Assuming Money

[Ghent12]

Re: Assuming Money

You surely realize the silliness of this statement?

If the value of things change over time, why shouldn't the value of money?

Money is meant to represent the value of things; by itself money is nothing.

Money is a collective stored value of things, and it is never alone. The value of money should remain relatively constant because society as a whole never really becomes more or less valuable--hence the shared stored value of things should be relatively constant overall. That's the idealized version, anyways. In truth, the marketplace should decide what currency it wants because it is the fastest to respond to any of the changes in economic circumstances you mention.



Your class-warfare contentions fail to impress. Poor people are poor largely from their own ignorance about money and their poor fiscal discipline, at least in America. In addition, many incentives to get out of poverty have been removed or substantially reduced by the various social safety nets such as welfare. I feel no sympathy whatsoever for poor people who are victims of their own design, and only two people of the dozens I have had extended interactions with were "poor" not of their own design but that of circumstance.

Let's be clear though, any person, poor or otherwise, typically can't save up enough to start a business or retire without the "assistance" of substantial debt, public or private, in the current monetary system. That is not the case under any sort of hard money standard, where savings are generally preserved precisely because they are savings and not because they were put in the stock market casino chasing returns on investment while risking complete loss.

A gold standard doesn't help if in fact most people can not or do not save.

How does an average wage earner even theoretically save enough to retire?

To say that a gold standard would somehow, for example, save Social Security is a completely farrago of nonsense.

An average wage earning can theoretically save money to retire by actually not spending their entire paycheck every pay period. It's really not that hard, even if "every dollar" is being spent right now. In order to live beyond their means in their old age (which most old-timers do, because they have very little earning power), they have to live below their means right now while they still can. It takes discipline--imagine that.

I don't care for people who do not choose to save or "can't" save (every single American that will be old enough to retire can save money for it). They are risking themselves and I should not have to pay for it. Nothing I've said has anything to do with Social Security--people securely saving for their own retirement is made possible via any sort of hard money standard. Fiat is what forces people to use their savings to chase returns on investments with varying risk and that is a shit sandwich people should only take a bite of if they really want to, not be forced to because what they saved in their 20's is worth less than the bus fare they pay in their 70's.

Switching to any hard money standard would not resolve overnight the imbalances built up over decades. It would, however, lay the foundation for some actual prosperity and growth instead of lurching over the abyss of wage-stagnation during inflation, widespread insolvency, and a seemingly endless setlist of schemes coming from Wall Street, the FED, and Washington in an effort to sap all wealth generation from literally everyone else. What you seem to be against, the accumulation of wealth at the top, is obviously already occurring under the fiat system.

A hard money standard isn't really enough, though, if it is to be subjected to the whims of the FED and scheming politicians--see The Great Depression, which is the only economic downturn of history that most people know existed. A hard money standard should be combined with a substantial lifting of the heavy foot of government on commerce. Without that, we will continually find ourselves in mess after mess with occasional decades non-prosperity for most.

[c1ue]

Re: Assuming Money

The value of money should remain relatively constant because society as a whole never really becomes more or less valuable--hence the shared stored value of things should be relatively constant overall.

This is utterly ridiculous.

According to you if the population rises 10%, then everyone should get poorer in dollar terms by 10%. If productivity increases by 100%, everyone should get poorer by 50%.

Well, the problem you continue to face in this bizarre desire to make your existing bucks worth ever more at the expense of everyone else is that you yourself are a small fry.

At some point, very close to the future, you're going to get squeezed as well as the 'hard money' concentrations start their end game.

You can see this all throughout history as well as every day examples: the monopoly board game once the money supply runs out. Poker games with no buyin. Corporations in a monopolizable area like enterprise software.

But hey, why let reality interfere with your libertarian desires?

Your class-warfare contentions fail to impress. Poor people are poor largely from their own ignorance about money and their poor fiscal discipline, at least in America.

Right, poor people are stupid because they're inherently stupid and lazy.

It isn't because they don't have access to jobs, to education, to health care, to even everyday role models.

Keep on truckin' in your fantasy world.

Let's be clear though, any person, poor or otherwise, typically can't save up enough to start a business or retire without the "assistance" of substantial debt, public or private, in the current monetary system. That is not the case under any sort of hard money standard, where savings are generally preserved precisely because they are savings and not because they were put in the stock market casino chasing returns on investment while risking complete loss.

You think that, but in fact you are wrong. There are innumerable historical as well as present day examples of this - ranging from business formation statistics during the 'hard money' era to such phenomenon as the early work of the Grameen bank.

An average wage earning can theoretically save money to retire by actually not spending their entire paycheck every pay period. It's really not that hard, even if "every dollar" is being spent right now. In order to live beyond their means in their old age (which most old-timers do, because they have very little earning power), they have to live below their means right now while they still can. It takes discipline--imagine that.

Again you are relying on ideology vs. reality.

The amount of cash necessary to maintain a 60% income lifestyle for someone making 'average' wage, assuming retirement at 65 and a lifespan of 80, and which all numbers are assumed to be from the same basis (i.e. a fixed purchasing power reference point):

.6 * $52K * 15 = $468000

Lifetime earnings for said individual @ $52K = $2.5M if you are a man, $1.6M if you are female. Source: http://www.census.gov/prod/2002pubs/p23-210.pdf

So yes, if you save over 20% of every dollar you ever make (man) or 25% (woman), then you could easily retire.

But of course, there are unavoidable expenses: 60% of work income assumes your housing is paid for. That's a huge average expense.

So are kids and their education.

So is food and transportation.

So are taxes.

Since tax free savings doesn't cover all of the 20% * $52K = $10,400 necessary every year to achieve full self sufficient retirement, the $468K in question must be significantly post-tax. Even only half being subject to 10% (income) + 7.65% (FICA) would require total savings from lifetime to add over $50K to required savings.

The illusion of being able to save has entirely been fostered by Social Security and fiat.

A close examination of Boomer wealth shows the vast majority being due to fiat - real estate and other real property equity increases due to 'soft' money. Prior to Social Security, in fact up until just after WW II, people just didn't live very much past 65, so saving was really less of an issue.

[Ghent12]

Re: Assuming Money

This is utterly ridiculous.

According to you if the population rises 10%, then everyone should get poorer in dollar terms by 10%. If productivity increases by 100%, everyone should get poorer by 50%.

Well, the problem you continue to face in this bizarre desire to make your existing bucks worth ever more at the expense of everyone else is that you yourself are a small fry.

c1ue, it is clear that we will never be able to have a clear economic discussion because we perpetually use different definitions of things. That became clear when you insisted that scarcity means the same thing as shortage in an economics discussion, even though they have clearly distinct meanings in economics. It is becoming clear once again when you perpetually misinterpret every word I have posted. You are the one being utterly ridiculous when you interpret what I've posted the way that you have.

As an example, in the underlined section, you're completely missing the point. The sum of society's population, resources and productivity do not equate to the society's shared value. Only the society can determine what it collectively values, and due to the fundamental constraints of psychology and physical limitations, such collective value is entirely relative. If you were to sum up all of everything the society places value in, then you would reach 100% and no more or less of the society's collective shared value. This will express itself in terms of money, food, and any number of goods or services. This sum value of 100% never changes above or below 100% by definition, but the individual constituents that make up portions of that shared value may gain or lose ground at any given time.

Fundamentally, you're right that a society should choose how much it values its money, but in economic terms society is expressed only through the marketplace. The FED is a nearly century old, entrenched knee-jerk reaction and cannot be reasonably argued to be a current extension of what "society chooses for its monetary system" simply because there is insufficient political capital to overcome the bureaucratic inertia to abolish or fundamentally alter it. Obviously, the contention that society should choose how it values its money is a contention against the current regime of the FED controlling the money supply, and I thank you for making it.

At some point, very close to the future, you're going to get squeezed as well as the 'hard money' concentrations start their end game.

You can see this all throughout history as well as every day examples: the monopoly board game once the money supply runs out. Poker games with no buyin. Corporations in a monopolizable area like enterprise software.

But hey, why let reality interfere with your libertarian desires?

The reality is that everyone is being squeezed right now as the current wealth concentrations continue their games. Your apocalyptic writing on the wall is the headline from years ago under the fiat regime and the current financial story today. Essentially all the horrible things that you've warned about that can happen under a hard money standard are already occurring under this fiat fiasco.

If you learned economics from the game of Monopoly, you're probably due for some reading to update your knowledge. Try this one for size: name a monopoly that isn't created or maintained by government intervention in the marketplace. There aren't many.

Right, poor people are stupid because they're inherently stupid and lazy.

It isn't because they don't have access to jobs, to education, to health care, to even everyday role models.

Keep on truckin' in your fantasy world.

You're an asshole for calling poor people lazy and stupid. That's certainly not what I've said. I've merely labeled a spade as a spade--poor people are poor for the most part because they are financially ignorant and ill-disciplined. That's true of the majority of people though, so it's not a slight against the poor. Guess what? The poor that become educated about the subjects of money and wealth, and the ones that practice good fiscal discipline (a dying art if ever there was one) typically do not stay poor forever--their trend is upward mobility on the income and wealth scales, often at impressive speed. The ones that stay illiterate and continue to waste their quite limited resources tend to remain at the bottom. As an example, the "financially correct" amount of money to spend on the lottery or in casinos is $0, yet that is obviously not the case due to factors such as entertainment and "hope" and whatever else. Indeed, it is often the poor that spend more money per person on the lottery than the rich. That is a sad state given that the rich "can more easily afford" to be less financially responsible than the poor.

As I said, I have no sympathy for those who are victims of their own design. So what if they "don't have access" to education or jobs? Join the club with millions of alums including myself, most of which don't have too much trouble except the trouble we make for ourselves. Most people actually do have access to education or jobs even if they don't realize it--education is free to those who really want it to be free, and heavily discounted for those who want it to be heavily discounted. Jobs are readily available to anyone that can make themselves hireable, which is less difficult than it seems in most cases. No job openings in your town at all? That's not even a problem for some job-seekers who do more than just drop a resume and go to interviews. At some point, though, the "static" and passive job-seekers will encounter hardships and that is a sad state, but obviously that is possible under any monetary policy.

[c1ue]

Re: Assuming Money

c1ue, it is clear that we will never be able to have a clear economic discussion because we perpetually use different definitions of things. That became clear when you insisted that scarcity means the same thing as shortage in an economics discussion, even though they have clearly distinct meanings in economics. It is becoming clear once again when you perpetually misinterpret every word I have posted. You are the one being utterly ridiculous when you interpret what I've posted the way that you have.

The discussion then was health care - your assertion was that health care is scarce because it isn't unlimited and free. You desired to somehow distinguish this thoroughly sophomoric framing of a concept to say that health care therefore must be expensive because it is scarce, yet you never reconciled why the United States is very much the only outlier in the entire world regarding health care costs.

Your continued insistence on definitions accomplished nothing except diminishment of your credibility when you failed (and continue to fail) to demonstrate any actual examples of either shortages or scarcity in the subject in question.

If you want to play word games, that's your choice. But if you cannot respond with real life examples of the theoretical word boundaries you've laid down, then all you are doing is trying to frame the discussion in the terms you desire.

As an example, in the underlined section, you're completely missing the point. The sum of society's population, resources and productivity do not equate to the society's shared value. Only the society can determine what it collectively values, and due to the fundamental constraints of psychology and physical limitations, such collective value is entirely relative. If you were to sum up all of everything the society places value in, then you would reach 100% and no more or less of the society's collective shared value. This will express itself in terms of money, food, and any number of goods or services. This sum value of 100% never changes above or below 100% by definition, but the individual constituents that make up portions of that shared value may gain or lose ground at any given time.

You are again trying to retreat into definitions.

The reality: if all money is backed by gold, i.e. 'hard', then all monetary value in society must be equally backed by gold.

If it is not, then all you accomplish is the introduction of massive 'runs on the gold bank' with all the instability associated with it - as was abundantly demonstrated in the 100 years before the Federal Reserve.

And please don't even bother going down the path of 'float'. Backing just the 'float' of gold is equally ridonkulous because the float changes radically even in extremely short time frames.

Thus while I understand why you might want a 'hard money' standard, I categorically reject the notion that such a standard in any way promotes stability or any other positive trait.

What you fail to realize is that the purpose of a gold standard is psychological, not physical.

It is intended to restore faith in money. Once this purpose is accomplished then the standard should be removed because of all of its other negative aspects.

Fundamentally, you're right that a society should choose how much it values its money, but in economic terms society is expressed only through the marketplace.

Your faith in the marketplace is touching given all around us, all over the world, the marketplace is a distinctly minor player in the value of money.

Governments are the ones who are determining the value of money - whether by fiat as in China, by inaction as in the E.U., by decree as in Switzerland, and the list goes on and on and on.

The reality is that everyone is being squeezed right now as the current wealth concentrations continue their games. Your apocalyptic writing on the wall is the headline from years ago under the fiat regime and the current financial story today. Essentially all the horrible things that you've warned about that can happen under a hard money standard are already occurring under this fiat fiasco.

If you learned economics from the game of Monopoly, you're probably due for some reading to update your knowledge. Try this one for size: name a monopoly that isn't created or maintained by government intervention in the marketplace. There aren't many.

As you cannot apparently read history books, nor have actual data, then I figured Monopoly would be simplistic enough for you to understand.

Or the economics of a fixed pool poker game.

But as you clearly can not or will not consider data sources other than your own beliefs, then I leave you to your ongoing ignorance.

As I said, I have no sympathy for those who are victims of their own design. So what if they "don't have access" to education or jobs? Join the club with millions of alums including myself, most of which don't have too much trouble except the trouble we make for ourselves. Most people actually do have access to education or jobs even if they don't realize it--education is free to those who really want it to be free, and heavily discounted for those who want it to be heavily discounted. Jobs are readily available to anyone that can make themselves hireable, which is less difficult than it seems in most cases. No job openings in your town at all? That's not even a problem for some job-seekers who do more than just drop a resume and go to interviews. At some point, though, the "static" and passive job-seekers will encounter hardships and that is a sad state, but obviously that is possible under any monetary policy.

I'd laugh, if I didn't want to cry.

Your sympathy or lack thereof is frankly irrelevant. Even the most peremptory perusal of the US political system shows 1 person, 1 vote.

Thus if you think that your views are shared by the majority, more power to you.

My view is I'd rather have a situation which everyone agrees on is at least acceptable, and the one we're in now isn't.

The growing view among a majority of Americans is that the system isn't fair, there isn't opportunity, that the 'American Dream' is a lie promulgated by financial predators, and that there's no point in being the only patsy.

Even beyond personal anecdotes, all you need to see is the ratio of job seekers to jobs at McDonald's to understand that your statements above clearly have no grounding in reality.

As was quoted by Marriner Eccles in front of Congress in 1933:

It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.

[Ghent12]

Re: Assuming Money

The discussion then was health care - your assertion was that health care is scarce because it isn't unlimited and free. You desired to somehow distinguish this thoroughly sophomoric framing of a concept to say that health care therefore must be expensive because it is scarce, yet you never reconciled why the United States is very much the only outlier in the entire world regarding health care costs.

Your continued insistence on definitions accomplished nothing except diminishment of your credibility when you failed (and continue to fail) to demonstrate any actual examples of either shortages or scarcity in the subject in question.

If you want to play word games, that's your choice. But if you cannot respond with real life examples of the theoretical word boundaries you've laid down, then all you are doing is trying to frame the discussion in the terms you desire.

c1ue, in the case of scarcity versus shortage, you are clearly incorrect and no further discussion is merited. If you think that health care is not scarce, then you think it is a free good which it clearly is not. If you choose to use different definitions such that scarcity equals shortage, then don't presume to call people wrong for using the correct definitions of economic terms.


In this particular conversation, it is again abundantly clear that you have not read and understood what I've posted. Your posts completely fly by all points being made and do not address anything brought up. This is a perpetual problem with many of your posts directed towards my and other members' posts on the forum. It is because of this problem that this sub-thread will see no more posts from me addressing you.

[c1ue]

Re: Assuming Money

c1ue, in the case of scarcity versus shortage, you are clearly incorrect and no further discussion is merited. If you think that health care is not scarce, then you think it is a free good which it clearly is not. If you choose to use different definitions such that scarcity equals shortage, then don't presume to call people wrong for using the correct definitions of economic terms.

You keep on banging on the definitions drum, and keep on reasserting that what you say is intuitively obvious, when in fact it is only obvious and intuitive to you.

Or in other words, you're just talking to yourself without actually touching reality.

Merely defining a non-free good as scarce does not equal scarcity.

Theory must be accompanied by empirical evidence of which you have and continue to fail to provide.