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Thoughts on "the dismal science"

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Thoughts on "the dismal science"

Post  Chart#3 on Mon Jan 14, 2013 4:16 am

arpie wrote:Welcome aboard Chart#3. Haven't been thinking about the economy much lately-too depressing. I believe it is all basically a Ponzi scheme as it is based on a continued growth model that is simply impossible to maintain, and it seems there is no plan B.

Are you familiar with the term 'fractional-reserve banking? Look forward to reading your thoughts on the fiscal morass and it's causes. I believe 12/23/13 will mark the 100th anniversary of when our troubles began. pale

I think fractional-reserve banking has existed long before the Federal Reserve came into existence. The 19th century was full of horrible periods of panic and sudden mass unemployment. I think the main difference between the 19th and 20th centuries was that earlier in the 19th century it was still possible to be somewhat self-reliant. During hard times you could still become a homesteader. People had larger families as well.

As for there being a plan B, the problem is the political will won't arrive until there's an intolerable crisis. The place right now that is much closer to being on the verge of a major political crisis is Europe.

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Re: Thoughts on "the dismal science"

Post  arpie on Mon Jan 14, 2013 5:26 am

Well, FRB may have occurred by happenstance before the fed, but as far as I know was never established policy. And like most Ponzi/pyramid schemes it worked quite well for nearly a while. Almost a century in this case, owing to the population explosion. But as always happens with such, eventually you run out of suckers. They begin to question whether there will be any payoff by the time the goods trickle down to them. Hence the riots in Greece and Spain are fueled mostly by the young.

I recall a poll about a decade back that showed more people under 30 believed in UFO's than that there would be anything left of the money they paid into social security and medicare by the time they were ready to retire. So while I agree Europe will be the first hit with the inflationary spiral on the horizon, I don't see any way the US will be spared a similar fate. And I haven't even mentioned the demographic time bomb China represents and the ripples it's implosion will create.

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Re: Thoughts on "the dismal science"

Post  Chart#3 on Wed Jan 16, 2013 4:21 am

Credit bubbles and bank runs have occurred all through history. One of the earliest examples was the Tulip Mania bubble of the 1630s. The problem is people don't see putting money in an interest accruing savings account as essentially a loan to a private entity that has a non-zero risk of default. Government regulations attempt to put a wall of separation between different categories of risk. To avoid moral hazard there has to be stringent conditions placed on banks that have access to the Fed as a lender of last resort. The problem is the mainstream commercial banking sector was allowed to become entangled with the unregulated shadow banking sector that had engineered all kinds of bullshit derivatives.

I don't really see the connection between FRB and population growth. I see the modern credit bubbles of the 20th and 21st century as not a root cause but a symptom of much deeper economic issues. In any case I think the root cause of most modern economic downturns can actually be traced to technology changes. Not many non-Marxist economists truly appreciate this though.

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Re: Thoughts on "the dismal science"

Post  arpie on Sat Jan 19, 2013 12:55 pm

The connection I see between FRB and population growth is that Ponzi schemes can last longer with a large supply of new suckers. When you start running out of them, as we are now doing with the decline in the number of children born in most industrialized countries, that when the denouement begins. hth

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Re: Thoughts on "the dismal science"

Post  Chart#3 on Tue Jan 22, 2013 12:37 pm

arpie wrote:The connection I see between FRB and population growth is that Ponzi schemes can last longer with a large supply of new suckers. When you start running out of them, as we are now doing with the decline in the number of children born in most industrialized countries, that when the denouement begins. hth
I don't see declining birth rates as an economic problem. I see it more as a social problem that industrialized society has to adapt to. The real Ponsi scheme I see is having bare minimum living standards of some contingent on the frivolous over-indulgence of others. This is the true flaw in capitalism.

Debt is just a way of tricking the big capitol holders into "spreading the wealth" for the benefit of society while giving them the illusion that they can have their cake and eat it too. As soon as that illusion goes away they immediately demand "their" cake back and to hell with the rest of society. That's basically what happened in 2007/2008 from my POV.

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Re: Thoughts on "the dismal science"

Post  arpie on Fri Jan 25, 2013 12:31 pm

It may be I'm just confused Chart3, {my default) for while I agree with what you said above I don't see how it invalidates my pov on FRB. Understand I'm not saying that alone spawned our economic tulip, but it did-assuming my comprehension of an extremely complex process is correct-provide the fertilizer. Neutral

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Re: Thoughts on "the dismal science"

Post  wind on Sun Jan 27, 2013 12:20 pm

Chart#3 wrote:
arpie wrote:The connection I see between FRB and population growth is that Ponzi schemes can last longer with a large supply of new suckers. When you start running out of them, as we are now doing with the decline in the number of children born in most industrialized countries, that when the denouement begins. hth
I don't see declining birth rates as an economic problem. I see it more as a social problem that industrialized society has to adapt to. The real Ponsi scheme I see is having bare minimum living standards of some contingent on the frivolous over-indulgence of others. This is the true flaw in capitalism.

Debt is just a way of tricking the big capitol holders into "spreading the wealth" for the benefit of society while giving them the illusion that they can have their cake and eat it too. As soon as that illusion goes away they immediately demand "their" cake back and to hell with the rest of society. That's basically what happened in 2007/2008 from my POV.

I agree. Michael Hudson has written a lot about that, and how it also relates to empires and wars, going all the way back into ancient Mesopotamia. (HUGE Michael Hudson fan over here. Smile )

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Re: Thoughts on "the dismal science"

Post  arpie on Thu Feb 14, 2013 10:16 am

Ya know, seems it really does take some naysayers to make a discussion interesting. Eventually one tires of reading opinions so similar to his/her own. Also, challenges often inspire new and better ways to explain our beliefs.

A friend from back in my youth, with whom I have only our past in common, recently told me he had referred his youngest daughter to me as one she could question on a school project. She apparently doesn't know any like me who stubbornly defend evolution despite all the evidence to the contrary, lol.

She's a freshman at one of those theist colleges in Virginia, forget name. I do remember Michelle Bachmann's daughter resides in her dorm. Apparently this project is closely monitored by her prof, and I plan to send him/her a link to this site and start a thread on the plethora of problems with creationism. I would love to see an actual university prof who actually teaches this concept to college level students defend these beliefs with some of the posters here. I'll just watch. Smile

eta-any way we can import better emoticons? These are the worst I've seen other than those Google uses.

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Re: Thoughts on "the dismal science"

Post  arpie on Wed Feb 27, 2013 12:27 pm

SUP y'all. TL;DR or what? Crying or Very sad

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Re: Thoughts on "the dismal science"

Post  nullnvoid on Wed Feb 27, 2013 12:42 pm

I've read it, but don't feel generally confident enough with the issues to provide a decent reply.

When you're equating the Federal Reserve Banking system, you're kinda being a little bit US centric, since we have a Reserve Bank in Australia who, along with various federal governments have managed to assist us in avoiding the worst aspects of deregulation in the banking sector. Consequently Australia has been among the best performing economies in the world. We didn't have a bank bailout, because they weren't given the freedom to put themselves into quite the substantial mess that the rest of the world did.

However, I do occasionally get a lecture from the conspiracy theorist at work on how the FIAT monetary system is responsible for the GFC and how things will only get worse as the current system is just constantly creating non existent wealth by injecting more and more money in the system through these intra bank loans.

I don't see the link between FRB and ponzi schemes - can you flesh it out a bit?

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Re: Thoughts on "the dismal science"

Post  arpie on Sat Mar 09, 2013 7:29 am

There are too many ways null. You are repeatedly adding more money into the system than future commodities will be able to accommodate. Kickin the can..and pretending there is no end to the road. Amway-like distribution chains. Too much to go into. And of course maybe I'm just a pessimist.

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Re: Thoughts on "the dismal science"

Post  nullnvoid on Sun Mar 10, 2013 11:52 pm

Not exactly the reply I hoped for as I'm no clearer about your specific objections to the FRB system.Sad

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