The Worthlessness of Our Money

[Warren Sear]

I'm with Mr. Sear!

I'm willing to pay the postage.

 

[johngalt]

Taxing people to prosperity?

I think it was Churchill, who said something to the effect:

"Taxing yourself to prosperity makes as much sense as trying to lift yourself up by standing in a bucket and pulling on the handle"

 

[clipper1]

I've had this under the glass on my desk for several years. Semantics yes, but it does make you think a bit.


currency is made just like toilet paper, on rollers.
Gold is the money of kings
Silver is the money of gentlemen
Currency is the "money" of slaves

Money is minted
Currency is printed

 

[gregintenn]

Thank you DougAZ!

I am in the same situation as you. I've worked very hard. I
made sure my Kids were successful. I live very comfortability.

When I see people smoking, joking, with the latest Cell Phone,
$150/month Cable TV, $60K vehicles, and then say they can't
live on $600 a week Unemployment money; they can go get Bent,
don't deserve it, and get no sympathy from me.

Your damn right I'll take your Worthless money, the whole world
does. The Only difference, I have "Chosen Wisely".

To all the above posters, thanks for a very interesting and thoughtful thread! All my very best my Friends, Joe.

I too am enjoying this thread. How money works is a fascinating subject for me.

 

[ladder13]

I think it was Churchill, who said something to the effect:

"Taxing yourself to prosperity makes as much sense as trying to lift yourself up by standing in a bucket and pulling on the handle"

It's easy to be benevolent when your country is the size of a bucket.

 

[Injunbro]

So who, exactly, has the money? Every country, w/ possible exception of a couple small ones, has a huge national debt... who carries that loan? It's all a shell game: think if the entire wealth of the world was $10 & there were 10 people & it was equally distributed. Person 1 could only spend $1 unless he borrowed $1 from #2 to buy a $2 item. Then #2 borrows from #3 & 3 from 4, etc. Go around the circle a few times & everyone is in debt for hundreds or thousands... but only $10 actually exists... now add however many 0's onto the figures & you have world debt & an excuse for gov'ts to keep raising taxes.

 

[Absalom]

....
currency is made just like toilet paper, on rollers.
Gold is the money of kings
Silver is the money of gentlemen
Currency is the "money" of slaves

Money is minted
Currency is printed

The people missing in your little list are "free men who actually work"

But this brings up an important historical point.

Paper money as we know it, detached from wealth in form of physical treasure like gold and silver and most importantly land, was invented in Europe in the late Middle Ages and the Renaissance primarily not as a value storage device, but as a medium of exchange.

Without it, the commercial revolution that among other things led to the Age of Discovery and America would have been impossible. You could not have a growing continent-wide economy by shoving bags of coins back and forth.

The people who pine for some gold or silver standard nowadays tend to be wealthy folks who are fixated on value storage. You've got yours and you want to keep its value up. Fair enough.

But the function of money as the lubricant of the whole economy which ideally keeps everybody engaged and in the loop of free/market exchange is infinitely more important. And that is working. Never perfectly, lots of ups and downs and even the occasional crisis.

But not disaster. As the German government convincingly demonstrated in 1923, you can intentionally drive your currency into hyperinflation and basically collapse its value to nothing to make a point to the world ... and walk away from it as a country, getting back to stability within a few years.

 

[peter-paul]

The people missing in your little list are "free men who actually work"



But this brings up an important historical point.



Paper money as we know it, detached from wealth in form of physical treasure like gold and silver and most importantly land, was invented in Europe in the late Middle Ages and the Renaissance primarily not as a value storage device, but as a medium of exchange.



Without it, the commercial revolution that among other things led to the Age of Discovery and America would have been impossible. You could not have a growing continent-wide economy by shoving bags of coins back and forth.



The people who pine for some gold or silver standard nowadays tend to be wealthy folks who are fixated on value storage. You've got yours and you want to keep its value up. Fair enough.



But the function of money as the lubricant of the whole economy which ideally keeps everybody engaged and in the loop of free/market exchange is infinitely more important. And that is working. Never perfectly, lots of ups and downs and even the occasional crisis.



But not disaster. As the German government convincingly demonstrated in 1923, you can intentionally drive your currency into hyperinflation and basically collapse its value to nothing to make a point to the world ... and walk away from it as a country, getting back to stability within a few years.

Some say a few Satoshis would fix the whole mess. (No, I am not advocating that.)

But to counter your point, it seems to me the West was Won on the back of Gold and Silver Certificates, not Federal Reserve Notes.

I'm not advocating a wholesale transition to gold coins, however paper money backed up by and pegged to physical assets is better than the current charade.

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[Absalom]

...
But to counter your point, it seems to me the West was Won on the back of Gold and Silver Certificates, not Federal Reserve Notes.

I'm not advocating a wholesale transition to gold coins, however paper money backed up by and pegged to physical assets is better than the current charade.

.....

I think we're down to a question of faith.

The Fed's monetary policy, and thus the dollar, is based on the aggregate value of the US economy, which (despite current problems) is quite real.

The intrinsic value of gold and other precious metals is not. That's why we see the wild gyrations in prices over time; their practical uselessness makes their value entirely dependent on the hope of a continued widespread belief in their preciousness.

I think I prefer economics over psychology

 

[peter-paul]

I think we're down to a question of faith.



The Fed's monetary policy, and thus the dollar, is based on the aggregate value of the US economy, which (despite current problems) is quite real.



The intrinsic value of gold and other precious metals is not. That's why we see the wild gyrations in prices over time; their practical uselessness makes their value entirely dependent on the hope of a continued widespread belief in their preciousness.



I think I prefer economics over psychology

No economy exists in the absence of humans, they make emotion based decisions almost all of the time. Hence mass marketing campaigns.

Your point about the value of the dollar being based on the total value of the economy reinforces my original post.

Flood the economy with dollars (and there is no end to QE in sight); and the purchasing power of the dollar diminishes. It is a hidden tax against those who have put faith in dollars as a store of value.

The market doesn't so much determine how much is pumped, people do. And you better believe they make policy decisions based on emotions. It's not some dispassionate machine algorithm that decides things based on "economics".

It does come down to faith, you're right. I don't have faith in the benevolence or competence of the Fed not to get it right.

If pumping Ad-Infinitum is not bad, why not pump and distribute until we are all millionaires? Granted, maybe a car will cost a million bucks, but that will be paid for by those who came before and actually saved a million dollars.

When a party can make more of something from nothing, that party reduces the value of the the commodity that already exists. It's why we outlaw counterfeiting.

I don't trust the angels at the Fed to make economic decisions inside an emotionless vacuum.

A lot of people don't.

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[Onomea]

We were discussing this earlier this year, the concern about the gummint issuing stimulus checks leading to hyperinflation, and I noted that Japan has been engaged in deficit spending, big time, since their economic bubble burst in the early 1990s, but the result has been deflation for much of the period since. (Japan is No. 1 in debt to GDP ratio at nearly 240%.) So it ain't necessarily so that deficit spending causes inflation.

As for inflation in our own country over the past 30 years:




• U.S.: average annual inflation rate 1990-2019 | Statista

(For the record, I don't claim to understand any of this. Ruminating upon it, and the different learned opinions out there, are just a way of passing the time for me.)

 

[peter-paul]

This proves @Absalom's point that the Fed is managing inflation at a steady rate. I do not dispute that.

And you are right about Japan.

My point is that it can't go on ad infinitum, especially considering all of the unfunded liabilities that we will need to pay for.

I suspect the bubble will burst caused by external and internal forces.

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[Jessie]

This all smells like " Peak oil"
What ever happened with that?

 

[pharmer]

I had J M Keynes "economics" explained in detail early '70's by some very learned professors. "Buy everything you want right now, pay for it with cheaper dollars down the road" (oversimplified, I know). The same folks were quick to throw out "Guns vs Butter" which stresses "smart spending." When I give the "basic economics talk" to teen age students, I always take them to the "United States of Pizza." Basically you can go Keynes however reality is a "Pizza" and the more money you print the more slices you get. Trick is to make the pizza bigger. War makes big pizza fast, Covid lockdown/ uncertainty/ unemployment don't make no pizza at all. I haven't delivered (pun intended) the second half of that, yet. Joe

 

[Dougaz]

A charmed life

You have obviously led a very successful charmed life... and that's really great. I feel good for you and your family. Some of us, for different reasons, have not had it so good... but no matter. The point is that if you should still be able to see what the OP is saying... namely that the government printing money non-stop and having State and Federal debt & obligations spiraling out of control isn't a really good thing for anybody long-term.

Not all for sure, but some of us and our children and our grandchildren are going to pay a mighty price for this someday. Fortunately, I think I'll be gone before the worst of it comes home to roost. Unfortunately, my children will still be around and one of them falls into the 'working poor' family category that will never own a house, a new car or have any sort of real retirement. You have to be invested in something today or you'll never be able to keep up with the inflation that's coming on wages alone. It would be nice to be able to stop it or at least slow it down a pinch, but I fear we are past the point of no return.

Not so much charmed. I couldn't afford college but I could go to work. As a young man, I commonly worked two (2) jobs at a time, 60 80 hours a week and it was worth it to me. When my friends financed a new, super cool car, I saved up my cash and bough used, with NO financing. I was the "working poor" but while I was/am uneducated, I made a point of earning, saving, studying, investing while developing relationships with men as mentors that were 30 years older than me.

When I got married, I paid for the entire affair with less than $1,000.00 - No $30K weddings for me and I never looked back.
Bought my first home for cash ($40K) and sold it a few years later for $95K, rolled the $95K and additional cash into a new home that was also paid in full the day we moved in.

Charmed my behind ..... It's called dedicated work ethics which by the way is exactly why we're seeing these idiot protests and riots .... Because those people have no work ethics and are demanding that Uncle Sam provide for them, cradle to grave.

Charmed indeed.

 

[TTSH]

Not so much charmed. I couldn't afford college but I could go to work. As a young man, I commonly worked two (2) jobs at a time, 60 80 hours a week and it was worth it to me. When my friends financed a new, super cool car, I saved up my cash and bough used, with NO financing. I was the "working poor" but while I was/am uneducated, I made a point of earning, saving, studying, investing while developing relationships with men as mentors that were 30 years older than me.

When I got married, I paid for the entire affair with less than $1,000.00 - No $30K weddings for me and I never looked back.
Bought my first home for cash ($40K) and sold it a few years later for $95K, rolled the $95K and additional cash into a new home that was also paid in full the day we moved in.

Charmed my behind ..... It's called dedicated work ethics which by the way is exactly why we're seeing these idiot protests and riots .... Because those people have no work ethics and are demanding that Uncle Sam provide for them, cradle to grave.

Charmed indeed.

Methinks you misunderstood my meaning. By "charmed", I mean no serious debilitating health issues, no crazy medical bills, no divorce, no other tragic family issues, no accidents, no having to support or care for others in your extended family, no legal judgements against you, etc., etc.

Has nothing to do with how hard you worked or how thrifty you were... and it sounds like you did/were both and I admire you for that.

Many of us did exactly the same and more. Unfortunately, the "charmed" part didn't quite follow all of us like it did you.

 

[johngalt]

We were discussing this earlier this year, the concern about the gummint issuing stimulus checks leading to hyperinflation, and I noted that Japan has been engaged in deficit spending, big time, since their economic bubble burst in the early 1990s, but the result has been deflation for much of the period since. (Japan is No. 1 in debt to GDP ratio at nearly 240%.) So it ain't necessarily so that deficit spending causes inflation.

As for inflation in our own country over the past 30 years:




• U.S.: average annual inflation rate 1990-2019 | Statista

(For the record, I don't claim to understand any of this. Ruminating upon it, and the different learned opinions out there, are just a way of passing the time for me.)

One problem is they are cooking the books. The factors used to calculate inflation hasn't remained constant over those 30 years. I can't remember under which administration this happened, but they rejiggered the formula to exclude food and energy prices. You know, those categories that are showing inflation. I'm sure that isn't the only time.

 

[johngalt]

I had J M Keynes "economics" explained in detail early '70's by some very learned professors. "Buy everything you want right now, pay for it with cheaper dollars down the road" (oversimplified, I know). The same folks were quick to throw out "Guns vs Butter" which stresses "smart spending." When I give the "basic economics talk" to teen age students, I always take them to the "United States of Pizza." Basically you can go Keynes however reality is a "Pizza" and the more money you print the more slices you get. Trick is to make the pizza bigger. War makes big pizza fast, Covid lockdown/ uncertainty/ unemployment don't make no pizza at all. I haven't delivered (pun intended) the second half of that, yet. Joe

Keynsian economics is a disaster that in the long run punishes the savers and investors. It is wealth transfer from them to the spenders by using inflation to loot them.

 

[TTSH]

One problem is they are cooking the books. The factors used to calculate inflation hasn't remained constant over those 30 years. I can't remember under which administration this happened, but they rejiggered the formula to exclude food and energy prices. You know, those categories that are showing inflation. I'm sure that isn't the only time.

If you think inflation is as low as the government is telling us, try going out and buying a new car or truck tomorrow. You will learn fast that real inflation never sleeps!

 

[Ματθιας]

How does it feel to live in a nation that's the greatest debtor nation in history? We have been since 1985.

We have $50 TRILLION in unfunded liabilities. There's no way we're ever going to pay that - even if we taxed everyone at 100%.

Let's face it, we're broke. But the .gov has an unlimited credit line - until it isn't.

Oh well. I'm not going to worry about it... Nothing I can do about it.