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Old March 10th, 2017, 11:38 AM   #61
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Another tact the Canadian government recently undertook to both protect against a potential real estate bubble and to limit money supply growth was to increase the down payment threshold and permissible amount of take home pay to be paid on mortgages. Thus fewer people can buy houses.

Pissed the banks and the builders right off, but the right thing to do in those circumstances.
BC and Southern Ontario still have over-valued real estate markets...so there must be some way new buyers are still getting in over their heads on mortgage debt. I haven't looked into it myself though.
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Old March 10th, 2017, 11:43 AM   #62
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A little deflation would be good for the economy. Cars etc. are too expensive and overvalued. Most folks are overpaid for what they contribute to society. Folks want to be paid for doing nothing and contributing nothing to society, much as the welfare recipients are.
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Old March 10th, 2017, 11:46 AM   #63
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The question that can't be answered until it's actually tried is: what happens to a capitalist system if it has to adopt full reserve banking rules?
It's actually never been tried before...even in the early, early days of banking, before there was modern banking and gold smiths were the keepers of gold and other valuables for nobility and other middle class, they soon learned they could distribute more value in promissory notes than they actually had on hand in gold reserves.
All I know is that aside from the gold standard believers, everyone else says you can't have a working capitalist economy and all lending would seize up immediately.
I don't think you'd have any kind of economy. The crash would be cataclysmic and recovery would be measured in multiple generations or more. Interestingly, IMO the most primitive societies would be the ones least affected and so if the remnants of "advanced" societies didn't kill them off while stealing their food, they would have to be the seeds of any new civilization that would replace the fall.
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Old March 10th, 2017, 12:06 PM   #64
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A little deflation would be good for the economy. Cars etc. are too expensive and overvalued. Most folks are overpaid for what they contribute to society. Folks want to be paid for doing nothing and contributing nothing to society, much as the welfare recipients are.
Everyone is over paid except you?
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Old March 10th, 2017, 12:10 PM   #65
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A little deflation would be good for the economy. Cars etc. are too expensive and overvalued. Most folks are overpaid for what they contribute to society. Folks want to be paid for doing nothing and contributing nothing to society, much as the welfare recipients are.
That would only work if you instituted total international trade bans or somehow managed to get all your trading partners to deflate at exactly the same relative amount.

Fat chance for either of them.
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Old June 5th, 2017, 02:11 AM   #66
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Both IT and Coke are adamantly against The Fed and banks in general for creating money willy-nilly and repeatedly claim that this will devalue currency for the gain of the banks and government.

Yet this has been going on in the US since 1933 other than in foreign exchange. And in most of the rest of the western world even sooner. So why haven't the western world's economies collapsed like Zimbabwe and Venezuela keep doing?

Or more importantly, just like the question of fiat currency, what alternative do you have to offer?

In fact, virtually every economist I have ever heard on the topic say that not only is an inflation rate in the low single digits acceptable, it is necessary. Deflation is a terrible situation for economic health. But high inflation rates are also harmful (see Zimbabwe and Venezuela).

The fed "creates" money by buying notes from banks. But they also remove money by selling those notes.

And that is the balance a good government tries to maintain.

Of course there needs to be a net increase in the money supply. For every car produced, for every bbl of oil pumped to surface, for every tree turned into a piece of furniture, the net wealth of the nation is increased. If the money supply didn't keep pace, there would be a deflation effect proportional to your GDP.

So again I ask, what are your alternatives?
1933 did Hitler rise for he's chance with Germany.
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Old May 22nd, 2018, 05:53 PM   #67
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get rid of the Fed Reserve, make the money directly and make it 100% gold or silver backed. No fiat money is possible when it's 100% tied to a physical asset that's durable, portable, divisible and rare or semi-rare.
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Old May 22nd, 2018, 10:48 PM   #68
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I wish I could play the guitar like ringing a bell.
Get one, and practice. I'd help you to choose a guitar.
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Old May 22nd, 2018, 11:32 PM   #69
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Get one, and practice. I'd help you to choose a guitar.
Guitars are for rednecks. A ukulele is what you want to be playing if one wants to look cool and be in sync with the times.
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Old May 22nd, 2018, 11:41 PM   #70
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Both IT and Coke are adamantly against The Fed and banks in general for creating money willy-nilly and repeatedly claim that this will devalue currency for the gain of the banks and government.

Yet this has been going on in the US since 1933 other than in foreign exchange. And in most of the rest of the western world even sooner. So why haven't the western world's economies collapsed like Zimbabwe and Venezuela keep doing?
So, if you jump off a 100 story building you can say the same thing...... until the ground reaches up to grab you!

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Or more importantly, just like the question of fiat currency, what alternative do you have to offer?
I would argue that there are no permanent solutions as long as everything functions by the rules of capitalist economic theory.

If I can explain one point in particular, both libertarian monetarists (in particular- full reserve banking theorists) and leftwing zero growth theorists are on the horns of a dilemma when they want to move from the simple world of theory to the real world. This is because banks or any institutions loaning out money based on claims of possessing real assets as collateral are going to try to cheat and loan out more money in paper notes and virtual currency than they actually have on reserve to back up their loans!

Apparently, "fractional" reserve banking was already happening in Medieval Europe..even prior to the creation of formal banking institutions....the goldsmiths of cities across Europe were the first to issue promissory notes to depositers who placed their gold in their safes for safekeeping....and you got it...the goldsmiths soon realized that depositers would audit or check very infrequently to make sure their deposits were safe! So, the goldsmiths could easily loan out more money in notes than they and their depositers had at any given time...until there was a war or some other calamity that might motivate the rich to flee town and go in to collect their real gold...and the process of finding out they were shorted or cheated kept repeating itself right up to the modern banking era...which is why the US created the Fed, and other nations created central banks providing deposit insurance...but all this means that when debt levels reach the point where they are considered unpayable and loans will not be paid back with full interest, an 08 type of crash occurs and if lenders have lost confidence in the future of the banking/monetary system-- BOOM!!! Everything's worthless..and that's hitting the pavement after jumping off that tall building, and something that every capitalist system...which provides growth by borrowing from the future seizes up.
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In fact, virtually every economist I have ever heard on the topic say that not only is an inflation rate in the low single digits acceptable, it is necessary. Deflation is a terrible situation for economic health. But high inflation rates are also harmful (see Zimbabwe and Venezuela).
If you're old enough to remember the economic malaise of the 70's, the combination of the first oil shock and low confidence in the introduction of officially 'fiat' currencies dropping the gold standard led to a prolonged period of low economic growth/combined with high inflation throughout the decade. For those of us who were first entering the workforce, high unemployment and stagnant wages that were not keeping up with inflation were the big problems. But, it was a crisis for the capitalists...not us! Because stockmarket and bond growth remained low and corporate profits also tanked, the owners of capital were not earning up to their expectations....mostly meaning that they weren't putting enough distance between themselves and the rest of us!

And that all started to change in the 80's, when the new normal of low inflation not only pushed capitalists back into the markets and out of interest-bearing investments where they were parking their money, but even forced retirees depending on retirement savings and pension funds (which never used to be invested in risky investments) to belly up to the roulette tables of the market and place their bets on the future. So, let's not forget who has the greatest motivation to keep inflation low!
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The fed "creates" money by buying notes from banks. But they also remove money by selling those notes.
Ummm, the US Federal Reserve System is not a central bank, like Canada and most nations have! It's a cabal of major banking institutions dominated by the largest of the...I believe 13 federal reserve members - the New York Fed. So, once we get past the slight of hand of having a Fed chairman pretending to be a government regulatory bureaucrat (who is typically a member of the club who's trusted enough by the group to go on hiatus and regulate for the benefit of Wall Street and the largest banks) it's merely the bankers regulating themselves and handing themselves free money and leaving IOU's behind that average US taxpayers will get stuck with eventually!

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Of course there needs to be a net increase in the money supply. For every car produced, for every bbl of oil pumped to surface, for every tree turned into a piece of furniture, the net wealth of the nation is increased. If the money supply didn't keep pace, there would be a deflation effect proportional to your GDP.
The increases in the money supply create a corresponding increase in the debt load that believers such as yourself, expect will always be paid back in the future....too bad we don't live on a planet that can accommodate us by expanding in size also or at least depositing more real wealth in the form of metal ores and minerals underground!
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So again I ask, what are your alternatives?
I don't believe more than a handful of people understand the modern predicament well enough and are willing to make the changes and sacrifices that would be necessary to go past all this money BS and save the future for coming generations.......CRASH!

I didn't look to notice that this was an old thread....the old names should have been a clue....so I ended up repeating myself somewhat.
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Last edited by right to left; May 22nd, 2018 at 11:50 PM.
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