nvm

[Masada]

What, for example, is meant by a "sum of financial systems"? "Financial system" alone is a sufficiently vague concept without bestowing additive properties on it.

There are you know, definitions of what exactly constitutes a financial system and so forth, so it probably wouldn't hurt to go look at say the IMF.

And what is "controlling the international flow of money"? Some functionary in London deciding how much money goes where?

See, now that's being pedantic. There are, you know, varying levels of control. Perhaps the most pertinent would be the principle of institutional control, where an institution or institutions effectively dictate some commercial practice - like, say, Lloyds of London in the shipping insurance game. I can think of a number of class acts in London at the turn of the century like the Bank of England, the London Stock Exchange, the London Metals Exchange and so on. The fact that most bond floats also occurred in London was also rather important.

Or do you mean the kind of capital controls that did not exist in the time period in question?

Context. Context. Context.

Or I can point out that British foreign investments never made up more than 10% of British GNP, which makes it a tiny, tiny proportion of the GDP of the rest of the planet.

Slightly misleading that would just show the outflows of capital and not any growth in the aforesaid. If you applied that standard you would end up with situations like the EIC float being valued at its issued rate and not at what it was actually worth.

 

[Naskra]

There are you know, definitions of what exactly constitutes a financial system and so forth, so it probably wouldn't hurt to go look at say the IMF.

You might take your own advice here. Exactness is exactly what you won't find. I have no quarrel with that. The term is necessarily vague. To put my point more starkly, suppose I were to say: "Taking the sum of the financial systems of The Cayman Islands with that of the Vatican, we find that....."
What we'd find is that I was talking gibberish.

And yes, I'm aware that a bond issuer in Buenos Aires would likely seek an underwriter in London; I just wouldn't call that anything like controlling the international flow of money. Quite the opposite, I think attempting to control the international flow of money is one sure way NOT to build a financial center.

But I'm not arguing with whatever it is xchen08 meant to say; just pointing out that I'm forced to guess at his meaning.

 

[ParkCungHee]

Actually, all I have to demonstrate is that U.S. GNP is higher than that of Britain. That's it, since GNP includes all income from foreign investments and does not include income from foreign holdings in one's own country.

But this does not necessarily represent the financial power of a nation. If I was to point to the GNP of say, then ation of North Korea, and placed that against the GNPof the city of New York, or specifically the Borough of Manhattan, we might conclude that North Korea is the prime financial power, but this is simply not true. Just as it was in those days, a nations GNP did not necessarily reflect it's financial power. The Ottoman, Russian and Chinese empires had relatively high GNPs, this in no way would be an accurate way to represent their Financial Power.

And yes, I'm aware that a bond issuer in Buenos Aires would likely seek an underwriter in London; I just wouldn't call that anything like controlling the international flow of money. Quite the opposite, I think attempting to control the international flow of money is one sure way NOT to build a financial center.

Evidence by how the British lost this Financial power. However, the question was, who, in 1914 had the most control over international finance, the answer is without a doubt, Great Britain.

 

[Masada]

You might take your own advice here. Exactness is exactly what you won't find. I have no quarrel with that. The term is necessarily vague. To put my point more starkly, suppose I were to say: "Taking the sum of the financial systems of The Cayman Islands with that of the Vatican, we find that....."

I'm sorry you've lost me. There are exact definitions of what a financial system is and what can and cannot be counted towards it. Just because people don't necessarily understand what it entails, doesn't mean that it has no meaning and that they can't use it. People use GDP all the time but most couldn't honestly tell you what it was composed off. That doesn't however stop them using it appropriately in conversations.

And yes, I'm aware that a bond issuer in Buenos Aires would likely seek an underwriter in London; I just wouldn't call that anything like controlling the international flow of money. Quite the opposite, I think attempting to control the international flow of money is one sure way NOT to build a financial center.

There is control in the layman's sense and there is control in the technical sense. I've provided one example of technical control already, the rest is really up to your imagination.

But I'm not arguing with whatever it is xchen08 meant to say; just pointing out that I'm forced to guess at his meaning.

I was forced to guess at your meaning in the first paragraph. I understand what a financial system is, so I kinda missed the whole point of the paragraph showing that it isn't what I thought it was...

 

[Naskra]

I'm sorry you've lost me.

Alright, I'll try again.
A parabola can be defined exactly, so that we know in every case whether a point lies on it or not. A financial system can not be so defined. E.g.:
Is a pawnshop part of the financial system? - it's my lender of last resort
what about a property assessor? - he sets prices
the lottery? - it's my pension fund
eBay? - the world's largest commodities exchange!
my bailbondsman? - a major player in a specialty bond market.
Suze Orman? - the advisory body that determines the nation's capital structure.
Bernie Madoff? - no, reclassified to Correctional System

Silly questions, for sure, but sufficient to illustrate why I say the term "financial system" is vague. Some things are clearly within the system, other things clearly not, but the border between these two groups is fuzzy.
Vague is not the same as meaningless. If Barney Frank says "Our financial system must be reformed", bankers are rightly more alarmed than bakers, yet there will be large group of people who aren't sure whether they are being threatened or not, even if armed with an "exact" definition of financial system.
Neither is vague the same as useless. It's perfectly ok with me if people want to talk about financial systems.
They can describe them, compare and contrast them, praise or deplore them, all fine by me. To SUM them is a different matter. Financial systems, like ethical systems, are just not additive. I'm ing about sloppy writing, that is all. This started when I pointed out to xchen08 his wrong usage of money and liquidity; that was a hint to him that he ought to tighten up his style; he asked for more, and he got it. "controlling the flow of money" is likewise conceptually sloppy.

Now what shall we do with ParkCungHee's notion of "financial power"?

 

[xchen08]

This started when I pointed out to xchen08 his wrong usage of money and liquidity; that was a hint to him that he ought to tighten up his style; he asked for more, and he got it.

That actually was just a nonsequitor. Liquidity is not a binary condition, and I was talking about U.S. assets being less liquid. There's no such thing as perfectly liquid money, and some national currencies are more liquid than others. For that matter, most non-currency financial assets and even physical assets fit the definition of money as long as they are saleable in any way, though they may not be legal tender. Certainly, perhaps I ought to have used more precise language than colloquial terminology, but your correction was nothing of the sort.

 

[Naskra]

Xchen08, you need to come to terms with the fact that some of your readers are slow-witted and poorly educated.
How is such a reader to know that "money" might mean any damned thing which might be sold? Or might not.
And how is he to reconcile the vast internal flow of US money (broadly understood, per the new convention) with all those not-so-liquid assets?
And how can he understand why, of two currencies, say the US dollar and the British Pd, both of which were freely convertible to gold, one is more liquid than the other?
Inquiring minds want to know.
Why would a reader not think you were typing nonsense on multiple levels?

 

[xchen08]

Xchen08, you need to come to terms with the fact that some of your readers are slow-witted and poorly educated.
How is such a reader to know that "money" might mean any damned thing which might be sold? Or might not.
And how is he to reconcile the vast internal flow of US money (broadly understood, per the new convention) with all those not-so-liquid assets?
And how can he understand why, of two currencies, say the US dollar and the British Pd, both of which were freely convertible to gold, one is more liquid than the other?
Inquiring minds want to know.
Why would a reader not think you were typing nonsense on multiple levels?

Hmm, I have some difficulty parsing this post, since it seems to have no internal organization in any way, and consists of multiple, internally contradicting arguments. Though, if I had to take a stab at it, I'd say 1) you are under the impression that only legal tender counts as money, 2) transaction costs don't exist, and didn't have a massive impact on trade and investment which leads you to the conclusion that two currencies both convertible to gold must have equal liquidity, and 3) you weren't aware that the dollar's convertibility to gold was rather spotty during the period in question. (ie 1880s to 1900) But no worries, some education should fix those deficiencies.

 

[Masada]

Also what xchen08 said, I don't have the willpower to do much more than this.

Alright, I'll try again.
A parabola can be defined exactly, so that we know in every case whether a point lies on it or not. A financial system can not be so defined. E.g.:
Is a pawnshop part of the financial system? - it's my lender of last resort
what about a property assessor? - he sets prices
the lottery? - it's my pension fund
eBay? - the world's largest commodities exchange!
my bailbondsman? - a major player in a specialty bond market.
Suze Orman? - the advisory body that determines the nation's capital structure.
Bernie Madoff? - no, reclassified to Correctional System

I'm sorry. There is an exact definition of what a financial system is. I've already provided a location where you could search for it. If you want to play on definitions go I don't know take issue with inflation that at least has some degree of ambiguity and not, you know, an internationally recognized and near universally adopted standard.

Silly questions, for sure, but sufficient to illustrate why I say the term "financial system" is vague. Some things are clearly within the system, other things clearly not, but the border between these two groups is fuzzy.

Only to you evidently.

Vague is not the same as meaningless. If Barney Frank says "Our financial system must be reformed", bankers are rightly more alarmed than bakers, yet there will be large group of people who aren't sure whether they are being threatened or not, even if armed with an "exact" definition of financial system.

Is implied meaning and the use of context lost on you?

They can describe them, compare and contrast them, praise or deplore them, all fine by me. To SUM them is a different matter. Financial systems, like ethical systems, are just not additive.

Go look at a table of GDP broken down into categories. In there you will find all the requisite detail you need.

I'm ing about sloppy writing, that is all. This started when I pointed out to xchen08 his wrong usage of money and liquidity; that was a hint to him that he ought to tighten up his style; he asked for more, and he got it.

Dude, nothing he said about money was fundamentally unsound. It wasn't technically the most brilliant piece of work but then neither was your riposte. The old adage about money having to be liquid is simply a guide, it isn't an empirical fact and it isn't universally held by economists either in point of fact. It's really more a convention of accounting than anything else. Exactly the same holds for liquidity, the rule of thumb is usuallysix months but that can vary quite considerably by country, industry and so on. There's no iron rule of liquidity. Its not impossible for something to be relatively illiquid under one standard while simultaneously being money under another. I'm aware of a number of court cases here where the receiver has taken business to court only to find that the industry standard for liquidity has a far longer window than would otherwise be the case. That's something you could have worked upon, unfortunately even what I've told you isn't definitive and the definitions themselves can vary from place to place, with liquidity being particularly fun to work with across countries.

"controlling the flow of money" is likewise conceptually sloppy.

There's control in the layman's sense which is what you seem to be confusing it with and there's control in the technical sense which can encompass all kinds of things like controlling minds, institutional control etc. Xchen08 didn't seem to be implying the former and seemed to be strongly implying the latter of the latter.

 

[Naskra]

There is an exact definition of what a financial system is. I've already provided a location where you could search for it

Indeed you did. Twice. It's still not there.

 

[Masada]

Indeed you did. Twice. It's still not there.

You know what, I'm not going to bother, not only have you contributed not an iota of content to the debate you just seem to be trolling.