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Mon Oct 22, 2012, 11:47 AM

If You Have The Ability to Create Your Own Currency, How Can You Ever Be Broke?

Let's say that you have the ability to print your currency using your computer printer, and every merchant accepted your printouts as a valid exchange for goods and services. You need to pick up your dry cleaning? You printout a $20 bill and your cleaners hand over your garments without question. Same would be true for your mortgage, groceries, car note, etc. Your creditors even accept your printouts as payment on your debts.

Given this, how can you ever be broke? Answer, you cannot be broke. The U.S. government is not in debt simply because it can create currency to pay off the debt, and our creditors gladly accept our currency as payment on our debts. You see, the world needs our dollars because the world needs oil, and in order to buy oil, you need dollars, which means that the world needs to stockpile dollars, and that means that the U.S. can print all of the money that it wants without incurring massive hikes in interest rates to attract lenders.

So, why the hue and cry about America being broke? Simple. The elites in this country need to create a defcit and scarcity crisis in order to dissuade the public from voting for increased social spending on things like a universal health care program, better education, better benefits for SS recipients better infrastructure, etc. You cannot argue against the logic nor the need for these programs, but you can argue that you cannot pay for them. Additionally, more social spending means that the public is not as dependent on corporate America for their economic survival. For example, if you have universal healthcare, you don't have to take a job just for the health benefits. If you have a generous Social Security program, you don't have to invest in the market.

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Reply If You Have The Ability to Create Your Own Currency, How Can You Ever Be Broke? (Original post)
Yavin4 Oct 2012 OP
abelenkpe Oct 2012 #1
RegieRocker Oct 2012 #2
Gman Oct 2012 #3
slackmaster Oct 2012 #92
bemildred Oct 2012 #4
Boetie Oct 2012 #67
hunter Oct 2012 #70
Boetie Oct 2012 #101
bemildred Oct 2012 #71
Boetie Oct 2012 #99
bemildred Oct 2012 #100
Boetie Oct 2012 #102
bemildred Oct 2012 #103
Romulox Oct 2012 #106
bemildred Oct 2012 #107
Romulox Oct 2012 #109
bemildred Oct 2012 #112
Boetie Oct 2012 #111
bemildred Oct 2012 #114
Boetie Oct 2012 #116
bemildred Oct 2012 #121
Boetie Oct 2012 #123
bemildred Oct 2012 #126
Boetie Oct 2012 #132
bemildred Oct 2012 #134
Boetie Oct 2012 #136
bemildred Oct 2012 #139
uppityperson Oct 2012 #149
Boetie Oct 2012 #120
bemildred Oct 2012 #122
Boetie Oct 2012 #124
bemildred Oct 2012 #127
Boetie Oct 2012 #131
bemildred Oct 2012 #133
Boetie Oct 2012 #137
bemildred Oct 2012 #141
Boetie Oct 2012 #143
bemildred Oct 2012 #145
Boetie Oct 2012 #146
bemildred Oct 2012 #110
Romulox Oct 2012 #117
Boetie Oct 2012 #119
bemildred Oct 2012 #125
Boetie Oct 2012 #108
bemildred Oct 2012 #115
Boetie Oct 2012 #118
bemildred Oct 2012 #128
Boetie Oct 2012 #129
bemildred Oct 2012 #130
Boetie Oct 2012 #135
bemildred Oct 2012 #138
Boetie Oct 2012 #144
Agnosticsherbet Oct 2012 #5
Yavin4 Oct 2012 #14
Agnosticsherbet Oct 2012 #29
Volaris Oct 2012 #32
Agnosticsherbet Oct 2012 #38
Art_from_Ark Oct 2012 #52
Yavin4 Oct 2012 #35
Agnosticsherbet Oct 2012 #40
hack89 Oct 2012 #6
GreenPartyVoter Oct 2012 #23
Honeycombe8 Oct 2012 #84
1StrongBlackMan Oct 2012 #7
Yavin4 Oct 2012 #17
hack89 Oct 2012 #25
KurtNYC Oct 2012 #37
sharkman25 Oct 2012 #8
dipsydoodle Oct 2012 #9
slackmaster Oct 2012 #10
PavePusher Oct 2012 #11
1-Old-Man Oct 2012 #12
Yavin4 Oct 2012 #15
1-Old-Man Oct 2012 #19
Yavin4 Oct 2012 #24
Yavin4 Oct 2012 #16
Dash87 Oct 2012 #33
Posteritatis Oct 2012 #73
ronnie624 Oct 2012 #13
Volaris Oct 2012 #36
ronnie624 Oct 2012 #53
reformist2 Oct 2012 #18
msongs Oct 2012 #21
Nye Bevan Oct 2012 #20
PavePusher Oct 2012 #31
Posteritatis Oct 2012 #74
Taitertots Oct 2012 #88
Egalitarian Thug Oct 2012 #94
Enrique Oct 2012 #22
Yavin4 Oct 2012 #26
reformist2 Oct 2012 #28
Enrique Oct 2012 #30
Yavin4 Oct 2012 #34
Egalitarian Thug Oct 2012 #95
lumberjack_jeff Oct 2012 #27
hunter Oct 2012 #39
badtoworse Oct 2012 #41
frostfern Oct 2012 #51
davidn3600 Oct 2012 #42
Zalatix Oct 2012 #43
Nye Bevan Oct 2012 #45
Zalatix Oct 2012 #46
Nye Bevan Oct 2012 #47
Zalatix Oct 2012 #48
Nye Bevan Oct 2012 #49
Zalatix Oct 2012 #50
dionysus Oct 2012 #87
Zalatix Oct 2012 #89
Posteritatis Oct 2012 #62
bemildred Oct 2012 #72
Nye Bevan Oct 2012 #76
bemildred Oct 2012 #77
Zalatix Oct 2012 #85
dionysus Oct 2012 #86
Zalatix Oct 2012 #90
Throd Oct 2012 #44
KFredrick Oct 2012 #54
ronnie624 Oct 2012 #55
Zalatix Oct 2012 #57
Post removed Oct 2012 #56
Post removed Oct 2012 #58
spidly Oct 2012 #59
lumberjack_jeff Oct 2012 #60
Yavin4 Oct 2012 #79
Darth_ Deciduous Oct 2012 #61
Egalitarian Thug Oct 2012 #63
Marinedem Oct 2012 #64
Yavin4 Oct 2012 #66
Marinedem Oct 2012 #68
Yavin4 Oct 2012 #82
Egalitarian Thug Oct 2012 #97
Boetie Oct 2012 #65
leftstreet Oct 2012 #81
Boetie Oct 2012 #98
One_Life_To_Give Oct 2012 #69
Darth_ Deciduous Oct 2012 #75
mythology Oct 2012 #78
Yavin4 Oct 2012 #80
StokeyBob Oct 2012 #83
Fred Bastiat Oct 2012 #91
Fumesucker Oct 2012 #96
Romulox Oct 2012 #104
Yavin4 Oct 2012 #113
Lurker Deluxe Oct 2012 #140
Boetie Oct 2012 #142
Yavin4 Oct 2012 #148
rrneck Oct 2012 #93
Romulox Oct 2012 #105
LanternWaste Oct 2012 #147
Romulox Oct 2012 #150
Post removed Oct 2012 #151
upi402 Oct 2012 #152

Response to Yavin4 (Original post)

Mon Oct 22, 2012, 11:51 AM

1. K&R

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 11:54 AM

2. It's all a ruse

 

Hook, line and sinker.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 11:55 AM

3. Eco 101 explains why this is a bad idea

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Response to Gman (Reply #3)

Tue Oct 23, 2012, 09:44 PM

92. I've never taken a real Econ class in a college or university

 

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 11:57 AM

4. Correct.

You can have inflation (not much of a worry right now), but you cannot be broke, unless you choose to be broke.

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Response to bemildred (Reply #4)

Tue Oct 23, 2012, 03:55 PM

67. Why would anyone ever work then?

Let's say you and 2 other guys are on a deserted island and you decide to just write a number on a leaf, call it money and try to exchange it with one of them for some fish they just caught.

What makes you think this situation is different from a collection of individuals the size of a country?

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Response to Boetie (Reply #67)

Tue Oct 23, 2012, 04:07 PM

70. You'ld like this cartoon...

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Response to hunter (Reply #70)

Wed Oct 24, 2012, 08:06 AM

101. Maybe those idiots on the island

should adjust their coconut, fish and hut repair production to accomodate the each other's needs a little better. Then, they might find that they have time for other activities, like making some tools to hunt with, producing traps, making rope, creating better hammocks to lay about in, etc. Something tells me they are going to die pretty soon. I do like the cartoon. It very humorously illustrates ignorance.

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Response to Boetie (Reply #67)

Tue Oct 23, 2012, 04:12 PM

71. To get money. It's paper now, eh? And it's still legal tender.

Furthermore we've been mainlining fiat money since the 70s and nobody has blinked an eye, and so are most of the other countries on the planet.

It's true you can overdo it, but you can also underdo it, and right now we are more in the latter situation.

However you are quite right, it's illegal to print your own, and nobody will accept counterfeits.

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Response to bemildred (Reply #71)

Wed Oct 24, 2012, 07:56 AM

99. How can you "underdo" it?

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Response to Boetie (Reply #99)

Wed Oct 24, 2012, 08:02 AM

100. Not print enough, not put enough in circulation, not pay working people enough,

among other things. It's like gas in a car, too little you get a depression, too much and you get hyperinflation, not in the right place and you get social disorders and your economy sucks.

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Response to bemildred (Reply #100)

Wed Oct 24, 2012, 08:08 AM

102. What if the value of people's money

appreciated? In other words they found they could buy more with their savings (with the money already in existence). And who determines the exact "right" amount of money?

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Response to Boetie (Reply #102)

Wed Oct 24, 2012, 08:25 AM

103. First off, it has no intrinsic value, it's paper. Nowadays it's not even that.

There is nothing to appreciate. It's true there are currency markets, but they are a.) manipulated by governments in pursuit of economic policy, and b.) not causally connected to anything in particular, sort of like sheep being herded around in a field.

You are talking about price changes for particular products etc. You can see this now, some things go up, others go down, depending on demand (you know "markets". Sometimes the herd spooks and everything tanks, sometimes the herd is mainlining crank and we have bubbles. We really like bubbles. Nobody ever seems to think bubbles are "hyperinflation" when they are hot, but that's what they are, but it's particular to the market, housing went through the roof, other things were still cheap. And sometimes, if the government is really dumb or desperate (think Zimbabwe) they go way overboard and nobody wants your currency anymore. But there is nothing inevitable about that, it's not a mechanical process by any means.

Pricing may be determined by supply and demand, but usually everybody involved is doing their level best to tilt the table in their direction, often with great success.

Bottom line, there is no substitute for paying attention to the current situation and good judgement, but there also is no cliff. With the crappy and misguided money management we have been subjected to, we "fall off a cliff" about once or twice a decade now, and they have always patched it up. In fact the big money boys like the occasional crash, it's a "buying opportunity".

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Response to bemildred (Reply #103)

Wed Oct 24, 2012, 08:47 AM

106. bemildred...American workers have a decreasing share of the national wealth. This "no consequence"

theory just doesn't engage with reality.

Your theories may have been formed when the economy was continually growing, leading to ever greater wealth for common Americans.

That's not reality right now. Whether it is a consequence of money policy is impossible to say, but financial conditions have gotten considerably worse for the average person over the past 30 years. To cite this period as evidence for your "no consequences!" theory is bizarre, to say the least.

Nobody ever seems to think bubbles are "hyperinflation" when they are hot, but that's what they are, but it's particular to the market, housing went through the roof, other things were still cheap.


Even after the housing "crash", the inflation in housing costs continues to vastly outstrip workers' wages. This is a terrible example of the theory of "no consequences!" to inflation.

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Response to Romulox (Reply #106)

Wed Oct 24, 2012, 08:53 AM

107. That's because the game is rigged. As Ms Warren says.

And it is thoroughly riggable. We need to re-rig it in OUR direction.

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Response to bemildred (Reply #107)

Wed Oct 24, 2012, 09:03 AM

109. Rampant inflation (e.g. of housing prices) does not and has not helped common people. nt

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Response to Romulox (Reply #109)

Wed Oct 24, 2012, 09:06 AM

112. Indeed. nt

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Response to bemildred (Reply #107)

Wed Oct 24, 2012, 09:05 AM

111. How is it rigged? And how do we "re-rig" it?

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Response to Boetie (Reply #111)

Wed Oct 24, 2012, 09:11 AM

114. Our money supply is in the hands of bankers and the wealthy.

Looks at the stats. That is the clearest possible evidence that the game is rigged. What else do you think we need? Do you really think the Romney family is in fact superior to the rest of us? I don't. They look utterly ordinary to me.

You re-rig it by putting the money back in the hands of people (Edit: let's add companies, like Detroit in 2009, here too) who a.) need it, and b.) will spend it productively, to buy stuff they need, not engage in financial masturbation on the "markets".

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Response to bemildred (Reply #114)

Wed Oct 24, 2012, 09:15 AM

116. What stats are you referring to?

And how do you put the money back into the hands of the people?

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Response to Boetie (Reply #116)

Wed Oct 24, 2012, 09:28 AM

121. Concentration of wealth. "Redistibution".

There are many ways to do it. I favor a progresive tax system that gets very high at the top, and confiscatory inheritance taxes at the top. I mean take it all, or damn near all, when we die. No dynasties, no plutocracy.

Pipe the extra money into infrastructure, jobs, free or very cheap and high-quality education, R&D, health care, etc. THAT will make America strong.

But all in the context of regulated capitalism that allows those with ambition and ability to do well and use the results as they please during their lifetime, and the ability to pass reasonable amounts on. You don't want to make the Commie mistake either. This is not something new, or something that has not been tried and is risky.

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Response to bemildred (Reply #121)

Wed Oct 24, 2012, 09:31 AM

123. By confiscation you mean taking property by force, is that right?

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Response to Boetie (Reply #123)

Wed Oct 24, 2012, 09:33 AM

126. Taxes.

What happens if you don't pay your taxes?

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Response to bemildred (Reply #126)

Wed Oct 24, 2012, 09:41 AM

132. Do you wish harm to me if I don't want to hand over my property?

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Response to Boetie (Reply #132)

Wed Oct 24, 2012, 09:43 AM

134. Of course not. Do you wish to harm me if I raise taxes? nt

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Response to bemildred (Reply #134)

Wed Oct 24, 2012, 09:49 AM

136. No. Why do you advocate redistribution and taxation if you don't wish harm on others?

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Response to Boetie (Reply #136)

Wed Oct 24, 2012, 09:55 AM

139. The present arrangements are not harmless either. nt

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Response to Boetie (Reply #136)

Wed Oct 24, 2012, 12:04 PM

149. Who are you backing for President? Thanks for answering my simple question.

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Response to bemildred (Reply #107)

Wed Oct 24, 2012, 09:24 AM

120. What are businesses competing for?

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Response to Boetie (Reply #120)

Wed Oct 24, 2012, 09:29 AM

122. Power and control. Money is one of the tools, one of the counters. nt

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Response to bemildred (Reply #122)

Wed Oct 24, 2012, 09:32 AM

124. Do they compete for your business, your money?

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Response to Boetie (Reply #124)

Wed Oct 24, 2012, 09:34 AM

127. They hate competition. But yes, they want your money. nt

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Response to bemildred (Reply #127)

Wed Oct 24, 2012, 09:40 AM

131. Is this not a voluntary act, you giving a business money in exchange for a good?

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Response to Boetie (Reply #131)

Wed Oct 24, 2012, 09:42 AM

133. That depends on whether you are being coerced.

Presumably, if you are not under any sort of pressure or compulsion, then it's voluntary.

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Response to bemildred (Reply #133)

Wed Oct 24, 2012, 09:50 AM

137. So, business in the free market is voluntary, and the state is coercion, yes?

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Response to Boetie (Reply #137)

Wed Oct 24, 2012, 09:57 AM

141. Businesses are perfectly capable of coercion, as everybody knows by experience.

The government at least has to get our votes once in a while.

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Response to bemildred (Reply #141)

Wed Oct 24, 2012, 09:59 AM

143. When you exchange money for a product, are you not voting for that product (in an economic sense)?

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Response to Boetie (Reply #143)

Wed Oct 24, 2012, 10:03 AM

145. No. I'm buying something I presumably need or want. I may or may not have choices.

And I may be forced to buy cheap crap because I don't have the money. When you buy inferior crap, are you "voting" for it?

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Response to bemildred (Reply #145)

Wed Oct 24, 2012, 10:28 AM

146. Yes, because you can go without, or you can buy it. No one is putting a gun to your head.

If the good is inferior and there is no other choice, then that may represent an opportunity to compete with the company producing the inferior product. If you do not have enough money, then maybe you should earn more, or don't buy it, or do buy it, or find a substitute, or if you can't find a substitute, then consider yourself lucky that you at least can buy the inferior product rather than go without. Your definition of force and mine, with regard to the state and how it carries out taxation and redistribution, are different.

My point is that when there are open markets there is as many variations as the people comprising the market chooses or fits the constraints of the resources available to that market. The openness and the resources available directly impact your ability to choose which to me is the purest form of democracy and self-determination that we can have.

I don't claim to have all the answers, but I absolutely detest the carelessness with which people throw about the ideas of printing money and taxation and re-distribution as if they don't even care that the result is always the threat of violence and/or actual violence upon innocent people that just want to be able to keep what is theirs or to exchange it freely by choice. It is much more challenging and much more congruent with maintaining a free society that we explore the ways that we can interact with each other without resorting to force which is inherent in all that the state does.

This may sound bitter, and so be it if it does, but wouldn't it take more guts to, instead of electing an agent to take property from others, that the person advocating it do it themselves?

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Response to Romulox (Reply #106)

Wed Oct 24, 2012, 09:05 AM

110. PS: I'm not saying there are no consequences to inflation. I lived through the 70s and 80s.

I'm saying that the value of money is arbitrary, subjective.

Which is obvious, it is 100% a social fiction, unlike back when currencies were based on physical objects of one sort of another, then you could actually physically run out.

This is why we no longer need to steal the Inca's gold to grow our economy, we just pump more money in, "easing", and it works, for a while, but if it's wasted on "defense" and "security" much of the beneficial economic effects are lost, or compartmentalized to segments of the economy. Our Congress is very fond of wasting money in this manner, it supports the whole corrupt election process which we now see before us. Graft basically, is what it is.

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Response to bemildred (Reply #110)

Wed Oct 24, 2012, 09:16 AM

117. Your first point is correct, your second way off base.

This is why we no longer need to steal the Inca's gold to grow our economy, we just pump more money in, "easing", and it works, for a while, but if it's wasted on "defense" and "security" much of the beneficial economic effects are lost, or compartmentalized to segments of the economy. Our Congress is very fond of wasting money in this manner, it supports the whole corrupt election process which we now see before us. Graft basically, is what it is.


No. The workers who make our cell phones, or jeans, or pick our fruit, or repair our roads, etc. etc., all need REAL resources to live on a daily basis. REAL food. REAL housing. REAL energy.

Just entering a number into a ledger doesn't increase the supply of the goods and services these workers (and all of us) require on a daily basis; quite the contrary, it simply sends more dollars after the SAME number of goods and services. Hence, inflation.

"No big deal" you say? "Just print more!" you say?

The problem with this idea is that ordinary Americans are being given LESS of the national wealth than in any time in modern history--workers' wages are not increasing in proportion to price increases.

This means that price inflation without concomitant wage inflation leaves regular people poorer than before. And nowhere is this more evidence than in relation to the price of housing.

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Response to bemildred (Reply #110)

Wed Oct 24, 2012, 09:19 AM

119. What is wealth?

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Response to Boetie (Reply #119)

Wed Oct 24, 2012, 09:32 AM

125. Whatever people think it is.

Some people, like me, think it's things like clean air, good food, and good friends. Other think it's numbers on a page somewhere.

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Response to bemildred (Reply #103)

Wed Oct 24, 2012, 08:54 AM

108. What do you mean "there is nothing to appreciate?"

That's what the interest rate is supposed to indicate - the supply and demand for money and money substitutes.

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Response to Boetie (Reply #108)

Wed Oct 24, 2012, 09:12 AM

115. It's little magnetic dots somewhere, that's what I mean.

Like letters on a page, there is nothing there, it's all in your head.

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Response to bemildred (Reply #115)

Wed Oct 24, 2012, 09:18 AM

118. Doesn't everything we value come from our perceptions?

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Response to Boetie (Reply #118)

Wed Oct 24, 2012, 09:39 AM

128. I think food, for example, is much realer than money.

You can eat food, you cannot eat money, unless it's also food, as in barter systems.

However, Hume adopted the view you mention, that all we know comes from our perceptions, and it's very popular with the phenomenology crowd. I'm still thinking about that one.

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Response to bemildred (Reply #115)

Wed Oct 24, 2012, 09:39 AM

129. Are my productive efforts (mowing a lawn, designing a building) an abstraction or are they real?

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Response to Boetie (Reply #129)

Wed Oct 24, 2012, 09:40 AM

130. Quite real, unlike our money. nt

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Response to bemildred (Reply #130)

Wed Oct 24, 2012, 09:46 AM

135. If money represents productive real effort, than why do you advocate its arbitrary creation?

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Response to Boetie (Reply #135)

Wed Oct 24, 2012, 09:53 AM

138. Money represents whatever the hell you want, including that. It's ARBITRARY.

People piss it away on nothing all the time too. Pet rocks.

This has been interesting, I thank you (seriously, I do) for the opportunity to go through the arguments, which are all there in outline, I think, now. But, I have other things to do now (my truck is broken and I have to spend some money on it), and I think some people will like it and some people won't. That's OK with me. Perhaps we can pick it up again sometimes.

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Response to bemildred (Reply #138)

Wed Oct 24, 2012, 10:01 AM

144. Ok.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:01 PM

5. Because the more money you print the less it is worth, in relative terms.

When we borrow money we are essentially printing money that must be repaid or bought back. The dollar is based loosely on our economic worth. But there is a limit to that. If we print more money than what our trading partner's perceive we are worth, the value of the dollar drops and the cost of goods increases.

Printing too much money is one way of causing run away inflation, where say the cost of a loaf of bread rises until you would need a million dollars to buy it.

This has happened many times in history. Look up the Wiemar republic's money woes for an idea what just printing money can do.


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Response to Agnosticsherbet (Reply #5)

Mon Oct 22, 2012, 12:37 PM

14. The Worth of Anything (including money) Is What Others Are Willing to Pay for It

For as long as oil contracts are denominated in USD, there will always be a demand for dollars. The currency of the Weimar Republica was not the world's reserve currency.

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Response to Yavin4 (Reply #14)

Mon Oct 22, 2012, 02:02 PM

29. The world is already trying to move in many places to start displacing the dollar form oil...

using a basket of currencies rather than the dollar.

We weren't always the reserve currency, and that status can and will eventually change.

Even if it lasts for another decade, endlessly printing money will still lead to runaway inflation. Under Bush, the U.S. Treasury quit listing how much it has printed, and that has caused a slow erosion of the worth of the dollar. You can see that clearly in the price of crude, now up around $100.00 a barrel.

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Response to Agnosticsherbet (Reply #29)

Mon Oct 22, 2012, 02:22 PM

32. The U.S. Treasury no longer prints Currency. (they DO still mint Coins)

The Printing Presses are all operated by the Federal Reserve Bank. It the Treasury were "in charge" of our Currency, they could make simple interest Mortgages at 10%, rather than the compound interest that make banks rich. It would prop up the public square to such an extent, that the Private Market (see Wall Street) would, in short order, totally implode.
It would also make Elected Politicians actually RESPONSIBLE for Monetary as well as Fiscal Policy in America again, and...well, we just can't have THAT, now can we. I'm not a Paul-bot by any stretch of the imagination, but I DO think we need to make some much needed alterations to the way we handle MONETARY Policy in America, in such a way that the Dollar is based on the value of LABOR, rather on how much profit it can generate for the already Rich.

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Response to Volaris (Reply #32)

Mon Oct 22, 2012, 02:50 PM

38. Where is there a country that bases their currency on the value of labor?

I am not saying it is a bad idea, but I would have to see how that works in practice.

And, yes, you are right about the Federal Reserve printing money. But it still applies. We can no simply print money willy nilly. It will cause massive inflation, which doesn't bother the rich.

Wall street actually imploded in between 2006 and 2008. That almost led to a depression when banks and other lending institutions quit lending.

Wall street and bans are not going away. Banks have been necessary in economies since the middle-ages, about a thousand years before the rise of capitalism. What banks need is better and stricter regulation.

As to the Fed, a national bank of some kind is necessary, as was proved by Andy Jackson. I am not sure that the semi-private government approved bankers on the Fed is the best form of national bank. It is the one we've got and is not likely to go away unless Paul-bots take over and start minting the dollar out of gold, which will happen shortly after pigs fly out of Ron Paul's ancient ass. Libertarians are useless and pretty much powerless (except for those on the Libertarian right who put on tea-party masks). That shows even a few libertarians in Republian sheep clothing can fubar everything.

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Response to Volaris (Reply #32)

Mon Oct 22, 2012, 08:20 PM

52. Paper money is printed by the Bureau of Engraving and Printing (BEP),

which is a division of the Treasury Department. Coins are produced by the various mints, which are separate from the BEP but still part of the Treasury Department.

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Response to Agnosticsherbet (Reply #29)

Mon Oct 22, 2012, 02:31 PM

35. That May Be Multiple Decades Away

The world still regards the U.S. Treasury as the safest investment on planet earth, even more than precious metals. Right now, the U.S. is paying a negative interest rate on its short term debts.

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Response to Yavin4 (Reply #35)

Mon Oct 22, 2012, 03:08 PM

40. My crystal ball isn't working...

But interest is irrelevant. We still can not print our way to wealth for everyone. Perception by the world that the US is printing too much money will weaken the US dollar which results in inflation and hurts the middle class and poor.

Again, the rich don't give a squat about inflation because they have sufficient money to live outside the normal economy. Printing money like that will hurt the middle class and poor by making food and necessities more expensive. It simply doesn't work.

The real answer to the claim that the US is broke is to call it bullshit. That call by Republicans implies that the national economy is just like my household economy. That is like comparing apples to stellar nebula. They make that point because, philosophically, the right is opposed to any form of social safety net, which includes everything from social Security to investment in infrastructure to create jobs when private industry isn't doing the job, to bailing out automobile companies. For them it is a matter of belief and ideology bordering on religion that only free market solutions ever work. (Well, except when building a big honking military, but for them that is the exception that proves the rule.)

To the right, the government is a college student in a whore house with a pocket full of his parents credit cards. If they take away the credit cards and let the parents act in accordance with the free market, everybody will be rich beyond their wildest dreams, and those who aren't are just lazy bums who want hand outs.

To sum up:

Printing money is the wrong answer to the "Oh My God the Government is Broke" argument. It will lead to inflation and inflation hurts the middle class and poor. Austerity is what they really want because they can use it to defund all those communist programs they hate.

End of Rant.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:02 PM

6. Hyperinflation can be just as bad.

Hyperinflation[2] results from a rapid and continuing increase in the supply of money, which occurs when a government prints money or creates credits in bank accounts, instead of collecting taxes to fund government activities. The price increases that result from more government spending create a vicious circle, requiring ever growing amounts of money creation to fund government activities. Hence both monetary inflation and price inflation rapidly accelerate. Such rapidly increasing prices cause widespread unwillingness of the local population to hold the local currency as it rapidly loses its real value. Instead they quickly spend any money they receive, which rapidly increases the velocity of money flow, which in turn causes further acceleration in prices.[3] Hyperinflation is often associated with wars or their aftermath, political or social upheavals, or other crises that make it difficult for the government to tax the population.


http://en.wikipedia.org/wiki/Hyperinflation

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Response to hack89 (Reply #6)

Mon Oct 22, 2012, 01:14 PM

23. +1 It takes wheelbarrows full of money to buy bread.

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Response to hack89 (Reply #6)

Tue Oct 23, 2012, 07:06 PM

84. True. If you print more $, it loses its value. nt

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:08 PM

7. Exactly ...

 

It is all a game, that most do not understand is being played.

So long as the rest of the world is willing to accept our currency and buy our debt, there is no "debt problem."

The issue is being exploited because most Americans can only think in terms of their experience. It only makes sense that because "we can only spend what they have in the bank (or what their paucheck yields), the same must be for the government ... right?"

These "kitchen table" economic comparisons just do not hold true. But wear a helmet when trying to tell this to the majority of Americans.

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Response to 1StrongBlackMan (Reply #7)

Mon Oct 22, 2012, 12:56 PM

17. Precisely. Just Look at some of the responses on this thread.

You can never be "broke" when you can create your own currency. In fact, having a cheaper currency boosts your exports and makes your goods and services more competitive globally. See China.

The elites are using the "debt problem" as a cudgel to destroy social safety net programs and people are willing to accept a lower and lower standard of living because we have this "debt problem". However, when it comes to starting a war, no one ever mentions the "debt problem" then, do they?

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Response to Yavin4 (Reply #17)

Mon Oct 22, 2012, 01:41 PM

25. But you can make your currency worthless

by creating inflation. More money chasing the same goods has only one effect - higher prices.

You may not go broke but you will also impoverish your population.

http://en.wikipedia.org/wiki/Hyperinflation#United_States

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Response to Yavin4 (Reply #17)

Mon Oct 22, 2012, 02:33 PM

37. Tell it to Greece and the Soviet Union

Could they not "print their own currency"? And even as bad off as the Euro is right now, it is still $1.30 to the USD.

But these are 2 separate things -- currency versus faux debt problem. I want to disagree with the idea that printing currency eliminates debt but I agree that the Right always cries about debt when Dems are in the Whitehouse. Romney has $7 trillion in debt que'd up for us while they scream about deficit spending during the GOP/Bush created recession.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:08 PM

8. Easy. You're broke when others view your currencey as worthless. n/t

 

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:18 PM

9. Yes everything is hunky dory

until the petrodollar recycling scam comes apart at seams and the printing of fiat money comes to an end.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:20 PM

10. Ask the natives of Yap Island

 

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:22 PM

11. Holy Shit. What the hell do schools teach about economics these days?

 

Please tell me you were quoting someone, and don't actually believe this.

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Response to PavePusher (Reply #11)

Mon Oct 22, 2012, 12:27 PM

12. +1

The question itself is so absurd that it doesn't really deserve much of an answer. Never the less, our currency is based on our willingness to go to work tomorrow and to pay taxes on our earnings. Its really that simple. If we did not borrow our currency would be based on the work we did yesterday, and our willingness to pay taxes on it but in fact there is no real difference between basing it on yesterday's work or tomorrow's unless a person believe that no one will be going to work tomorrow.

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Response to 1-Old-Man (Reply #12)

Mon Oct 22, 2012, 12:40 PM

15. "our currency is based on our willingness to go to work tomorrow and to pay taxes on our earnings"

Wrong. Dead wrong. The value of our currency is based on the demand for it from other nations. If the world is willing is pay a negative real interest rate for our debt, then we cannot be broke.

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Response to Yavin4 (Reply #15)

Mon Oct 22, 2012, 01:06 PM

19. So you are suggesting that our currency has no relevance for domestic use?

It doesn't make a hoot in hell if the world is willing to demand our currency for some purpose. What matters is that we are willing to use it among ourselves to facilitate our own trade in goods and services. This has nothing at all to do with foreign demand or interest rates. In fact it really doesn't demand that our currency be backed by anything either, only that it be very very difficult to counterfeit.

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Response to 1-Old-Man (Reply #19)

Mon Oct 22, 2012, 01:24 PM

24. No.

"It doesn't make a hoot in hell if the world is willing to demand our currency for some purpose."

Um, yes it does. If people are willing to buy your debt, then you can borrow money much more cheaply.

"What matters is that we are willing to use it among ourselves to facilitate our own trade in goods and services. "

Wrong.

" This has nothing at all to do with foreign demand or interest rates. "

Wow. Way wrong. Currency prices is what really drives the global economy. Because China actively de-values its own currency, that's the prime reason why so many jobs have been outsourced there.

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Response to PavePusher (Reply #11)

Mon Oct 22, 2012, 12:47 PM

16. Tell Me Where I Am Wrong

You cannot be "insolvent" if you have the ability to print your own money. The amount of interest that you have to pay may be high, but you are not insolvent.

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Response to Yavin4 (Reply #16)

Mon Oct 22, 2012, 02:24 PM

33. However, your money can be worth less

Than the paper it's printed on. Think paying $1,000,000 for an apple.

Money is just paper and metal. Its worth comes from perceived value.

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Response to Yavin4 (Reply #16)

Tue Oct 23, 2012, 04:36 PM

73. A quadrillion of something with no value cannot pay for even the cheapest things. (nt)

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 12:35 PM

13. Any realistic economic theory would adhere strictly to the Laws of Thermodynamics,

because an economy is exactly analogous to a thermodynamic system; the conversion, utilization and dissipation of matter and energy.

Our current system is designed to further enrich the elite class and consolidate their political power through accelerating debt. It is destined to fail, spectacularly.

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Response to ronnie624 (Reply #13)

Mon Oct 22, 2012, 02:33 PM

36. can you describe that in Thermodynamic terms?

I want to know what the analogy is.

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Response to Volaris (Reply #36)

Mon Oct 22, 2012, 11:26 PM

53. I have neither the time nor the skills to write such an essay,

but here are two good ones. They're rather long, but worth every bit of the time and effort they require.

http://markbc.net/thermodynamics-for-economists/

http://www.ktu.lt/lt/mokslas/zurnalai/inzeko/57/1392-2758-2008-2-57-15.pdf

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 01:01 PM

18. The rich have $50 trillion in wealth. The US just needs $1 trillion of that to balance the budget.

And somehow, our politicians can't seem to muster the courage to ask the rich to pay this much mor ein taxes, which would solve all these budget "crises" that the press goes on and on about. Can anyone seriously argue that our government isn't bought and paid for?

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Response to reformist2 (Reply #18)

Mon Oct 22, 2012, 01:11 PM

21. we have two 1%ers running for president. what else would you expect lol nt

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 01:10 PM

20. Yes. The Weimar Republic could simply print all the Marks they needed.

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Response to Nye Bevan (Reply #20)

Mon Oct 22, 2012, 02:16 PM

31. You beat me to it.

 

"Just print more money."

Astounding, that people can't do basic math.

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Response to Nye Bevan (Reply #20)

Tue Oct 23, 2012, 04:37 PM

74. Or the festivities in Zimbabwe a few years ago

Logarithmic scales should never have exponential slopes.

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Response to Nye Bevan (Reply #20)

Tue Oct 23, 2012, 08:16 PM

88. Have you ever looked at how much money was printed during those years?

 

Or in Zimbabwe?
The money creation rate was several orders of magnitude higher than would be required to balance the budget. I'm not saying we should print away the debt rapidly. But we would be orders of magnitude better off than the Germans were.

If anything the US needs to print a little more, spend a little more, have a little more inflation, and not worry about arbitrary debt limits. Moderate inflation can be beneficial and shouldn't be avoided simply on the grounds that significantly higher inflation is bad.

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Response to Nye Bevan (Reply #20)

Wed Oct 24, 2012, 06:18 AM

94. Perhaps you can tell me what other nations were completely dependant on the German market

 

to sell their goods. Or maybe you can show how Germany has/had the capacity to be completely self-reliant. Could post WWI Germany even feed itself?

These asinine comparisons between Germany after the treaty of Versailles, Argentina, modern day Greece, Spain, or any of the other obfuscations so popular in these discussions are more than annoying, they are nothing but repetitions of Reich-wing propaganda put forth to stifle any discussion of actual solutions to completely manufactured problems created by the owner class and preying upon the ignorance of those that might benefit from those debates.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 01:13 PM

22. this is not correct, imho

the liberal position on social programs is not that they have no real cost, our position is that the cost is worth it.

By your logic, why should there be any limits on the amount of benefits? That argument cannot be sustained, imo.

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Response to Enrique (Reply #22)

Mon Oct 22, 2012, 01:42 PM

26. No. My Argument Is That If You Can Print Your Own Currency,...

then you cannot be broke.

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Response to Yavin4 (Reply #26)

Mon Oct 22, 2012, 01:56 PM

28. You are correct. People are just hyperizing about doing this long term, which is in fact bad.

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Response to Yavin4 (Reply #26)

Mon Oct 22, 2012, 02:05 PM

30. ok then, let's raise social security checks to $1 million per month

i'm not an economics expert, maybe in some technical sense we would not be "broke", but common sense tells me we'd be in some condition that isn't good.

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Response to Enrique (Reply #30)

Mon Oct 22, 2012, 02:25 PM

34. We Could Do That And Still Not Be Broke

If we did the $1 million/mo. SS checks, we'd have to borrow the money to do it. What interest rate we'd pay depends on the global demand for our currency. If the globle thinks us foolish for doing this, they would demand a higher rate of interest which we would have to pay.

Again though, we would not be broke.

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Response to Enrique (Reply #30)

Wed Oct 24, 2012, 06:22 AM

95. "i'm not an economics expert". That much is certain, and is the first thing you should consider when

 

engaging in these discussions. Ignorance is no fault. Realizing that you are ignorant and neglecting, or refusing to remedy that state, is.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 01:51 PM

27. Wozniak prints his own money

 

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 03:03 PM

39. You can't be broke.

The trouble starts when you create too much money and don't skim off the scum that floats to the top, or flush out the stagnant wealth.

If you don't properly tend an economy, if you don't tax the stagnant wealth at high rates, and you don't adequately regulate the markets, then you get the mess we have now -- a lot of scummy people sitting on hoards of stagnant wealth.

Guys like Romney are like anaerobes. A certain number of them are necessary in a healthy environment, but when you've got too many of them they poison the pond.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 03:30 PM

41. Technically, the Weimar Republic didn't go broke, but the people suffered greatly.

 

The currency was worthless and people burned it in their stoves to stay warm.

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Response to badtoworse (Reply #41)

Mon Oct 22, 2012, 08:08 PM

51. It's really not that simple though.

The Weimar Republic was burdened with a butt load of foreign debt after WWI. This debt sure as hell wasn't in their own currency. It was the external shock of the punishing "war reparation" treaties that really drove the Weimar Republic bankrupt. In addition their productivity went way down in the aftermath of WWI.

If you want a better analogy for what could happen to the US look at Japan. Their federal debt-to-GDP ratio is 200%. Ours is still under 100%.

Printing money will eventually cause inflation, but actual hyperinflation is extremely unlikely. Of course it all depends on how much you print and more importantly who's hands it falls into. The problem right now is most of the money the Fed prints does not go to consumers. It goes to private banks. Normally banks will lend to businesses, giving them a source of capital so they can expand in hopes of future profits. The problem is there is not enough demand so the money is just sitting there useless. During the Bush years a bunch of that printed money was going to the giant Ponzi-scheme financial clusterfuck housing bubble.

What has to happen is the money going to those who will spend it. Printing money is really just another form of taxation. In a relative sense it's devaluing the money already in circulation and putting it somewhere else. Of course the currency doesn't actually devalue if the demand for dollars is increasing at the same time, compensating the inflation. Of course a better policy would be to just tax the damn rich as printing money is a less-than-ideal roundabout method of redistribution. For one thing it isn't progressive at all because, all else held equal, it subtracts from the potential value of everyone's money equally.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 04:38 PM

42. The problem is inflation

 

The more currency in circulation, the higher the velocity, and the higher the demand for goods and services. This leads to devaluation of the currency.

The Weimar Republic tried to print its way out of debt and out of poverty. At the conclusion of WWI, the treaty of Versailles required Germany to pay reparations for the war. This killed the economy. In order to pay the bill, they printed money. The currency quickly became worthless. In 1919, you could buy a loaf of bread for 1 mark. In 1924, only 5 years later, that loaf of bread cost 100 billion marks! No one had anything. Their money was all destroyed. The only people that were rich were those who had gold or diamonds or material things of value. The mess is what helped contribute to the rise of Nazism as the people grew desperate and afraid.

Increasing currency supply does not create wealth. You cannot create wealth out of thin air. It has to come from something. It has to be based on something. Even when the Fed dumps money into the supply with these quantitative easing programs, they are usually offsetting the rise of currency with the bond market.

Now to be clear, what the Fed is doing right now is not technically bad. The Ron Paul people are sounding the alarm bells far too soon. But what the Fed is doing is only designed to work in the short term, during an economic recession or depression. It's supposed to be a band-aid. It's not designed to be a permanent fix. If the Fed is still doing these quantitative easing into the 2020s....then we might have some very serious problems on the horizon. This economy needs to get moving within the 5-10 years in order to get out of this.

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Response to davidn3600 (Reply #42)

Mon Oct 22, 2012, 04:53 PM

43. The upsides to hyperinflation are

 

1) Chinese imports go away. Offshoring dies, immediately.
2) Plutocrats lose control of any asset they are not physically sitting on. No more absentee ownership of farms, mines, etc.
3) In fact, hyperinflation makes it hard to pay the police thugs. That means the workers can finally take control of farms, mines, etc.
4) A lot of billionaires are going to be wiped out.

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Response to Zalatix (Reply #43)

Mon Oct 22, 2012, 06:21 PM

45. OK. Now I know DU economics threads do not tend to be academically rigorous

but openly advocating for Weimar-style hyperinflation is about the stupidest thing I have ever seen here. This post makes pushing for Smoot-Hawley 2 seem positively sane by comparison.

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Response to Nye Bevan (Reply #45)

Mon Oct 22, 2012, 06:40 PM

46. Weimar is unlikely to happen.

 

Import prices may skyrocket, though.

Long before apples go to $1,000,000 a bushel, everyone with an apple tree in their back yard will be in the game, driving prices way back down. And we've got a lot of people with apple trees around here. I had an orange tree in my APARTMENT PATIO many years back.

Smoot Hawley didn't do any harm. And it most certainly cannot do any harm to a country that NEEDLESSLY imports much more than it exports.


Really, before you call anyone else's ideas stupid, you need to bone up on some basic economics and stop spouting the laughably stupid arguments you just posted.

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Response to Zalatix (Reply #46)

Mon Oct 22, 2012, 07:13 PM

47. Dude. Hyperinflation is not OK just because you have an apple tree.

You're advocating for hyperinflation and I'm the "laughably stupid" one? I'm almost starting to think that you are cleverly parodying DU "bad economics" threads.

In case you are not:

http://www.historylearningsite.co.uk/hyperinflation_weimar_germany.htm

Such a drop in confidence also caused a crisis in Weimar Germany itself when prices started to rise to match inflation. Very quickly, things got out of control and what is known as hyperinflation set in. Prices went up quicker than people could spend their money.

In 1922, a loaf of bread cost 163 marks. By September 1923, this figure had reached 1,500,000 marks and at the peak of hyperinflation, November 1923, a loaf of bread cost 200,000,000,000 marks.

The impact of hyperinflation was huge :
People were paid by the hour and rushed to pass money to loved ones so that it could be spent before its value meant it was worthless.
People had to shop with wheel barrows full of money
Bartering became common - exchanging something for something else but not accepting money for it. Bartering had been common in Medieval times!
Pensioners on fixed incomes suffered as pensions became worthless.
Restaurants did not print menus as by the time food arrive…the price had gone up!
The poor became even poorer and the winter of 1923 meant that many lived in freezing conditions burning furniture to get some heat.
The very rich suffered least because they had sufficient contacts to get food etc. Most of the very rich were land owners and could produce food on their own estates.

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Response to Nye Bevan (Reply #47)

Mon Oct 22, 2012, 07:15 PM

48. There are SEVERAL kinds of inflation.

 

Import price inflation is not the same as domestic inflation. First, understand that, before you come back into this discussion.

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Response to Zalatix (Reply #48)

Mon Oct 22, 2012, 07:23 PM

49. You used the phrase "The upsides to hyperinflation are". That's all I really need to say. (nt)



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Response to Nye Bevan (Reply #49)

Mon Oct 22, 2012, 07:25 PM

50. Import-price hyperinflation is possible.

 

We already are seeing import-specific inflation right now.

If the US dollar stops being the world's reserve currency, that doesn't mean it becomes useless in America. It means import prices will skyrocket. AKA hyperinflate.

Really, you're off-target here.

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Response to Zalatix (Reply #46)

Tue Oct 23, 2012, 07:57 PM

87. "you need to bone up on some basic economics". i think you might want to read some basic econ....

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Response to dionysus (Reply #87)

Tue Oct 23, 2012, 08:20 PM

89. I would answer your argument... but wait, you made none!

 

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Response to Zalatix (Reply #43)

Tue Oct 23, 2012, 02:25 PM

62. There are no upsides to hyperinflation. (nt)

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Response to Posteritatis (Reply #62)

Tue Oct 23, 2012, 04:13 PM

72. There are no upsides to depression either.

Unless you are filthy rich and in need of servants.

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Response to bemildred (Reply #72)

Tue Oct 23, 2012, 04:57 PM

76. Hey guys, you're BOTH right! We don't want hyperinflation OR depression!

Fortunately, it is not an either/or situation.

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Response to Nye Bevan (Reply #76)

Tue Oct 23, 2012, 05:07 PM

77. Yes! I think you've got it. nt

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Response to Nye Bevan (Reply #76)

Tue Oct 23, 2012, 07:50 PM

85. With as many jobs as we're sending overseas, both are inevitable.

 

You do realize that large trade deficits devalue the currency, right? The US dollar is only surviving now because other nations are propping it up.

When that bubble pops, the very thing you defend so much will bring about hyperinflation. Or at least terrible inflation.

It is the very nature of the beast.

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Response to Zalatix (Reply #43)

Tue Oct 23, 2012, 07:55 PM

86. you can't have just seriously proposed such a stupid thing. krugman wept.



you forgot ;
0) the nation collapses


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Response to dionysus (Reply #86)

Tue Oct 23, 2012, 08:22 PM

90. If our gobstoppingly high trade deficits don't abate, it is not stupid, but rather, INEVITABLE.

 

And hyperinflation can occur where it comes to import prices, rather than domestically.

Really, read up.

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Response to Yavin4 (Original post)

Mon Oct 22, 2012, 04:58 PM

44. The Greeks should renounce the Euro and give every citizen a billion Drachmas. Problem solved!

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 10:17 AM

54. If it were only that easy

If the government could just print all the money we need with no consequences, why shouldn't they do that and send 2 million dollars or so to every household in America? This would solve the housing crisis and the economic malaise all at once.

That wouldn't work because nobody would bother working for money anymore. It would create a disconnect between the currency and the real value of the goods and services behind it. Currency is just an easier way of exchanging labor and goods between ourselves. Printing paper money well in excess of the value of those goods results in people demanding more of it for the same goods and services. Runaway inflation results.

One of the reasons for this is increasing the money supply creates disincentives to produce. Why should we all work if we can just print money right? Goods become more scarce as a result and prices begin going up because demand exceeds supply.

The US Government is playing a dangerous game right now with our currency, we may be the reserve currency today but that can change. A few more steps toward insolvency and we might find nobody wants to buy our debt anymore. Fiscal collapse will be the result.

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Response to KFredrick (Reply #54)

Tue Oct 23, 2012, 10:43 AM

55. Humans are only motivated by a desire to "earn money".

Just one of many neo classical assumptions that are widely regarded as truth.

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Response to KFredrick (Reply #54)

Tue Oct 23, 2012, 11:07 AM

57. Yet at this time nobody has money to buy anything. And they're working their asses off.

 

All this printing of money isn't hyperinflating because we have serious (but not yet hyper-)deflationary pressures counteracting.

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Response to Yavin4 (Original post)


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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 02:00 PM

59. Hyperinflation

Hyperinflation - give everybody a million dollars for doing nothing, an egg would probably end up costing 2 million immediately.
Currency, even fiat currency has to reflect some real stable value. I may not be able to convert my dollar into gold, but today - tomorrow - and next year I can convert it into a jumbo box of JuJuBees. Today - tomorrow - and net year I can earn X number of JuJuBees per hour at job Y.

Printing your way to wealth doesn't happen. http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic

The Soviets all but used potato stamps to churn out money and destroy central european currencies after WWII - hyperinflation on purpose.

The QE's have/are pumping billions into the money supply each month but it basically shows up as government debt and not physical dollars. Banks liquidate securities which the government buys, and the banks buy government bonds. The fed is making it profitable for banks to do all this swappy craziness so money never really hits the market - It all stays on paper. Banks end up getting paid to borrow from the fed. Cool.

It'll probably end very badly.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 02:06 PM

60. "Broke" isn't the problem.

 

The problem is devaluation of the currency.

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Response to lumberjack_jeff (Reply #60)

Tue Oct 23, 2012, 06:05 PM

79. That's Correct.

You're not "broke". You're currency may be devalued, which is not necessarily a bad thing.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 02:23 PM

61. I like this idea

 

But I need to take the time to read the thread to get the downside...which I will start doing now.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 03:25 PM

63. Only by creating so much that others lose faith in your ability to generate sufficient

 

worth to cover it. That's both the beauty and danger of fiat currency. You're absolutely right about the elites need to create the illusion of scarcity.

& R

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 03:28 PM

64. W. T. F. ?

 

Is this a joke thread?

You can't possibly believe this, can you?

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Response to Marinedem (Reply #64)

Tue Oct 23, 2012, 03:47 PM

66. The U,S, Is Not "Broke"

It's not insolvent primarily because it can print money to pay its bills, and does so with regularity.

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Response to Yavin4 (Reply #66)

Tue Oct 23, 2012, 03:59 PM

68. No.

 

Your assessment does not stack up with inflation.

Or reality.

Mostly reality.

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Response to Marinedem (Reply #68)

Tue Oct 23, 2012, 06:18 PM

82. I Never Said That There Wouldn't Be Inflation

I said that you would not be broke. The level of inflation would depend on your ability to get others to buy your currency/debt. Currently, the U.S. is not seeing any hikes in interest rates.

The idea that the U.S. is "broke" is not reality.

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Response to Marinedem (Reply #64)

Wed Oct 24, 2012, 06:45 AM

97. Could you possibly expand your argument beyond merely nay saying?

 

Yavin4 has made a fairly detailed argument. Do you have anything to add?

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 03:42 PM

65. Obvious Question

Why would anyone ever work?

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Response to Boetie (Reply #65)

Tue Oct 23, 2012, 06:17 PM

81. OP didn't really say anything about working

Just the reference to forced employment because of for-profit medical coverage

Rich people don't 'work,' but they seem to have a lot money

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Response to leftstreet (Reply #81)

Wed Oct 24, 2012, 07:54 AM

98. I believe the that the very topic

sentence to the original post is "If You Have The Ability to Create Your Own Currency, How Can You Ever Be Broke?" and my answer to this idiotic question is implicit in my question. What would happen if, rather than work and exchange value for value with others, that people simply printed "money" and tried to con others into taking it? Look, you can make IOU's with people, and they will take them up to a point. At some point though, you cannot print any more than others perceive your ability to re-pay. Hell, you can even try to make IOU's on the original IOU's right? At some point you have to actually produce something that others value or you yourself value. In other words, at some point YOU HAVE TO WORK. This seems very simple, and I'm not sure why so many people struggle with this idea. Maybe the economy of a country is so large and complex that people can't see the forest for the trees.

And, I have a friend that has a lot of money and he worked his ass off to get it by building a business out of his bedroom, so I'm not sure why you think you either are qualified to make those kinds of statements or if you actually have evidence. Sure, some spoiled brats get money handed to them. Some people are CEO's of companies that, rather than compete and work harder in the market they use the gun of government to legislate their profits into existence AT OUR EXPENSE or are very good at "competing" for government contracts. And some worked their ass off (contrary to what our dear leader may think). Maybe you should look at exactly who are in the hated 1% and try and uncover who they are and how they got there, and maybe you should try to make some important distinctions, and start seriously analyzing cause and effect. I mean no condescension either. It is important to make distinctions, especially when it comes to understanding voluntary society and the state.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 04:00 PM

69. "Cigarettes replace the reichsmark as Germany’s currency"

What was going on was a unique phenomenon in German currency history. Never before had any state currency lost so much of its value and reputation that it was replaced by physical objects. Even in the terrible inflation year of 1923, when a pound of butter cost the unimaginable sum of 20 billion marks, the mark remained the currency.


Just look to history for your answer.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 04:46 PM

75. In because this thread is famous

 

Good job.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 05:18 PM

78. Ow

 

Reading some of the posts in this thread makes my head hurt. This is an awful, awful idea as many people have told you.

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Response to mythology (Reply #78)

Tue Oct 23, 2012, 06:08 PM

80. So, You Buy Into the Phony Lie About The U.S. Being Broke?

If you're right, then explain why long term interest rates on U.S. debt is extremely low even after multiple announcements of more Fed easing and keeping interest rates at 0% for years to come.

Why aren't we seeing huge spikes in long term rates?

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 06:39 PM

83. Super Dollar

I think what most people are missing is that whenever they counterfeit the money supply they don't create anything that adds to our pile of stuff. They are just shifting the property lines.

No matter how much hard earned honest money, "We the People" can come up with to build their world the way they want, others can fire up the fake money presses and get their way.

[link:|

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 09:42 PM

91. Is this post satire or

 

or are you really serious about printing endless fiat paper money? A continuous QE? Have you ever read about Zimbabwe and their 100 trillion dollar paper money currency? You can buy a note as a novelty below or just wait a few years of endless QE's and ramping up the printing press and our currency will need to be revamped to include 100 trillion dollar notes that you will need a wheel barrow to carry to buy a loaf of bread.

http://www.ebay.com/itm/100-TRILLION-ZIMBABWE-DOLLARS-CURRENCY-MONEY-INFLATION-BANK-NOTES-MINT-UNC-BILL-/120793060726?pt=Paper_Money&hash=item1c1fd3d576

Your logic is so full of fail that it reminds me of the broken window fallacy, which I am sure you have never read. Give it a read as a primer to basic economics:

http://en.wikipedia.org/wiki/Parable_of_the_broken_window

When you are done with that get the book linked below. It is basically economics for dummies, which I think you really need as you obviously have no formal education in economics or have read up on the subject.

http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232/

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Response to Fred Bastiat (Reply #91)

Wed Oct 24, 2012, 06:36 AM

96. Welcome to DU

There aren't very many DUers who know who Bastiat was, he's very popular in certain libertarian circles.

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Response to Fumesucker (Reply #96)

Wed Oct 24, 2012, 08:33 AM

104. The "Parable of the Broken Window" doesn't work when the rich are hoarding so much, though...

This is where the parable breaks down. In modern America the "shopkeeper" (capitalist class) are hoarders. They will deposit the 6 francs in their Swiss bank account, to be hoarded, then passed down to their children, such that their children might hoard more than they can use.

Ebenezer Scrooge, for example, wasn't going to buy "something else" on Christmas morn; if he hadn't been haunted on Christmas Eve night, the British sterling used to pay for the goose he brought to the Cratchits would've ended up unspent.

The following is not necessarily true:

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.[1][2]

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Response to Fred Bastiat (Reply #91)

Wed Oct 24, 2012, 09:09 AM

113. Ooooo. Your Mightt Libertarian Brain Is Tooo Much For Me...

Read my post. If you can someone to accept the paper that you print as a currency, then you can never be broke. In your Zimbabwe example, obviously people didn't accept their currency so there was hyper inflation.

Second, if the U.S. can indeed go "broke", then at what level will it go "broke"? Currently, we're running the highest debts and deficits on record, but there are no massive hikes in interest rates. In fact, short term rates are NEGATIVE.


Finally, economics is not a formal science like chemistry or biology. It's a SOCIAL SCIENCE just like Sociology or Politics. It's all theories.

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Response to Yavin4 (Reply #113)

Wed Oct 24, 2012, 09:56 AM

140. Debt is what it is

Obviously, as long as someone will accept your paper everything will be fine. Just as in your original example, your mortage, groceries, utilities, and on, are all paid with this paper that you just continue to print. Life is great.

Then, someone says that paper is no good. Now what? You are overextended and there is no way your bills can be paid.

It is not "if" the US can go broke, it can. At what level? Who the hell knows. The deficit can not contine to double every so many years forever. I get it, our guy is in the office so it's all good. But, sooner or later the bills will become due.

When it happens, and it will, it will sudden and severe.

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Response to Yavin4 (Reply #113)

Wed Oct 24, 2012, 09:58 AM

142. Look dude

you wrote: "Given this, how can you ever be broke? Answer, you cannot be broke." "You cannot be broke." And obviously you can be broke. So your statement is wrong. It's ok to be wrong, no one is ganging up on you and I am certain there are no libertarian interlopers here.

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Response to Boetie (Reply #142)

Wed Oct 24, 2012, 10:51 AM

148. The "Given this.." in my statement refers to the fact that people accept your currency.

If people accept your currency at face value, you cannot ever be "broke". That's it. That's all. In my original post, I made no mention of inflation because inflation does not enter the picture if people accept your currency at face value.

Inflation occurs when people don't accept your currency at value. You, and many other posters, are assuming automatic inflation whenever money is printed, and that's demonstrably false as the U.S. has proven and continues to prove.

We've been inflating our currency since the early 1970s. The American people are not sharing in the inflated currency equally or even somewhat equally.

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Response to Yavin4 (Original post)

Tue Oct 23, 2012, 09:55 PM

93. Just like any commodity

it ain't how much you can make. It's how much you can sell.

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Response to Yavin4 (Original post)

Wed Oct 24, 2012, 08:36 AM

105. Then let's just print a Kazillion-Brajillion bucks for each of us, and we'll all be RICH!

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Response to Yavin4 (Original post)

Wed Oct 24, 2012, 10:48 AM

147. Funny thing about imaginary constructs like money..

Funny thing about placing our faith and our way of life into imaginary constructs like money... they can be anything we want them to be, and conversely, they are never what we deny them to be.

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Response to LanternWaste (Reply #147)

Thu Oct 25, 2012, 09:44 AM

150. Um, money isn't an "imaginary construct". It's very real.

You may be thinking of the value of money being arbitrary. But even then, it's not "imaginary". It's very real.

they can be anything we want them to be, and conversely, they are never what we deny them to be.


You keep telling yourself that as the heat is shut off.

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Response to Yavin4 (Original post)


Response to Yavin4 (Original post)

Fri Oct 26, 2012, 08:52 PM

152. Just hide the M3

and huck the empty whiskey bottles off the roof of your mobile home until the neighbors get home

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