An excellent article explaining why an economic collapse is inevitable.

originally posted by: Aazadan

originally posted by: Semicollegiate
Bitcoin is money, in the sense that value is traded for every coin. The value of bit coin could go lower than gold though.
Bit coin could go to zero, gold will never go to zero.

There was a time where salt was worth more than it's weight in gold. Hows that working out today? Gold can lose a lot of value.

Gold has always had value.

Yes gold could lose a lot of value. The total amount of gold is in the 100 billions and the total amount of created money is in the 10 trillions. The financial system can "sell" gold for nothing 1000s of times and keep the price of gold low.

The Hows and Whys of Gold price Manipulation

This manipulation by the Fed involves the short-selling of uncovered Comex gold futures. “Uncovered” means that these are contracts that are sold without any underlying physical gold to deliver if the buyer on the other side decides to ask for delivery. This is also known as “naked short selling.” The execution of the manipulative trading is conducted through one of the major gold futures trading banks, such as JPMorganChase, HSBC, and Bank of Nova Scotia. These banks do the actual selling on behalf of the Fed. The manner in which the Fed dumps a large quantity of futures contracts into the market differs from the way in which a bona fide trader looking to sell a big position would operate. The latter would try to work off his position carefully over an extended period of time with the goal of trying to disguise his selling and to disturb the price as little as possible in order to maximize profits or minimize losses. In contrast, the Fed‘s sales telegraph the intent to drive the price lower with no regard for preserving profits or fear or incurring losses, because the goal is to inflict as much damage as possible on the price and intimidate potential buyers.

A primary example of this type of intervention occurred on December 18, 2013, immediately after the FOMC announced its decision to reduce bond purchases by $10 billion monthly beginning in January 2014. With the rest of the trading world closed, including the actual Comex floor trading, a massive amount of Comex gold futures were sold on the Globex computer trading system during one of its least active periods. This selling pushed the price of gold down $23 dollars in the space of two hours. The next wave of futures selling occurred in the overnight period starting at 2:30 a.m. NY time on December 19th. This time of day is one of the least active trading periods during any 23 hour trading day (there’s one hour when gold futures stop trading altogether). Over 4900 gold contracts representing 14.5 tonnes of gold were dumped into the Globex system in a 2-minute period from 2:40-2:41 a.m, resulting in a $24 decline in the price of gold. This wasn’t the end of the selling. Shortly after the Comex floor opened later that morning, another 1,654 contracts were sold followed shortly after by another 2,295 contracts. This represented another 12.2 tonnes of gold. Then at 10:00 a.m. EST, another 2,530 contracts were unloaded on the market followed by an additional 3,482 contracts just six minutes later. These sales represented another 18.7 tonnes of gold.

All together, in 6 minutes during an eight hour period, a total amount of 37.6 tonnes (a “tonne” is a metric ton–about 10% more weight than a US ”ton”) of gold future contracts were sold. The contracts sold during these 6 minutes accounted for 10% of the total volume during that 23 hours period of time. Four-tenths of one percent of the trading day accounted for 10% of the total volume. The gold represented by the futures contracts that were sold during these 6 minutes was a multiple of the amount of physical gold available to Comex for delivery.

www.paulcraigroberts.org...

originally posted by: Semicollegiate
Banning reserve banking simply means prosecuting fraud. If a bank loans out more money that it possesses then its fraud.

Banks don't loan money.

The gold standard limits the amount of money, without any governmental action. The money is limited by the amount of gold.

Limiting the supply of money puts everyone in poverty. Money actually works best when it has an ever increasing supply. The value of money is not determined by it's scarcity, it's determined by it's ability to be exchanged for another persons labor. Even very common items like eggs and even rocks can be exchanged for labor in a barter system, and really money is just numerical barter.

a reply to: Aazadan

Limiting the supply of money puts everyone in poverty. Money actually works best when it has an ever increasing supply.

My remark about limiting the supply of money was in the context of limiting government spending and limiting govenrmnt debt.

Gold limits the govenrmnt WITHOUT limiting the economy. Smaller denominations of gold backed dollars can be issued without limit.

The dollar bill today should be a 1/10th cent bill.

Money should directly represent wealth that is not being used for anything else, that is , all money should have collateral for it.

Companies like Home Depot, Lowes, Target, and Walmart, should be able to offer coupons instead of change, as long as the customer has a choice between coupons and money. The coupons would be backed by whatever goods they are used to purchase.

Oil companies should be able to offer gasoline coupons, which would be backed by the gasoline that they will eventually purchase.

An employment agency should be able to offer man hour tickets.

Et cetera

originally posted by: Semicollegiate
My remark about limiting the supply of money was in the context of limiting government spending and limiting govenrmnt debt.

Government spending has little to anything to do with monetary value. When the government spends money they get the funding for it through taxation and then by spending they put the money right back into the economy, it doesn't cease to exist.

The central bank does create some money but that's not actually where inflation comes from. Currency value isn't inversely proportional to the supply. It's actually supply*velocity. The velocity of money is a measurement of how quickly it exchanges hands. If you increase the supply but also increase the speed at which money exchanges hands money doesn't concentrate and it keeps inflation down. This is why the Bush stimulus didn't cause inflation, it's also why the CBO rated it as mostly budget neutral (the money gets spent x times, usually 14 and then mostly winds up back in the government coffers, making it only temporary debt).

Money should directly represent wealth that is not being used for anything else, that is , all money should have collateral for it.

It does, it's called the work that can be exchanged for it.

Companies like Home Depot, Lowes, Target, and Walmart, should be able to offer coupons instead of change, as long as the customer has a choice between coupons and money. The coupons would be backed by whatever goods they are used to purchase.

No, they shouldn't. Because then you get into the issue of a medium of exchange. Even gift cards are pushing it honestly. Then a consumer has to evaluate $1 in Walmart money vs $3 in Target money vs a $5 bill. The fewer currencies that are in circulation, the better. It's also very anti competitive because a store coupon means you have to purchase goods from that store. Right now Target and Walmart compete, if they weren't using a common medium of exchange that wouldn't be the case.

If you want to see what the type of economy you want looks like, go look at the card economy for Magic: The Gathering. It's in shambles, it's a 100% unregulated free market, with no government interference, and no taxes, where the big stores deal in store credit just as often as they deal in cash, and every single good has an innate value. There are wild speculation bubbles, ridiculous inflation, private groups that initiate pump and dumps, demand from multiple types of players, propaganda/advertisements to buy specific cards, and more. It literally has everything there's even mutual funds on Wall Street that only invest in these cards, and if it were a good congress actually cares about, pretty much every single aspect of the market would be illegal under current SEC laws, but none of that applies to them.

originally posted by: Aazadan

originally posted by: Semicollegiate
My remark about limiting the supply of money was in the context of limiting government spending and limiting govenrmnt debt.

Government spending has little to anything to do with monetary value. When the government spends money they get the funding for it through taxation and then by spending they put the money right back into the economy, it doesn't cease to exist.

If the government spent only tax receipts that would be true. The government has spent borrowed money, which is created counterfeit fiat money, as often as it could.

WW1 was paid for with fiat money that halved the value of the dollar.

The debt will reach at lest 20 trillion before any real lip service is given to controlling it. All of that is by government spending.

The central bank does create some money but that's not actually where inflation comes from. Currency value isn't inversely proportional to the supply. It's actually supply*velocity. The velocity of money is a measurement of how quickly it exchanges hands. If you increase the supply but also increase the speed at which money exchanges hands money doesn't concentrate and it keeps inflation down. This is why the Bush stimulus didn't cause inflation, it's also why the CBO rated it as mostly budget neutral (the money gets spent x times, usually 14 and then mostly winds up back in the government coffers, making it only temporary debt).

There is no inflation because hamburger and hot dogs are counted as the same as steak.

It does, it's called the work that can be exchanged for it.

Work increases the amount of wealth in the world. The Wealth made by work is value of the money. Not work qua work.

No, they shouldn't. Because then you get into the issue of a medium of exchange. Even gift cards are pushing it honestly. Then a consumer has to evaluate $1 in Walmart money vs $3 in Target money vs a $5 bill. The fewer currencies that are in circulation, the better.

Why is that? All must be centrally controlled?

Don't use a currency unless you trust it.

It's also very anti competitive because a store coupon means you have to purchase goods from that store.

Then don't use them. Choose all change as cash money.

The stores that offer coupon money would offer it at a rate that is better than cash, although the coupons could gain in value by popularity or velocity.

Right now Target and Walmart compete, if they weren't using a common medium of exchange that wouldn't be the case.

How does that follow? After a while they would probably accept each others coupons so as not to deter customers from buying.


The idea is not " I have a business therefore I can issue money"


The idea is "Anything that has value and is not being used can be offered as money, in a one to one correspondence."

If you want to see what the type of economy you want looks like, go look at the card economy for Magic: The Gathering. It's in shambles, it's a 100% unregulated free market, with no government interference, and no taxes, where the big stores deal in store credit just as often as they deal in cash, and every single good has an innate value. There are wild speculation bubbles, ridiculous inflation, private groups that initiate pump and dumps, demand from multiple types of players, propaganda/advertisements to buy specific cards, and more. It literally has everything there's even mutual funds on Wall Street that only invest in these cards, and if it were a good congress actually cares about, pretty much every single aspect of the market would be illegal under current SEC laws, but none of that applies to them.

Games have distortions and idiosyncrasies. Maybe the game was made to have those problems.

originally posted by: Semicollegiate
If the government spent only tax receipts that would be true. The government has spent borrowed money, which is created counterfeit fiat money, as often as it could.

Government spending ripples through the economy and it does so fairly quickly, borrowed money to pay for government checks increases the velocity of money in the economy which in turn lowers inflation.

The debt will reach at lest 20 trillion before any real lip service is given to controlling it. All of that is by government spending.

The debt will continue to rise until we get serious about passing tax increases to pay for it. We need to raise taxes by about 50% if we hope to get revenues to the point that we can pay it down. We already have one of the lowest costs per citizen of any developed nation, there's no room to cut from the budget only revenue increases can fix the debt.

Don't use a currency unless you trust it.

No, because people are incapable of making the right decision usually. It leads to massive consumer fraud to have multiple currencies. Markets rely on customers making the right choices, but humans are usually incapable of making the most optimal choice. Anything that obfuscates information, which multiple currencies does harms the market.

Then don't use them. Choose all change as cash money.

The stores that offer coupon money would offer it at a rate that is better than cash, although the coupons could gain in value by popularity or velocity.

And when stores start paying their employees in corporate money? Then we're back to the days of corporate towns.

Games have distortions and idiosyncrasies. Maybe the game was made to have those problems.

Anything with value has those problems.

a reply to: Aazadan

Government spending ripples through the economy and it does so fairly quickly, borrowed money to pay for government checks increases the velocity of money in the economy which in turn lowers inflation.

A higher velocity of money stabilizes prices at the higher inflation price sooner.

When new money is created, the first spender gets the pre-inflation value. As the money moves through out the economy, prices go up because more money is trading for the same amount of goods.

Velocity could be used as an economic activity indicator, but inflation is directly proportional to the amount of money, regardless of the temporary effects of velocity.

The debt will continue to rise until we get serious about passing tax increases to pay for it. We need to raise taxes by about 50% if we hope to get revenues to the point that we can pay it down. We already have one of the lowest costs per citizen of any developed nation, there's no room to cut from the budget only revenue increases can fix the debt.

The rising debt is a choice. The people who choose to raise the debt should be the one's to pay for it.

Inflation makes everybody with dollars pay the debt. Hence the advocation in favor of inflation by the establishment economists. Taxation without representation.

No, because people are incapable of making the right decision usually.

Then either we get rid of democracy, or we let people deal with their choices. Everybody has a mind. They need to learn how to use it.

It leads to massive consumer fraud to have multiple currencies. Markets rely on customers making the right choices,

Markets rely on predictable choices.

but humans are usually incapable of making the most optimal choice.

Optimal for whom? The consumer chooses what he thinks will work best. If he learns different he will choose different.

Anything that obfuscates information, which multiple currencies does, harms the market.

The price is the information, in a free market. All currency use is voluntary. Bad currencies will disappear. Over time, the best system will emerge from the action of market forces.

And when stores start paying their employees in corporate money? Then we're back to the days of corporate towns.

That is up to the employees and various other variables. The employees might get a higher rate of pay in WalMart coupons.

Money only has value because things are available for sale. Things for sale are surplus things. The amount of money should approximate the total amount of value created by civilization.

originally posted by: Semicollegiate
Velocity could be used as an economic activity indicator, but inflation is directly proportional to the amount of money, regardless of the temporary effects of velocity.

No, it is not. Since I'm not getting through to you, maybe some economists will.

www.forbes.com...

What you are referring to is the thought from the Austrian School of Economics, however they've largely been discredited as none of their predictions are actually reflected in real world examples.

The rising debt is a choice. The people who choose to raise the debt should be the one's to pay for it.

Inflation makes everybody with dollars pay the debt. Hence the advocation in favor of inflation by the establishment economists. Taxation without representation.

Inflation and paying the debt have little to do with each other. Yes you can inflate your way out of a portion of your debt, but the cost of goods changes to reflect inflation so a person doesn't really lose out to inflation unless they're holding money under their bed instead of in commodities. If you're holding the money in stocks or even in the bank, interest rates take the inflation rate into account when determining interest.

Markets rely on predictable choices.

No, they rely on consumer ignorance.

Optimal for whom? The consumer chooses what he thinks will work best. If he learns different he will choose different.

What you think you know, and what's optimal are very rarely the same. There's currently 17 candidates for President, one of those 17 is the objective best, yet all 17 have support and none of the 17 are supported by over 10% of the population. Atleast 90% of society is making the wrong choice.

To give another example, look at all the smart phones out there. There is an objective best product, and a best value product. There should be no more than two phone models that sell, but that is not the case. People do not make the best choice. The entire field of marketing is based around the idea of preventing the consumer from making the best choice. If a consumer chooses wrong, they will then purchase another product believing they're now purchasing correctly. Where this really gets screwed up is if a consumer chooses right, they're still highly likely to believe they chose wrong and purchase something else.

originally posted by: Aazadan
originally posted by: Semicollegiate


No, it is not. Since I'm not getting through to you, maybe some economists will.

www.forbes.com...

What you are referring to is the thought from the Austrian School of Economics, however they've largely been discredited as none of their predictions are actually reflected in real world examples.

More money, same amount of goods and services. The inflation might be latent, depending on behavior, but inflation must be there or else math is illogical.

The Austrians predicted

The Great Depression

The Post WWII recovery

The End of Bretton Woods

The Savings and Loan Crisis

The Dot-Com Bubble

The Housing Bubble.

wiki.mises.org...

The Austrians never can predict when it will happen, but they have always identified the economic imbalance.

Inflation and paying the debt have little to do with each other. Yes you can inflate your way out of a portion of your debt, but the cost of goods changes to reflect inflation so a person doesn't really lose out to inflation unless they're holding money under their bed instead of in commodities. If you're holding the money in stocks or even in the bank, interest rates take the inflation rate into account when determining interest.

The debt itself is a big chunk of the inflation. Government spending produces no market goods. All government spending is welfare from the point of view of supply and demand. The government debt is money put into the economy without a commensurate increase in supply of consumer goods. Gov spending increases the money supply without increasing the amount of goods and services and so is inflationary.

No, they rely on consumer ignorance.

The producers must sell what the consumers want. Wants are satisfied or not. Wants are not on a continuum with ignorance.

What you think you know, and what's optimal are very rarely the same. There's currently 17 candidates for President, one of those 17 is the objective best,

None of them are the objective best, because different people have different wants.

yet all 17 have support and none of the 17 are supported by over 10% of the population. Atleast 90% of society is making the wrong choice.

There is no right choice. All politics is now proactive, like there is a crystal ball showing the future. None of the winner's programs are economically valid, and will all lead to economic stagnation or catastrophe.

Less 30% of society votes. A plurality of voters have perceived that they will always be unrepresented.

To give another example, look at all the smart phones out there. There is an objective best product, and a best value product.

One size fits all is ridiculous.

There should be no more than two phone models that sell, but that is not the case.

Exactly two lifestyles then.

People do not make the best choice.

Best by what standard? Some people don't want a cell phone, so they get the cheapest one they can.

The entire field of marketing is based around the idea of preventing the consumer from making the best choice.

Marketing is based on spending money in order to get more customers. Everything else depends on circumstances which typically involve regulation of the media by government.