Debt Based Monetary System Question

[Injin]

No. I grew up in Pakistan (to age of 13 before coming to America) and know firsthand the disaster anarchy leads to. Japan is way, way, way much better than what I saw in Pakistan.

But anyway. Let us focus on Germany. You say "evil system of extortion". Germany is a democracy. Is it not?

Germany is the best example I have seen of a society in the modern world which is highly disciplined and ordered yet quiet creative. Granted, Britain has been probably more creative in the past and I see mostly a rudderless Britain now.

What is needed is a cross between the Britain of 1700 to 1960 (very creative) to a Germany of today (highly disciplined and ordered and aware of connectedness of members of society).

Mansoor

You do understand that anarchy is the absence of violence in personal interactions, right?

[mansoor_h_khan]

You do understand that anarchy is the absence of violence in personal interactions, right?

Not exactly. I believe in right and wrong and collectively deciding on right and wrong:

right = leads to an overall most peaceful, fun and fulfilling life possible

wrong= leads to the OPPOSITE of an overall most peaceful, fun and fulfilling life possible

That is where we differ. I believe TRUTH exists. Hard to find but exists.

Violence is good and ok to achieve "right". The right must be decided collectively.

Can the collective screw up? Yes.

But mostly humanity has been marching toward the truth overall, again my proof:

"Today's 6.5 billions humans alive (with Malthus turning in his grave) with more material production per capita than ever dreamed of I say we are doing pretty good materially at least."

Mansoor

[Injin]

Not exactly. I believe in right and wrong and collectively deciding on right and wrong:

right = leads to an overall most peaceful, fun and fulfilling life possible

wrong= leads to the OPPOSITE of an overall most peaceful, fun and fulfilling life possible

That is where we differ. I believe TRUTH exists. Hard to find but exists.

Violence is good and ok to achieve "right". The right must be decided collectively.

Can the collective screw up? Yes.

But mostly humanity has been marching toward the truth overall, again my proof:

"Today's 6.5 billions humans alive (with Malthus turning in his grave) with more material production per capita than ever dreamed of I say we are doing pretty good materially at least."

Mansoor

There are no collectives.

[mansoor_h_khan]

There are no collectives.

Then why worry about anything! Truth does not exist. Why try to find it. Why debate and discuss?

Just Eat, Drink and Be Merry! Don't fight anything. Just Be Kool.

Mansoor

[Injin]

Then why worry about anything! Truth does not exist. Why try to find it. Why debate and discuss?

Just Eat, Drink and Be Merry! Don't fight anything. Just Be Kool.

Mansoor

The truth is there are no collectives.

Collectives are to the truth what baldness is to hair colour.

[mansoor_h_khan]

The truth is there are no collectives.

Collectives are to the truth what baldness is to hair colour.

There are collectives. That is why you are so bothered.

The "collective" is successfully (and rightly) imposing limits on your behavior.

[Injin]

There are collectives. That is why you are so bothered.

The "collective" is successfully (and rightly) imposing limits on your behavior.

No, an individual is, and rather than just saying it's his opinion he's invoking bu115hit to cover his tracks.

There are no collectives.

You'd prefer to believe there are collectives because then you get to excuse the individuals who you have no power over but who attack you nonetheless.

[mansoor_h_khan]

No, an individual is, and rather than just saying it's his opinion he's invoking bu115hit to cover his tracks.

There are no collectives.

You'd prefer to believe there are collectives because then you get to excuse the individuals who you have no power over but who attack you nonetheless.

I do have power over you (collectively). You are unable to (so far) make me un-collectivize and remove the rules I have imposed on your behavior.

That is why exactly why the "collective" bothers you so much!

Mansoor

[Injin]

I do have power over you (collectively). You are unable to (so far) make me un-collectivize and remove the rules I have imposed on your behavior.

That is why exactly why the "collective" bothers you so much!

Mansoor

Nope.

You can individually threaten me with weapons, when you do it I hate you personally. I don't think when an individual is attacking me it is down to some enormous grouping that's ranged against me, just some guy.

You can only exert power over me by using violence, when you do that it is evil.

Forcing people is always wrong, everywhere. Now, interesting topic for you - why are these concepts important in relation to the state, debt and banking?

[mansoor_h_khan]

Nope.

You can individually threaten me with weapons, when you do it I hate you personally. I don't think when an individual is attacking me it is down to some enormous grouping that's ranged against me, just some guy.

You can only exert power over me by using violence, when you do that it is evil.

Forcing people is always wrong, everywhere. Now, interesting topic for you - why are these concepts important in relation to the state, debt and banking?

Look I don't want an adversarial relationship with you. Let us start with common ground. It appears you like and value the institution of marriage (thank god!). You are ok with imposing some limits on those who enter this union (at least I think you would be ok). Now, those same elements which you love, cherish and value and want to protect in the institution of marriage what if they also exist in your association to a business (your boss and co-workers, and customers, and vendors). Would you not want to impose limitations on behavior of individuals engaged in this "union" to protect and promote this institution (i.e., a corporation)?

Mansoor

[Injin]

Look I don't want an adversarial relationship with you.

Me either, but you are attacking me and saying it's for my own good.

Let us start with common ground. It appears you like and value the institution of marriage (thank god!).

Ah. I only said it can actually exist, I didn't say whether it was good or bad.

You are ok with imposing some limits on those who enter this union (at least I think you would be ok). Now, those same elements which you love, cherish and value and want to protect in the institution of marriage what if they also exist in your association to a business (your boss and co-workers, and customers, and vendors). Would you not want to impose limitations on behavior of individuals engaged in this "union" to protect and promote this institution (i.e., a corporation)?

Mansoor

The only limitation I want to see is people never use violence i.e. no more physically attacking others.

That means no more pretending we have a state, amongst other things.

[mansoor_h_khan]

Me either, but you are attacking me and saying it's for my own good.

Ah. I only said it can actually exist, I didn't say whether it was good or bad.

The only limitation I want to see is people never use violence i.e. no more physically attacking others.

That means no more pretending we have a state, amongst other things.

ok. Let us talk here. It seems like you do believe truth exists. Am I right?

Just to be sure let me re-state:

Truth => leads to an overall most peaceful, fun and fulfilling life possible

OPPOSITE OF Truth => leads to the OPPOSITE of an overall most peaceful, fun and fulfilling life possible

do you agree with the above definition?

Mansoor

[Injin]

ok. Let us talk here. It seems like you do believe truth exists. Am I right?

Logically it has to.

Just to be sure let me re-state:

Truth => leads to an overall most peaceful, fun and fulfilling life possible

OPPOSITE OF Truth => leads to the OPPOSITE of an overall most peaceful, fun and fulfilling life possible

do you agree with the above definition?

Mansoor

Sure, you haven't outlined a method for finding truth tho.

[scepticus]

Scepticus,

I strongly, strongly suspect that any fractional reserve system will eventually fail without government backed deposit insurance protection.

Do you see what I mean?

Not after peak debt has been achieved. SImply because at this point the credit system is no longer tugging against the tethers of artifically scarce money. A bank may fail here and there but because there is no multi decade credit expansion there would be no danger of systemic failure.

[scepticus]

Sure, you haven't outlined a method for finding truth tho.

We just ask you, right?

[Injin]

We just ask you, right?

I'll do a little yellow book for you or something.

[BobBobson]

From what I can make out, nobody has answered the following question:

[1] "That figure grows with every turn of the cycle". The increase in the money supply since WW2 has been exponential, and I often see this linked to the dropping of the gold standard. How would staying on the gold standard prevent this exponential growth?

Under a classical gold standard, all the world's currencies are fixed at a certain price to a certain quantity of gold. Banks still practised fractional reserve lending, i.e. creating more credit than the amount of gold that existed in the vaults. However banks dared not lend out too great a multiple of thier gold reserves for fear of a run on the bank/insolvency. Unlike the FIAT currency we have today, gold cannot be printed or created out of yet more 'promises to pay'. With only a limited amount of gold available to support credit creation, governments were also discouraged from getting into too much debt or deficit spending, as if the government ate into the lions share of available credit, there would be much less available for the private sector and interest rates would go shooting up, thus having a detrimental effect on the economy as a whole.

The gold standard also enforced discipline and a degree of equilibrium in the arena of international trade. For example, a country with a large current account deficit (i.e. US current account deficit is fuelling both world economy and money creation today), would soon find that all its gold reserves would become depleted. As gold left the deficit nations banking system credit would contract. Since a contraction of credit means a scarcity of money, prices would have to contract and their would be a recession. Needless to say, it would not be possible for this nation to continue consuming more than it produces as it would have no money (gold and thus potential for credit creation) left with which to do so. As prices and consumption were pushed down in this economy, it would become more attractive to foreign investment and foreign trade, as a result of the depressed costs in relation to those of other countries. Likewise, when a nation had a trade surplus, the high volume of gold coming into the nations banking system would cause a boom in credit, which would result in over-investment and a tendency towards price inflation, which in turn would lower the competiveness of the countries products in the international market, thus lessening its current account surplus.

As is widely known, after WW2, the USA was left holding most of the world's gold reserves rendering a gold standard an infeasible proposition for all other nation states. Therefore the Bretton Woods standard was introduced whereby soveriegn governments had the right to convert US dollars into gold bullion at a rate of $35/ounce. All the world's currencies were therefore pegged to gold through being pegged to the US dollar. Due to heavy US investment oversees and especially due to deficit spending by the US government due to funding the Vietnam war, many of the world's governments grew suspicious of the US's ability to honour the $35/ounce of gold promise and began increasingly converting thier dollars into gold (which was already trading beyond $35/ounce on free market). This caused Nixon to suspend dollar/gold convertibility, with the Bretton Woods standard finally being brought to an end in 1973. At this point, all those dollar denominated reserves went from being backed by a fixed amount of gold, to be being backed by nothing except the creidt worthiness of the US government. If you look at a chart showing international reserves, it is since this point in time (the 70's) that both the USA's deficit spending started to increase and credit creation started to rise exponentionally all over the world.

I heard Marc Faber state that if the world was to go back on to a gold standard tomorrow, then each ounce of gold would have to be worth $1 million! Of course there will be no return to any gold standard notwithstanding a global economic collapse, wreacking social catastrophe and probably a major war........but if you can survive all that with yer Krügerrands intact then you (or your kids) would be rich men.

[mansoor_h_khan]

Logically it has to.

Sure, you haven't outlined a method for finding truth tho.

Injin,

The method is "your heart" It knows through experience! Don't completely rely on Plato. That is what you are doing.

That is why you hate force and violence against anyone. So do I. So do most people by far!

That is why you like marriage.

That is why you used the word "evil" earlier.

That is why you use the word "bulshit" earlier.

With me so far?

Mansoor

[Injin]

From what I can make out, nobody has answered the following question:

Under a classical gold standard, all the world's currencies are fixed at a certain price to a certain quantity of gold. Banks still practised fractional reserve lending, i.e. creating more credit than the amount of gold that existed in the vaults. However banks dared not lend out too great a multiple of thier gold reserves for fear of a run on the bank/insolvency. Unlike the FIAT currency we have today, gold cannot be printed or created out of yet more 'promises to pay'. With only a limited amount of gold available to support credit creation, governments were also discouraged from getting into too much debt or deficit spending, as if the government ate into the lions share of available credit, there would be much less available for the private sector and interest rates would go shooting up, thus having a detrimental effect on the economy as a whole.

The gold standard also enforced discipline and a degree of equilibrium in the arena of international trade. For example, a country with a large current account deficit (i.e. US current account deficit is fuelling both world economy and money creation today), would soon find that all its gold reserves would become depleted. As gold left the deficit nations banking system credit would contract. Since a contraction of credit means a scarcity of money, prices would have to contract and their would be a recession. Needless to say, it would not be possible for this nation to continue consuming more than it produces as it would have no money (gold and thus potential for credit creation) left with which to do so. As prices and consumption were pushed down in this economy, it would become more attractive to foreign investment and foreign trade, as a result of the depressed costs in relation to those of other countries. Likewise, when a nation had a trade surplus, the high volume of gold coming into the nations banking system would cause a boom in credit, which would result in over-investment and a tendency towards price inflation, which in turn would lower the competiveness of the countries products in the international market, thus lessening its current account surplus.

As is widely known, after WW2, the USA was left holding most of the world's gold reserves rendering a gold standard an infeasible proposition for all other nation states. Therefore the Bretton Woods standard was introduced whereby soveriegn governments had the right to convert US dollars into gold bullion at a rate of $35/ounce. All the world's currencies were therefore pegged to gold through being pegged to the US dollar. Due to heavy US investment oversees and especially due to deficit spending by the US government due to funding the Vietnam war, many of the world's governments grew suspicious of the US's ability to honour the $35/ounce of gold promise and began increasingly converting thier dollars into gold (which was already trading beyond $35/ounce on free market). This caused Nixon to suspend dollar/gold convertibility, with the Bretton Woods standard finally being brought to an end in 1973. At this point, all those dollar denominated reserves went from being backed by a fixed amount of gold, to be being backed by nothing except the creidt worthiness of the US government. If you look at a chart showing international reserves, it is since this point in time (the 70's) that both the USA's deficit spending started to increase and credit creation started to rise exponentionally all over the world.

I heard Marc Faber state that if the world was to go back on to a gold standard tomorrow, then each ounce of gold would have to be worth $1 million! Of course there will be no return to any gold standard notwithstanding a global economic collapse, wreacking social catastrophe and probably a major war........but if you can survive all that with yer Krügerrands intact then you (or your kids) would be rich men.

First random thought - if gold standards worked, we wouldn't be here.

Second random thought - if you put a gold standard back in, we'll be right back here in no time.

Third random thought - gold standards forced people to behave in the same way that stella artois stops hangovers.

[Injin]

Injin,

The method is "your heart" It knows through experience! Don't completely rely on Plato. That is what you are doing.

Er, no. I explicilty reject platonism.

That is why you hate force and violence against anyone. So do I. So do most people by far!

That is why you like marriage.

That is why you used the word "evil" earlier.

That is why you use the word "bulshit" earlier.

With me so far?

Mansoor

You are right, sortof. Violence sucks, i know this from experience. Violence never makes anyone happy (experience and all documented history prove this.)

[mansoor_h_khan]

Not after peak debt has been achieved. SImply because at this point the credit system is no longer tugging against the tethers of artifically scarce money. A bank may fail here and there but because there is no multi decade credit expansion there would be no danger of systemic failure.

Why then is government backed deposit insurance protection so pervasive?

and

Why are massive rescues of FRB banks necessary all over the world?

Jamie Dimon has said that we should expect a financial crises every 5 to 10 years. Why?

Mansoor

[mansoor_h_khan]

Er, no. I explicilty reject platonism.

You are right, sortof. Violence sucks, i know this from experience. Violence never makes anyone happy (experience and all documented history prove this.)

If you review world history you will also see that violence is the favorite tool of evil. Shrewd and smart evil will organize and collectivize eventually to the detriment of the "good" in anarchy. Anarchy as you have defined it I see it as being the more natural state of "good" but it has to constantly fight the bad.

Again, your heart and experience will decide good or bad.

With me so far? I am definitely taking this somewhere step-by-step.

Mansoor

[Injin]

If you review world history you will also see that violence is the favorite tool of evil. Shrewd and smart evil will organize and collectivize eventually to the detriment of the "good" in anarchy. Anarchy as you have defined it I see it as being the more natural state of "good" but it has to constantly fight the bad.

Again, your heart and experience will decide good or bad.

With me so far? I am definitely taking this somewhere step-by-step.

Mansoor

Sure, except you can't fight violence with violence and have less violence.

[mansoor_h_khan]

Sure, except you can't fight violence with violence and have less violence.

Actually, in year 2011 I am with you. Weapons are too powerful. In ancient times fighting COULD be more civil. Today, weapons are much too powerful. But at the same time people rely on rationality much more today (I think). This means we can and have been using and will be using more and more the "sword" of the mind and "sword" of the tongue.

Consider the following:

World War II was a pivotal event in human history. It did so much collateral damage that near the end of the war, world powers were convinced that all-out total “hot” war was no longer an option, given the current technology. Therefore, world powers started fighting more “cold” than “hot” wars (Roman and Persian Empires probably fought more “hot” than “cold”). The USA and USSR fought mostly “cold,” with some small “hot” proxy wars.

The rules of all-out war broke down in the face of massive weaponry. The superpowers adjusted to the new reality.

Human beings can learn and improve themselves. Big bad weapons means that the "bad" collectives can get so much more power to screw us all. This is exactly the incentive to try to create a "good" collective guided by people whose heart sees the "good" and wants to do good (as I defined earlier).

Just look at the example of Egypt. It happened with very little violence.

With me so far?

Mansoor

[Injin]

Actually, in year 2011 I am with you. Weapons are too powerful. In ancient times fighting COULD be more civil. Today, weapons are much too powerful. But at the same time people rely on rationality much more today (I think). This means we can and have been using and will be using more and more the "sword" of the mind and "sword" of the tongue.

Consider the following:

World War II was a pivotal event in human history. It did so much collateral damage that near the end of the war, world powers were convinced that all-out total “hot” war was no longer an option, given the current technology. Therefore, world powers started fighting more “cold” than “hot” wars (Roman and Persian Empires probably fought more “hot” than “cold”). The USA and USSR fought mostly “cold,” with some small “hot” proxy wars.

The rules of all-out war broke down in the face of massive weaponry. The superpowers adjusted to the new reality.

Human beings can learn and improve themselves. Big bad weapons means that the "bad" collectives can get so much more power to screw us all. This is exactly the incentive to try to create a "good" collective guided by people whose heart sees the "good" and wants to do good (as I defined earlier).

Just look at the example of Egypt. It happened with very little violence.

With me so far?

Mansoor

Not really, no.

There are no collectives, remember?