New Monetary Theory?

[Texas Star]

I have two brothers. One is pretty normal, if not much into guns. The other wants to change the social order.

He has some language problems that'd require a full-time editor, but has written a long manifesto about why he thinks the major nations should abandon gold, etc. and base the value of their money on people's faith that the government will stand behind the paper money they issue. In other words, the money is worth its face value because a government says that it is.

He's probably right that many countries really don't have the gold or whatever to back up their paper. But can you economists explain why we can't just print paper money, without regard to what standard it's based on?

He thinks that if just paper was involved, the govt. could print enough they could distribute it to out-of-work people and the poor, etc. and everyone would have nicer lives.

Aside from the liklihood that Cuba, Guinea, or Haiti, or Nigeria, etc. could then print all the money they wanted and be as well off as we are, what flaws do you see with his plan?

I'm trying to convince him not to make a fool of himself by starting a blog to promote this scheme or selling printouts of his plan by mail.

What are the flaws in doing this? In just relying on paper being worth what the govt. says that it is and using it to eliminate poverty through government monetary handouts to those in need?

P.S .: Please, no ridicule. This is a serious question.

 

[johngalt]

Post-World War I Germany did this. They had hyper-inflation, as in the millions of %.

Increasing the money supply without increasing the amount of goods means that each unit of 'good' costs more. Or in other words, as you print money, the value of the money decreases.

It is also looting the savers and investors - you are stealing the value of their savings. It is no different than physically robbing them at gunpoint.

 

[DeathGrip]

Ask him if he'd be happy with a useless check?

 

[gregintenn]

You aren't by chance a Geithner are you?

 

[805moparkid]

its exactly what were doing... the 1 trillion dollar coil is exact proof. if we have One Trillion in platinum sitting around its already an asset(unless we buy it lol), so turning it into a coin is just another shell game.

the real thing that is happening is the dollar is no longer going to be the world standard for trade. so with the BRICS nations (about half the planets population) using their own currency, gold, or the new "World Currency" being started by the Chinese calded the Yuan. all this adds up to us printing money with no influence on the big picture. as we get knocked off the pedestal, our money will greatly fall in value. and its going to get so bad that all the internment camps and billions of hollow point rounds will come into play to try and qwell the uprising.

 

[Out West]

Modern Monetary Theory (MMT), in my experience and reading, is usually advocated by people much more liberal than myself. In fact, I'd put most of them into the socialist boat.

The theory contradicts most of what I learned in economics. The trillion dollar platinum coin is an example. I can't see how this idea will result in anything other than an inflationary devaluation of the dollar. Additionally, I wonder what the impact will be on our global trading partners. How would you feel if I paid you back for a purchase or investment with money that I printed when ever the whim hit me?

PS: I don't think that the trillion dollar platinum coin has any linkage to a trillion dollar supply of platinum. In fact, the coin is fiat money. The idea exploits a loop hole in the law preventing the treasury of issuing currency without raising revenue.

Out
West

 

[Texas Star]

You aren't by chance a Geithner are you?

No. The family has not had any Germanic origins since maybe 1000AD. We are Anglos, of Norman French name.
Not, however, of sufficient value to William the Conqueror to have been included in the Domesday Book.

Actually, I have no idea who the Geithners are. I majored in Journalism, so know little.

 

[jlrhiner]

Look at the value of silver coins versus their face value. One silver dollar is worth @$18.00 printed dollars. The difference is inflation. I'm not really sure you'd convince people otherwise.

 

[Texas Star]

its exactly what were doing... the 1 trillion dollar coil is exact proof. if we have One Trillion in platinum sitting around its already an asset(unless we buy it lol), so turning it into a coin is just another shell game.

the real thing that is happening is the dollar is no longer going to be the world standard for trade. so with the BRICS nations (about half the planets population) using their own currency, gold, or the new "World Currency" being started by the Chinese calded the Yuan. all this adds up to us printing money with no influence on the big picture. as we get knocked off the pedestal, our money will greatly fall in value. and its going to get so bad that all the internment camps and billions of hollow point rounds will come into play to try and qwell the uprising.

Is this "trillion dollar coil" the one in which you found a rattlesnake that sent you to the hospital, which charged about a trillion to treat you, especially if antivenin was required? It's best to avoid coiled reptiles.

Seriously, I suspect that you refer to the Trillion dollar COIN that another member mentioned? I have seen a HUGE gold coin issued in Australia. Probably even it isn't worth a trillion, but I bet it'd buy a LOT of hamburgers!

The image of the Queen on it looks really good, too. And I didn't see any snakes in her hair. (When I was stationed for a year in Canada, there was a rumor that H.M. had a hidden snake in her hair if you looked really closely at their money.
I think the originator of that story had probably been looking at Canadian bills though the bottom of a bar glass...)

BTW, if I went to the Royal Bank of Canada, I could get the (then) better exchange rate for my US money. Local merchants often didn't want to give the exchange rate difference. It was easier to just go to the bank and get Canadian money and not have to dicker with restaurants and shops.

This and the fact that I never have enough is all that I know about money. I've never reached the end of a rainbow, so can't verify if there is a pot of gold there. Okay, I have seen the end of a rainbow created by a garden hose, but no pot of gold, not even one containing copper pennies. Maybe you have to be Irish for it to work?

 

[Texas Star]

Look at the value of silver coins versus their face value. One silver dollar is worth @$18.00 printed dollars. The difference is inflation. I'm not really sure you'd convince people otherwise.

Jim-

Are you basing this on OLD silver coins that were really all silver? What percentage of silver is really in the current ones? The dollar, the half dollar, the quarter? I've never heard that.

 

[DeathGrip]

An old saying becomes relevant now. Save your pennies and the dollars will take care of themselves.

Like silver, copper is worth more than it's face value in scrap alone.

Keep any silver coin before 65 and your pennies before 85.

Soon the penny will be no more. I'm seeing less pure copper pennies in my change everyday.

 

[5-Shot]

I do believe your brother is fighting a battle that he won years ago. If I'm not mistaken, all the major countries pretty much employ his "full faith and credit" standard.

Ed

 

[mc5aw]

The other wants to change the social order. He has some language problems that'd require a full-time editor, but has written a long manifesto ...

Manifestos about changing the social order are usually penned by lunatics and/or serial killers (see Ted Kaczynski). "Treatise" is a far better word, as is "Thesis".

I remember silver certificate bills ...

 

[arjay]

We've been doing it for years,paying off the debt with cheaper dollars.At some point it will bite us.

 

[sipowicz]

Tell him if we keep it up, this will buy a loaf of bread. Day old of course...

 

[S&W ucla]

You can go to coinflation.com and see metal values for coins. I have an actual bill that was printed by the reserve bank of zimbabwe in the amount of one hundred trillion dollars. At the last official trade it was worth about 4 cents USD. Now you can find them on ebay for a few bucks. Suprisingly they hold the #2 spot with Germany still holding #1 for inflation. I remember seeing pictures of people rolling wheel barrows full of money to the store to try and buy a loaf of bread before the price went up again. Coming to a country near you if we don't change our ways!

 

[Iggy]

Ain't gonna be long before the US dollar is just like shootin' blanks. Makes smoke and noise, but it don't bring home any bacon.

 

[chud333]

Jim-

Are you basing this on OLD silver coins that were really all silver? What percentage of silver is really in the current ones? The dollar, the half dollar, the quarter? I've never heard that.

Texas star,
All of the pre-1965 silver dollars, quarters, and dimes contained
90% pure silver. So if you find them don't spend them for face value.

Chuck

 

[jlrhiner]

1964 was the last year we minted silver coins.

And yes, stop in a coin shop and buy a silver dollar. (not a unique one, regular old scuffed and circulated). That's the easiest way to understand how devalued our currency is. (just for fun, use that math to figure out what a barrel of oil, gal. of gas, loaf of bread or new S&W costs)

 

[dmar]

OP, so much that can be written on this subject, but this is a gun forum... So, please encourage your brother to get educated on economics and monetary theory/policy. I am not trying to call out your brother, many people have this notion. In fact, half the country just voted for a president whom they believe will just deliver them 'free' services/money.

My first economics class in college was interesting. At the end of the first class our professor gave us our reading assignment for the night, and he also had some letters written on the blackboard (yes, blackboard...). It read, "TANSTAAFL." Aside from our reading, our other assignment was to let him know what these letters stood for, they were a mnemonic. No one got it right, but it stood for "There Ain't No Such Thing As A Free Lunch." This set the stage for a very interesting semester, and an understanding that I would have never had, if it was not for this person. He was a piece of work, swore like a sailor (former Navy guy), smoked cigarettes in class (we couldn't), and threw a students text book out the window after he discovered that she didn't read the previous night's reading assignment. He said, "if you're not going to read it, you don't need it," although there may have been some more colorful language in there. He was an attorney, a combat veteran, and he took no prisoners.

Anyway, Google "Fiat Money." It's the term used when governments establish a monetary system based on nothing of value; printed money with nothing to back it up... It's what we do, and it's what started us down this horribly slippery slope.

Without getting into all the rationale behind this subject, how about a quick example? Let's say there was just $100 of money in the whole country. Now, let' say you personally had $10 of this $100. Congratulations Mr. Buffet, you've got 10% of all the wealth in the USA! Now, let's say the government enacted legislation to transfer our country's banking system from government control to a PRIVATELY HELD and operated central bank (which was specifically prohibited by our founding fathers, and was established by corruption and deception) called the "Federal Reserve" (sounds like an actual government entity, doesn't it...IT'S NOT). Then let's say this government then takes the banking system the gold system. Now, the stage is set for what has been happening to this country since 1913.

Anyway, now that this government is no longer encumbered by having to match printed money with actual durable-goods wealth, so they go and print another $100 to give to people so they can stay in power and continue to funnel money to themselves and their friends. Guess what Mr. Buffet, you now only have 5% of the wealth/money in the USA. You just lost 50% of your value, and you are not really Mr. Buffet, you are just a regular guy, and don't have the resources to game the system.

Well, in response to this printing of money, prices for goods and services have to increase to match this decrease in value; it's called inflation. Whenever our government "prints" money it is like a big tax on every person. It does not affect the banking cartels, as they make a % on all of this money no matter (a whole twisted subject, in itself...). It just hurts average stakeholders in an economy. It's much more complicated than this, but suffice it to say, we have a really bad fiscal policy, run by the true <1% wealth-holders in the world (the real players are truly a few...), and supported by an incestuous relationship with our government. Let's see where Mr. Geithner ends up next... Do some research on our other former Federal banking officials, both Regional, and National, and see how they go back and forth between government policy positions and privately held banks. It happens in all areas of or government (defense, health and human services, EPA, don't get me going on FDA, etc.). It's called corruption, and you won't be able to change it.

So, please encourage your brother to do some reading, take some classes, get his head out of his behind, whatever, but there truly is no such thing as a free lunch. And yes, our country will be ruined, like many before it, if we don't get a handle on what these guys are doing, and insist on responsible policy, and representation of people, not corporations. The current system continues to funnel huge amounts of taxpayer money into a very (and I mean very) few elites, and slowly, but surely impoverishes everyone else. Oh, BTW, our banking system is designed to fail, and be "bailed out" (guess who pays for the bailing, and guess who gets the money...). All part of the game. We had a pretty good system in place when founded, but slowly, but surely it has been corrupted. Peace!