Poll: How will this ultimately work out?
The Fed will be able to continue buying up the government's with newly printed money indefinitely.
The Fed will have to stop at some point, but the US will be able to handle the interest payments.
It will lead to either a currency collapse if the Fed keeps printing money like this, or a default if they don't.
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Big surprise. The Republicans caved in.
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17-10-2013, 12:09 PM
RE: Big surprise. The Republicans caved in.
Big surprise. You make a broad, general statement that my post is illogical, so I challenge you to point out something specific that was illogical, and you run with your tail between your legs, saying "I am done responding to you as you have no idea what is actually involved in these decisions and are uninterested in a real discussion."

Hello. I'm trying to have a real discussion. That's why I was asking you to be specific, as I am with you.

I did NOT throw out silly attacks. You made an incredibly illogical, ignorant statement earlier with saying the debt limit _IS_ money already spent, the bills the federal government already has. What an absurd proposition. Ask any bookkeeper. You are confused, mixing up 2 unrelated concepts. The bills you already have are your "accounts payable", they are in the liabilities section of the balance sheet. The 'debt limit', the maximum you can borrow, does NOT even appear on a balance sheet. It is NOT the same thing as bills.

It might be accurate to say that if you can't borrow more money (ie you hit your credit limit), THEN the result is that you cannot pay your bills. But it's moronic to say that your credit limit IS your bills.

If you hit your credit limit, it is up to you to decide what you will and will not pay. You may CHOOSE not pay your electric bill or your car payment, while still spending money on restaurants. But it's your CHOICE. I already explained that if the debt ceiling wasn't raise, the government still has enough revenue to pay it's bills and not default, IF it stops spending on stupid, unnecessary stuff, like all the wars. Similarly, if you hit the credit limit on your credit card, and your income is enough to pay your bills, but not enough to pay your bills AND and go on exotic vacations and fly your mistresses around first class, then it is up to you to decide if you're going to pay your bills or spend your income on the other stuff.
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17-10-2013, 04:15 PM (This post was last modified: 17-10-2013 08:16 PM by frankksj.)
RE: Big surprise. The Republicans caved in.
Quote:I'm seriously sick of explaining this "invisible/fake money" money thing. It's NOT invisible, it's NOT fake. This is such a misunderstanding among people.

The misunderstanding is confusing money with currency. For thousands of years, money has been some item of value that is used as a medium of exchange, historically it's been gold, but it can be anything people accept holds value, like diamonds, food, whatever. Banks, as a service, hold onto your money (ie gold) and give you “claim checks” for your gold called “currency”, dollars, yen, etc.. From 1948-1971, the US Federal Reserve provided the world this service. All countries shipped the US their gold (ie money), and the Fed gave them US dollars (claim checks) that were convertible to gold at $35/oz, based on a treaty (Bretton Woods). Dollars were NOT money—they were currency, which is redeemable for money. To pay for Vietnam, Nixon decided to end the convertibility, confiscate the world's gold, and now those “claim checks” are simply a piece of paper that is only worth what people imagine it's worth. And all it takes is a panic for people to conclude it's worth nothing, like happened to the Weimar Republic, and suddenly it's being used as wallpaper because it's just a piece of paper, no different than monopoly money.

Quote:So the money they receive is very much real. Try buying a $100 government bond with monopoly money and see how far you get.

The only reason the US is able to keep paying all it's bills by printing money is simply because the US uses military force. Every time an oil producing country tries to sell oil in non-dollars, the US attacks them. I can give you lots of examples (Iraq, Libya, Venezuela, Iran). Can you give me ONE example when a major oil producing country started selling oil in non-dollars and was NOT attacked by the US?

Also, what has happened to Americans every time they've tried to introduce alternative mediums of exchange, like liberty dollars, e-gold, etc.? They're all arrested. And what would happen to a bank if they opened current accounts in non-dollars? Again, they'd be hauled off at gunpoint. This is no different than monopoly money. I can hold a gun to your head and tell you to sell me a $100 government bond for monopoly money, or else I'll pull the trigger, and guess what?! I'll be able to buy a $100 government bond with monopoly money! Does that somehow make the monopoly money more "real"?

Federal Reserve notes ARE the same thing as monopoly money. They are both pieces of paper that have no natural value. The issuer (Hasbro and the Fed) do not guarantee their convertibility into anything else anymore. That's what “fiat” means. Somebody is sitting with a printer making as much of both currencies as he wants. The only difference is the guy with the printing press: for dollars it's the Fed, for monopoly it's Hasbro.

When you have representative currency (ie dollars are convertible to gold), you never have a currency collapse, because the currency is a claim check for something the world assigns value to, because of gold's unique properties that make it good for money. Can you name one time in human history when a bank has issued and honored gold-backed currency and it has failed? AFAIK, it's never happened. You could hop into a wormhole that threw you back into any random time and place throughout human history, and a gold coin would always be convertible for whatever you need. Take a stack of US Dollars to, say, ancient Greece, and see what you can buy with them. Nothing, because they're not worth anything. They're just pieces of paper.

What you forget is this isn't a new situation. It has done this over 3,000 times already in human history. Not once, out of 3,000 attempts, has a fiat currency lasted more than 50 years before it's collapsed. And what usually triggers the collapse is when the government starts printing money to pay it's bills (ie quantitative easing).

Do you dispute this? If so, can you name ONE fiat currency in all of human history that has not collapsed within 50 years? Name one representative currency that has ever collapsed? If you can't, and concede that the fiat currency has a 100% record of failure, and the representative currency has a 0% record of failure, what are we debating? You're arguing that a fiat currency is better? For what reason?
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17-10-2013, 10:04 PM
RE: Big surprise. The Republicans caved in.
Quote:OK just so we are clear the debt limit is not a budget. The debt limit is what enables the treasury to pay the bills of the federal government, it is not allocating new spending. To not raise it would be to default on all the payments (everything from social security and medicare to government bonds) for the stuff that has already been spent. This has never been controversial before 2011. Under every president the debt limit was raised as was necessary no questions asked with the exception of 1 time in the 70's when they actually did go over accidently and it caused interest rates to spike costing Americans several millions of dollars (both private and to the national debt). A good analogy is the debt limit is like making a payment on your motorbike it is not new spending but rather a payment on things already spent.

But that's still directly related to total debt.
If you're limiting the amount you can spend than the more you can spend the more you can borrow and get into more debt.
The US has a bad habit of overspending and that's exactly what's happening.
The debt ceiling get's raised and that extra spending power is used to incur further debt to fund some new project, ie: Obamacare in this situation.

Quote:Sorry to burst your bubble. It means c) people have given up hope and stopped looking for jobs. The number of WORKING Americans is going down. The number of unemployed is also going down only because they've given up.

Why should "giving up" matter?
If you don't have a job, you're unemployed, irrespective of if you're actively looking for a job or not.

Quote: The ignorance of the right is astounding.

From an economic stand point it is very much the left who are ignorant.


The problem is simple. The US government is overspending.
Debt should be in relation to GDP. Like 20% of GDP or something. And so yes, if GDP goes up than you can borrow that bit extra and have nice things. BUT if GDP goes down, such as during a recession, than debt should be decreased which is usually achieved by cutting spending in other areas (or borrowing less) to pay off that debt. And so your nice things become not so nice or you have less of them.
That's how it works.
The problem is, particularly in America but not limited to, that people, middle class regular Joe people, love their current life style. They don't want spending cuts to social programs. No, they want MORE social programs.
And so politicians who are driven by what the public want, because it's the public who vote them in, promise this that and the other, such as Obamacare.
And so instead of spending cuts you get overspending.

People like their little cocoon and they don't like it ruffled.

The consequence of this is overspending that is resulting in ever increasing debt that will eventually result in a collapse and than rather than suffering a small cut today, you'll will suffer a huge fucking cut in the future.
Greed and ignorance son, greed and ignorance.

Quote:Federal Reserve notes ARE the same thing as monopoly money. They are both pieces of paper that have no natural value. The issuer (Hasbro and the Fed) do not guarantee their convertibility into anything else anymore. That's what “fiat” means. Somebody is sitting with a printer making as much of both currencies as he wants. The only difference is the guy with the printing press: for dollars it's the Fed, for monopoly it's Hasbro.

When you have representative currency (ie dollars are convertible to gold), you never have a currency collapse, because the currency is a claim check for something the world assigns value to, because of gold's unique properties that make it good for money. Can you name one time in human history when a bank has issued and honored gold-backed currency and it has failed? AFAIK, it's never happened. You could hop into a wormhole that threw you back into any random time and place throughout human history, and a gold coin would always be convertible for whatever you need. Take a stack of US Dollars to, say, ancient Greece, and see what you can buy with them. Nothing, because they're not worth anything. They're just pieces of paper.

I get what you're saying but I disagree.
Everything, including Gold, is only worth the price someone will pay for it.
Oil was "discovered" by the ancient Egyptians but they had absolutely no use for it and so it considered a waste product and completely worthless. Today.. well..
I agree money is worthless (short of the value of the material used) but it's just a system we use to put a number value on anything.
It doesn't matter if it's gold or not. If I work an hour and get paid that money is representative of my 1hour of work just the same as if a country sent the US its gold and got US dollars representative of that gold in return.
And so you don't need to have a gold standard.
In fact it's better not to have a gold standard because things like exchange rates are not fixed, they fluctuate and so making them fixed isn't necessarily a good thing.

The issue with the Fed bank printing money, well you'll have argument from me here, it's a bad thing to do (most the time).
But it's not really true that it doesn't represent anything.
It's part of the whole picture.
Like say I work an hour and get $10. What determines that $10 as opposed to $100 is dependent on how much money is in the system.
aka: inflation
And so Fed printed money represents everything in a sense. It's sort of hard to explain. Say inflation goes up and for that same hour's work I get $12. Same amount of work, different price. And so all the money printed by the Fed Reserve that increased inflation by 20%, $2 of that money is represented by my work.
Fuck it's really hard to explain.
It doesn't represent nothing though.

BUT you're right in the sense that it only holds it's value as long as people perceive it to be what they want to use for their currency.
But this is the same when it's representative of gold. It only holds it's value so long as gold holds it value. And yea you could argue that that's good because gold is trustworthy of being valuable (though try telling that to the Spanish during the colonial time period when inflation due to all the gold coming over from South America/Mexico fucked up the country). BUT so is working and things like iron and oil and pretty much everything. I can trust someone will want a bottle of coke just as much as I can trust someone will want a lump of gold.

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18-10-2013, 09:39 AM
RE: Big surprise. The Republicans caved in.
(17-10-2013 10:04 PM)earmuffs Wrote:  Why should "giving up" matter?
If you don't have a job, you're unemployed, irrespective of if you're actively looking for a job or not.

The US unemployment numbers ONLY include people actively looking for a job by spending their time in the unemployment office and going to interviews, etc. Once they give up, they are no longer considered unemployed and the official unemployment number goes down.
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18-10-2013, 12:06 PM (This post was last modified: 18-10-2013 12:16 PM by frankksj.)
RE: Big surprise. The Republicans caved in.
@earmuffs,

I think you're over-complicating it. If you look at a modern monetary system it seems so complex. But if you study the history, starting before there even was money, and follow the evolutionary progress, it becomes very clear why things work the way they do. It's pretty easy to get your head around. I know it's long, but I did this here: http://www.thethinkingatheist.com/forum/...eal?page=7

Quote:I get what you're saying but I disagree. Everything, including Gold, is only worth the price someone will pay for it. Oil was "discovered" by the ancient Egyptians but they had absolutely no use for it and so it considered a waste product and completely worthless.

We don't disagree at all. There are some things that are universally considered valuable because they have properties humans need, like food and water which nourishes human cells, steel because it can make weapons, and gold because it's the best medium of exchange the world has since it's rare (never more than a few kg per person), which makes it convenient to divide between the populace, it's hard to find, so the money supply grows only 1-3%/year normally, it's distributed in tiny flakes, rather than large chunks, so the money supply grows small amounts across the population, and it's an element, so 1 oz of it always be the same as another oz, it can easily be melted and shaped, and at room temperature it has a unique color and texture that doesn't exist anywhere else. If it's diluted, or a 'fake gold', it's easy to tell because when you bite it your teeth won't leave an impression. Naturally, it's not perfect, and when they found a ton of gold in the New World, it was devastating to the economy for the exact same reason it is when the Fed prints tons of new money. But, I'll bet that 99.9% of the places & times in human history, food, water, and gold will have inherent value because they all have properties humans need. However, I'm not a gold bug, nor am I advocating returning to a gold standard. I'd rather use a more modern system, like bitcoin. So, I'm not advocating FOR gold, rather I'm AGAINST having one authority (the Fed) have the ability to confiscate as much wealth from as they want silently, without our knowing, by hitting the print button. IF they want to take half of our wealth, I want it to be done transparently, through taxation, where we know what is being taken, and who it's being taken from, and can ensure the burden is spread evenly. Politicians, of course, LOVE a fiat currency because, when they want to spend to boatloads of money, they don't need to deal with pesky voter approval—they just tell the Fed to hit 'print', and the voters do end up paying, but they don't even realize it, because it happens slowly and gradually in the form of increased prices.

Quote:And so Fed printed money represents everything in a sense. It's sort of hard to explain. Say inflation goes up and for that same hour's work I get $12. Same amount of work, different price. And so all the money printed by the Fed Reserve that increased inflation by 20%, $2 of that money is represented by my work. Fuck it's really hard to explain. It doesn't represent nothing though.

It's simpler if you start small. Imagine the world consists of a village with 100 people. They once discovered 1,000 shells, and assumed these were the only shells in the world, so they agreed to use them as money, a medium of exchange, with each person on average having 10 shells, and each shell representing a day's labor. But, unbeknownst to everybody, one guy in the village, Fred, discovered a hidden cache of 10,000 shells, which he's hiding in his house. What effect does this have on the village? It depends on what Fred does with those shells. If he does nothing and they just sit in the house, it has no effect. This is the same as when the Fed prints money and gives it to the big banks, and the banks just sit on it and don't loan it out. We don't perceive any real effect. But what if Fred has a fetish for bananas and buys up all the bananas? The price of bananas will soar right away. Over time, as Fred obtains all the villages bananas, the price of other fruits may rise. So people may switch to eating more grains, bringing the price of non-banana fruits back down. But, gradually, as those new 10,000 shells start circulating and being used to buy all sorts of things, eventually all prices will go up, and people will start demanding higher sums for their labor, maybe 2 shells/day, so they can feed their families. Or, Fred could alternatively offer loans to all the villagers, which would drive down interest rates. Which is what the Fed has done with house loans.

The bottom line is that when someone has the ability to make more money, be it Fred or the Fed, he gets a lot wealthier. But it's not new wealth, it's just taking wealth from someone else. And it's hard to track who is paying what. Classic liberals and Austrian economists have always said that the poor and the middle class suffer the most. And history has proven their predictions to be accurate. Here's the US gini-coefficient (inquality): http://www.leftbusinessobserver.com/GiniLong2004.jpg It got better while the US was on a gold standard (ie the government paid the bills only with taxes and couldn't print money), and it reversed course precisely when Nixon ended gold convertibility. Since then, whether taxes are high or low, whether the US is run by liberals or conservatives, the poor and middle class have been consistently wiped out, exactly like the Austrians predicted. If you think there's 2 sides to this story, I can't find it. The opposition, the Keynesians, do not dispute this--they just ignore it, truncate the gini charts at 1980, and blame Reagan. Whenever you point out that the change happened during the Nixon shock, they refuse to discuss the matter further.
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18-10-2013, 04:32 PM
RE: Big surprise. The Republicans caved in.
I do not understand those of you how think growing government spending is somehow an economy stimulus. There is such a thing as good debt, an investment, but that is not what most of you are describing.

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18-10-2013, 04:59 PM (This post was last modified: 18-10-2013 05:02 PM by frankksj.)
RE: Big surprise. The Republicans caved in.
@Dark Light, my favorite thing is to ask these people: "If increasing government spending and the number of public sector workers is good, what would happen if we kept doing until 99% of the population worked for the government. Then you'd have 1% of the population that has to build all the houses, mow all the lawns, clean all the teeth, and make all the stuff the other 99% needs. And each private sector person will have to pay enough taxes to cover the cost of 99 public sector employees. Will this put a major burden on the 1%?" They always say 'of course that would be a disaster'. And then I ask, "Ok, so imagine that the size of government is a knob, like the volume on the stereo. You know that if you turn it all the way, to 99%, it's a disaster as you just admitted. Obviously turning it small notches is still having the same effect, just a lot smaller. If turning it small notches has no effect, then you could keep just turning it small notches over and over again, until the knob was all the way."

I've yet to find a 'big government spender' who will engage in this thought experiment.

Of course, if someone is unemployed and not doing anything productive, but is collecting unemployment, say $1,000/month, you're better off to put them that same amount of money to work for the government, say building a road, than doing nothing but watch TV. BUT, this is true only until they could have otherwise found a private sector job. The problem is that once they get a government job, they stop looking. There are no temporary government jobs. Once the government creates some new departments to hire up the unemployed as 'stimulus', those departments NEVER get shut down, and the people NEVER return to the private sector.
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18-10-2013, 07:05 PM
RE: Big surprise. The Republicans caved in.
(18-10-2013 04:32 PM)Dark Light Wrote:  I do not understand those of you how think growing government spending is somehow an economy stimulus. There is such a thing as good debt, an investment, but that is not what most of you are describing.

Roads and bridges and railways and wind farms and nuclear power plants and upgrading the grid and teachers and cops and firemen and other infrastructure sounds like both a stimulus and an investment to me DarkMeat. Tongue

I am us and we is me. ... bitches.
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18-10-2013, 07:13 PM
RE: Big surprise. The Republicans caved in.
(18-10-2013 07:05 PM)GirlyMan Wrote:  
(18-10-2013 04:32 PM)Dark Light Wrote:  I do not understand those of you how think growing government spending is somehow an economy stimulus. There is such a thing as good debt, an investment, but that is not what most of you are describing.

Roads and bridges and railways and wind farms and nuclear power plants and upgrading the grid and teachers and cops and firemen and other infrastructure sounds like both a stimulus and an investment to me DarkMeat. Tongue

I have never understood how libertarians overlook all those things when discussing the government.

(31-07-2014 04:37 PM)Luminon Wrote:  America is full of guns, but they're useless, because nobody has the courage to shoot an IRS agent in self-defense
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18-10-2013, 07:32 PM
RE: Big surprise. The Republicans caved in.
(18-10-2013 07:13 PM)Revenant77x Wrote:  
(18-10-2013 07:05 PM)GirlyMan Wrote:  Roads and bridges and railways and wind farms and nuclear power plants and upgrading the grid and teachers and cops and firemen and other infrastructure sounds like both a stimulus and an investment to me DarkMeat. Tongue

I have never understood how libertarians overlook all those things when discussing the government.

Because that stuff is largely paid for by state and local governments. Federal government taxes mostly go towards buying debt (yeah, I said it), administration, military, etc. Roads, bridges and the like are mostly paid for by state income taxes, state gasoline taxes, etc.

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