Bits Bucket for June 1, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
September 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
100 Million Americans Without Jobs
“The numbers are staggering. The jobs-to-population ratio peaked 12 years ago. If we were to have the same ratio today, we would need 15.3 million more jobs, or 23.7 million fewer people.”
http://www.businessinsider.com/100-million-americans-without-jobs-2012-5#ixzz1wTaHFtpi
Wow! That’s some chart.
Wow! That’s some chart.
Indeed. The time-line coincides with the “Made in China” label appearing virtually everywhere and on everything.
Stupid boomers retiring and echo baby boom pushing up births which peaked in 2009, meaning there are 25% more 60 years-old, and 25% more 20 year-olds, then there are 40 year-olds.
Now normalize it for the % of the population that is between… say…. 35-63, when the kids are old enough for the mom’s to go back to work, and before people start taking early retirement.
Because of the Baby Bust, of which I am dead center, we have the LOWEST % of the population that is in key earnings years, like EVER, and it is only going to get worse for another 10 years as boomers continue to retire.
Come on people, we’ve know this is coming for like 45-50 years. How can we be shocked that it is here?
And we wonder why Obama double deficit spending, or whatever. It’s not Obama. It’s those retiring baby boomers all getting sick that are spending government money — money they contributed decades ago, but was pissed away on tax cuts, wars, and badly-designed deals with Big Pharma.
FY 2009 (started Oct 1 2008, so already set before Obama), Bush’s last year, receipts fell $400B and spending jumped $600B, making the deficit $1T larger.
But, not nearly all the money is going to boomers, not yet.
Social Security is up only $150B and Medicare only $120B.
That is less than half of the spending increase since 2007.
Food stamps up $50B
Unemployment up $100B
Payroll tax cut (also counted as an expense as the money is transferred back to the trust funds, rather than being counted as reduced receipts) $200B
It does get worse and worse as we move forward.
Oh but is is Obama. Before him, it was those other guys. The names are irrelevant. The system that produced them is what is relevant, and Obama is a shining example. Personally, I expect the next guy to be even worse, until the system breaks down and can be reformed.
like EVER, and it is only going to get worse for another 10 years as boomers continue to retire.
Boombers retire - That’s a good one. My guess is they many of them will be working for far longer then they planned.
many of them will be working for far longer then they planned ??
Working where….Home Depot ??
Working where….Home Depot ??
The Home Depot, 30-minutes East, appears to hire just enough people to keep the doors open. It’s a huge place that you can wander through without seeing anyone to ask where you might find something. Amazing.
The Home Despot near me is a solid wall of orange aprons sported by the most diverse, both in age and nationality, population of employees I’ve ever seen. Busy paint counter too.
Many are “retiring” per SS and working at the same time.
Yes, I’ve been seeing that. The Boomers are milking the system for all they can get. They took on too much debt, itself doubled by trying to take on the lifestyle costs of their ridiculous children. There are probably 1-2 million jobs that would be filled by the unemployed today if the effin’ Boomers would just retire properly and stay home… but they “need the money” (to keep paying and paying).
I studied the chart a little more… Look at the trends, then look what was happening at the time, 20 years prior and 65 years prior….
http://www.infoplease.com/ipa/A0005067.html
Early 90’s.
Current: Echo baby boom. births up.
20 years prior: pit of the baby bust
65 years prior: roaring 20’s baby boom.
In short, that rapid rise in the early 90s was because there are a lot of people retiring, lots of babies being born, and not many workers entering the market.
Flat in the late 90s.
Current: Echo bust. Births down 400K a year from the 1990 peak
20 years prior echo boom from 75-80
65 prior: baby bust of the great depression.
In short, the flat-to-down in the late 90s was fewer babies and fewer retirees, and more 20 year-olds entering the workforce.
Spike since:
Another echo boom post 2000, so more babies
Baby boomers
fewer entering the workforce.
It seems as if the baby booms match the credit cycles. Maybe that’s why children are sometimes called “charges”.
Say what? There are only 154 million people in the entire workforce. (~16 to 65)
Our population is only 330 million. So unemployment is 30%?
I don’t think so.
People who are not in the “workforce” cannot by definition be unemployed. If there are 154M people in the workforce and 140M employed then unemployment is more like 10%.
We are able to get this low % by dropping people out of what we consider the workforce.
Workforce = Did meaningful work for money in the last week or actively looked for work in the last week.
Stay at home parents, disabled, early retirement, gave up looking from frustration, in high school/college and not working/looking… not in the workforce, and therefore not unemployed, even though they do not have a job.
A very convenient way of defining unemployment that always leads to a Lower number. If they are not working and are in the age bracket of working americans, they are UNEMPLOYED.
I think the “participation rate” is a much better indicator of the state of affairs of the economic malaise of the us of a.
Dio, by that definition, unemployment was higher in the 50’s than now because half(?) the workforce was home being June Cleaver.
“Workforce” means “all who are of eligible age to work”.
ALL.
That number is 156 million.
I’m assuming the chart pertains to working-age population?
Is that correct?
Oh dear, here we go again.
UK manufacturing in ‘worst performance for three years’
The manufacturing PMI dropped to a three-year low.
The UK’s manufacturing sector turned in its worst performance for three years in May, according to a survey.
The Markit/CIPS manufacturing Purchasing Managers’ Index dropped to 45.9, down from 50.2 in April. A reading below 50 indicates contraction.
http://www.bbc.co.uk/news/business-18293411
Spain’s manufacturing sector sees contraction worsen
The rate of contraction in Spain’s manufacturing sector was worse than that of Greece in May, according to a business survey.
Markit’s eurozone manufacturing purchasing managers’ index for the whole eurozone dropped to 45.1 from 45.9 in April.
http://www.bbc.co.uk/news/business-18293197
China’s factory activity weakest this year
Activity in China’s biggest and mainly state-owned factories has hit the lowest point this year due to weak domestic demand.
China’s purchasing managers index (PMI), which measures activity in factories, fell to 50.4 in May, official data showed.
It is the weakest reading this year. Analysts had forecast a reading of between 51.5 to 52.2.
http://www.bbc.co.uk/news/business-18291873
Still as long as we stick to austerity with a dash of QA we will all be fine; wibble wibble
http://www.mashpedia.com/Captain_Blackadder
But, but, but….
We were told that big deficits by governments were sucking up all the capital, and that austerity would shrink deficits, freeing up some of that capital to be put to work in the private sector, triggering economic growth.
How can governments cut spending, raise taxes, shrink deficits, and still we have a shrinking economy? That makes no sense!
It makes perfect sense when the jobs are continually sent offshore.
There is NO austerity anywhere.
There are NO spending cuts. There are some slight decreases in the rate of increases of spending.
There are still MASSIVE budget deficits
Even in Greece.
They have done NOTHING except to kick the can down the road and hope all gets better.
And then same in America…
Yes, but it’s grow or die. It only takes a slowing of the expansion of debt to feel like the end of the world to the parasitic component of society. I’m pretty sure that includes just about everybody.
“There is NO austerity anywhere.
There are NO spending cuts. There are some slight decreases in the rate of increases of spending.”
You haven’t been to our school district. Real spending is down, as in fewer dollars than last year.
Yes, there is austerity. Our city has had muni wages frozen for a few years now.
Just because the FedGov can buy all the bombers it wants doesn’t mean everyone else is doing fine.
A wage freeze may seem like austerity, but slightly more severe circumstances might be concievable.
Oh yes, it can be worse. The school district has implemented pay cuts over the past 3 years, plus layoffs. So far the city has dodged that bullet, thanks to steady sales tax collections. Those of course could go off a cliff on short notice.
Our town, where houses cost up to $6M will be forced to file bankruptcy before the end of the month.
The austerity here has begun but soon we will be forced to get serious.
Dang, Charlie. I skip one itty bitty little season up there and the whole place goes under….
Seriously, if you get a chance, what happened? I didn’t see any over-spending on the mountain last time I was there, although the town seemed overbuilt and under-occupied.
Mammoth Lakes 2nd city to use state bankruptcy law
Associated Press
Friday, April 6, 2012
Kat Wade / The Chronicle
Joe Davidson fly fishes for trout on Tim Alpers, trout farm and fly fishing retreat near Mammoth Lakes, California.
Sacramento –
Stockton isn’t the only local government in California taking advantage of a new mediation process as it contemplates bankruptcy.
The Sierra Nevada ski resort city of Mammoth Lakes (Mono County) is set to start pre-bankruptcy talks with creditors at the end of the month after losing a breach-of-contract lawsuit. Letters about the mediation process were sent last week, said Assistant Town Manager Marianna Marysheva-Martinez.
Unlike Stockton, which has been battered by the economy, Mammoth Lakes is facing a mammoth bill -$42 million.
“We have a major judgment against us,” Marysheva-Martinez said Thursday. “With the magnitude, it’s almost unimaginable for us how we’re going to deal with this judgment.”
…
“There is NO austerity anywhere.”
The Arizona state budget is down from almost $11B in 2007 to $8B. That is $3B, 25%, real cuts, not slowing growth.
Adjusted for population and inflation, it is a lot more than 25% nominal cuts.
I’m feeling that austerity right here in Tucson. Used to do a lot of business with the University of Arizona. Since 2009, however, not so much. And it’s not like the private sector is hopping.
And it’s not like the private sector is hopping.
Nope. I was well above quota beginning of the year. Just slid under quota (YTD) in May. It’s gotten uncomfortably quiet.
Salary, Sale, Sell… all have as their etymological origin the word “sal”, the latin word for salt.
Once upon a time, consumable salt was used as money. It was rare, had inherit demand, took labor to get, is fungible, dividable, easily measurable, easily transportable, and all the other qualities that makes something ideal to be used as a barter currency.
In our modern economy, is salt money?
Is gold money?
All the attributes you listed for salt also apply to gold.
Do not skip ahead….
is work money ?
is money backed by work or the promise of future labor ?
“is money backed by work or the promise of future labor?”
Current assets are backed by past work, but they are no longer commonly exchanged for other goods and services, since we no longer have a barter based economy, and since they are not commonly circulated as currency, they are not money.
The bills and ledger entries that now serve as money are backed by the promise of future labor, in the form of the debt that was created when the money was borrowed into existence. The person/entity with debt has promised to do labor in the future, give the product of that labor to the current money holders, in exchange for money, so they can repay their debt, destroying the money (claim to future labor) and debt (promise to provide that future labor).
I think thats right
Comment by cactus
2012-06-01 12:03:40
“I think thats right”
Of course it is right.
Only those that refuse to accept that it is the offsetting debt, and NOT some government fiat, that gives money its value, refuse to see the obvious. The only government fiat is that money can be used to repay debt! The ability to use it to repay debt, is what gives money its value.
That value remains, as long as people are still trying to get it to repay their debts.
“is salt money?”
No, but I suppose it could be. Anything can represent money, even paper.
If we were in a barter economy, then yes, salt could be money.
In paper money, what is the source of demand that would give the paper value?
We know why people want salt. It makes food taste better, and replaces the electrolytes we need for nerves to carry electrical signals from the brain.
We know why people want gold. It is pretty, traditionally has been a symbol of love, wealth, power. It doesn’t go bad, making it an excellent store of wealth. It is fungible, dividable, portable, yadda, yadda, so traditionally had been used as money.
But, what is the demand for paper? Why do people want it? Why are they willing to trade goods and services for paper?
‘replaces the electrolytes we need for nerves to carry electrical signals from the brain’
Brawndo?
“IT’S WHAT PLANTS CRAVE!”
It might be usefull to think of paper money as a type of coupon.
A coupon is generally a piece of paper you exchange for a specific good or service. Paper money is similar but more expansive in that the good or service you are alowed to trade it for isn’t limited to anything in particular.
As a child, I made up a little book of coupons for my mother as a gift. One carwash, one sweep the kitchen, that sort of thing. Who knew, I was a banker!
The coupon idea certainly makes it clear that the money is debt. Addin in Blue Skye’s example, those coupons probably said “I owe you one carwash” or “good for one car wash.” The money was offset by an equal and opposite debt (little boy/girl Blue Skye had to provide the chore to mother).
Salt isn’t debt, but if you decided that carrying around all that salt was annoying (especially in the rain) and instead gave someone a note saying “I owe you one ounce of salt” then you have money in the form of the note and a debt represented by the giver of the note having to hand over an ounce of salt. If the debt gets paid, the giver of the note gets the note back and the debt and money disappear.
The salt itself is just a good that was convinient to use as barter.
But, what is the demand for paper? Why do people want it? Why are they willing to trade goods and services for paper?
we want fiat paper because it represents ‘money’. money doesn’t mean what most people think it means. fiat currency is imbued with money, or it would have no value. money is far different than currency. currency can be seen and touched. money can not.
the differences in money and currency don’t matter in everyday life. they only matter when you want to get down deep to understand what they really are.
if you want to find out more, google “money and unreal OR imaginary”.
But, what is the demand for paper? Why do people want it? Why are they willing to trade goods and services for paper?
no one wants paper. the government MANDATES that ALL debts public and private can be satisfied with their printed paper. If I owe you money, I can give you paper, and even if the paper is worthless, it still settles the debt.
You will find when the paper becomes worth its intrinsic value that no one will want it. There are hundreds of examples of WORTHLESS currency.
when people no longer ‘trust’ the value of the paper, they will opt for payment in commodities. real items. they won’t take the paper.
“no one wants paper. the government MANDATES that ALL debts public and private can be satisfied with their printed paper. If I owe you money, I can give you paper, and even if the paper is worthless, ”
Nomination for contradiction of the day?
It is worthless, except for its worth in repaying debt. No one wants paper… well, except the people with debt that want the paper because it can be used to repay debt.
In the modern, NON-BARTER economy, money is borrowed into existence, is always offset by an equal amount of debt, and the value comes from people trying to get it to repay their debt.
Yes, there have been many times where debt has gotten so large, people have lost faith that it can be repaid, and no longer want the money that can be used to repay that debt. At that point, modern economies cease to function and people revert to primitive barter.
None of that alters that the TRUE value of the paper money comes from the people trying to get it to repay their debts, and NOT from government fiat.
The value of the dollar is going up, and the value of the Euro is going down. Is that because a government has altered its fiat as to the value of the dollar or the Euro? No! The value comes not from any government fiat other than the law that it can be used to repay debt. The debt give the money its value, and what people are willing to trade to get the money, so that they can repay their debt.
The value of the euro is going down, because people are judging it more likely that a big chunk of debt denominated in euros, won’t be repaid, that euros will poof out of existence when the debt is written off, and they do not want to be holding that debt when it poofs.
It is not government fiat that gives money value. it is the debt that offsets it!
Incorrect again Darrel, it IS the gov’t mandate that gives money the value. If you want to prove it to yourself and not make me make the argument for you, just walk through the short history of paper money in the US. Where did it come from? Was it always a FIAT currency? At any point was there paper money backed not by debt, but by assets and commodities? Why did this change? Were people happy about it? Why was the change accepted? (Hint: what would have happened if the people didn’t accept it?)
As you go though these simple bits of history, maybe you will start to understand why there is a call to end our FIAT system of money, why (some) people keep a portion of their assets in physical commodities, and why the rich love having people too busy watching Oprah to care about the system of currency used. And you will understand why “debt is money” is correct, and not “money is debt”. Remember Mammal is Dog.
One other thing I find amusing. Certain people have called for allowing both FIAT currencies and asset backed currencies to compete side by side in our market by accepting them as legal tender. How might this work? Assume two currencies to start. At some point, the government would have to agree to accept payment of your taxes in either currency. Suppose this was dollars and gold. The gov’t would have to set some “official” exchange rate say $1000 to 1 oz of gold.. IOW they could mint $1000 gold coins, or accept any 1oz gold coin as being worth $1000 and accept them for cost basis amounts and for payments of taxes. Suppose the current cost basis of gold was close to this 1000:1 ratio (it’s really about 1500:1 but 1000:1 will work more easily for the example). If your salary was $4000/month, you could be paid in gold or in dollars. suppose you had to pay $1000/mo in taxes. You could pay 1 gold coin, or $1000 .
Now if for some reason the currency floated to the point where it was $1200 to 1 gold coin, you could take your salary in gold, trade 1 gold coin for $1200, pay $1000 of paper to cover your taxes, then keep the $200 and come out ahead on your overall bill. The gov’t wouldn’t want to get cheated on it’s money, so it would either have to raise the official conversion rate, or raise the value of the dollar in terms of gold. To do this, they might just let you make the extra profit by the work you did in the currency conversion.. in which case more people would be trying to get dollars to pay their tax bill, the demand for dollars would rise, and the value of the dollars would tend to rise as people tried to get them to pay their taxes. Of course, this assumes you are paid in gold, not in dollars.
What if the dollar rises compared to gold? Say the “official” rate is still $1000:1oz, and you are paid 4 gold coins, but the “street” rate is $800: 1oz. You will put pressure on your employer to pay you in dollars so you can convert it to gold, and pay at the less expensive rate. Both these scenarios will tend to drive equilibrium of the currencies relative to the “official” payment rate.
If you are paid in dollars, you could equally convert your dollars to gold, then pay your taxes in gold. Of course, if the Gov’t floods the market with dollars, then the people will just take their salary in gold and pay in dollars. Effective tax rates and salaries of those paid by the gov’t in dollars will start dropping to 0 and the gov’t will be less and less effective as they can’t afford to hire anyone to do anything. Policy makers would be forced to reign in dollar distribution or face a collapse of gov’t, or more likely being voted out of office. This is why people are calling for competing currencies. Not a bad idea IMHO.
When I was a kid, both silver certificates and silver dollars were in common circulation. In fact, 1950’s Las Vegas used silver dollars as casino chips and they were accepted at all banks and businesses on a $1silver-certificate:$1 silver-dollar basis.
I cringe to think of all the silver dollars Grandmother brought back to us dutifully deposited in we children’s savings accounts….
We are in a barter economy, at least here at the Cantankerous household. Just ask my wife!
Once upon a time was all salt-money offset by debt?
Darrell, you claim (all) money is debt and it is easy to see how debt and money are created when a bank makes a loan. However a fraction of the money is created add a fraction is held in reserve.
Yes, you deposit $100 (that was created when someone or something borrowed it into existence, so there is $100 in debt on someone offsetting this money).
The bank loans out $90 and holds $10 in reserve.
Your $100 is still in your account, and now there is $90 in someone else’s hand. There is now $190. And there is $190 in debt.
Wait… what was your point? How is any of the $190 that now exists not offset by an equal amount of debt?
If the money is held in reserve it cannot be offset by debt, if it was offset it would not be reserve.
The point you are missing is that money changes hands all the time while the offsetting debt does not change hands.
Example, you but my light sport airplane and fund the purchase with a loan. When I receive the money the debt remains your obligation, I now have a pile of money with no offset while you have a pile of debt offset by your newly acquired plane.
If the offsetting debt was passed along with the money there would be no point in the transaction unless the transactaion was a loan.
he’s not talking about individual transactions. he’s talking money in the economy as a whole.
Offset means THE ECONOMY AS A WHOLE!
I have $x debt, and you have $x money.
Summing up all the money and all the debt in the entire world, there is an equal amount of money and debt.
Sure, one individual can have more money that debt, but ONLY if there is someone in the economy that has more debt than money.
If I walk into the bank with the airplane and say “I want to use this to repay my debt”, do the plane and debt both magically disappear, leaving the money with no offsetting debt?
No. To repay the debt, I would have to trade the plane for money. Then I take the money to the bank, pay off the debt, and poof… both the money and debt go away, since one can not exist without the other.
he’s not talking about individual transactions. he’s talking money in the economy as a whole.
It doesn’t matter he is still wrong. Offsetting debt does not follow money after it has been spent. It remains the obligation of the purchaser and is now offset by the asset purchase or it is offset by an expense or loss.
When you make this macro vs micro argument you miss an important point. Sure this debt that once offset the money I now have will likely be paid but when its paid the money its paid with goes poof not mine. This proves that not all money is debt.
” when its paid the money its paid with goes poof not mine. This proves that not all money is debt.”
Money is fungible. That does not alter the fact that somewhere in the economy, there is a $1 of debt for every $1 of money.
Maybe I will try a potential difference analogy next time.
Offset means THE ECONOMY AS A WHOLE! False - offset, specifically when referring to economics means that the money is counter balanced by the debt leaving a positive, negative or neutral resulting value. The point you miss is that the debt offsets specific money or assets and the debt no longer offsets the money once it has been spent, it then offsets what has been purchased.
I have $x debt, and you have $x money.
Summing up all the money and all the debt in the entire world, there is an equal amount of money and debt. False - there is no equivalence
Sure, one individual can have more money that debt, but ONLY if there is someone in the economy that has more debt than money. False
If I walk into the bank with the airplane and say “I want to use this to repay my debt”, do the plane and debt both magically disappear, leaving the money with no offsetting debt? No Thank bank won’t take the plane you have to satisfy that debt with money.
No. To repay the debt, I would have to trade the plane for money. Then I take the money to the bank, pay off the debt, and poof… both the money and debt go away, since one can not exist without the other. my point is that the money you gave me didn’t go poof because there is no ofsetting debt.
Money is fungible. That does not alter the fact that somewhere in the economy, there is a $1 of debt for every $1 of money.
My money is fungible in that I can use it for any purpose. If I receive rental income I can co-mingle it and it may pay for my living expenses. It is not fungible in that other people can satisfy their debts with my money.
You have been given a meaningful array of examples that disprove your “there is a $1 of debt for every $1 of money.” theory.
The irony in this dead end thought street is that there is much more debt than there is money. Like a giant Where’s Waldo. The existing debt cannot be satisfied, not by an entire lifetime of toil. There is your culdesac. Time to turn your bus around.
BS, :^
The United States has $100T-$200T in un-funded liabilities which is not part of our $16T national debt.
CharlieTango said:
You have been given a meaningful array of examples that disprove your “there is a $1 of debt for every $1 of money.” theory.
you’re absolutely correct CharlieTango. there’s no debt attached to the dollars you hold. no one is entitled to your dollars to pay anyone else’s debt. keep fighting the good fight.
If all the debt in the world goes poof, what will happen is a massive transfer of wealth from lenders to borrowers.
Debt is a logical construct, an agreement to pay. When backed by the force of law, it can be a very hard-to-dissipate construct.
Currency (money), while also a logical construct - a store of value - has a physical representation as coins and bills. Of course, a non-trivial amount of it is in digital form as well which is closer to logical construct than physical form.
I think a lot of the confusion in this debate is a result of imprecise definitions.
The irony in this dead end thought street is that there is much more debt than there is money. Like a giant Where’s Waldo. The existing debt cannot be satisfied, not by an entire lifetime of toil. There is your culdesac. Time to turn your bus around.
Increase my pay to 1M dollars an hour and I can pay off any PAST debt. Of course any new debt might be hard to borrow after this..
I see no other way out. When every dollar goes to pay exsiting debt and new borrowering is cut off it’s over.
This will happen sooner than most expect I fear. It already is in the first stage with deflation caused by too much debt.
2nd part is default and not just Greece.
3rd part massive inflation and the end of the middle class
4th part a new currency maybe even scary like a biblical mark on the head to trade ?
Hopefully not!!
Hopefully real money backed by real things and not allowed to be printed willynilly and backed by promises of future generations to pay it back.
“Comment by cactus
2012-06-01 11:20:20
Hopefully real money backed by real things and not allowed to be printed willynilly and backed by promises of future generations to pay it back.”
So, NO LOANS?
None at all?
The instant you allow even a single loan of ANYTHING, the loan creates a debt, which has two sides, who owes, and to who it is owed. We call these debt (who owes) and money (who is owed). Debts are not real, and being owed is not real. So, for money backed by real, there can be NO LOANS.
I think a lot of the confusion in this debate is a result of imprecise definitions.
I think some people think you are saying that when they have money, they also have debt to offset it. They’re missing the point that the money and the debt start to become disconnected as soon as they enter the economy.
You personally can have money and no debt, but the economy as a whole can’t.
(Well, except for the base money.)
“Summing up all the money and all the debt in the entire world, there is an equal amount of money and debt.”
“You personally can have money and no debt, but the economy as a whole can’t.”
Tell that to Iceland.
Tell that to Iceland.
Iceland’s money is also born into existence by borrowing- the ‘original sin’ which makes all money (and theirs too) have an offsetting debt somewhere in the economy.
The various money supply definitions (M0, M1, etc), from Wikipedia.
Darrel, you are so so so close on this. You are just missing one small point. “Money” in a bank account is not dollars. It is a promise by the bank to pay you. It is the bank’s debt to YOU, not real “dollars”. When the bank creates “money” by loaning the dollars out to someone, they are not creating DOLLARS, but they are creating debt. Now someone owes the bank $90, so there is still only $100 DOLLARS, but there is now $190 WORTH of debt. See, debt is money.. but there are 2 kinds in this case… 1 kind is 100 DOLLARS, paper money, the other is two IOU’s valued at $190, but not the ACTUAL bills themselves.
Bath Salt Money?
+1! LOL.
Salt rare? The seas have always been full of it.
Yeah, but, as in real estate, the value of salt comes down to location location location.
If you need it but it is located somewhere else then its value increases. It’s not just its supply of the stuff, it is also its availability.
BTW, this is one of the things that makes the dope trade so profitable, this location thingy.
Dope maybe very cheap in one part of the world but very pricey in another part of the world. The big money is made in moving the stuff.
Note that I said consumable salt. It takes time, effort, labor to create consumable salt from the oceans. Back in the say it was used as money (and even now) more often, it was dug up from ancient dry seas than extracted from current oceans.
Salt in the old days was used mostly as a preservative, to prevent meat and such things from spoiling.
true.
Doesn’t alter the point that it had value based on its usefulness, making it an asset. This made salt a barter currency vs. the modern concept of money being paper or ledger entries without intrinsic usefulness, that have value simply because people with debt need them to repay that debt.
Salt and mystery meat. A delectable medley.
Money is a proxy for labor. Tangible things are a proxy for past labor. IOUs are a proxy for future labor. The former is sometimes called “honest money”.
Salt and mystery meat. A delectable medley.
Snap into a Slim Jim!
http://www.phrases.org.uk/meanings/below-the-salt.html
In mediaeval England salt was expensive and only affordable by the higher ranks of society. Its value rested on its scarcity. Salt was extracted from seawater by evaporation and was less easily obtainable in northern Europe than in countries with warmer climates, where the evaporation could be brought about by the action of the sun rather than by boiling over a fire. This method was abandoned in England in the mid-1600s, when natural rock-salt began to be mined commercially in Cheshire. Prior to that date, the high value of salt was the source of the high symbolic status given to it in the day-to-day language that originated from England in the Middle Ages.
At that time the nobility sat at the ‘high table’ and their commoner servants at lower trestle tables. Salt was placed in the centre of the high table. Only those of rank had access to it. Those less favoured on the lower tables were below (or beneath) the salt.
Sounds kinda like Jack Daniels today…:-)
————————–
Once upon a time, consumable salt was used as money. It was rare, had inherit demand, took labor to get, is fungible, dividable, easily measurable, easily transportable, and all the other qualities that makes something ideal to be used as a barter currency.
GoonMan!
Can anyone here suggest a good plastic surgeon?
TIA
Another cannibal attack reported, this time in Maryland.
Q: What did the cannibal say to the homeless man/roommate?
A: I’d like to have you for dinner.
Fine Young Cannibals - She Drives Me Crazy - YouTube
Jan 1, 2010 … Need the Lyrics for this 80s song? http://bit.ly/6hA4pr.
http://www.youtube.com/watch?v=XSCJJkFgt_w - 166k - Cached - Similar pages
Billy Idol Eyes Without A Face XDVD Keesie - YouTube
Mar 2, 2009 … Standard YouTube License. 1227 likes, 23 … Billy Idol - Eyes Without a Face cover by fromtheziksby OurVirtualJourney38 views · see all …
http://www.youtube.com/watch?v=chbWJVwaoY8 - 161k - Cached - Similar pages
“Billy Idol Eyes Without A Face”
Realtors sing “Head Without A Brain”.
“Can anyone here suggest a good plastic surgeon?”
If you are on a budget you could try Oneal Ron Morris, who was born a man but who identifies as a woman.
Nov 18, 2011 7:06pm
Florida police on Friday arrested a person suspected of administering dangerous and illegal butt-boosting shots – injecting at least one woman with a cocktail of substances including cement, glue and tire sealant.
The person is 30-year-old Oneal Ron Morris, who was born a man but who identifies as a woman. Morris is pictured above.
Police could not release an official report on the incident, noting that the case is still under investigation. However, Sgt. William Bamford of the Miami Gardens, Fla., Police Department said that the procedure took place in May 2010, after the as-yet-unidentified victim met with Morris to discuss the procedure.
“They agreed on the price of $700 for the procedure, which was intended for cosmetic purposes,” Bamford said.
What the woman got for her money was a series of injections containing a bizarre concoction of cement, super glue, mineral oil and Fix-A-Flat tire inflator and sealant, police said.
http://abcnews.go.com/blogs/health/2011/11/18/man-arrested-for-boosting-butts-with-cement-fix-a-flat/ - -
I’ve heard good things about this surgeon.
Face Off-
Actually, yes….
Cannibal zombie apocalypse realtors. They head straight for your wallet.
…it seems they headed for your face…
?
Someone here said they would rather be beat up than kill a person, an opinion that I totally agree with. The ? is would you rather have your face chewed off or kill a man. I am afraid I am going to have to flip flop on this one.
By law, if you reasonably believe you are only going to get beat up, and not killed, then you are not allowed to use deadly force to stop an assault.
Deadly force is only authorized when you reasonably believe you or someone else, is at reasonable risk of loss of life or limb, and the person using the deadly force has not committed a felony crime that instigated the risk. (or vital national security such as someone stealing vital secrets or time of war (declared or not)).
The Florida shooter can not simply say, I shot the guy that was beating me up because I wanted the beating to stop. He has to say, I shot the guy that was beating me up because I thought he was going to kill or maim me.
When you are getting the sh.t beat out of you, at what point would you determine that your life may be in danger or that you may suffer great bodily harm? This question assumes that the attack was unprovoked.
I was one who said that, and I was really just being contrary. Just brought my .270 BDL down from SF for any zombie attacks! Just kidding; found out that deer season opens Aug 15 in these parts.
Been in new home now 2 months. Big lift style change. Haven’t had a tv; used to fall asleep laying down watching tv at night, don’t miss it. Used to go to the gym, now I get a workout doing projects around the acre. Get to hear the birds chirping like now at 5:30 am, watch the wild life coming through the yard. At first wife’y thought bambi was adorable, that is until bambi ate the flowers off some of her prized plants including my lemon tree and new to be planted avocado tree. Love the quietness and views and rustling of the trees in the breeze. Everyone who has visited has said ‘How did you find this place’ and those that slept here said that they got their best nights sleep.
My aggravation has been trying to do projects and finding cheap chinese parts that will fall apart. Everyone talks only about jobs overseas and cheap chinese labor, I want quality parts and will pay the cost so that I don’t have to redo the project months or a couple of years later.Heck, the furniture that we’ve had, some over 29 yrs is still is as good as the day we bought it.
“My aggravation has been trying to do projects and finding cheap chinese parts that will fall apart. Everyone talks only about jobs overseas and cheap chinese labor, I want quality parts and will pay the cost so that I don’t have to redo the project months or a couple of years later.Heck, the furniture that we’ve had, some over 29 yrs is still is as good as the day we bought it.”
ron, try to find a good thrift store, flea market or charity/estate outlet in your area. A lot of the guys around here shop a charity outfit that’s only open two mornings a week, but has everything from building materials to tools to clothing. Try to find a good salvage yard, one that specializes in stuff from older homes. Maybe there’s one like that near you. I also recommend ebay or even craigslist for old tools and stuff made in the USA.
All the thrifts and charity stores around here sell out of the old Corning Ware as soon as they get it in (if it’s in decent shape) because many guys and gals now have concerns about cookware and tableware made in China.
Oh, also I think there’s some sort of web portal or aggregator that links to sites where companies sell goods made in the USA. Doesn’t guarantee quality, though.
You are right about checking out flea markets for tools. I just haven’t had the time for that yet as they are on the weekends. Last year before I thought we’d even find a house to buy I saw some great old ceiling hanging lamps for bedrooms at a consignment store but didn’t buy them as I didn’t want to store them. Went back later and the store was out of business after 29 yrs. Did buy a great solid brass floor lamp at a flea market in the valley last summer for $5, rewired and re-socketed it and it’s fantastic.
Amazing to me is the plumbing industry. I went to a plumbing hardware store in Sand City to pick up a part but ended up in the fixture store rather than parts store to get directions. While there I was looking around. Unbelievable what some people will pay for a tub, sink, faucet, etc. Most of the faucet were (ugly) $400 and up past $1000. How many times to most people go to someone’s house and label shop a faucet? There is no end to stupidity. However, while in the store some 40-59-ish woman was buying a $4000 plus tub, $800 plus faucets and her husband or boytoy wasn’t even blinking an eye.
“Unbelievable what some people will pay for a tub, sink, faucet, etc.”
I’ve found that you get what you pay for more often than not. I’ve got a toilet that retails for $3K (TOTO NEOREST 500). My wife thought I was bananas but now she sees the light. I like it so much that when and if I sell my Ca place and someone tries to dick me on the price I’ll unbolt that toilet and take it with me.
I might take it anyway.
5:30am? Sorry, that’s against my religion.
Totally agree with your cheap Chinese crap comment. It’s so frustrating when you’re working on a project, you’ve actually planned so that you don’t have to bike back to the hardware store and your tools keep falling apart after few uses, even if well-cared for or correctly installed: screws, screwdrivers(!?), digging fork handles, hoes, child locks, trash can locks, wheel barrows. The list is endless.
And now I find that Carhartts are made in Mexico. WTF happened? Fake Plastic Trees by Radiohead springs to mind every time something falls apart in my hand. It looks like the real thing…
Recently I went to Ace Hardware to get one of those inside security door locks (the kind that wedge between the door and the jamb and make it impossible to open the door from the outside even if it’s unlocked). There were two in a package for $3.95. The machining on both of them was horrible, and was so bad on one of them that, when flipped, it wouldn’t slide down into the channel to the locked position. Absolute garbage. What’s the point of selling something like this? I’d cheerfully pay $3 more for something that, you know, actually WORKS.
Ron have i got a computer chair for your new office……Im sitting on one now…the most comfy chair in the world got it from a lawyer and its time for a reupholster…get ready…..its a doozie:
http://www.regalchairs.com/JIMMY-CARTER-OVAL-OFFICE-CHAIR-PSC-JC.htm
cheap chinese parts that will fall apart.”
you mean plumbing parts at home depot
its a real problem maybe the internet has a site to help out here
I have to replace the fill valve on my 3 year old whirlpool washer as the cheap plastic threads don’t hold the hose threads hot water inlet side. its MM right now with teflon tape
asked at a parts store and was told it’s because the parts are made like crap overseas oh and 65 dollars for a new part we have to order it
online I can find them slighly cheaper but what worthless junk
this is becoming a real problem
I found a parts shop (all brands) in Seaside. It’s mainly a gal or two behind the counter. When I first walked in I thought man I’m in trouble. Was I wrong. Man, she can tell you what you need and find the up grades for those made south of the border or else where.
Here in Tucson, the place to go is Precision Tool. Talk to the Tool Ladies. You won’t be disappointed because these gals really know the construction biz.
Has anyone else here received a phone survey on behalf of Wal-Mart? I usually don’t participate in these things, but curiosity killed the cat. Very interesting. Seems they’re worried about their “image” in light of the Wal-Mart de Mexico “scandal”. I could have told them not to bother and spend all that money. I mean, who is worried about Wal Mart’s “image”?
One of the questions was about whether or not I used Facebook or Twitter (I don’t) and how many “friends” I had. I’m gathering that means how much alleged “influence” I can spread. Also if I had a blog or posted on one.
All big retailers do this sort of stuff on an ongoing basis. I’ve been surveyed twice in the same manner. Once was for Walmart, maybe 5 years ago, the other Walgreens, about 1-2 years ago.
For retail, image is crucial. The slightest hint that a store is “uncool” and that quickly translates to lost revenue. Ask Sears/k-Mart about that. I think Walmart is insulated from that since love it or hate it, people go there for the low prices.
But with other retailers who sell the same thing that 10 other stores sell for the same price, bad image can be devastating.
“I mean, who is worried about Wal Mart’s “image”?”
LOL. Can’t argue that one.
Boy does this story ring bells! How is it, despite the fact that All Real Estate is Local, so many different countries all over the planet ended up in the very same pot of stew?
‘Tis a puzzlement!
The Bane Of Spain: How The Property Market ‘Broke’ The Economy
By: QFinance
Date: 1 June 2012
The crisis growing within Spanish banks at the moment appear to have its roots in the country’s property market. Some 80 billion euros worth of loans by Spanish banks to the country’s broken construction and real estate sectors are now considered near worthless – being at serious risk of default – while the drying up of credit also means that fewer people are able to afford homes.
Spain is following Ireland in giving a graphic demonstration of just how difficult it is to recover from the bursting of a major property bubble. As Greece edges ever closer to a messy exit from the eurozone, the attention of the markets are moving ever more to the Spanish government’s frantic efforts to shore up its tottering banks.
In an excellent recent briefing paper on Spain’s debt position, Raoul Ruparel, Head of Economic Research at Open Europe, the European think tank body, argues that it is now doubtful that the Spanish economy can survive without external help.
“One in five loans to the real estate and construction sectors held by Spanish banks is now potentially toxic, a situation which could explode if house prices continue to drop,” Ruparel says.
He gives the Spanish government plenty of credit for the structural reforms it has managed to put in place so far, but argues that Spain’s labour market in particular, needs to be fundamentally reformed before Spain can be confident of having a future inside the eurozone.
…
Because finance is global.
Ugly jobs number. Ugly day for stocks.
Not necessarily. Some Belgian Bilderbugger might crap out a golden turd and the market will soar!
Whatever happened to the Candy Crapping Unicorn?
He goes by the name “The Bernank” these days.
Germany is about to bail out Spain… pop.
Germany says, Oh no we are not…. drop.
Oh yes you are…. pop.
No, seriously, we’re not…. drop.
Risk on — risk off — risk on — risk off…
It sounds like a Greek Comedy.
Anybody else besides me planning a Greek vacation as soon as they bail on the Euro?
Have to admit the idea has occured to me. Probably want to give them a few months to calm down.
How about an HBB tour of the Greek islands!
From a zeppelin, maybe.
Place is going to be uninhabitable for the next few years, I suspect. (Refer to the last time Greece went the resistance route starting about 1967.)
Churn baby, churn!
My neighbor tried to short sell his house this year, but the lender was not willing to pick up the tab for 3-years of unpaid property taxes ($30,000) so the deal cratered. They lender gave him a loan mod instead, so he took it. $750,000 at 2% for 5-years. He paid $950,000, in 2006 and market value today is probably $550,000. The loan payment dropped from $3400 to $1700 P&I, though he still has to pay the back taxes and $700/mon for current taxes and insurance and $260/mon HOA.
It gets even stranger: He just rented the house out to someone for $3295/mon! The tenant shows up in a brand new GL550 which he says he had trouble getting financed last week! Sheesh, if he financed $60,000 for 5 years at 6%, his loan payment is $1150/mon. So this tenant has to come up with $4,350 every month before he gets out of bed! Is everybody crazy? Some people spill more money than I will ever spend!
Kick all down the road…..evidently forever.
$1700 must be ITI only. Even if the entire $1700 was going to P, it would take 36 years to pay off.
$1250 a month interest, $450 prop tax and home owners insurance. That is the only way the $1700 number makes sense.
Sorry, $2700, not $1700.
Usually cities are not so forgiving when taxes are not paid. It not as if they are banks with unlimited TARP/Stimulus money behind them.
$10,000 for property taxes/year? Well, at least the public unions are making out in this time of “austerity”
———————————
My neighbor tried to short sell his house this year, but the lender was not willing to pick up the tab for 3-years of unpaid property taxes ($30,000) so the deal cratered.
“at least the public unions are making out in this time of “austerity”
MOMMY!!!!! There’s a Saul Alinsky boogeyman community organizing under my bed!
MOMMY!!!!!
Ronny?
His penalties alone are accuring at $300/mon…
Businesses only care about the big score these days.
Wal Mart prospects can take a hike.
It’s also amazing to hear people making 50K plus complain about their life.
It’s also amazing to hear people making 50K plus complain about their life.
FWIW, $50k isn’t chit if you’re raising a modest family.
That’s 50k take home and you are right about that.
Which makes those who are complaining even more irritating because many families are living on less… while working 2 jobs.
He paid $950,000, in 2006 and market value today is probably $550,000.
BWAHAHHAHAHAHAHAHAHA!
ahem…. now that I got that out of my system.
So just think…. in another 5 years he might find a buyer at $250k.
“So this tenant has to come up with $4,350 every month before he gets out of bed! Is everybody crazy? Some people spill more money than I will ever spend!”
My dentist leases a new BMW 7-series every 2 years. That thing has to be in the $1000/month range at least, probably more.
There are plenty of people out there who make enough money that they can rent a house for $3300, lease a car for $1000 and not break a sweat.
If you’re paying 4300 in car and rent payments alone, that means that you must make gross ~52K a year just for that, right? Add in petrol, electrical, heat, food, clothing, entertainment, etc. and you have to be upwards of ~100K without saving anything. Is that correct(ish)?
With the median HH income at ~46-50K and only < 3% making 200K+, what does “plenty of people” mean?
It seems to me as though most of us are still swimming nude while the tide is going out. It is, after all, better to look good than to feel good.
You forgot income taxes.
I didn’t actually “do the math”, just went to an income calculator and put in a number that I thought might “give” ~43K and it was 52K. But it was a UK calculator, my bad. I went to http://www.adp.com/tools-and-resources/calculators-and-tools/payroll-calculators/gross-pay-calculator.aspx and put in 4300 for the amount that I’d like to earn in CA filing jointly with 2 allowances and it came up with 63K just for the car and house.
Lazy and sloppy, sure, but my point, I hope, is not lot in my bad math: there just aren’t a lot of people who can afford this type of (worthless) consumption.
Kick all down the road…..evidently forever.
At taxpayer expense!
The bank got him by the nutz…
After dec 31 he’ll have to pay taxes on all forgiven debt…why did he do such a dumb thing? Geez Doesn’t he know who to use the internet?
Watch in January how easily the banks will accept ALL offers no matter how low ball they are.
Hint HBB maybe then your low ball offers might win?
What changes take place on January 1st as far as the BANKS are concerned? It seems to me that it’s just the govt that will benefit by collecting taxes on the forgiven amount.
No debt was foregiven. The interest rate was adjusted from 5.5% to 2.0% for 5-years. He still owes the whole $750,000 (plus fees for the servicing activity.)
I bet he still bails. this is what my seller did used the lower payment to save up for a better house then bailed
Cactus, You are probably correct. He can’t really win. The rent of $3300 is short of the PITI_HOA of $3600/mon, plus he has to pay back the $30,000 in deferred property taxes (plus $300/mon for interest and penalties).
So if he is lucky, after 5-years, his loan balance may be down to $655,000, but his negative cash flow after payments and expenses totals over $50,000. He is clearly an idiot. If he has a 5% vacancy, and a normal management fee, add another $20,000 to the upside down part for a total of $70,000 negative. If the property needs any maintenance…..well, you all get the idea. That $95,000 in principal reduction will just about equal what he will pay for the privilage of owning the house.
Of course, by then, the property may appreciate 5%/ year, rising from $550,000 to $710,000. From 2012 to 2017 he will still be $40,000 upside down on the loan + 5-year carry, not to mention upside down on the $950,000 purchase price. Tough deal.
Dear Gawd - she is a house flipper too…
————————–
Flipping Liz Warren’s credibility flops
Boston Herald | June 1, 2012 | Howie Carr
If there’s anything Granny Warren hates more than a fake Indian or a plagiarist, it’s one of these damn real-estate speculators buying up the hammered middle class’ homes and flipping them for big bucks.
Unless, of course, Granny is the hypocrite conniving with the banks to do the hammering and the hacking.
Granny wrote in 2000 that foreclosure sales “are notorious for fetching low prices.” And boy, would she know.
Here’s a foreclosed property she picked up in Oklahoma City at 2123 NW 14th St. for $4,000 in 1993. She transferred it to her brother and his wife in March 2004 and they sold it for $30,000 in February 2006.
Those kinds of returns make you a 1 percenter like Granny. That, and cashing in on a racial spoils system you have no business taking advantage of.
The prior owners of the $4,000 house were Richard and Shelley Walter, who had a son who served as a Marine in Iraq. I wonder if they’ve read Granny’s impassioned attacks on foreclosures: “Foreclosure rates are skyrocketing. Is it a civil right to lose that home in a sheriff’s auction?”
It is if Granny Warren’s picking up some good stuff cheap, a la Bain Capital. Let’s move on to another foreclosure, this one on 500 NW 18th St. in her hometown. She’s listed as the mortgagee on a $55,000 mortgage taken out by her brother John in 1992.
In 1998, John Herring sold the foreclosed house for $140,000.
The people who lost their home this time to greedy Granny were D.L. and Sue Trent. At least they can take solace in the fact that the former Elizabeth “Red” Herring feels their pain: “Thus foreclosures harm other homeowners both by encouraging additional foreclosures by reducing home sale prices, while decreased property values hurt local businesses and reduce state and local tax revenues.”
Lieawatha bragged last fall that she provided the “intellectual foundations” of the national crime wave known as Occupy Wall Street. Everyone assumed she was talking about her turgid prose, not her own wheeling and dealing in the misery of the middle class.
In her book “All Your Worth,” the 32/32nds white woman says it is a myth that “you can make big money buying houses and flipping them quickly.” Really?
A message left with the Warren campaign was not returned.
The lesson here is, not everything you read is true. For instance, your mother probably told you, “Cheaters never prosper.” Your mother never knew Granny Warren.
She’s only 1/32 house flipper.
Liars, hypocrites and revisionists all (most, anyway). Left and Right, Dem and Rep, Lib and (neo)Con.
She didn’t do anything wrong or illegal here, let’s get that straight. The worst you can accuse her of on this issue is being a hypocrat (spelling deliberate). There was a time when I actually fell into the trap of believing this woman might have had something to offer, that she was sincere. I considered her sort of a Brooksley Born. I’ve since learned my lesson.
A “minority”. Good Lawd a’mighty.
I knew a tall blond-haired white girl who qualified for Hispanic preferences because of her parents’ South American ancestry.
Yeah, whatever. The whole state of affairs is so twisted, I don’t mind seeing people choke on it. Every time Warren opens her mouth on this subject, she bites her own arse. Now the Indians are pissed at her. She shoulda just laughed and ignored it.
Her opposite number is just as bad in his own way.
The people will get what they deserve.
Warren came up with the idea for the Consumer Financial Protection Bureau. She’s the daughter of a janitor, and became a Harvard law professor. Pretty sharp cookie.
All this stuff with the Cherokee heritage and now these house resales (I hesitate to call them flips because she and her brother held onto them for several years) is just a sideshow. Completely divorced from the issues. Head fakes. An attempt to get people’s eye off the ball.
Who is going to better serve the people? To see who’s funding them, check out OpenSecrets dot org.
I for one, would love to see her in the Senate.
Oh please. If she had an “R” next to her name you’d be screaming for her to quit the campaign.
HAH! You obviously have no idea about me.
Hey Goonman….. Hows Alice The Goon?
“the national crime wave known as Occupy Wall Street”
Those Occupiers need to occupy a shower and get a job!
“The lesson here is, not everything you read is true”
Unless, of course, it is linked from the Drudge Report, then its truthiness is unquestionable…
“….$4000 in 1993……$30,000 in February 2006….”
Last time I checked. “flippers” weren’t in the habit of holding onto a property for thirteen years.
Also not mention is how much money was spent turning a $4000 crapshack/lean-to into a $30K semi crapshack.
The Repubs are really having to dig hard to find anything even remotely questionable in her record. Too bad they don’t want to talk about what voters really care about.
LOL, goonie.
I never even HEARD of Saul Alinsky until some wingnut started freaking out about him. And the faux outrage over Elizabeth Warren is just pathetic. In the 1970’s and 1980’s universities encouraged us to note (even remote) native and minority ancestry in order to up the representation. NOT for “quotas”. And seriously, a $4,000 house she owned (jointly) for 13 years?!
These people are so desperate to avoid the issues I almost feel sorry for them.
Two large copper plates. Wire coming off one plate, attached to large coil of wire, wife coming off the coil attached to the other plate. Use a power source (steam from coal, water from a dam, wind spun prop) to spin magnets around the coil.
Electrons are coaxed, by the spinning magnetic fields, from the spinning magnets, from one copper plate to the other. Between the two copper plates, a potential difference builds. One copper plate has more electrons than protons and the other has more protons than electrons. The electrons in the plate with too many electrons really, really want to go to the plate with too many protons. Positively charged ions of copper in one plate, are offset by negatively charged ions of copper in the other plate.
We can use that potential difference to do work, such as lighting a light bulb, powering a motor, running a computer, moving bits of data through the internets.
As the work is done, the excess electrons flow back from the negatively charged plate to teh positively charged plate. For each electron that moves, one of the copper atoms stops being a negatively charged ion and another atom stops being a positively charger ion.
The electron need not go back to the exact same atom from which it was coaxed away. This does not alter the fact that the positively charged ions and the negatively charged ions of copper exist in exactly equal numbers, and offset each other.
You can remain a negatively charged ion, even though the atom you got your electron from has received an electron from someone else…. that someone else is now the positively charged ion that offsets your negative charge.
Quanta virtual particles are actually a much better anomaly, but i figured fewer people would be familiar with them… and we’ve not yet figured out a way to harness the zero-point energy in the potential difference those virtual particles temporarily create.
I’ve never tried the “wife” in this type of circuit. Does it make a difference?
Really, turkey. I was wondering how he got her to sit still….
But what happens when said copper electrons are exchange-coupled under thermosplastic conditions? Throw a constintan bar in there somewhere between them and you’re going to get a Thompson effect. THEN where are your negative offsets, hmmmm, DiP?
“The electron need not go back to the exact same atom from which it was coaxed away. This does not alter the fact that the positively charged ions and the negatively charged ions of copper exist in exactly equal numbers, and offset each other.”
Darrell, I am truly disappointed, I thought you were going to connect money is debt into a new format.
What happens if too many try and all move at the same time ?
spark
Money is ONLY created when it is borrowed into existence. Money is ONLY destroyed when it is used to repay debt, or debt is written off as noncollectable..
Debt is ONLY created when money is borrowed into existence. Debt is only destroyed when it is repaid or written off as uncollectable, and in either case, this destroys money.
Money and debt ALWAYS exist in equal, offsetting amounts.
The debt could be repaid, but if, and only if, all the people with more money than debt ceased having more money than debt.
“Money is ONLY created when it is borrowed into existence”
So without debt there is no money? Are you saying then that if borrowing were to end tomorrow we’d cease to have money go to a barter economy?
I am saying that if all borrowing were to cease we would not have NEW money. All the existing debt will still exist, so all the existing money would exist.
If all the debt went poof, then, and only then, would all the money also go poof. Then we would be forced to return to barter economy, such as trading stuff, such as gold or salt, for other stuff.
If all the debt went poof, then, and only then, would all the money also go poof. Then we would be forced to return to barter economy, such as trading stuff, such as gold or salt, for other stuff.
100% bull.
The economy is debt based, agreed. Question: is that a good or bad thing? What does an alternative look like and why is it better or worse than what we have?
“The economy is debt based, agreed. Question: is that a good or bad thing? What does an alternative look like and why is it better or worse than what we have?”
A debt based economy can work fine, IF the total debt in existence can be kept at a level where it can reasonable maintained. Say, each household’s share of total debt being 2.5x median income, as it was when Reagan took office.
To maintain that level of debt, you have to accept money supply not growing faster than population/wage inflation. This means you can’t have money flowing out of circulation via trade imbalances.
You would have to attack and reverse the existing trade imbalances, both domestic and international, to ensure that money kept moving within our national economy.
No international trade deficits (no free trade) and the rich can not keep accumulating more debt based money.
Basically, we’d need an economy something like the 1950s, with no negative international trade imbalance and steep income tax with 90%+ marginal rate with TONS of deductions to encourage the rich to spend their newly earned money rather than them accumulating ever more money.
hi CharlieTango,
The economy is debt based, agreed. Question: is that a good or bad thing?
there’s nothing wrong with debt based currency. (the economy isn’t really based on debt). as someone said above, our fiat currency is debt/credit based, but currency is not one’s personal debt. i think that debt/credit is a natural good thing as long as government stays completely out, and doesn’t try to fix or guarantee things.
What does an alternative look like and why is it better or worse than what we have?
well, we can’t go back to a gold standard. i mean we could, but it would be very inefficient. people would always trust that gold would have a value, but never be sure what the short term value might be. would you lend out your gold on a thirty year mortgage+interest, if you thought there was a chance that the gold you get back might be worth substantially less than when you first left it? the banks would feel the same way you would.
and if we went back to strict barter like the old days, we’d devolve into tribalism. old fashioned barter works, but very inefficiently.
i think the best bet is to stay with a fiat currency that’s managed knowledgeably, honestly and honorably. fiats are very efficient, and they will hold their value under good management. as a matter of fact they should really gain in value over time. but right now we have crooks in charge. and our dollars are being devalued because of them. they have made our money very cheap, which is disastrous for our economy. as our economy weakens, our dollars will buy less and less. in other words, inflation.
Charlie,
i want to add one more thing..
you said:”The economy is debt based, agreed.”
while it is true that all transactions involve debt/credit, that’s not the important point when it comes to an economy.
all economies depend on production and trade. and in that order. trade can’t happen without production.
here’s a little known secret. trade creates wealth, even if the two items traded have the exact same dollar value (as long as the items traded aren’t the same type of product). i hope you consider that for a while, because once one understands that, one’s understanding of economics increases greatly.
TJ,
I have been beating myself up this year as I question my long held belief that free trade is good policy. Now that we “don’t make things” here anymore I question if the target shouldn’t be fair, mutually beneficial trade.
Otherwise you are preaching to the choir, I have been contracting for almost 40 years and the hallmark of a good deal is one that benefits both sides.
Now that we “don’t make things” here anymore I question if the target shouldn’t be fair, mutually beneficial trade.
‘fair trade’ is simply protectionism. it usually involves tariffs. and tariffs always hurt the imposer more than the recipient. there would never ever be another trade war if the elite understood this. but of course, they don’t. they can’t think 2 or 3 steps ahead, so they keep making the same mistake. ‘fair’ trade is bunk.
who gets to decide what’s fair? and what’s fair about one party imposing a penalty on another. fair trade restricts trade and makes all of us poorer for it.
free trade doesn’t need agreements. if i were king of a country, i’d promise never to impose a tariff in retaliation for another country’s tariffs. i’d sign any agreement they put out there that involved only trade. remember, free trade doesn’t need agreements. the cave men never had agreement to trade their furs and spears. agreements aren’t needed, but if a country wants to sign one in order to trade, then fine, i’d sign it. and later then the rest of the world would wonder how my country could prosper so much when i wasn’t ‘protecting’ it with ‘fair’ trade.
Perhaps I should turn this around.
Can anyone give me an example of how money is created, without offsetting debt being created.
I do not mean you “making” money by exchanging goods and services for money. In this case, the money existed and is just moving from one person to another.
I mean… M amount of money exists and D amount of debt exists. Something happens. M+X amount of money exists and D amount of debt exists, where X is a positive real number. What is this “something happens”.
AND, we have to use the United States Government and Federal Reserve’s definition of money.
“There are several standard measures of the money supply, including the monetary base, M1, and M2. The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve). M1 is defined as the sum of currency held by the public and transaction deposits at depository institutions (which are financial institutions that obtain their funds mainly through deposits from the public, such as commercial banks, savings and loan associations, savings banks, and credit unions). M2 is defined as M1 plus savings deposits, small-denomination time deposits (those issued in amounts of less than $100,000), and retail money market mutual fund shares.”
Note: gold is not in there, nor is salt. Gold coins are not in active circulation, and are therefore, not money. They are an asset that must be converted to a money value before being spent.
Can anyone give me an example of how money is created, without offsetting debt being created.
here’s an example of how debt can be repaid without all the currency going out of existence or ‘poof’.
someone finds some gold and makes 48 gold coins from it. it is agreed upon that each coin is worth 1 goat.
1. someone wants to borrow all the coins and will repay a coin and a goat per month for four years. that would be considered to be 100% interest over the four years. half the interest has to be paid in goats because there are no other coins in existence. at the end, the lender has his all his coins and the interest in goats. presumably the borrower has made a profit with the use of the coins for those years.
if something goes wrong and the lender isn’t being paid back, he can try to get the property of the borrower as restitution. but he can’t go collect the coins that borrower may have spent. whatever coins have been spent, are in the economy to stay. the lender takes the risk when he makes the loan. if he doesn’t get paid back, it’s his loss and his alone. the debt is solved by either repayment or default.
2. or they make an agreement where the lender is totally repaid in goats. 2 goats per month for 4 years. this way all the gold coins stay in the economy. in this way, fiat dollars or gold coins makes no difference. once they are exchanged in the economy, they stay (well, until the goats get eaten). worn fiat dollars get replaced, so in theory, they are more durable than even gold. gold may slowly get worn away, but won’t get replaced.
the point is to see that the physical money in the economy won’t disappear as the ‘money is debt’ videos claim. debt is always self resolved. currency can be goats, gold or fiat dollars. most currency is debt/credit based, even goat currency (in the sense that they are used for repaying a debt). fiat dollars are a government debt that is everyone else’s asset.
Now, step out of the 19th century barter economy, where gold and goats were money, and into the 20th century.
You example of goats being money, the money being created without debt is easy… a new goat is born… poof money. But that is barter currency, NOT our modern economic definition of money.
Since goats and gold are not circulated as currency today, they are not money.
Using the definition of money as established by the USA government and the Federal Reserve, can you provide an example of money being created without debt.
But that is barter currency, NOT our modern economic definition of money.
currencies can be anything. they can be metal by weight, or fiat. there are good currencies and bad currencies. modern currencies are mostly fiat paper. but they could also be fiat gold, like the old $20 gold piece.
a ‘currency’ is that which you exchange for labor.
“currencies can be anything. they can be metal by weight, or fiat. there are good currencies and bad currencies. modern currencies are mostly fiat paper.”
Now step out of the 19th century.
Currencies are not MOSTLY fiat paper. They are ALL paper, coins and ledger entries that were borrowed into existence. They do not have value based on government fiat. They have value based on the value of the promise to repay the debt that was created when the money was borrowed into existence.
Unless, of course, you can point me to stores in the USA that accept goats in exchange for goods and services.
your misunderstanding of what a currency is will hinder what you are striving to understand.
I wish that you guys would stop trying to convince Darrell to use your definition of money and instead for the sake of argument address his points based on his definition.
Fine. Money is historically based on collateral, loaned on collateral, and created on collateral. It’s only in the last 20 years that money has routinely been loaned, created and based on bs.
You example of goats being money, the money being created without debt is easy… a new goat is born… poof money.
i forgot to answer about the goat.
first, goats have been used as currency. anything that’s reasonably fungible can be used as a currency.
second, the new born goat isn’t free. it has price with the cost of taking care of the parents that brought it into the world. tending herds of cattle, goats or sheep is work. the work has value. therefore the goats have value. even a goat you might happen to catch in the wild would have value because the the work that would have to be done to get a similar item.
Gold is NOT money!
Gold is NOT money!
i guess this comment was to me.
i never said that gold was money. one of gold’s uses is as a currency though.
And the streets are not paved with goat!
Can anyone give me an example of how money is created, without offsetting debt being created.
Conterfeiting I wonder if the US prints money on the side to give to certain Despots around the world and when things go bad the despots used the free cash to move to beverly hills ca
maybe thats why RE prices are so high here? that ain’t working thats the way you do it
Can anyone give me an example of how money is created, without offsetting debt being created.
Mining for natural resources. The “money” is in the ground, basically. Other than that, yeah, it’s probably debt.
There are dollar bills in the ground?
Comment by Blue Skye
2012-06-01 08:02:15
“Money is a proxy for labor. Tangible things are a proxy for past labor. IOUs are a proxy for future labor. The former is sometimes called ‘honest money’.”
The former is called an asset. It is used in barter. We no longer have a barter economy, so it is no longer money.
Money is:
http://www.federalreserve.gov/faqs/money_12845.htm
“There are several standard measures of the money supply, including the monetary base, M1, and M2. The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve). M1 is defined as the sum of currency held by the public and transaction deposits at depository institutions (which are financial institutions that obtain their funds mainly through deposits from the public, such as commercial banks, savings and loan associations, savings banks, and credit unions). M2 is defined as M1 plus savings deposits, small-denomination time deposits (those issued in amounts of less than $100,000), and retail money market mutual fund shares.”
Show me where anything tangible fits into that!
dude, can you NOT start a new thread for every response??
I do nto do it with “every response”.
I do it when a new post is significantly different from the post it is imbedded under, that either it will get lost, or it will derail the previous conversation… and when we’re approaching max thread depth, meaning it can’t effectively be its own tree under the post where it was made.
In a thread about barter currency status of salt, a new definition of money, that is NOTHING even close to either barter currency or the government’s definition of money, I believe, justifies a new thread. Especially when this new, totally new definition of money that popped up out of left field, is posted at max thread depth, preventing new posts from going into a tree under it.
I do nto do it with “every response”.
literally every response? no. Practically every response? yes. Day in and day out.
There are people here who are reading the blog not solely for seeing you expound your theory. Would you mind being respectful in that regard?
5 posts of my 29 posts today. That is “practically every”? Really?
Personally, I’ve started skipping over every single post started by Darrell. And every post that heads into the direction of “money, wealth, mammals and dogs”.
“Personally, I’ve started skipping over every single post started by Darrell.”
With a couple of exceptions, the ‘money is debt’ discussion has been civil and informative, imo.
I wasn’t thinking you worked for the Fed!
Go with whatever view makes your world go round. It surely isn’t the only practical view. Some people assert that FRNs are not actual money. The debt ponzi scheme is so large and entrenched however that honest money has been eclipsed by these phoney IOU Nothings.
Bad money drives out good. It doesn’t extinguish it, but sends it hiding. There is real money, which I guess you figure never existed, and it is in hiding. The concept may make your head spin, but that doesn’t change things. I may not be able to deposit real bullion in our FDIC insured Federal Reserve Ponzi bank, but I sure as hell can spend it, all day long, to buy anything that is not dangling from the Ponzi economy. It is probably illegal as all get out, but in practice it is real. So is barter.
Signing off.
“Some people assert that FRNs are not actual money.”
And those people are wrong.
“he debt ponzi scheme is so large and entrenched however that honest money has been eclipsed by these phoney IOU Nothings. ”
They are not IOU nothing. They are IOU future labor.
Where I agree with you is that we have we have stupidly allowed the debt ponzi to grow too large. I believe this has happened because we have pretended that the dollars are IOU nothings.
If people understood that every dollar that does overseas is another dollar of debt on an American, if we understood that every dollar a billionaire adds to their bank account, is another dollar of debt on someone.
My end goal is to construct an argument establishing trade imbalances are unsustainable because they create unsustainable debt growth that cannot possible be paid back.
But I can’t even get the first premise of the argument established because all the people that think they are living in the barter economy of the 19th century won’t even accept in the modern, non-barter economy, the stuff that we call money, that is used to fund corporate profits and global trade imbalances, is borrowed into existence.
Money as debt, is not a fundamentally flawed paradigm, IF we can keep total debt at a level that it can be repaid. That requires that we not have long-term trade imbalances, so that the limited amount of money, as limited by the limited amount of debt that can be repaid, remains in circulation where those that need it to repay their debts have a chance to get it.
But, I can’t even start the journey to arguing why trade imbalances are unsustainable, because of all the people that think goats are commonly circulated as money in the modern global economy.
SOB
In the words of my wife, why do I even bother?
Darrel, What do you call it when a printing press spits out a fresh batch of $100 bills. More specifically, the Fed is the one printing the money. Say they print $2M. Now the Us Gov’t wants to spend some more money. The treasury prints some T-Bills (IOUs) for $2M. Now, before the Us took the money and made the T-Bills valid, the money was in existence. It was in existence with no offsetting debt because it rolled out of a printer. There was nothing, then POOF, there was $2M dollars of fresh money. Again, no debt was created yet, just “money”. THEN the Fed loaned it to the US Gov’t and took the T-Bills in exchange. So what was it that the Fed had that the US gov’t wanted? They had nothing.. they had a printing press with the ability to magically mark some squigglies on paper…
So lets say the Fed actually got paid back it’s 15T of outstanding T-Bills and had $15T sitting there in it’s reserves… and as they got paid back, they tore up the T-Bills. What would they do with the money? Crumple it up? throw it away? There would be $15T of dollars sitting there with no debt wouldn’t there? Isn’t that money without debt?
Mathguy,
If we look to Pacioli and recognize that any booked transaction needs to have a debit and an offsetting credit to be valid we can see the original printing by the FED needs an offset.
The debit would increase the FED’s cash by $2M and the credit would increase some liability by $2M.
If the FED prints without recognizing an obligation they are not recognizing a valid transaction.
I assume they recognize the debt otherwise how would their balance sheet balance?
If the FED prints without recognizing an obligation they are not recognizing a valid transaction.
true, and that would be counterfeiting.
Yeah, they credit a column called M1 or something… It means they are crediting an “existence” account. I think they also credit some ink cost accounts, paper cost accounts, and some personnel cost accounts. If the fed were a corporation it would be the most profitable corporation in the world. They literally mint money and have a monopoly on doing it!
This feels a little like someone in power finally admitting the emperor has no clothes.
ECB chief calls euro zone ‘unsustainable,’ criticizes Spanish bank response
By Howard Schneider, Published: May 31
European Central Bank President Mario Draghi warned in Brussels on Thursday that he considered the euro zone’s current structure “unsustainable,” and said the region’s governments must surrender far more budget and regulatory power to a central authority if the currency union is to be saved.
http://www.washingtonpost.com/business/economy/ecb-chief-calls-euro-unsustainable-slams-spanish-bank-response/2012/05/31/gJQAB7qY5U_story.html
European Central Bank President Mario Draghi warned in Brussels on Thursday that he considered the euro zone’s current structure “unsustainable,” and said the region’s governments must surrender far more budget and regulatory power to a central authority
And there we have it. The central banks will keep the foot on your neck until you give up control to a central authority. This is why Germany is pushing the austerity line, not because it thinks it’s the best economic policy but because it wants to unify control of Europe. My guess is that a wall of money will be released when this happens. Maybe they let Greece collapse and flood Spain with money after it surrenders. The other countries will see this and they will all throw up a white flag.
or the whole thing will collapse
It’s a fine line between stupid and clever.
My money’s on the EuroFlop. Gotta hand it to the Eurocrats, though, they’ve got this financial necrophilia down to a science.
“And there we have it. The central banks will keep the foot on your neck until you give up control to a central authority.”
BINGO
Submit or be choked. (Or have your face torn off and eaten by a bath salt snorting realtor)
Anyone think Corzine’s “bad” trades might turn out “good” and everyone gets paid back in full?
In his statement, he is really calling for a stronger union. He doesn’t in any way imply the EU will break apart. He says that in the future it will be different and he wants the nations to get together and start talking about what changes will be made.
GOLD IS NOT MONEY!
Gold is an asset that can be exchanged for money!
Gold used to be money when we had a barter economy when it was common to walk into a store with stuff, and exchange it directly for stuff. Salt, wheat, eggs, gold, rice, silk…. All were once upon a time, commonly used as barter currency where stuff was traded for stuff.
Stores no longer trade stuff for stuff. Stores take MONEY, which is not stuff. You have to trade your STUFF ( yes, EVEN GOLD) for money, before you can spend it!
Arg. You gold bugs that refuse to acknowledge that we no longer have a barter economy, are SOOOOOO frustrating.
Goats are money? Really? Is the USA GDP measured and reported in terms of goats? Really? Arg.
Not everything needs to be acquired using US Dollars. At least in my world.
I never expected the dollar to continue to hold its value and increasingly conduct many non-dollar transactions. These include bartering or using alternative currencies.
I have bartered for food, garden plants, stereo equipment, a BMW motorbike, computer work, computer hardware, a VW engine, yard work, house work, rent, tools, materials…and that’s only a start.
We also have a local alternative currency that is taking hold regionally that uses Life Dollars. The person that runs it told me about someone in the UK that built his entire home using alternative currencies.
Are bartering and alternative currencies main stream? No, but they are prudent defense mechanisms to embrace and are a significant part of my lifestyle.
How many goats was the USA GDP last year?
How many goats was our international balance of payments deficit last year?
How many goats is the median house in the USA?
How many goats of mortgage debt is there?
How many goats worth of US Treasuries does China own?
How many goats was IBM’s profit last fiscal year? How many goats will their dividend payout be this quarter?
Darrell,
who made the claim that only goats are used as currency?
answer: no one that i know of.
that makes your post a classic strawman.
My grandparents raised goats on their ranch. They bought at about $85 a piece and sold for around $145. So at $145 per goat, and assuming the median home price is $200k, then a house costs 1,379 goats.
I believe the price is broadcast by the Chicago Mercantile Exchange.
Like people have been saying money is a medium of exchange and as long as the thing you are trading for has a market, then you can determine the price equivelent.
You keep backing yourself into all sorts of wierd corners with the pricing of goats and saying that money is not an asset, when the money=debt is not even a parallel to that.
Just stick to your message or whatever.
How many goats circulate in the economy as currency? What other items are priced in goats.
Medium of exchange, your own words. Really. How many transactions a year are conducted with goats as the medium of exchange? What stores price their goods in goats?
I never said that money is not an asset. I said that physical assets are not money.
Goats (and even gold) do not circulate within the economy as a common medium of exchange, so are not money.
“What other items are priced in goats.”
I hear that in some places 20 goats will buy you a bride.
I hear that in some places 20 goats will buy you a bride.
Which is the better annuity?
New LPS Mortgage Monitor came out yesterday:
http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/MortgageMonitor/201204MortgageMonitor/MortgageMonitorApril2012.pdf
Judicial states still lagging on inventory clearing. Non-judicial continuing with the slow march forward. Page 4.
AZ non-current rate went from 9.1% to 9.0% (they were down 0.5% the prior month).
CA non-current rate went from 9.3% to 9.1% (they were down 0.3% the prior month).
FL is still a mess at over 21%…
Are Bath Salts considered currency? (I just want to get in on Darrell’s jackassed currency debate)
See also article linked from Drudge Report confirming that the face-chewer was a member of Jeremiah Wright’s congregation for over 20 years.
Did he attend on a regular basis? Or was he just an occasional drop-in?
I read on newsmax that it was Jeremiah Wright himself. I knew there was something evil about that guy.
So the house next door to me is a foreclosure. It was a 1700 sq ft rental and had 2 or so different tenants in the past 3 years. Guy finally tried to shortsell in February for $150k. Failed to sell and into foreclosure by April. Guy took the appliances and a few light fixtures on his way out. And everything else he owned including his giant taxidermied goat. I don’t think he left the place a mess.
According to nosy neighbor, they got a full price offer, but either the bank didn’t accept or the people backed out for whatever reason.
Taken over by the bank early May, and they’ve done an amazing job getting it ready for sale. They mow the grass more often than I do, and trimmed all the trees some distance from the house as apparently required for FHA sale. Someone comes once a week or more to maintain it.
Now its at a 20 day auction for $130k managed by a company called FHA Pemco on the sign but it redirects to HUD Pemco. Lots of buyer traffic at both price points. Not sure how many lookyloos vs actual buyers.
It’s interesting to see all this up close.
Sorry Over,
This topic is no longer relevant. The blog is about the price of goats now, and the fact that sooooomebody reeeeeally needs to find a job.
So, okay, maybe $180K mortgage, then failed $150K short sale, now a $130K auction.
It was incremental gains all the way up, now it’s incremental losses all the way down. The same forces that built house price inflation are now building house price deflation. The only surprise here is that the media refuses to admit that.
Well, it has been increment weather…
this “money” debate is basic stuff people.
I am truly surprised at the number of people on this blog that do not understand that our economy is based on a credit-based monetary system.
it’s not the entire economy…as evidenced by the few folks on this blog that are apparently running around trading goats for crap…but it’s the general monetary system…and more importantly…the one that is failing.
it’s not even debatable.
stop listening to darell and just spend half an hour on wiki or reading itulip.
“I am truly surprised at the number of people on this blog that do not understand that our economy is based on a credit-based monetary system.”
It’s pretty much common knowledge isn’t it? Take away the credit and prices fall to realistic levels… and I’m not talking about housing either. It’s everything. How does a pair of Nike’s that in reality are worth no more than $25 sell for $150? Credit.
This entire debate with Darrell is a waste of time and diversionary.
Take away the credit, the dollars go away. The price of a pair of Nikes falls to a goat.
If we wanted to return to a gold and silver based monetary unit with all the gold and silver in the world converted into dollars,
0.7736 oz silver to the dollar
0.052 oz of gold to the dollar
Then all the gold and silver in the world (5 billion and 45 billion ounces respectively) then the global money supply would be
$58B silver dollars + $96B gold dollars = Let’s call it $150B.
By contrast, there is $5T physical currency (M0) and $60T total money (M3) in the global money supply, converting local currencies into USD.
So, to get rid of debt based money (current) and return to a gold/silver, NO loaning of money into existence money, then you would need $400 current to get $1 hard.
A $400K (current) house would cost $1000 hard, which is about 5.2 troy ounces of gold (based on historic definition of a dollar as .052 oz gold).
A $100 (current) pair of Nikes would be $.25 hard, or .19 oz silver.
you should read the book “Flashback” easy read fiction book has some stuff on new dollars and old dollars
I found it pretty entertaining
We can debate numbers later, but the point we need to make to the gold nuts is that there’s nowhere near enough gold in the world to suffice as their envisioned world currency. There’s a little less than 1 ounce of gold for each person in the world now, and most of that is locked up in something or another, hence can’t be used for the new “Worldollar” or “Earthuro”. In order to “stretch” that gold in order to give all national economies enough to use, you’d have to adulterate the gold so that only a smidgen was in each coin… so how would that be any different than our cupro-nickel coins of today? Our U.S. pennies are almost 98% zinc, too.
Adding silver in would only make the point more clear; there’s just not enough of these metals. And that’s why we use fiat currencies. We put those obsolete hard-currency standards aside since they were unable to carry us into large economic growth and then the large scales of economic existence that we now enjoy (i.e. like a United States with 300 million people with $10T GDP).
“Take away the credit and prices fall to realistic levels”
Credit, subsidy and insurance all act to drive prices UP. The more we wanted credit, subsidies and insurance in our Western culture, the more we actually advocated that we destroy ourselves. Whaddaya know? It worked well; our empire is actively crumbling and we spend our time (that we have left over after working long hours to pay bills) blaming each other for it.
From Wiki:
“Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country.[1][2][3] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment.[4][5] Any kind of object or secure verifiable record that fulfills these functions can serve as money.
Money is historically an emergent market phenomena establishing a commodity money, but nearly all contemporary money systems are based on fiat money.[4] Fiat money is without intrinsic use value as a physical commodity, and derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for “all debts, public and private”.
The money supply of a country consists of currency (banknotes and coins) and bank money (the balance held in checking accounts and savings accounts). Bank money usually forms by far the largest part of the money supply.”
Works for me.
Are we done now?
It is not clear to me. Are goats “generally accepted as payments for goods and services”?
Is gold a banknote, or a bank deposit?
So, the only government fiat giving banknotes value it the declaration that it can be used to repay debt…. hmmm… interesting concept.
If paper money is worthless and gold is so valuable, then why is it you can buy gold with paper money?
Because people want paper money to pay their taxes, repay their debts, and trade to people that need it for the above reasons… and they are willing to give you gold to get it.
I think the fact that it takes a LOT more paper money to buy gold today than say 10 years ago ($1600 vs $300) indicates which one is more valuable.
It indicates the debasement of our currency by the FED.
It tracks the unsustainable debt growth/money creation along with the lack of other safe assets for all that newly created money to chase.
“On a day that rates were falling in the U.S. after a wretched jobs report, former Federal Reserve Chairman Alan Greenspan was warning that investor opinions could turn quickly against excessive deficits and drive interest rates sharply higher.
In the wake of the May employment data, which showed just 69,000 nonfarm jobs were created in the U.S., a much worse reading than analysts and traders expected, yields on Treasury debt were lower across the board. The 10-year note was recently yielding 1.486% and the 30-year bond was at 2.577%, according to FactSet.
Greenspan, speaking on CNBC, expressed concern that the economy could begin to follow a track like it did in the second half of the Carter administration — not exactly anyone’s view of vibrant times for the U.S.’s financials. Then, the 10-year was yielding about 9% before bolting higher.
“I listen to a lot of what people say that we don’t have to worry. We can do it in our own time,” Greenspan said in reference to lowering the $1.2 trillion budget deficit, a CNBC summary of his comments said. “Good luck. The markets have not been told this.”
Rising yields in European Union nations, notably in places such as Greece, Italy and Spain, in the past few months have caused considerable angst in the markets. In the U.S., rates have remained low despite government stimulus efforts that inflation hawks say inevitably will have to lead to higher borrowing costs.”
Why, oh why, does anyone still listen to what Greenspan has to say? He’s long past his sell-by date.
Mr. “2 FIRE sector bubbles” Greenspan?
There’s a “special” place for him in the next life.
There’s a “special” place for him in the next life.
Greenspan might argue that it’s not a proven fact.
Mr Bubbles should not be fought because they are cheaper to clean up after than prevent, Greenspan.
“Revisions from previous months also showed the economy gained 49,000 fewer jobs in March and April than originally thought.”
LOL. I’m guessing this wasn’t “unexpected” news to the HBB crew.
And now, it’s time for a little opera:
O Fortuna (with lyrics)
I so-o-o-o want to play this on my next radio show. Right after this song, of course.
BTW, this is coming from someone who recently got in trouble for playing Sharon Jones and the Dap Kings.
I was a substitute deejay during the women’s issues show. Word later came down from Madame Producer: No men’s voices allowed.
Oops. My bad.
Please help me remember why I, as a male heterosexual with a sister and mother, finally became so tired of the emasculation by the ruling elite of NOW that I ceased being a dues-paying member after years of trying.
Please, or maybe it screamed at me. Yup,…that was it!
Comment by mathguy
2012-06-01 12:55:55
“Incorrect again Darrel, it IS the gov’t mandate that gives money the value.”
Then what is that value?
“If you want to prove it to yourself and not make me make the argument for you, just walk through the short history of paper money in the US.”
I am well aware of the history of paper currency. The first national bank of the USA had assets, issued paper notes. People deposited those notes into accounts, and the notes were loaned out. The moment the loan was made, the underlying asset was promised to two people, the person with the ledger entry in their account and the person holding the note that was loaned back out.
What backed the ability to promise the asset to two people was that in addition to the actual asset, the bank also had the promise of the person that borrowed the notes, to repay them.
People didn’t get it, that even though your note said “silver certificate”, there wasn’t actually enough silver to cover the notes and ledger entry accounts if the debt was not repayed.
When things went bad, people ran to the banks to get their promised assets that backed their money, only to find the assets were not actually in the bank. I the immortal words of George Bailey, you’re money is not here, it is his house, and his house, and his house….
EVEN in the days when money was defined as gold or silver, there was far, FAR more money than the underlying assets supported, and that extra money actually had value because of the promises of those that had taken out loans, to do work in the future, to repay the loans.
After there were a few runs on the official central bank of the USA, congress decentralized and let lots of individual commercial banks do the printing of the notes. This way, a run on one bank (that did not have enough hard assets covering the notes and ledger entries) would not spill over into a larger run on the system as a whole.
In this era we were in recession or depression about half the time, including the long depression.
We decided that thousands of little banks issuing lots of notes, issuing loans, did not resolve the underlying issue that the vast majority of money was NOT backed by physical assets, but rather, were borrowed into existence and were backed by the promise of the borrowers to do work in the future to repay those loans.
We created a new central bank, to issue notes so that they were portable, and to pool the reserves. A run on one bank could be covered by using the reserves of other banks.
Then, even this system collapsed in the great depression when there were too many losses on too many banks, creating too many runs.
So, we created things like FDIC. Do not worry… if the people that borrowed the money from your bank do not pay, then the government will assume that debt and ensure you can always get (at least X amount) of the money back.
I wish that more people would understand that even in the time that a dollar note could be exchanged for .773 oz of silver, there was NEVER enough silver for everyone to actually convert all of their paper currency and ledger accounts, into silver. The vast majority of money was created by loans, and was given value by the people promising to do labor in the future in exchange for getting the money back so they could repay their debts.
“Was it always a FIAT currency?”
The only fiat now is that it can be used to repay loans.
“At any point was there paper money backed not by debt, but by assets and commodities?”
Never was ALL the money, paper plus bank account balances that could be converted into paper money, backed by hard assets. NEVER. This is what people fail to understand. This is why there were runs on banks, booms and busts, debt bubbles and collapses, EVEN in the days of the dollar being defined as .773 oz of silver.
“Why did this change?”
Because trade imbalances was putting pressure on exchange rates, which didn’t work when both countries defined their currency as the same precious metal. The exchange rates caused metals to flow from one country to another.
Countries broke the lock to precious metals so that exchange rates could float. The hope was that exchange rates would be sufficient to counter trade imbalances. However, countries worked to ensure favorable exchange rates were maintained, allowing trade imbalances to persist, and unsustainable debt buildup in the nations on the negative side of these trade imbalances.
“Were people happy about it?”
No, because they did not understand that most of the money was ALREADY backed by nothing but debt, and that removing that last anarchic throwback to a barter economy was disfunctional in a global market where monies needed to be able to float.
“Why was the change accepted? (Hint: what would have happened if the people didn’t accept it?)”
New money was issued without the “silver certificate” and the government stopped exchanging the existing bills for the precious metals.
People accepted the new bills because they retained the majority of their value, that ability to use them to repay debts, creating demand for the new bills.
“As you go though these simple bits of history, maybe you will start to understand why there is a call to end our FIAT system of money,”
Oh, I get it. Most people fail to understand that the vast majority of money, since LONG before there was a United States, was backed by the debt that was created when the money was borrowed into existence.
“why (some) people keep a portion of their assets in physical commodities,”
I get it… you guys don’t understand that there was never enough physical commodities in the bank’s vault, to cover all the money in the accounts and the issued currency.
“and why the rich love having people too busy watching Oprah to care about the system of currency used. And you will understand why “debt is money” is correct, and not “money is debt”. Remember Mammal is Dog.”
Debt is not money. Debt is the promise of future labor. Money is the claim on that future labor.
Commodities are the result of past labor. Commodities have not been used as money for almost 100 years. Time to step out of history. Stop pretending that money has value by some government fiat OTHER than the government’s fiat that it can be used to repay debt, and it is actually the people trying to get the money to repay their debt that gives the money value.
Accept that EVEN in long ago historical times, every loan a bank made, created new money, backed not by commodities, but rather by the promise of the borrower to repay the loan.
I commend your grasp of the history of the money. Seriously. I think BLue Sky said it best though:
Comment by Blue Skye
2012-06-01 08:02:15
Money is a proxy for labor. Tangible things are a proxy for past labor. IOUs are a proxy for future labor. The former is sometimes called “honest money”.
I agree that in the past not all money was “honest money”. In other words, there was a fractional reserve lending of the money. AKA “debt money”. However, this does not mean the currency was FIAT. In other words, a debt could be satisfied with something other than the currency itself. If you had a debt of 100 silver you could pay it with 100 silver certificates OR you could pay it with 100 oz of silver.
Ok, now lets take today and “step out of the past”. If you have a debt (especially tax debt), and are ordered by the court to pay the debt, but you have no “dollars”, then a few things can occur one of which is the court seizes some or all of your assets as a legal tender form of payment of the debt - they take your “honest money” including cars, gold, silver, stored commodities, real estate, or any other item of value as payment of debt.
So if money is debt, then the destruction of debt would mean that there is a destruction of money. So there is one case where no dollars were destroyed, yet debt was destroyed. So if your theory is true that money is debt, then some money should have been destroyed there. But it wasn’t. Therefore, your theory is false. Provably, by the mathematical theory of logic.
“Darrel, What do you call it when a printing press spits out a fresh batch of $100 bills.”
Currency, but not all currency is money. Only currency in circulation is money.
“More specifically, the Fed is the one printing the money. Say they print $2M. Now the Us Gov’t wants to spend some more money. The treasury prints some T-Bills (IOUs) for $2M. Now, before the Us took the money and made the T-Bills valid, the money was in existence.”
No, the currency was in existence, but since it was not legally spendable, it is not considered money.
The Fed prints up $2 million in $100 bills. Currency is created, but money is not. US Bank calls up and orders $1 million of those bills. The armored car delivers the bills and they are placed in the bank’s vault. No money is created.
My work does and electroninc transfer of my paycheck from there account to my account. No money is created.
I go into the bank and withdraw $100 cash from US Bank. My checking account is reduced by $100 and $100 currency of that freshly printed cash is taken from the vault and is put into circulation. No money is created. M0 is increased but M1 is M0+checking account balances. Since my checking account balacnce went down by the same amount M0 went up, M1 is unchanged.
I spend the money and it ends up in your hands. You deposit it into your checking account. The $100 bill is taken out of circulation, so is no longer money, and your checking account is increaed, and that is money. M0 goes down, but your checking account goes up, so no change in M1.
“There was nothing, then POOF, there was $2M dollars of fresh money.”
No. There was paper and ink, then poof, there was $2M of currency that is not in circulation, and therefore, not money.
“Again, no debt was created yet, just ‘money’.”
Nope. not money.
“THEN the Fed loaned it to the US Gov’t and took the T-Bills in exchange.”
And the currency enters a legally spendable state, putting it in circulation, transforming it into money.
“So lets say the Fed actually got paid back it’s 15T of outstanding T-Bills and had $15T sitting there in it’s reserves.”
As the Fed gets paid back, the money becomes not legally spendable, taking it out of circulation…. making it no longer money. In fact, the Fed doen’t keep the “ledger entries” that it gets paid back in its list of assets. It does keep the INTEREST it earns in an account, since the interest is added to the debt it is owed. That money is not destroyed until it is paid back.
So, if the Fed holds $1T in US debt, paying 4% coupon, the Fed is “earning” $40B a year interest. To pay the interest, the federal government borrows the $40B into existence and hands it to the Fed. The Fed uses a tiny, tiny fraction of the money to pay its expenses, then hands the rest back to the federal government. So, at the end of the year, even the cash account of interest earned by the Fed is $0ed out, leaving it with only debt on its balance sheet.
“What would they do with the money? Crumple it up? throw it away?”
If they get paid back in cash, they put the cash in the “not in circulation, so not money, pile of currency” waiting for a member bank to call up and order some currency. More likely, they are getting paid back with ledger entry money, like checks drawn on checking accounts. In that case, the money is withdrawn from teh checking account, and goes nowhere. It ceases to exist, just as the debt ceases to exist.
“There would be $15T of dollars sitting there with no debt wouldn’t there? Isn’t that money without debt?”
Nope.
“Yeah, they credit a column called M1 or something… It means they are crediting an “existence” account. I think they also credit some ink cost accounts, paper cost accounts, and some personnel cost accounts. If the fed were a corporation it would be the most profitable corporation in the world. They literally mint money and have a monopoly on doing it!”
And EVERY dollar of profit is transferred to the US Treasury.
http://www.nytimes.com/2012/01/11/business/economy/fed-returns-77-billion-in-profits-to-treasury.html
“If the FED prints without recognizing an obligation they are not recognizing a valid transaction.
true, and that would be counterfeiting.”
They Fed can print, it just cannot spend. The Fed can even ship a batch of not-in-circulation currency to a member bank, it just cannot be spent. Not until it is loaned into existence or exchanged for a M1, M2, or M3 withdraw of money that had been loaned into existence by someone, somewhere. Those ledger entry dollars cease to exist and are replaced with M0 physical currency dollars.
Counterfiting is when anyone not authroized by congress prints money. The Federal Reserve, through its mints, are legally authorized to print currency, as much as they want. They just cannot put it into circulation without offsetting debt creation.
“they take your “honest money” including cars, gold, silver, stored commodities, real estate, or any other item of value as payment of debt.”
Those assets are not currency in circulation, and are therefore not money. They are non-money assets. Non-money assets can not be used to repay debt. The bank can not put the car in the vault and say the debt has been repaid.
The bank must sell the car, gold, silver, bushels of wheat, etc, for money. The money is then to repay the loans, poofing both the money and debt out of existence.
If they sell the goods for more money than the debt, the extra is returned to the debtor. If they sell the goods for less than the debt, then the remaining debt has to be wirtten off. The bank must subtract the difference from its tier 1 capital account, its legally spendable operating capital, that is money, poofing that money out of existence to ensure the amount of money destroyed is exactly the same as the debt destroyed.
IF the bank doesn’t have enough money in its tier-1 capital, spendable, working capital accounts, then it is insolvent, the FDIC steps in and gives up the money needed to poof an equal amount of money and debt out of existence.
“Debt is not money. Debt is the promise of future labor. Money is the claim on that future labor.” —
Almost correct - the exchangeable, dividable, transferable form of the claim on future labor (or goods) is one form of money.
I can promise to pay you, and you can loan to me and accept my promise. Debt is created, no money is created, just a promise.
Things have value. Promises have value. Money is a way to exchange them. The US dollar is one form of money.
And actually because of this I will recant “Debt is money” because it’s not true either. Only the transferable, divisible, etc forms of claim on debt are money.. so “some kinds of claims on debt are money”
What does it mean that, on a Friday night, instead of being out drinking one of Portland’s fine microbrews, I’m home watching the Walker-Barrett debate, Boehner’s rant on the jobs number, and Obama’s defense of the same on C-SPAN?