, but it might not be clear to everyone. Residential mortgages are highly idiosyncratic to the country you're talking about. Try getting a 30 year fixed rate mortgage in the UK.

is there somewhere where a majority or a plurality of mortgages come with a prepayment penalty?

Re: Calling All Hackers: How money works (2024)

#205

Post by eru »

TZubiri wrote: post #199
eru wrote: post #93

Earlier quoted context omitted.

> Without fractional reserve rules the banks could lend their money infinitely. What's that supposed to mean? > I like Richard Wagner's theories/research on the subject, as in he actually asked for a loan and went through the books of the bank to verify where the money came from, it came from nowhere, they just credited their account and that's it. That's a bit silly. Yes, when you get a loan and just let the money s…

>What's that supposed to mean? The misconception is that if a bank has a capital X, the law gives them power to create loans up to 10X. What I'm saying is that without the law, the bank could create loans without a constraint, so say 20X, 100X 1000X. The fractional reserve policy is actually a limit, not the source of lending in excess of capital. Loans are money creation, and this creation is organic, it doesn't nee…

> What I'm saying is that without the law, the bank could create loans without a constraint, so say 20X, 100X 1000X.

No, they couldn't, and they didn't when no such laws existed. Canada and Scotland had prominent episodes in their histories when banking was fairly lightly regulated and no such laws existed; and their banks did not create '1000X' loans from thin air.

> Another misconception is that this money creation is monetary emission or that it somehow causes inflation.

No, it would absolutely contribute to inflation. As a thought experiment: just imagine the government banned private money creation tomorrow. Inflation would totally crash and the economy would collapse from a lack of demand.

> It doesn't, because it is gross money creation, not net money creation.

What is that supposed to mean?

> Loans are money creation, and this creation is organic, it doesn't need a charter from the government.

I agree on the first and last part. I'm not what you mean by organic.

Re: Calling All Hackers: How money works (2024)

#206

Post by eru »

aleph_minus_one wrote: post #153
eru wrote: post #146

Earlier quoted context omitted.

Well, that's about as valid as listening to sovereign citizens' interpretation of the US constitution. (At least from the Catholic point of view as far as I can tell.) > Nowhere in the Bible for example it is written that one can pay off sins by giving money to some authority. I'm no expert but doesn't James 2:26 says "Faith without works is dead."? Surely giving some money (that you had to work hard for!) to the gre…

> Well, that's about as valid as listening to sovereign citizens' interpretation of the US constitution. (At least from the Catholic point of view as far as I can tell.) From an "axiomatic perspective" this means accepting much more encompassing axioms than the holy scripture; such a "proof" requires much more than "the Bible/Quran says" as huijzer implicitly used in his argument "That’s why the Bible and Quran are a…

Nah, you can start from the Pope, and you only care about the Bible insofar as the Pope says you should care about it. Very simple 'axiom'.

Re: Calling All Hackers: How money works (2024)

#207

Post by lxgr »

eru wrote: post #132
takinola wrote: post #120

Earlier quoted context omitted.

Which jurisdictions tax unrealized capital gains? Asking for a friend so I can avoid passing through.

Denmark is one of them. Germany has something similar. But you can ask your friendly neighbourhood LLM for details on the world's jurisdictions to get a complete list.

Germany doesn't tax actual unrealized gains. They do tax foreign accumulating ETFs, but those really just dress up dividends to look a bit like unrealized capital gains to brokerages and, in the past, tax authorities.

Re: Calling All Hackers: How money works (2024)

#208

Post by lxgr »

arunc wrote: post #67

I can relate to a lot of things said in the article, both practically and philosophical. Thanks for speaking to/for fellow hackers! PS: Hackers websites don't have to look this ugly. We do take care of attention to detail that the page have to be rendered for mobile devices as well.

That's primarily not a website, but a hacker zine. That's just the format they come in for historical reasons, similar to RFCs.

I personally also don't love it, but fortunately, hackers have the technology to reflow legacy fixed-width text files to any format of their choosing :)

Re: Calling All Hackers: How money works (2024)

#209

Post by littlestymaar »

eru wrote: post #201
littlestymaar wrote: post #196

Earlier quoted context omitted.

> a bit more neoliberalism (stochastically) gives you a bit more prosperity in the long run. You don't need the whole thing 100% to reap partial benefits. Except in practice it always fail to materialize, neoliberalism has repeatedly been tried everywhere in the western world, resulting in decline instead of prosperity. And people blame the fact that not enough regulations were removed to justify why it failed. So ex…

> Except in practice it always fail to materialize, neoliberalism has repeatedly been tried everywhere in the western world, resulting in decline instead of prosperity. Are we living in the same world? All over the place, we see that more neoliberal places are richer than less neoliberal places. For example, Ireland is richer than Germany which is richer than Greece. > As if the only difference was regulations, and n…

> Are we living in the same world?

I live in the western world. In a continent that gave ordoliberal (the German branch of the Mont Pellerin society) principles a quasi-constitutional values. And that continent has fallen behind both the government-debt pumped US and the state-driven China, down from a dominant position when the said principles were raised as supreme laws.

In fact, the very country that invented railways has now been unable to operate first-world level of rail service for three decades, with the collapse happening because of Thatcher's policies.

> All over the place, we see that more neoliberal places are richer than less neoliberal places. For example, Ireland is richer than Germany which is richer than Greece.

Ireland is a tax haven. And half of its GDP is entirely virtual. And again China and the US (which has roughly three time as much public debts as the EU and has had much more relax monetary policies than what the EU can legally due to the Treaty of Rome and its updates) fare better than the EU. But then again I'm sure you'll say that “it's not actual liberalism”…

> The US had and has really asinine and heavy-handed financial regulation.

The regulations put in place in the 30s after the great depression were relaxed by Reagan, and unsurprisingly it lead to the reemergence if financial crisis after half a century of financial stability.

Re: Calling All Hackers: How money works (2024)

#210

Post by danielmarkbruce »

SturgeonsLaw wrote: post #144
danielmarkbruce wrote: post #17

This is bad, don't read it. When you borrow $100 you do not create a liability which includes the interest to be paid. People who don't understand the very basics of finance and accounting shouldn't write about finance and accounting.

It was quite a good article if you don't care to nitpick over terminology. Too many technical people avoid the business side of things because they find it boring or are too cynical to engage with it, which limits their impact. Instead we get sleazebag money guys running the world. The people who are in a position to influence the world are those who understand it, and if this article nudges people with a hacker mind…

>> Instead we get sleazebag money guys running the world.

Nonsense. To the extent some small group of people have an outsized influence it's politicians and the rich of the rich (who at this point are overwhelmingly tech guys).

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