Swiss vote to end fractional reserve banking

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BRUTE
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Re: Swiss vote to end fractional reserve banking

Post by BRUTE »

Solvent wrote:
Sat Sep 08, 2018 4:02 am
No no. You can't have meant that. If the nominal money supply is irrelevant and prices adjust frictionlessly, how does a CB printing money cause any ill effects?
through the Cantillon effect. any nominal amount of currency that is sufficiently divisible to facilitate transactions in the economy is enough, so at a certain point, the nominal amount does not matter. but the central bank can have a systemic influence on distorting the economy, e.g. through the Cantillon effect.

if Solvent imagines that all humans in the country suddenly woke up with 2x the money in their bank account, under their mattress, in their 401ks, value of their real estate, and so on, and all humans knew this had happened, nothing much would change. just the numbers, but all prices would quickly double as well.

but that's not what the central banks do. the money they "create" enters the economy through commercial banks and FRB. thus the banks get the new money first, and it might take a long time to trickle down to the last recipients (e.g. laborers or pension earners). thus the humans at the beginning of the chain can use their extra money while prices are still low, whereas humans late in the chain have to buy at the newly higher prices before they get any of the new money.

this is likely one reason why the banking and finance sector are so overblown in relation to the real economy these days. sectors that are close to banking (e.g. real estate) are also prone to being "blown up" artificially.

BRUTE
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Re: Swiss vote to end fractional reserve banking

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@Campitor:
brute is still unsure he understands. maybe one by one.
Campitor wrote:
Sat Sep 08, 2018 8:14 am
Does the increased cost of employing humans put significant pressure on what type of currency is desired or how it's utilized?
brute doesn't think so, at least it doesn't have to. currently planned inflation is kind of used to cheat fixed-wage humans out of 2% per year, with real wages decreasing while they nominally stay put or even increase slightly. so it could be said that central bank inflation robs wage earners and poor humans with little access to capital markets, and that's certainly an argument against central banks in brute's view.
Campitor wrote:
Sat Sep 08, 2018 8:14 am
Jacob is right about gold's availability versus human population. There are known gold reserves that haven't been mined because it's not worth cost (gold ounce per cubic yard) or it's located in areas that prohibit mining (wildlife refuge, proximity to human habitation or water resources used for consumption). And there may be asteroids that contain gold. If gold prices are high enough, it makes previously unprofitable sources worth the mining expense. There's more gold out there but I don't know if it would be enough to sustain gold as a currency.
brute doesn't see why the total amount of gold needs to rise in lock step with the economy. slight deflation is fine, if it's the result of a market process.
Campitor wrote:
Sat Sep 08, 2018 8:14 am
In regards to labor and it's increased cost resulting from scarcity of human capital or government regulation, I believe it incentivizes, to a certain degree, the adoption of financial instruments that are only made possible by the misallocation of resources. Resources which can only result via government intervention; too big to fail so we'll bail you out with taxpayer money irrespective of bad business practices, etc.
brute agrees. labor regulation incentivizes extra use of technology and finance. it pushes the money from where it would be invested most effectively to the next best investment, and so on. brute believes that not AI or automation are the reason for large scale unemployment problems, but minimum wage and labor regulation.
Campitor wrote:
Sat Sep 08, 2018 8:14 am
So how do you incentivize better behavior irrespective of the cost of labor and commodities?
does Campitor mean how companies could be incentivized to hire more humans and pay them more, instead of using finance and technology? the answer is of course deregulation.

Campitor
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Re: Swiss vote to end fractional reserve banking

Post by Campitor »

So how do you incentivize better behavior irrespective of the cost of labor and commodities?

does Campitor mean how companies could be incentivized to hire more humans and pay them more, instead of using finance and technology? the answer is of course deregulation.
I sometimes asks questions that leave out details in order to avoid "leading the witness" in their responses so I can see how they are thinking and what answers are returned. I want to be exposed to any ideas and points of view that arise when questions are more open.

I acknowledge that this can be confusing or unfair to the questionee. I want to see how other people think about a problem as opposed to providing such a narrow question that they can only provide a narrow answer. I don't get to see how they view the problem in its totality or how their minds ruminate or frame a problem. These are things that help me consider other viewpoints, question if I'm framing the problem correctly, and if there are any emotions being unconsciously triggered that may affect a questionee's responses.

So I apologize and I'll rephrase the question.

Since the cost of labor and commodities will continue to increase as a result of political and economic pressures, and governments will continue to pass policies that neither punishes or prevents moral hazards, how can companies be incentivized to produce goods and services that are beneficial in the short and long term? What solutions can be brought to bear that are palatable to Wall Street insomuch they don't incentivize the exports of businesses and revenues to foreign countries?

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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Campitor wrote:
Sun Sep 09, 2018 10:52 am
Since the cost of labor and commodities will continue to increase as a result of political and economic pressures, and governments will continue to pass policies that neither punishes or prevents moral hazards, how can companies be incentivized to produce goods and services that are beneficial in the short and long term? What solutions can be brought to bear that are palatable to Wall Street insomuch they don't incentivize the exports of businesses and revenues to foreign countries?
Real wages in developed countries have been dropping for decades. Deflationary pressures in developed markets such as demographic trends and technological advances actually lower the cost of commodities. Your questions have been framed with the assumption that labor and commodities are increasing in cost. Do you have statistics that point to the increasing costs of labor and commodities?

If we are asking whether something would be palatable to Wall Street, haven’t we arrived at the problem? Why is it important that something is palatable to Wall Street? Indication that the tail is wagging the dog.

https://m.youtube.com/watch?v=IVjCRWbvM4c

“I don’t create. I own.”

https://m.youtube.com/watch?v=wM6exo00T5I

“We don’t create shit. We don’t build anything.”

So if you ask whether something is palatable to Wall Street, I will ask this question in reply:

At point does Wall Street destroy the ability of the United States to foster a real economy, and at what point does the doctrine of socialism and violent social upheaval become viable in the face of growing inequality and the disconnect between the paper economy and the real economy? The financial sector is supposed to facilitate efficient allocation of capital, not become an end in itself. What draconian measures can we implement to incapacitate speculation and rollback the financialization of the economy?

I ask that question as someone who is stridently libertarian and anti-socialist. I understand full well that technological advance lends itself to globalization and local inequality. But when the result of financialization is crash and then bail out, Wall Street is not pure capitalism. It’s free market capitalism when it suits them, and statist socialism when it suits them.

Another question: when we have another stock market crisis in the next couple of years, do you support another round of QE and government purchase of securities to support asset prices? Or do you think they should be written off as the losses that they are?

Campitor
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Re: Swiss vote to end fractional reserve banking

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If we are asking whether something would be palatable to Wall Street, haven’t we arrived at the problem? Why is it important that something is palatable to Wall Street? Indication that the tail is wagging the dog.
So we don't wind up throwing out the baby with the bath water. Every economic system (socialist, communist, capitalist, etc) in its application concentrates capital with no exception. Capital will concentrate in the hands of the oligarchs, government officials or committees, free market private individuals or corporations. I'd rather have free market individuals/corporations, not incentivized by moral hazards, decide how to utilize their monies. I believe no central committee or government can steer a market; market size and variability makes this an impossibility. Government's best role in the market is as a referee; they need to make sure everyone is abiding by the rules and not externalizing problems.

I can see what corporations are doing because of their filings. It's harder to track what a government committee is doing in regards to the market, and it's extremely difficult to see what oligarchs and tyrannical governments are doing. And we need Wall Street because some ventures require enormous capital otherwise we are all beggars waiting for government to provide it, or we ourselves become Wall Street - we become the lenders of capital. So I want to see what you guys think. What possible solutions can be implemented that can walk Wall Street back from the ledge that may be acceptable to them and not incentivize the relocation of important sources of capital?
At point does Wall Street destroy the ability of the United States to foster a real economy, and at what point does the doctrine of socialism and violent social upheaval become viable in the face of growing inequality and the disconnect between the paper economy and the real economy?

I ask that question as someone who is stridently libertarian and anti-socialist.
This will occur when the lending of capital is better served by "financialization" than production. We are almost there. We need to convince the guy on the ledge holding most of our money (Wall Street) that it's all about to crumble and that there are better solutions. I want the guy on the ledge to step back rather than incentivize him to seek other ledges on other shores while holding our bag of money.
Last edited by Campitor on Sun Sep 09, 2018 3:32 pm, edited 1 time in total.

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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If we keep bailing out the stock market, he has no incentive to stop.

There is no convincing him to stop. Gordon Gekko doesn’t take off his finely tailored suit to become a Henry Ford.

The answer is to not bail him out. When he fails, let him fail. Don’t give him anymore money. Another corporate bailout via QE is akin to giving more money to your drug addict friend who keeps swearing that they are ready to turn a new leaf.

I want the guy on the ledge to fall off the ledge, so we can stop concerning ourselves with him.

BRUTE
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Re: Swiss vote to end fractional reserve banking

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Campitor wrote:
Sun Sep 09, 2018 10:52 am
Since the cost of labor and commodities will continue to increase as a result of political and economic pressures, and governments will continue to pass policies that neither punishes or prevents moral hazards, how can companies be incentivized to produce goods and services that are beneficial in the short and long term? What solutions can be brought to bear that are palatable to Wall Street insomuch they don't incentivize the exports of businesses and revenues to foreign countries?
since apparently governments will be completely useless and unhelpful at best, brute assumes the solutions cannot be government based.

brute actually thinks that globalization is, in part, such a solution. governments were being unreasonable, so firms started side stepping them.

brute does not actually think the exports of business and revenues to foreign countries as "bad". it is only categorically bad for the government, and the government being unreasonable was the reason it happened in the first place. will there be some losers amongst the winners of this happening? sure. e.g. maybe coal miners in Virginia will lose their jobs. the rest of the country will benefit because things become cheaper.

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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BRUTE wrote:
Sun Sep 09, 2018 12:36 pm
the rest of the country will benefit because things become cheaper.
Only if the currency in which their savings are denominated is not devalued.

Campitor
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Re: Swiss vote to end fractional reserve banking

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But if he falls off the edge he takes our money with him. Americans aren't going to like that - they will hate this more than Wall Street. Is there a way to back him off the edge first, get back our money, and then let him fall? To push the analogy further - he isn't afraid to fall because he's holding our money - it's his air bag. If he falls under the current paradigm, everyone else dies with him. I don't see a way around this but perhaps I haven't considered or know all the options. Thoughts?
Last edited by Campitor on Mon Oct 01, 2018 12:34 am, edited 1 time in total.

Campitor
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Re: Swiss vote to end fractional reserve banking

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@Brute

So our source would be foreign capital. Money is money regardless the source. Is there any downside to having foreign companies be the majority source of capital?

7Wannabe5
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Re: Swiss vote to end fractional reserve banking

Post by 7Wannabe5 »

Invest in your personal, local and intimate social (might be international) economy. Don't buy any kind of paper or gold. You think you are investing when you do that, but only direct producers truly invest. Others are just saving or slow-motion trading.

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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@Campitor

Yes, that is what I mean when I say we don’t have the spiritual or cultural will. We would rather die slowly than eat our lumps and save ourselves. But little do the Baby Boomers who vote and are clinging to their Social Security checks know....the wealth is already gone. And so they want to mortgage the future of their grandchildren, because apparently the rivers of money flowing all around them- growing up at the most prosperous time in the most prosperous country in the history of the planet- was not enough of an opportunity. They still yet want to be taken care of. Everyone has to scale down this debt-fueled lifestyle. Destitute elders must move in with their children. Idiot millennials will have to stop taking 3 vacations a year so they can post it on Instagram. Everyone has to grow up if we don’t want to be bankrupt ourselves/enslave ourselves to China/end up with an oligarchy. The oligarchy might already be here.

How about a one-time tax of the financial “industry,” to compensate for decades of theft, corruption, and dissipation of the country’s wealth? This won’t happen of course, but it’s the only thing I can think of.

@7w5

That’s a fine idea in principle. I own one piece of rental real estate that I bought in 2016 but I don’t want to buy more at these valuations. I originally just bought the property to defend myself from inflation, because in crawling out from six figures of student debt while living at my parents house, I had a strong desire to not feel poor for the rest of my life. Now I rent out the property, while living in an RV parked in the back of a Cracker Barrel parking lot.

I make well into six figures but the job takes most of my time. I have investment ideas but I need to park my wealth somewhere in the meantime. If one is working 55-60+ hours a week, that limits the time they have to run a real and profitable business.

I’ve networked with some local groups, and their “businesses” amount to really just dressed up forms of charity. The only woman I met in the network who had any real entrepreneurial sense, invested $200,000 5 years ago into a restaurant. She is still in the red. If everyone is around you is poor, there isn’t much you can sell them.

I agree that gold is just savings, not an investment. I just think I should be able to save without being forced into the toxic stock market. Central banking policies obviously make saving in cash a suicidal proposition over the long-term.

7Wannabe5
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Re: Swiss vote to end fractional reserve banking

Post by 7Wannabe5 »

@MI:

Oh, don't take me too seriously. I'm reading "Capitalism Without Capital: The Rise of the Intangible Economy" by Haskel and Westlake, so I was just thinking about how capital could be made more tangible. GDP doesn't count Home Production, so investment towards home production isn't counted as Investment, and you can't count individual financial investment AND business fixed investment, because then you'd be counting more than once. IOW, when you buy a few shares of XYZ by tapping a few keys on your laptop, you aren't directly ordering that resources be allocated to the production of .000001 more textile loom or .000000001 more work be done towards production of patent for new triglyceride lowering medication, so what are you doing?

This is relevant to a larger puzzle I am trying to solve which is how could my 22 year old niece who says she wants to be a stripper be motivated to do the same things with her body (engage in the same behaviors) as my 79 year old friends who is a multi-millionaire? So, I am trying to correlate verbs like "invest" with observable body movements of "investors" ,etc.

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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Does your niece need protection and management? I have a long history of being responsible with revenue streams and have recently started practicing with firearms. I can act as both manager and fiduciary. Her desired profession has a high profit margin. She would be retired by age 30.

7Wannabe5
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Re: Swiss vote to end fractional reserve banking

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She knows how to shoot. She could definitely use some management :lol:

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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I’ve seriously thought about that before. They make great money, they just don’t know how to save or invest it. Enter White Knight, Mister Imperceptible.

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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http://edelweissjournal.com/pdfs/Edelwe ... al-007.pdf

“The Buffett-Munger octogenarian duet of incoherent pronouncements as to what “civilized people” do with their money does not seem to have made much of its desired impact. Civilized people are at a complete loss as to the safety of their money if not the nature of what is money. Addressing his clients in his First Quarter report, David Einhorn, the chief guru at Greenlight Capital, is not beyond a little tongue-in-cheek at the expense of the delirium from Omaha:

“The debate around currencies, cash, and cash equivalents continues. Over the last few years, we have come to doubt whether cash will serve as a good store of value. If you wrapped up all the $100 bills in circulation, it would form a cube about 74 feet per side. If you stacked the money seven feet high, you could store it in a warehouse roughly the size of a football field. The value of all that cash would be about a trillion dollars. In a hundred years, that money will have produced nothing. In a thousand years, it is likely that the cash will either be worthless or worth very little. It will not pay you interest or dividends and it won’t grow earnings, though you could burn it for heat. You’d have to pay someone to guard it. You could fondle the money. Alternatively, you could take every U.S. note in circulation, lay them end to end, and cover the entire 116 square miles of Omaha, Nebraska. Of course, if you managed to assemble all that money into your own private stash, the Federal Reserve could simply order more to be printed for the rest of us.”

:lol:

Jin+Guice
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Re: Swiss vote to end fractional reserve banking

Post by Jin+Guice »

Strippers were partially responsible for me discovering FIRE and the most successful entrepreneur I personally know got her seed capital from stripping. I guess some of them know how to save.

Resume gold-standard debate...

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Mister Imperceptible
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Re: Swiss vote to end fractional reserve banking

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Resumed.

Harry Browne interviewed in 1970:

https://m.youtube.com/watch?v=jK01aLsKw7w

Bald arrogant jackass Eliot Janeway acting as functionary of corrupt and incompetent state at 7m25s: “Get off the gold kick, nothing good will come of it.”

Harry Browne at 9m45s: “I don’t consider myself a pessimist at all. I have my affairs in order.”

From the same taping:

https://m.youtube.com/watch?v=mkVGTx92Ka0

If you sold an average home in 1972 and bought silver with the money and then sold the silver 8 years later, you could buy 14 average homes with the profits.

I am looking forward to the comeuppance. I have my affairs in order.

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