Article that Explains our Debt Trap

[say1988]

There are several fundamental problems. First off there is more debt than money. If a hundred dollars is created a hundred dollars plus interest has to be paid back. Second there is a constant shift of wealth to the ones who lend.

The first part doesn't make sense.
The second part ignores the primary purpose of debt (at least private debt). You take on debt when you expect the investment of thatmoney to return a greater value (be it financial returns, or convenience, or anything else one may value) than the interest.

Adding to this... Since the total debt is zero, and we want regular people to have positive savings, it's absolutely necessary that the government run a debt.

You forgot businesses. They can, and are expected to, carry debt if they well run.

If you believe that, then why ever create more of it?

If there were no increases in the nominal money supply you would be calculating your everyday purchases in small fractions of a penny.
Further inflation is not bad. In fact it is beneficial for encouraging investment rather just shoving your money under the bed. The issue arises when nominal returns and/or wages do not keep up.

 

[Integral]

I really want to wrap my head around this.

I went back to that old thread. Even though I had gone through the whole thread before.

And after eleven pages of studying, I finally achieved enlightenment! I feel a bit Zen-like now.

Thanks for not giving up on the explanations Cutlass (and the other guys who contributed - even those who questioned).

I just re-read that thread and realized that I basically dodged all of your questions. My apologies! Feel free to re-ask them and I'll try to actually address them this time.

edit: also page 8: my avatar at the time was MV=PQbar. I ought to change it back so that it makes sense!

 

[Cutlass]

I just re-read that thread and realized that I basically dodged all of your questions. My apologies! Feel free to re-ask them and I'll try to actually address them this time.

edit: also page 8: my avatar at the time was MV=PQbar. I ought to change it back so that it makes sense!

Yeah, I noticed that rereading the thread too

If you believe that, then why ever create more of it?

Because there is no one quantity that meets the needs of the economy at all times. It is called an "elastic money supply" because it can both expand and contract as the economy needs it to.

The goal is a money supply that does not get in the way of the real economy. No one quantity could do that.

I really want to wrap my head around this.

I went back to that old thread. Even though I had gone through the whole thread before.

And after eleven pages of studying, I finally achieved enlightenment! I feel a bit Zen-like now.

Thanks for not giving up on the explanations Cutlass (and the other guys who contributed - even those who questioned).

That thread started as a train wreck. But it was fun, and it had some good stuff in it. I think there was a good exercise on debating monetary policy and a good primer on money and banking in there. Once you get past the conspiracy stuff.

 

[Unconventional]

Just one fact related to the US debt crises: One of my professors told me that US alone itself spends 500 billions of dolars for weapons each year while her second competitor country( I forgot which country it was) only spends 50 billion dolar per year. Just imagine for a moment that for 3 to 5 years at least, this spending would be reduced by 80 per cent, it would be still the most powerful country in terms of arms and it would be able to pay its debt gradually or even can spend this money on her population from which it extracts this money in the first place. Why is this madness for spending so huge on armament? Is it just for enriching the arm dealers? No it can't be.

 

[Conspirator]

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

Lord Acton

“Power tends to corrupt and absolute power corrupts absolutely.”

Lord Acton

 

[Conspirator]

Anyone heard of Song Hongbing?

Bloomberg's No. 20 China's Most Powerful People.


According to the book, the western countries in general and the US in particular are controlled by a clique of international bankers, which use currency manipulation (hence the title) to gain wealth by first loaning money in USD to developing nations and then shorting their currency. The Japanese Lost decade, the 1997 Asian Financial Crisis, the Latin American financial crisis and others are attributed to this cause. It also claims that the Rothschild Family has the wealth of 5 trillion dollars whereas Bill Gates only has 40 billion dollars.[11]
Mr Song also makes the sensational claim that the famous U.S. central bank - the Federal Reserve, is not a department of state functions, but several private banks operated by the private sector, and that theses private banks are loyal to the ubiquitous Rothschild family.[12][13][14]
On June 4, 1963 President Kennedy signed a virtually unknown[dubious – discuss] Presidential decree, which, as an amendment to Executive Order 10289, delegated the authority to issue silver certificates (notes convertible to silver on demand) to the Secretary of the Treasury. The direct consequence was that the Federal Reserve lost its monopoly to control money.
The book looks back at history and argues that fiat currency itself is a conspiracy; it sees in the abolishing of representative currency and the installment of fiat currency a struggle between the "banking clique" and the governments of the western nations, ending in the victory of the former. It advises the Chinese government to keep a vigilant eye on China's currency and instate a representative currency. The book, published in 2007, also correctly described and warned[citation needed] of the various forms of derivative speculation used by Wall Street which eventually became the causes of massive margin call sell offs and stock market crash in late 2008.

(from wikipedia)

NOT AVAILABLE IN ENGLISH.

This guy used to work as a CONSULTANT FOR FREDDIE MAC AND FANNIE MAE.

The book has been read by millions and is KNOWN to be in high regard by the the CHINESE GOVERNMENT.

There is NO ENLIGHTMENT from Cutlass. He is a blinded.

 

[MagisterCultuum]

“Power tends to corrupt and absolute power corrupts absolutely.”

Lord Acton

This one is more accurate:
Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible.
- Frank Herbert

 

[Conspirator]

^ More accurate but as succinct? Besides either way it still stands.

 

[Conspirator]

Anyway back on this book, why is it not available in English? It has been widely discussed in major publications including US publications. It obviously would sell well. Strangely there is a book only recently published by the same name. Bit confusing? There is even a warning on that book letting people know it is not the book by Song HongBing!!

 

[Antilogic]

^ More accurate but as succinct? Besides either way it still stands.

Being short doesn't matter if it's inaccurate. I could say "the world is a pineapple"--it's short, but it doesn't make any sense.

I find your response strange, considering the two quotes are flat-out disagreeing with each other.

 

[Conspirator]

Both men are saying powerful men are corrupt. I hardly see that as disagreeing.

 

[Antilogic]

Both men are saying powerful men are corrupt. I hardly see that as disagreeing.

No, one says people become corrupt when they attain power, the other says corrupt people are drawn to power, which is completely amoral. One views power as inherently corrupting and evil, the other as simply a tool, neither good nor evil.

Completely, utterly, different.

 

[choxorn]

You know, Conspirator, if you want to convince people your opinion is correct, you could try not sounding like you're just rambling on about nonsense. The exclamation marks, ALLCAPS, bolding, bad grammar... yeah, that's just going to make you sound crazy.

 

[classical_hero]

But doing that shows you really mean it.

 

[Ooovis]

When people say money is debt the term refers to where it gets it's power from.

So while the modern doller is used for accounting it gets its power from the promise that someone has, is, or will preform some type of labor to insure it is useful in the case of now it is placed in the future catigory thus being labed debt and chargeing interest on that debt garantees that a debt crisis will form at some point, the only thing the system can do to keep that from happening is pumping money into the system but because that money also comes with debt attachments that just makes the problem come a little slower and makes the problem a little bigger.

As long as i have known of it i have liked the idea that >If you can't explain it to a child then you yourself don't understand it<

Toodles and have fun

 

[Conspirator]

What would happen if all debts in the UK were paid off?

Over 90% of all money in circulation would be destroyed, and the remaining money would be in the hands of the super rich. We would be in a deflationary cycle similar to the Great Depression. That's why the governor of the Bank of England is saying that QE shouldn't cause inflation and that in actual fact we should be more worried about DEFLATION. Why is he saying this? Because he knows that as the government pays off its debt it will no longer be in the system. (Because the principle part of any loan is destroyed when it is paid.)

In our current system there is a need for perpetual debt creation to keep the money supply positive. That's a fact. Our system would not function if debt was paid off and no one wanted any new debts.

Why is there a boom and bust cycle that we are told will ALWAYS HAPPEN IN OUR SYSTEM? I mean the people on the news actually admit BOOM AND BUST WILL ALWAYS HAPPEN.

WHY???

To understand this look at the cycle of a single loan:

debt issued
debt spent into system (boom)
debt paid back and taken out of system (bust)

This is happening on a gigantic scale.

 

[JerichoHill]

That is horribly simplified and utterly wrong example.

 

[Conspirator]

Thanks for that... Fancy elaborating?

 

[Cutlass]

The book looks back at history and argues that fiat currency itself is a conspiracy; it sees in the abolishing of representative currency and the installment of fiat currency a struggle between the "banking clique" and the governments of the western nations, ending in the victory of the former.

Which is ironic (and wrong). Both banks and governments want fiat money because they want a functioning economy.

The irony part is that all this arguing against fiat money is really an attempt to get governments to concentrate wealth and serve the creditor class at the expense of everyone else in the nation.

There is NO ENLIGHTMENT from Cutlass. He is a blinded.

By science?

 

[Integral]

What would happen if all debts in the UK were paid off?

Over 90% of all money in circulation would be destroyed, and the remaining money would be in the hands of the super rich. We would be in a deflationary cycle similar to the Great Depression. That's why the governor of the Bank of England is saying that QE shouldn't cause inflation and that in actual fact we should be more worried about DEFLATION. Why is he saying this? Because he knows that as the government pays off its debt it will no longer be in the system. (Because the principle part of any loan is destroyed when it is paid.)

In our current system there is a need for perpetual debt creation to keep the money supply positive. That's a fact. Our system would not function if debt was paid off and no one wanted any new debts.

Why is there a boom and bust cycle that we are told will ALWAYS HAPPEN IN OUR SYSTEM? I mean the people on the news actually admit BOOM AND BUST WILL ALWAYS HAPPEN.

WHY???

To understand this look at the cycle of a single loan:

debt issued
debt spent into system (boom)
debt paid back and taken out of system (bust)

This is happening on a gigantic scale.

See, now you're just asserting stuff.