What is money? How is it made? outsidethebluepillcave.blogspot.com Summary of 9/11 scepticism: outsidethebluepillcave.blogspot.com #1 For a full list of doubters: patriotsquestion911.com Services leaders questioning the OCT: georgewashington.blogspot.com CIA veterans doubting: www.opednews.com Engineers & architects doubting: www.ae911truth.org Physicists doubting: physics911.net Pilots doubting: www.pilotsfor911truth.org High-level officials doubting: 911proof.com In arecent Zogby International poll (September 06, 2007): 51% of Americans want Congress to probe Bush/Cheney regarding 9/11 attacks; over 30% seek pressing impeachment; 67% fault 9/11 Commission for not investigating anomalous collapse of World Trade Center 7 911truth.org Protest in Brussels for 911 Truth (09 Sep 2007): www.youtube.com #2 But surely this could not have happened, I mean, governments would not in fact resort to terror attacks to advance their interests. Would they? Unfortunately, yes they would. In fact, they have a history of doing so. Operation Ajax: From the archives of the New York Times, the British and US involvement in overthrowing Mossadegh in Iran: www.nytimes.com Operation Northwoods: Operation Northwoods was a 1962 plot by the US Department of Defense to enact acts of terrorism and violence on US soil or against US interests, blamed on Cuba, in order to generate US public support for services action against the Cuban government of Fidel Castro. en.wikipedia.org Operation Gladio …
@thinkertank1 I was using deflate in the laymen significance, i was not talking about deflation (which i clarified and covered my stay on up). If you inject more dollars into the logic you ‘deflate’ or ‘decrease’ the value of the dollar.
You are confusing this unnecessarily, but what i said was accurate and i do stand by it still. More dollars chasing the same goods makes the value of the dollar deflate/decrease. If you disagree, then you have a fundamental error in your understanding of this subject.
@digitised There is no point to continue this conversation if you won’t admit your error here. Deflation is a drop in prices of goods and services. This means that the purchasing power of the currency has increased, (the currency buys more). This is a fact. Your description of deflation is in fact the definition of inflation. I don’t claim to know it all, but I know when I am right.
@digitised If money supply increases year on year, you end up with the value of dollars decreasing. The target for this currently is 2%, as long as you invest your savings and spend your money on goods when you earn it you are all but immune to inflation.
Now if the money supply contracts (goverment is trying to reign in aggregate demand and prevent booms) you end up with unenthusiastic inflation…DEFLATION which makes prices higher.
Know now?
@thinkertank1 More money in circulation DOES deflate currency! Did you not know this?
Deflation of currency means that your money buys less since prices increase in relation to their being more nominal dollars chasing the same quantity of goods.
Its about REAL value, where the money you hold is devalued by what economists would call a ‘positional externality’.
This is MV=PT in action, you do know what i mean dont you?
No of course you dont, you reckon you know it all and you fail year 1.
@thinkertank1 Its a tale, and it only remains right if gold stayed in relative supply and demand to the goods for which it is traded against.
There is of course more gold in circulation now than ever before, so i would doubt Ceasars gold would be worth as much as modern fort knox gold. (i.e. you would have been able to buy more in the past with an ounce of gold)
@thinkertank1 Sorry but thats just nonsense.
Prices are determined by scarcity. Anything can increase in price, including water, wheat, land and any resource.
Currency can also increase and decrease in value, meaning next year the dollar could buy more loaves of bread than it could from the year before.
Yes expansion means there is inflation, but deflation can also occur if the money supply contracts.
Im in fact worried you are blagging this whole conversation at this point.
@thinkertank1 it was an example, so lets not go off on a tangent futher.
Just accept that you know of equipment which cost less to yield now than they did in the past due to technological movement. Its a fact so we do not need to delve further.
@thinkertank1 The fed is independant, its goal is to protect the economy.
The economy is a mixture of – Financial transactions, government transactions, overseas transactions as well as domestic spending.
You are reverting to rather shallow conspiracy theories here rather than being realistic and looking at this reasonably.
The government does run the Fed…they just give it independant status to prevent individual administrations from abusing it.
@digitised I dont reckon you know this at all, which is why i have questioned you numerous times to go and read about it. This is pretty much 1 whole semester in macro-economics if you really want to get your head around the models and maths.
I know you arent an expert, you keep building obvious mistakes but you refuse to admit that this it outside of your understanding and keep criticising it for being incorrect.
Its YOUR model which is incorrect, you have a broken thought in your head which you wont fix.
@thinkertank1 You dont know inflation, and you have proven this with some of the bizarre statements you have made about the central banks controlling the rates. Really it seems like you are just stating your own flawed understanding as fact, it would make any economist face palm because what you have said is so incorrect.
The central bank doesnt choose the rates, thats the choice of the MPC.
This is guided by government policy eg, expansionary or contractionary.
@digitised “More money leads to deflation of the currency” I hope you simply made a typo here. More money and simple credit via artificially low interest rates, leads to price inflation. Note: the housing bubble, simple credit thanks to the Fed, led to inflated real estate prices.
@digitised Consider this tale (if you never heard it) about gold. An ounce of Gold at the time of the Roman empire would buy a fine toga, sandals and a sash.
At the end of the American Revolutionary War an ounce of Gold would buy a excellent tailored suit, a pair of shoes and a belt.
At the end of the Following World War, the same.
Nowadays, well after the end of the Cold War, an ounce of Gold will buy the same goods.
@digitised To say that the cost of living increases over time only confuses people. Those equipment which sustain life don’t become “more expensive” or “more valuable”, but we are required to buy those equipment with more units of currency, because our currency has been devalued. Prices don’t go up; fiat currencies just become more worthless due to the policies of central banking and the countries which collaborate with them.
@digitised There are numerous variables to consider in your example, where the TV was made, how much was the worker paid to make it, the classic law of supply and demand, etc….The only useful example is “cost of living”. Can I sustain the same standard of living now on the same wages I earned 20 years ago? No. I won’t argue that some items become cheaper over time, but overall the cost of living increases.
@digitised The Fed is self serving because its policies are directed at benefiting the interests of the entire U.S. banking logic and not the people. This video clarifies the fact quite well, that in any country which has a central bank, that only ONE BANK in fact exists. This makes significance since it is the central bank that sets interest rates. I am for ending the central bank model completely, any thing less would be a disaster. If the government ran the Fed we would be in even worse shape.
@digitised I have read and I know the difference between price inflation and credit inflation. I know the dangers of central banking and the power of central banks to control interest rates non-centrally of free market forces. I am not out of my depth and the arguments I have made thus far can be backed up with reason and logic. Am I an expert? No. Do I need to be? No. I believe that the Fed is unconstitutional Just as Andrew Jackson said of the central bank which he finished.
@digitised Oh and the useful purchasing power would likely increase, not that purchasing power should ever remain fixed (!). Prices fluctuate all the time, usually they decrease for luxury and necessary goods.
E.g a pretty dreadful 20″ TV 20 years ago cost about £500 in the uk, (when my mum earnt £2.50/hr), now a excellent 32″ LCD costs £500 where min wage is £5.85/hr.
If you calculated the real wage and real price, you’d see an increase in purchasing power due to technological innovation.
@thinkertank1 But you dont have to worry about your savings.. your money goes into a bank account where its immune from inflation (because inflation is always lower than the interest rate paid into savings accounts). And to top it off, if your bank cant stump up your money, the FED quietly gives it to your bank… to give to you.
This is why the logic is fine, your money GROWS over time. Inflation targets are about 2%Pa, whereas savings accounts pay at least that if not 3-5% above even today.
@digitised If we had a stable currency which could not be devalued, we wouldn’t need to worry as much about investing our money or worry about our life savings being wiped out. You quite litterally could just save your money in a safe, and 30 or 40 years from now it would still have the same purchasing power as now. Under the current logic it would be insane to do that. Because of the Fed’s inflationary policies, we basically have no scale but to place our savings at risk. This is some lifeline.
@thinkertank1 The fed is independent, because it needs privacy to handle sensitive problems. Dont you know that if governments or the public were involved that people would manipulate information to gamble, invest, cheat and sink companies?
There are very austere rules in the financial logic, it is also the backbone of the US economy so if it needs help it needs it confidentiality.
The fed does not keep any profit, so how is it self serving?
@thinkertank1 When i questioned you before to go and read a small more, this is why.
You clearly dont have a clue about interest rates or inflation. You seem to reckon you do, but really YOU DONT. Im not amplification it here, theres plenty of books and even websites which can clarify it.
Im not being rude, or mean, its just you are out of your depth and im in fact a small embarrassed for you so take my advice and go and read before you come back with more questions about this.
@thinkertank1 We are not facing a collapse half as terrible as what most people make it out to be. Yes there is a huge shortfall because some huge banks chose to act like idiots with CDO’s. So you have 2 options, let the banks collapse and millions of people lose their savings, jobs and futures…or the logic patches the hole temporarily and everyone pulls together and pays a fraction of the bill.
You have basically have 2 dishes on the menu, and both are dog s**t.
@thinkertank1 Both can be devalued or inflated.
We can find more gold in the ground, trade more gold with other countries for their resources, use more gold in electronics and jewellery etc This will make gold stocks fluctuate and affect its price.
Also paper money is still tied with value because its linked to the quantity of currency in circulation. Have you not heard of Fishers equation MV=PT?
I mean seriously its mathematical proof that the quantity of money is directly linked with prices.
@digitised I’m not blundering, I just figured you must be ignorant of that fact since you are so willing to defend an institution which admits that it caused millions upon millions of people to suffer. These people laugh at us and you want more of it. This new financial reform bill has given even more powers to the Fed and I suppose you have hope now that all will be well. The Fed always acts in the interest of the Fed and not the people.
@digitised All businesses in a free market run risks, but there is no free market in the banking industry. The Fed controls all banks in the U.S. via the setting of interest rates. If there was a right free market in banking, banks would compete for depositors and would offer interest rates which reflected economic realities. But as it stands now, people are discouraged to save money due to low interest rates and inflation. Thank you Federal Set aside.