Is Money Real?
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29-09-2013, 07:17 PM
RE: Is Money Real?
I have no idea what Earmuffs has to do with any of this. I neither addressed him nor responded to him. As for the comment about people like me who believe that we are smarter or more sophisticated, that's pretty funny given the source. I haven't always chimed in but I've read quite a bit of your words of wisdom since you joined this forum and all I can say is your comment is beyond ironic.

Finally, I have no idea what black people, and whether or not I'm afraid of them, has to do with anything. To quote one of my favorite movies, yours is truley a dizzying intellect. But, for the record, I'm not afraid of black people, or at least no more or less than I am about any other people in general. What that has to do with the price of tea in China, though, is beyond me.

Shackle their minds when they're bent on the cross
When ignorance reigns, life is lost
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29-09-2013, 07:53 PM
RE: Is Money Real?
(29-09-2013 02:24 PM)TrainWreck Wrote:  
(29-09-2013 08:08 AM)BnW Wrote:  Seriously, I don't care if you want to insult me but at least try to stay on point while you do so.
The world continues to generate stupid people, and people like you who believe that you are smarter and more sophisticated than the rest, do not have a way to teach people, nor a solution as to what to do with them.
So by your own logic, all of your rants have in fact, offered no effective solutions to any of the issues you have addressed since you believe yourself to be superior to everyone? Oh wait I forgot who I was talking to, you don't believe you are superior, you KNOW you are superior to everybody else. Rolleyes

Quote:You need to try harder to reach the morons, and not call them names because that only makes them feel bad about themselves.

You are a perfect example of a moron not capable of being reached. Drinking Beverage

Quote:I bet if Earmuffs was a black man, or woman, you wouldn't call them "morons." No doubt in my mind that you are afraid of black people - you little bitch.

Another non-sequitur, and a baseless assertion to boot.

Please do continue with your antagonistic, ego-inflating exploits, oh so humble Trainwreck.Laughat

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01-10-2013, 05:45 AM
RE: Is Money Real?
Speaking of black people, I must say I always envisioned Trainwreck as an old white guy with a huge bushy beard pissed off at the world because NASCAR isn't on the TV enough.

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06-10-2013, 09:37 AM
RE: Is Money Real?
Addressing I and I's original post, I think the concept is much clearer if you start at the beginning.

Go back in time when early man didn't have any money or trade, and lived like other primates. Everybody spent their days trying to grow their food, build shelter from the elements, and all the other things needed to survive. Nobody can ever be a blacksmith or a carpenter or a teacher or anything other than a hunter/gatherer because, without trade, he would starve. And every time a harsh winter comes, or a flood, the people die.

The first step in forming a civilization is coming up with a medium of exchange, or trade, so that people can develop their special skills. Rather than everybody building their own home, if there's a medium of exchange, you can let the guy who has a unique talent in construction build lots of homes, and he can trade these skills for the food and necessities he needs. Another can make clothes. Another can be an artist. And so on.

The question is what to use as a medium of exchange, namely money? The first instinct is to use something with inherent value, or a practical use, or something people need, like food. But the problem is that then the concept of “saving” implies hoarding something (like food) that other people need. It's a waste for “saving” to consist of hoarding stockpiles of corn which rot, while your neighbors are starving. It's far better to find something that has no inherent value, no practical use to use as money. But what? Assume you use something that is plentiful, like sand. Then people on the beach have all the money they need and don't need to ever sell anything for sand. Plus, there is SOO much sand, that if you divide it by all the people in the world, every man has to carry millions of tons of sand. Transporting 5 tons of sand to buy a loaf of bread is impractical. So it needs to be something that is rare, so that if you divide the total quantity of money by the population, there's only, say, no more than 100 lbs per person, and so that money for daily expenses can be carried in your pocket. Ideally it should be distributed in small flecks so that even with a great effort at extracting it, the quantity of money only grows at 1-2%/year, the same as the rate of the economy, to have steady prices. It needs to be a solid to be carryable. Some early society's used shells. This works, except there's no uniform quality. Is one tiny shell worth the same as a big, beautiful shell? It's too subjective. It better be something that is “pure” and contains a consistent amount and quality by weight. This means it has to be an element on the periodic table. And, it has to be inert, non-toxic, not radioactive. And, ideally it would be great if it could be melted easily and shaped into convenient coins that all had the same weight. That means a metal. But, most metals are gray and have no distinctive properties, making it easy to make counterfeits, and only a chemist can tell what's “pure”. So ideally it should be a metal with unique properties that only exist when it's in pure form. Like, when it is pure, it has a unique yellow color, and a unique texture that is soft so that you can bite it and know that it's real, since it loses those qualities when you dilute it. People accuse gold bugs of having some bizarre fascination with the metal. But there's nothing bizarre about it. It's simply the substance that is the most practical thing to use as a medium of exchange.

To facilitate trade, some people can form 'banks' which, as a service, hold onto your gold for you, and they give you claim checks for your gold. These are pieces of paper, or currency, which you can trade instead of trading actual gold. The danger is that as people get more and more used to using the paper currency for their trade, the guys who run the bank may start printing extra currency fraudulently, that they can spend themselves and get very rich. By getting 'rich', they're not actually creating real wealth, they're taking wealth from everybody else who is holding onto that currency. They're just printing more currency to chase the same amount of goods and services, so everybody's currency is worth less and less. This is inflation. The system will fail only people start figuring out what's going on and demand their gold back and the banks don't have enough gold to honor all the outstanding currency (claim checks). When this happens, the people will hang the bankers for fraud. However, if the government and the bank work together, or the government owns the bank, the government can force people to keep using the paper currency, even though it has no value. This is called “fiat currency.”

This system was first tried in the 11th century by the Song Dynasty. They were fighting expensive wars, and raising the money they needed through taxation wasn't politically possible. So, by switching to a fiat currency they could pay for the wars by printing paper money, which is effectively taxation since it's still taking wealth from the people, but they learned that the people don't protest or blame the government when their “tax” comes in the form of paying tiny amounts more every day.

This monetary system has been tried 3,000 times since then. It has a 100% rate of failure. Within 50 years or so, the people get tired of seeing their salaries and savings shrink every day and this leads to a revolt. What determines how long it lasts is how good the government is at forcing people to keep using the currency. It is always done the same way, for the way same reason. Remember, after WWII, the US signed Bretton Woods, where the whole world gave the US much of their gold to store in Ft. Know, and the US gave them “claim checks” for their gold (ie Federal Reserve Notes—aka Dollars). But when Nixon was fighting those unpopular wars in Vietnam he knew he couldn't get re-elected if he raised taxes to pay for them. So he started printing money. And then countries like France started handing in their claim checks demanding their gold back. So, in 1971, Nixon said the US was confiscating all the gold and would no longer honor the claim checks. This is why the US now has several times more gold than any other country.

As I mentioned in another post, economists have modeled the effects of a fiat currency and proven that the “tax” imposed is born by the poor and the middle class. And the US's historic gini coefficient proves this to be the case. During the 50's and 60's when the US had 0% inflation on the gold standard, the poor and middle class grew and became more equal—no matter which party was in charge. The moment the US switched to a fiat currency in 1971, inflation soared, as the gini co-efficient, as the poor and middle class got wiped out. Since 1971, whether there are high taxes, such as under Carter, or low taxes, such as under Reagan, whether liberals or conservatives are at the helm, either way the gini co-efficient keeps rising.

So, to your original question, is money real? First, remember that money and currency are technically two different things. Money (gold) is some substance that people use as a medium of exchange which in itself has no inherent value per se other than that it has all the necessary qualities (rarity, solid, etc.) to be a good medium of exchange. Currency, under normal circumstances, is just a claim check for money, except during the 'fiat currency' phase, like we have now, when it's used as money. During this phase, currency has no value other than what the government convinces people it's worth, and it's very fragile because all it takes is a panic, and the people will refuse to use it and the currency implodes with hyper inflation.
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