uncle rogi Posted February 3, 2009 Share Posted February 3, 2009 In objective reality which we can probably never perceive totally correctly but which is nevertheless there. yes even us neopagans can agree with that... and look science is catching up with us finally.....LOlz http://www.nowpublic.com/strange/global-co...akening-reality Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 it does not have to be, deflation however if allowed would have the same effect in such a mallinvested system deflationary death spiral of the state as opposed to inflationary collapse. How can it be inflationary? Assuming all other aspects of the State are unchanged? what would happen is what has happened in weimar germany and every other place it has been tried.http://en.wikipedia.org/wiki/Inflation_in_...Weimar_Republic Does that mean you think it would be inflationary (in terms of prices)? That ship has sailed.Credit isn't money and doesn't need to be repaid. Every day someone new finds that out and cancels their own debts, the banking system is now stuffed because of the internet and it's extinction is merely a matter of time. Even if that ship has sailed, holders of credit could still get compensated with a bailout before it all goes south. In objective reality which we can probably never perceive totally correctly but which is nevertheless there. How best can we know that someone who thinks that credit is money is outside reality? Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 How best can we know that someone who thinks that credit is money is outside reality? They can't be. They can only think they are, and their thoughts don't count. Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 They can't be.They can only think they are, and their thoughts don't count. So you're saying that someone who thinks that credit is money has thoughts which do not line up with objective reality? Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 So you're saying that someone who thinks that credit is money has thoughts which do not line up with objective reality? Not in this instance actually. I think that most people think that money is legal tender, whch credit is not. As money is also the most commonly desired item in an economy and this is tenners for most people, the collective misaprehension is actually correct. It always has to be. Whatever the majority of people think of as money is by definition money. Credit isnt money because most people don't think of it as money and at one and the same time people think of credit as actually being legal tender. ******ing weird, but there you go. Quote Link to comment Share on other sites More sharing options...
uncle rogi Posted February 3, 2009 Share Posted February 3, 2009 How can it be inflationary? Assuming all other aspects of the State are unchanged? i am not assuming anything mate and it would not be inflationary as such it would be deflationary which is why it will not happen. Does that mean you think it would be inflationary (in terms of prices)? how could it not be. How best can we know that someone who thinks that credit is money is outside reality? have your day in court (that wont happen though the debt will be written off as the contract cannot stand up to legal scrutiny) Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 Not in this instance actually.I think that most people think that money is legal tender, whch credit is not. As money is also the most commonly desired item in an economy and this is tenners for most people, the collective misaprehension is actually correct. It always has to be. Whatever the majority of people think of as money is by definition money. Credit isnt money because most people don't think of it as money and at one and the same time people think of credit as actually being legal tender. ******ing weird, but there you go. What if they also make the mistake of thinking that the bank has all their money sitting in a vault, so they think their bank account is actually legal tender... then they would treat credit as though it were legal tender without knowing the difference. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 What if they also make the mistake of thinking that the bank has all their money sitting in a vault, so they think their bank account is actually legal tender... then they would treat credit as though it were legal tender without knowing the difference. That's what I say. I also say that the value of legal tender is derived from how much there actually is. It doesn't matter how much peope lthink there is, reality is not fooled. Supply and demand reign supreme. Quote Link to comment Share on other sites More sharing options...
uncle rogi Posted February 3, 2009 Share Posted February 3, 2009 What if they also make the mistake of thinking that the bank has all their money sitting in a vault, so they think their bank account is actually legal tender... then they would treat credit as though it were legal tender without knowing the difference. a lot of people do and this fallacy is encouraged by the bankers. Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted February 3, 2009 Share Posted February 3, 2009 That ship has sailed. Credit isn't money and doesn't need to be repaid. Every day someone new finds that out and cancels their own debts, the banking system is now stuffed because of the internet and it's extinction is merely a matter of time. Even if that ship has sailed, holders of credit could still get compensated with a bailout before it all goes south. no they can't. compensation requires proof of losses. Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 i am not assuming anything mate and it would not be inflationary as such it would be deflationary which is why it will not happen. And if they are bailed out would that be inflationary? how could it not be. Because a similar quantity of credit has been removed from the system. have your day in court (that wont happen though the debt will be written off as the contract cannot stand up to legal scrutiny) Are you suggesting that the courts don't recognise bank credit? Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 That's what I say.I also say that the value of legal tender is derived from how much there actually is. It doesn't matter how much peope lthink there is, reality is not fooled. Supply and demand reign supreme. So then, when the supply of credit is increased in people's bank accounts they all think they have more legal tender... Leaving aside the reality of the situation for a moment, at this point because of their opinion on what has happened to their bank account, legal tender now loses value as a result. There is uncertainty surrounding the actual value of their bank-account money. You could say Bank Credit is a bet on whether or not the banking system will get bailed out. Now, if that bet is reliable I'm not making any judgement on whether it is or not, so far but assuming it is, then would you agree that the value of legal tender should correctly be priced lower than before the bank credit? Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 no they can't. compensation requires proof of losses. Ok, but if they got paid out with legal tender the rest applies. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 (edited) So then, when the supply of credit is increased in people's bank accounts they all think they have more legal tender... Leaving aside the reality of the situation for a moment, at this point because of their opinion on what has happened to their bank account, legal tender now loses value as a result.There is uncertainty surrounding the actual value of their bank-account money. You could say Bank Credit is a bet on whether or not the banking system will get bailed out. Now, if that bet is reliable I'm not making any judgement on whether it is or not, so far but assuming it is, then would you agree that the value of legal tender should correctly be priced lower than before the bank credit? Legal tender is knocking about in quantity y and has a value of x z peope think they have that quantity y legal tender and only 3% of them are right. The other 97% are mistaken. If we provide it to them by printing, the quantity y will increase and this will cause inflation. Credit is access to the value of money, it is not money. Edited February 3, 2009 by Injin Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted February 3, 2009 Share Posted February 3, 2009 I think that most people think that money is legal tender, whch credit is not. Neither's the George Stephenson £5 note, or a Charles Dickens £10, but they're still very much part of the monetary base. (incidentally, no Bank of England note is north of the border or in Northern Ireland for that matter) Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 Neither's the George Stephenson £5 note, or a Charles Dickens £10, but they're still very much part of the monetary base.(incidentally, no Bank of England note is north of the border or in Northern Ireland for that matter) Sloppy of me, I mean to say the notes and coins. Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 3, 2009 Share Posted February 3, 2009 Legal tender is knocking about in quantity y and has a value of xz peope think they have that quantity y legal tender and only 3% of them are right. The other 97% are mistaken. If we provide it to them by printing, the quantity y will increase and this will cause inflation. Credit is access to the value of money, it is not money. This is my last post on this thread (today at least!)... Let's assume a Mafia family are issuing banknotes, most notes have a signature on them but after a while some notes appear which have the signature missing. At first people aren't sure what to do with these notes but pretty soon they circulate equivalently to the original notes. If you perceive that the Mafia family are likely to encourage the use of unsigned notes as if they are normal notes would you then have a reason not to value them? Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 Ok, but if they got paid out with legal tender the rest applies. Unless they ask where the money is now, because the answer will be "it's in our vaults." Quote Link to comment Share on other sites More sharing options...
Injin Posted February 3, 2009 Share Posted February 3, 2009 (edited) This is my last post on this thread (today at least!)...Let's assume a Mafia family are issuing banknotes, most notes have a signature on them but after a while some notes appear which have the signature missing. At first people aren't sure what to do with these notes but pretty soon they circulate equivalently to the original notes. If you perceive that the Mafia family are likely to encourage the use of unsigned notes as if they are normal notes would you then have a reason not to value them? That's not what happens. What happens is that there is a pile of banknotes on a tablle. Dave walks in and is told "they are yours." An accountant writes thsi down. Dave leaves. Sharon walks in and is told "they are yours". An accountant writes thsi down. Sharon leaves. Jill waks in and ..... The accountants recording of people being offered the same item is called "credit" "broad money" or "fraud" depending on how you want to look at it. if they all roll up at the same time and want their money, if it gets printed the money supply has trebled. Edited February 3, 2009 by Injin Quote Link to comment Share on other sites More sharing options...
uncle rogi Posted February 3, 2009 Share Posted February 3, 2009 And if they are bailed out would that be inflationary? yes, it is looking like it will be, not that it has to as such but you know that right ? Because a similar quantity of credit has been removed from the system. no, 30-1 leveraged ponzi schemes when propped up result in massive inflation,e.g. the buying of assets at face vaule when only 50% at best will be recovered devaules all currency.... also the way you posed the question paying attention to the details is important suddenly paying everyone with notes and coins etc or shutting down the debit card system etc real world factors render your point moot. heard of the localised inflation in the kurdish area of iraq ? Are you suggesting that the courts don't recognise bank credit? they never get the chance, settled out of court. Quote Link to comment Share on other sites More sharing options...
brianjamesos Posted February 3, 2009 Share Posted February 3, 2009 Just as a little aside, it seems the CIA agrees with Injin et al. If you look at the CIA factbook under the economy section, they actually record figures for 'money' and a seperate figure for 'quasi money'. From Irelands profile: individual members of the EMU do not control the quantity of money and quasi money circulating within their own borders How true. And how sad. Let's see Australia: Stock of money: $298.5 billion (31 December 2007) Stock of quasi money: $667.2 billion (31 December 2007) Def. 'quasi' quasi (Cambridge Dictionary) used to show that something is almost, but not completely, the thing described qua⋅si   (Dictionary.com) /ˈkweɪzaɪ, -saɪ, ˈkwɑsi, -zi/ resembling; seeming; virtual: It's all out there plain as day if you open your mind. Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted February 3, 2009 Share Posted February 3, 2009 Just as a little aside, it seems the CIA agrees with Injin et al. If you look at the CIA factbook under the economy section, they actually record figures for 'money' and a seperate figure for 'quasi money'.From Irelands profile: How true. And how sad. Let's see Australia: Def. 'quasi' quasi (Cambridge Dictionary) used to show that something is almost, but not completely, the thing described qua⋅si   (Dictionary.com) /ˈkweɪzaɪ, -saɪ, ˈkwɑsi, -zi/ resembling; seeming; virtual: It's all out there plain as day if you open your mind. Interesting. But what is the difference between money and quasi-money? I thought that all fiat money was quasi. Thus, the differentiation you cite would seem to me to be better expressed as quasi money and quasi, quasi money... Unless I am missing something, i.e. that money has intrinsic value.... Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted February 3, 2009 Share Posted February 3, 2009 Unless I am missing something, i.e. that money has intrinsic value.... fiat banknotes are stay out of jail tokens. see sig. Quote Link to comment Share on other sites More sharing options...
threetimesdead Posted February 4, 2009 Share Posted February 4, 2009 the_austrian = Injin Injin = the_austrian Keep the nonsense coming Quote Link to comment Share on other sites More sharing options...
crispindry Posted February 4, 2009 Share Posted February 4, 2009 (edited) This thread is very interesting and not a little confusing but Injin and the Austrian seem to be arguing about what is and what isn't money. The great British public and all the other buy now pay later brigade couldn't give a monkeys.... MV = PQ and the various derivations of the quantity theory mean that as far as we are concerned Money (or quasi money or phantom money or derivatives of phantom money!) all contribute to the money supply...no? Since the equation must balance we can predict the effect of an imbalance. Consider: M=money V=velocity P=price Q=quantity If (MV) increases in value then so must (PQ). Assuming that an increase in credit increases MV it follows PQ must rise also. For arguments sake we can call credit money or we can call it an increase in V but the result is the same (there's more money stuff sloshing around the system). So credit becomes easily obtainable and MV goes up. Therefore PQ also goes up in the form of rising prices (house prices are a case in point) with a similar but smaller rise in production. Now as I see it the various bubbles have been fuelled by increases in credit but when the credit is not repaid or derivatives devalue then MV drops but is NOT immediately balanced by a reduction in PQ (since human nature resists lowering prices) this is where we are now and is recession. The logical solution would be to allow price levels to drop naturally and the combined value PQ to decrease so that the equation balances. Trying to increase the supply of credit is quantitative easing but also increases MV so now the imbalance is greater (even if the easing is temporary). Fundamentally the equation still does not balance but the economy gets moving again and PQ is allowed to drop slowly over an extended period (we all get relatively poorer but). Essentially Price level must drop (but might not be apparent especially as it will occur slowly) Increasing the money supply will cause inflation so price levels in pounds may not drop at all but they will still drop when compared to real values. I would like to here your thoughts, particularly with respect to money, credit and this term Velocity. Edited February 4, 2009 by crispindry Quote Link to comment Share on other sites More sharing options...
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