Paul's Last Attempt To Save The Dollar (video)

And all this arguing really boils down into why I think a currency like Bitcoin is the perfect type of currency. It is a fiat currency, meaning it's not backed by anything of intrinsic value. That means we don't have to have a massive stock of gold or silver to back it, and as such one cannot use the argument about the bankers and super rich people hoarding all the gold.

But on the other hand it has properties which are often found in sound money and commodities. The number of bitcoin which can ever exist is limited to a certain amount, which makes it a bit like a digital commodity. The number of units which will exist at the limit is a ridiculously high amount because the currency is so granular.

You could have 90% of all bitcoin hoarded away and the remaining currency could easily provide enough granularity to keep the economy flowing. But the main point is that the it can't be inflated infinitely, it's only possible for inflation to occur during the period where new bitcoins are being released into circulation.

It's completely independent from all Government authorities and central banks, we don't have to trust anyone. All we need to trust is the algorithms which keep things operating as they should be. The amount of bitcoins in circulation is completely predictable and the value of each bitcoin is left to fluctuate naturally.

Anyway if you want to discuss this topic further please post your thoughts on this thread I made concerning bitcoin. We already have a nice long discussion of about 3 pages which is very interesting to read. I just thought I would mention bitcoin here because it really helps put everything into perspective.

And here is a quote from that thread which really helps to cement my position into clear focus, because you obviously aren't understanding me:

People have been using a fiat currency created by the Federal Reserve for almost 100 years now, and if it weren't for their excessive money printing the US dollar would be much stronger. Federal Reserve Notes have little use beyond acting as a form of money, just like bitcoin... but the difference with bitcoin is that the money supply is protected from destructive inflation and is designed so that each bitcoin will hold value very well. This is essentially what I've been trying to explain this whole time. Bitcoin is like a fiat currency which has all the loose ends tied up and fixed. We need to overcome this "fiat stigma" and realize that with the right rules in place a fiat system of money is perfectly plausible.

reply to post by ChaoticOrder


I don't think you understand that lower prices does not equal deflation. You can have lower prices without deflation. But deflation is something else entirely.

Like I said, the housing crisis we JUST HAD was deflation and it was a disaster. We have entire neighborhoods of empty houses rotting away because nobody can get the loans to buy them. Now this caused prices to drop didn't it? So, how come nobody is buying up those hot hot empty deals? How come the houses still just sit there empty? It's because you don't understand deflation.

Deflation is not the same thing as lower prices. Only people that don't understand it think like that. You think, oh deflation is good because prices will drop and I can buy all this fancy stuff! Wrong!

If people still had money to buy there wouldn't have been deflation in the first place. You don't lower prices just for fun BEFORE people run out of money. You lower them as a last desperate attempt to move some product AFTER everyone has ran out of money. This means by the time deflation hits everyone is already broke. It doesn't matter how hot the deal is at that point. You also can't have slow out of money. People buy and buy right up until the last minute when they're already tapped out, THEN the deflation hits.

That's why homes that have plummeted in value still sit there empty. The buying has already stopped because the money supply has gotten smaller. It's too late for a hot deal. If you take out a loan today there's no guarantee the money will exist in the economy to pay that loan off tomorrow as the money shrinks.

People that support deflation have never ran a business. Business 101 is to invest in a product today that you can sell for more tomorrow at a profit. That's inflation. Deflation is the opposite of that. Deflation is investing in a product today that you have to sell for LESS tomorrow. Only an idiot would do business that way. You'll go broke every single time.

Also, as for my friend paying me a loan back with money at a fraction of the value? You have to take inflation into account when you calculate your interest rate. A loan is an investment. If inflation is 2% and you loan it at 5% then you'll still make 3% profit even with inflation.

But here's what you forget! the money is going to inflate anyway regardless of if I loan it or not! This means inflation is actually an incentive to loan the money and not hoard it! If I know my savings are going to be devalued then why wouldn't I loan it at interest to my friend and counteract the inflation?

Also since we have inflation that means my friend's income is going to increase. He may make $500 a week, but by the time he pays the loan back he could be making $600 or $700. As time goes on the loan gets easier for him to pay which means it's more likely I'll actually get paid! This leads to economic growth. Now I make a profit on my loan, and my friend buys stuff he otherwise couldn't have afforded. Then he can pay it back with tomorrow's cheaper money.

Deflation however would be a disaster. Deflation means that nobody has money which means my friend's income is probably going to go down and he's probably not going to be able to pay me back. Therefore, I'm not going to loan him or anyone any money. Neither is anyone else.

That's what you deflation people don't get. There's no way business owners will still be able to pay employees the same wages during deflation. Deflation means less money in the economy. The business owners will have to deflate your wages or lay you off if there is deflation. You won't have a bunch of money to buy super fancy hot deals like you all think you will. You'll have to use your savings just to survive as your wages go down, or stop completely, but your bills and loans stay the same.

reply to post by tinfoilman


Honestly I don't even know why I'm responding to you at this point. You continue to mumble absolutely nonsensical garbage. But here we go anyway.

Like I said, the housing crisis we JUST HAD was deflation and it was a disaster. We have entire neighborhoods of empty houses rotting away because nobody can get the loans to buy them. Now this caused prices to drop didn't it? So, how come nobody is buying up those hot hot empty deals? How come the houses still just sit there empty? It's because you don't understand deflation.

Actually the housing BUBBLE collapsed because toxic assets in the derivative market and all sorts of other complicated factors which we don't need to get into. Deflation had no role in it, those prices dropped because there was a massive market of complex overvalued packages which couldn't be sustained. In reality it had nothing to do with deflation, because deflation hasn't occurred for decades, and we have continued to experience steady inflation since before and after the housing crisis.

Deflation is not the same thing as lower prices. Only people that don't understand it think like that. You think, oh deflation is good because prices will drop and I can buy all this fancy stuff! Wrong!

I never said anything like that. As I said on the last page the change in numerical values don't mean anything beyond indicating the purchasing power of the dollar. What I've actually been saying is that deflation results in a stronger dollar and it allows people to save their money and have faith that their savings wont whither away into nothing over time. Of course it wont allow you to buy more because people will continue to be paid less in accordance with the rate of deflation. Just like people now continue to get paid more because each dollar continues to become worth less. However, wages don't tend to keep up with inflation properly, and that is yet another way people continue to be robbed.

That's why homes that have plummeted in value still sit there empty. The buying has already stopped because the money supply has gotten smaller.

WRONG!!! First of all deflation doesn't need to have anything to do with a smaller money supply, it also happens when the money supply stays the same but economic growth takes place, which is the type of deflation I support. Second, the money supply has been growing since before and after the housing collapse, it hasn't gotten smaller in a very long time, they are constantly printing new money all the time. In fact, as I already stated, the Federal Reserve released around $16 trillion in near zero interest secret loans to special interests around the time of the collapse, and that is very likely to catch up with the economy any time now and deal a large inflationary blow.

People that support deflation have never ran a business. Business 101 is to invest in a product today that you can sell for more tomorrow at a profit. That's inflation.

You truly know nothing do you. For your information I've studied business for nearly 3 years and I'm currently operating my own small business. Business 101 is to manufacture a product yourself or buy it wholesale from a supplier, and then add a resale price to the product, with the difference being the net profit. It has absolutely nothing to do with inflation. Businesses don't buy a heap of products and then hope to make a profit due to inflation... inflation, while considerably large in the long term, is very slow and the effect cannot really be measured within the cycle of creating/buying and selling a product. If businesses were to rely on inflation as the profit margin they would be doomed sir.

Deflation is the opposite of that. Deflation is investing in a product today that you have to sell for LESS tomorrow.

And here you are spewing the exact same nonsense you were mocking just a few moments ago. In the same way that deflation does not mean lower prices, it ALSO doesn't mean higher prices! The money that business gets back will have the same purchasing power as the larger amount of money invested in the product, so technically they aren't losing any wealth, once again it's just numbers changing to represent the real value of the currency. And once again deflation wouldn't happen that quickly, just like inflation doesn't happen that quickly. And if we are talking about long term business assets they depreciate despite inflation or deflation. That's why most products are sold quickly enough to avoid depreciation, and certainly they would avoid the effects of inflation and deflation when sold so quickly.

Also, as for my friend paying me a loan back with money at a fraction of the value? You have to take inflation into account when you calculate your interest rate. A loan is an investment. If inflation is 2% and you loan it at 5% then you'll still make 3% profit even with inflation.

Yes exactly, and that is exactly also what would happen in an economy using a deflationary currency, just in the opposite way. Most things are just simply reversed within a deflating economy... and usually those reversals work out to be better for consumers and for savers and for the working class. Inflation is good for nearly nothing, unless it is used solely to maintain a stable dollar, not to continuously devalue the dollar and rob the savings of everyone.

Deflation however would be a disaster. Deflation means that nobody has money which means my friend's income is probably going to go down and he's probably not going to be able to pay me back. Therefore, I'm not going to loan him or anyone any money. Neither is anyone else.

Or... you could simply take your own advice and adjust the interest rate accordingly to make sure it wont be super hard to pay back. I mean even if you had an extremely tiny rate, you will still make a profit from that loan if it was conducted with a deflating currency. The main incentive for making loans is to get a profit from those loans, as long as there's a profit to be made businesses and banks will be providing loans, there's no doubt about that, so your concerns are completely unjustified.

That's what you deflation people don't get. There's no way business owners will still be able to pay employees the same wages during deflation. Deflation means less money in the economy. The business owners will have to deflate your wages or lay you off if there is deflation.

And here it is, the absolute confirmation of your hypocrisy and short-sightedness. Once again let me point out deflation normally has nothing to do with a shrinking money supply. I do not support anything related to continual contraction of the money supply. The good type of deflation which I am referencing occurs when you have economic growth and the money supply stays the same; that causes the dollar to grow in real value, since it is a floating fiat currency. The main purpose of the central bank is to inflate the money supply to counter this type of deflation, so that the purchasing power of the dollar neither grows nor shrinks. My position is simply to allow the money supply to naturally adjust however it wants, if it wants to deflate due to economic growth then that's what should be allowed to happen. Once you have enough money in circulation to ensure a good level of granularity it doesn't matter if deflation is allowed to occur.

And most importantly business owners wont need to pay their employees the same wages because the purchasing power of each dollar will have increased! Remember, we need to think in reverse here. With an inflating currency, employers typically pay their employees more and more to account for inflation, which can easily be seen if you look at historical income figures compared to today. If businesses were to continue paying their employees the same amount of money whilst the dollar continued to become weaker and weaker then employees would hold strikes and simply not work for those stingy ass businesses. With a deflationary currency a similar but opposite thing would happen. If businesses continued to pay their employees the same amount, the employees would be better off, but obviously that wouldn't happen because it wouldn't be in the best interests of the business.

You won't have a bunch of money to buy super fancy hot deals like you all think you will. You'll have to use your savings just to survive as your wages go down, or stop completely, but your bills and loans stay the same.

Bills and loans will not stay the same, once again we need to think in reverse here. Utility bills and most commodity products in general have a consistent history of becoming more and more expensive, but actually they are just increasing their prices to account for a dollar which continues to become worth less and less. In a deflationary environment the cost of products would continue to lower in price because the dollar will continue to gain more and more real purchasing power. Competition will force businesses to lower prices, people will choose to purchase their items from businesses who offer the best prices, and the best prices will come from businesses who lower their prices (and lower their employee wages) in accordance with deflation, thus the economy will naturally adjust according to the real value of the dollar. Prices get lower AND wages get lower, thus being paid less doesn't mean you can afford less.

reply to post by ChaoticOrder


Deflation that's caused by something other than the monetary contraction is not what we're talking about. It's just lower prices, economic growth, standard supply and demand. and it's a good thing. We agree on that. Don't know why you're arguing with me on that.

Remember, the context of this whole argument was the rich hoarding their gold. When we say deflation in this context, we mean exactly that, deflation caused by a contraction of the money supply.

The housing crisis happened because people could no longer take out loans to keep flipping the houses for higher and higher prices. When the loans ran out and the money stopped coming in to pay the loans, notice the housing prices deflated.

Please take note of when people were buying houses. It was NOT when the prices were going down. People were buying when the prices were going up! And they kept going up until the very last minute before they dropped drastically. Don't you think that's a bit odd? Why were they doing that? Because if people are buying there's no reason to lower prices! As long as people are buying prices will not go down. Deflation never happens until AFTER the money is gone. You can't have slow out of money. You either have money or you don't.

Nobody wants to take out a loan on a home that's going DOWN in value. They wait until they start to go back up in value. Everybody waits for the inflation. If inflation is so bad, how come everyone is sitting around waiting for it before they go buy houses again?

And your bills aren't going to go down when the deflation starts. A bill is charging you for PAST service you already received at that past price. And loans don't change either. When you have deflation your bank isn't going to say, well you borrowed $1,000, guess you only have to pay back $500?

Sure the government could come and revalue all the loans and make it even out. But look at the housing crisis! They didn't do that! Everyone that lost their home was still on the hook for the same amount even AFTER the prices started to fall.

The government is not going to come in and save your business from its loans when deflation starts. They don't care about you. That's the whole point of this website lol. They want you to default so they can foreclose on you and then THEY own your REAL goods, the actual wealth, while you're left with a debt you can't pay.

reply to post by ChaoticOrder



Here's your deflation. When the big three laid everyone off and the money stopped flowing leaving these people with no way to buy anything, you think the government came in and adjusted their loans for them? HA!



EDIT: Also as for my loan with my friend. Yes, you're assuming I already have the loan out. And yes I would adjust it so he could pay it back because he's my friend. However, the problem is if I HAVEN'T already given him the loan. I really have no incentive to do it because he probably won't be able to pay it back, and since my money is going up in value on its own anyway, I can just sit on it. There's no incentive to loan it in the first place. That's the problem.

That gives an incentive not to loan. Which means people can't start new businesses and so on. Investment halts.

reply to post by tinfoilman

Deflation that's caused by something other than the monetary contraction is not what we're talking about. It's just lower prices, economic growth, standard supply and demand. and it's a good thing. We agree on that. Don't know why you're arguing with me on that.

Oh god I'm really getting a headache now. Of course it's what I've been talking about, that has been crystal clear since the very beginning. You kept going on about needing to create enough money for everyone and I continuously kept telling you that's not necessary when a sufficient granularity has been achieved. I continuously kept telling you the value of the dollar should be left to naturally fluctuate.

Remember, the context of this whole argument was the rich hoarding their gold. When we say deflation in this context, we mean exactly that, deflation caused by a contraction of the money supply.

But I haven't been saying deflation in that context, only you have, even after I've repeatedly attempted to explain my position, and only now you begin to grasp what I'm talking about. But you're right, I did day inflation was not the answer to solve the problem of the rich hoarding all the money. And it clearly isn't because each time you do that you give more and more money to them, they'll continue to hoard more and more from the economy every time you inject new money into the economy. This will continue on and on until the ratio of wealth held by the rich and the wealth existing in the economy is completely and utterly out of proportion.

And furthermore, hoarding does not create a true contraction of the money supply, a real contraction of the money supply is when currency is retired and taken out of circulation faster than new money is created and put into circulation. Hoarding merely lowers the size of the active economy but doesn't cause money to disappear, and that's exactly why printing more money to solve that problem doesn't work. Imagine if they decided to suddenly dump large amounts of their money onto the market, it would cause total and utter devastation to the economy. And they are in a position to do that right now. As I've been saying all along now, you are ignoring the deeper problem.

If you don't keep creating new money they will be limited to how much they can take, until they reach a point where people realize what they are doing and demand a fairer level of equality. Your quick fix treatment merely puts a temporary patch on the problem whilst at the same time multiplying the severity of the true underlying problem by creating an ever growing disproportionate ratio of wealth owned by the super rich hoarders. Until eventually you end up with people that have so much wealth they can easily undermine the economy and essentially control the media, government policies, and in turn they can control the world, which is the situation, once again, we find ourselves facing today.

notice the housing prices deflated

No the housing prices did not "deflate" for christ sakes, you are twisting up the logic here into illogical nonsense with no factual grounding. The prices COLLAPSED because they were propped up by a bubble which grew too large and grew out of control, inevitably leading to a popping of that bubble. Deflation is a currency wide phenomena, it causes ALL prices of ALL commodities to be affected. If only one specific segment of the market experiences a quick collapse like that then it has nothing to do with currency deflation, it's based on a specific bubble which has popped. So please get a grip on reality here and stop spewing this garbage and basing your arguments on the housing collapse, because it's simply not logical.

If inflation is so bad, how come everyone is sitting around waiting for it before they go buy houses again?

Once again you're talking about a shift in the price of a specific commodity, namely houses, which is not indicative of an overall shift in the real value or purchasing power of the dollar, and thus is not a true indication of inflation or deflation.

And your bills aren't going to go down when the deflation starts. A bill is charging you for PAST service you already received at that past price. And loans don't change either. When you have deflation your bank isn't going to say, well you borrowed $1,000, guess you only have to pay back $500?

Wow grow a brain already. I'm not talking about the cost of things which has already been contractually agreed upon before hand. I'm talking about the gradual shift that will happen over time, as new agreements come and go. I could make the exact same argument you just made, but for inflation. Clearly you didn't understand a thing I said. The price of our bills has historically risen in line with inflation, and that's exactly the same thing you would see in a deflationary economy, except the prices would gradually change in line with the rate of deflation.

Here's your deflation.

Yes and I could show equally problematic historical scenarios where inflation has led to large collapses. For instance there's the Germany 1923 hyper-inflation crisis that resulted in a situation where people would need a wheel barrow full of money just to purchase a loaf of bread. But of course these are all extreme situations, and extreme versions of anything, whether deflation or inflation, hardly ever results in anything good.

reply to post by ChaoticOrder


Well if you're not talking about the same deflation I'm talking about, then we agree with each other. So, why are you arguing with me? Just for fun?

Also, $1 for a house isn't deflation? Wow! how low does it have to go before you call it deflation lol! It was caused by a bubble? Sorry, but that explanation doesn't work here. Here's why. Because in Detroit the $1 dollar house wasn't $1 dollar before we started the bubble.

To say it was a bubble and then it crashed implies that the prices just went back to where they started. But they didn't.

I can guarantee you the $1 house cost more than $1 before the bubble started. It didn't just go back to where it was. There was real deflation after the crash. Also other home prices deflated around the country as well. Housing prices in many places are now lower than they were even before the bubble started. Showing it wasn't JUST a bubble. There was deflation as well on top of that after the fact.

The reason is because after the bubble everyone's credit was ruined. Fractional reserve banking remember? No loans=no money=deflation. Sure the government is printing money like crazy, but many people with ruined credit can't get their hands on any of it. Most money is actually created when people take out loans. And right after the bubble that supply dried way up actually resulting in less money for most people.

Yes you can have local deflation. We just had it. In Detroit and in other places. I know country wide the currency has inflated, but the Detroit example shows what happens when people can't get their hands on any of it. Regardless of what causes people's money to dry up, the result is the same. A drop in prices which we call deflation.

The same effect can be caused by massive hoarding. If money doesn't change hands, goods like houses, just sit there and don't sell. Even for a $1.

Like I said, if you believe deflation is a good deal? Well they have $1 houses in Detroit. Hot deal! Hot deal! Gonna move to Detroit and buy one? Bet you don't! Bet you stay somewhere where the prices are inflating nicely and people have plenty of money don't ya?

Now, you can show me examples where hyper inflation caused disaster. However, I never said I was in support of hyper inflation. That's a straw man argument.

Like I said, you grow the economy first, and then sometimes when needed you print the money that is backed by said economy. If you do this a little inflation doesn't hurt.

While it's true you may be able to show me EXTREME examples of where drastic hyper inflation has caused disaster, can you show me any examples of say a small 3% increase in inflation over the years causing disaster?

reply to post by ChaoticOrder

it causes ALL prices of ALL commodities to be affected.

You obviously don't remember how bad the economic collapse was until they started printing money to try and fix it lol. It wasn't just the prices on housing that got screwed up. We were literally on the verge of systemic economic failure lol.

reply to post by tinfoilman

So, why are you arguing with me? Just for fun?

I'm clearly arguing against your irrational support of constant inflation. Just as you appear to be arguing against my support of deflation.

Also, $1 for a house isn't deflation? Wow! how low does it have to go before you call it deflation lol!

For it to be called deflation it has to be real deflation buddy. It has to be a deflation of the CURRENCY, not a specific segment of the market. You don't get some places in America where the same currency is worth less than other places. The US dollar is the same US dollar every where. If the US dollar were to experience true inflation then you would see the prices everywhere drop, but that's not what happens, prices continue to rise... thus proving conclusively that the US dollar did not deflate and such hypothetical deflation was not responsible for the housing crises. I already explained in rather simply terms what caused that crises, but you fail to listen and accept the truth.

In the U.S. press, we are constantly hearing about something called toxic assets. We hear that banks' balance sheets are full of toxic assets and that is why they can't loan to businesses and individuals. But we don't seem to really understand what these toxic assets are and how they have caused such a problem in our economy.

Toxic assets are largely investments backed by risky subprime mortgages. CBS News Correspondent Bianca Solorzano reported recently that when you see foreclosure signs littering neighborhoods, you're probably looking at toxic assets.

These toxic assets are held by large U.S. banks and are dragging down their balance sheets because they have lost their value. When the housing crisis started in 2007 and people started defaulting on subprime mortgage loans (toxic assets), the value of mortgages on banks' balance sheets was gutted. As a result, banks lost confidence regarding lending to each other and they had no money to lend to the public because of these toxic assets crowding up their balance sheets. Result? The nation's financial system became clogged up. You heard it called "the credit crisis."

Toxic Assets: What They Are and How They Brought Down the U.S. Economy

Regardless of what causes people's money to dry up, the result is the same. A drop in prices which we call deflation.

Except if that drop in prices isn't a result of an increase in the purchasing power of each single dollar (whether due to a contraction of the money supply or a growing economy), then it isn't technically described or defined as currency deflation.

Like I said, if you believe deflation is a good deal? Well they have $1 houses in Detroit. Hot deal! Hot deal! Gonna move to Detroit and buy one? Bet you don't!

Let me tell you if I lived anywhere near Detroit during that time when the houses were so cheap (I don't even live in America actually), I would have purchased as many homes as I could afford... because anyone with any brains would have realized those houses weren't going to remain that cheap for very long, and they didn't. They were only that cheap at the lowest point of the collapse, the dip in the graph. Collapses like that are often exploited by the super rich so they can buy everything up on the cheap and then make immense profit once the bubble bounces back to where it naturally want to be.

Considering the dollar didn't actually deflate to a state where $1 was actually worth a house, then there's no problem to spend that money if you're going to get a whole house for that price. Now, if true deflation of the currency occurred then you would see $1 having so much purchasing power all throughout the country, you could also buy cars and boats for a few dollars... but that wasn't the case. And that indicates it was a localized mortgage problem involving toxic assets which led the bubble to collapse on those homes.

Now, you can show me examples where hyper inflation caused disaster. However, I never said I was in support of hyper inflation. That's a straw man argument.

lol what? You were the first one to try and use that straw argument against me by posting your extreme example (even though the $1 houses isn't actually a true example of extreme currency deflation). I simply countered your example with my own example of hyper-inflation, and I never said you supported it, I clearly stated that extreme version of either scenarios are undesirable.

Like I said, you grow the economy first, and then sometimes when needed you print the money that is backed by said economy. If you do this a little inflation doesn't hurt.

Yes, and as I have stated countless time now, I don't have anything really against a small amount of inflation if it's merely used to level out economic growth and keep the dollar stable. But you are continuously acting as if you support the type of inflation and excessive money printing which is conducted by the Federal Reserve, the type of inflation I am arguing against, the type that constantly depreciates the value of all money already in circulation and the kind that undermines the economy and eats away at peoples saving. That is what I hate, if they merely had a small amount of inflation which kept the dollar stable and didn't cause it to depreciate then I wouldn't have much of a problem, but that's not what they do.

While it's true you may be able to show me EXTREME examples of where drastic hyper inflation has caused disaster, can you show me any examples of say a small 3% increase in inflation over the years causing disaster?

And I challenge you to find me an example where small gradual amounts of deflation have ever caused a disaster.

It wasn't just the prices on housing that got screwed up. We were literally on the verge of systemic economic failure lol.

You were on the verge of a collapse because the housing prices got screwed up. You have still failed to name any other goods or services which actually fell in price in any considerable way.

reply to post by ChaoticOrder


Prices everywhere were dropping and it was currency deflation because people could not get loans or pay the loans they already had because they could not get enough money because other people weren't taking out more loans to keep their jobs going.

Don't you remember the big debate about how the banks weren't loaning enough even after the bailouts? Don't you even remember what the collapse was about? Don't you remember the stimulus plan?

Don't you remember cash for clunkers? It wasn't just houses. It was cars, all kinds of things. Don't you remember all the retail stores that went broke? There are still empty buildings from that all over the country?

Didn't you ever figure out what the point behind all those programs were? Don't you remember why they set the interest rates so low? To make loans cheaper hoping more people will borrow which causes inflation?

It was because they were afraid the economy was going to go into a deflationary spiral. They certainly weren't afraid of inflation! You don't print money when you're trying to solve inflation! lol.

So yes actually there was deflation, but for the most part, they cancelled it out by causing reverse inflation. Overall it worked and we got a net inflation. However, in some parts of the country like Detroit where they had other economic problems on top of that, it didn't work, and the deflation still happened anyway.

They were only that cheap at the lowest point of the collapse, the dip in the graph.

So, you're saying that's the "lowest" point of the collapse? What are you saying? That when the housing prices started to go back up and INFLATE that meant things were getting better? Well what do you know! I agree with you! For a second I thought you said LOWER prices were better? Now it's higher prices?

Collapses like that are often exploited by the super rich so they can buy everything up on the cheap..

That's what I've been trying to tell you! You don't want deflation that causes everyone to default on their loan, and then the rich come along and buy it all up for a dollar! That's what I'm trying to stop! It's the same thing they did in the depression.

The rich can't buy it all up cheap for a dollar if the price doesn't deflate down to a dollar now can they?

And I challenge you to find me an example where small gradual amounts of deflation have ever caused a disaster

That's because there is no such thing as slow deflation in America. Sure you say deflation is good because your cash reserves increase in wealth, that's true.

But Americans don't have any cash reserves! They have debt! Even the government itself doesn't have cash reserves! Only the rich that want to buy up your land for a dollar has cash reserves! Get it?

When Americans take out loans they don't generally borrow it and sit on it and hope it goes up in value. They buy something with it, then they have to go to work every to pay that loan back.

Like I said there is no such thing as slow out of money. Americans are in debt. When they spent money they usually spent it until they're completely out of it! You will continue to have inflation when this happens as long as people are buying stuff.

When the deflation kicks in that means the Americans have already used up all their reserves! All they have is a stinking pile of debt and no way to pay it off. And the people that do have cash? They're not gonna loan it or give it to people in massive debt with no way to pay the debt off.

They're going to sit on it, and hoard it while it goes up in value until the deflation is over.

reply to post by ChaoticOrder


I mean think about it. If you really think about how absurd it is you'll see it. We had an economic collapse that was caused by toxic assets that people couldn't pay their loans on?

The entire country was about to go into systemic collapse because people couldn't pay their loans? So, to fix it, did they try to stop people from borrowing and reduce the country's debt? NO! They lowered interest rates to try to get people to take out more loans! How does that make any sense?

Do you solve a drug addiction by buying more drugs? What's going on here?

Well it makes perfect sense. We have fractional reserve banking. That's how our money is created. When the money supply went to take a dump, they needed people to take out more loans to make more money!

reply to post by tinfoilman

Don't you remember cash for clunkers? It wasn't just houses. It was cars, all kinds of things. Don't you remember all the retail stores that went broke? There are still empty buildings from that all over the country?

As I already said I don't live in America, but none of those things indicate the dollar was going into a deflationary spiral. They indicate the housing crises was having a wide economic effect which propagated into many areas of business and banking. It was mainly a housing crises, that much is absolutely crystal clear and indisputable. The fact you are still trying to clutch onto the pathetic argument that the situation was a result of deflation is completely laughable. There was no cars or boats or private-jets for $1. The cost of food didn't plummet. The cost of utility bills didn't plummet. No indications that vast deflation happened, all the evidence points to toxic assets withing the housing market, so DEAL WITH IT.

So, you're saying that's the "lowest" point of the collapse? What are you saying? That when the housing prices started to go back up and INFLATE that meant things were getting better? Well what do you know! I agree with you! For a second I thought you said LOWER prices were better? Now it's higher prices?

Errrr... for christ sakes would try to at least understand what I say. Things were getting better when the prices floated back up to where they wanted to be IN RESPECT TO THE TRUE PURCHASING POWER OF THE GOD DAMN DOLLAR. The prices of the houses were affected because of toxic freaking assets, not because of a dollar deflated to such an extent where one dollar was worth a god damn house. Understand that already.

That's what I've been trying to tell you! You don't want deflation that causes everyone to default on their loan, and then the rich come along and buy it all up for a dollar! That's what I'm trying to stop!

Oh please. The only thing you're trying to stop is common sense. We are not talking about a sudden switch to a deflationary currency here bud. We are talking about a NEW ALTERNATIVE currency which would have nothing to do with existing loans, so they will be allowed to pay pack their loan in what ever damn legal tender currency they so choose. Furthermore, we are talking about a very slow rate of deflation for christ sakes, would you get that into your head?!? It's not like one day a house worth 500K will drop to 1 dollar. It's an excruciatingly slow process and each step of the way the economy is naturally adjusting to make sure prices and wages are in accordance with the purchasing power of the deflationary currency. So there will be no one buying up anything on the cheap, because things wont actually be any cheaper in terms of real value and purchasing power, nor will the prices have any reason for rapidly rising at any point. The only reason that happens in the case of the Detroit houses is because their prices were drastically out of touch with the actual value of the dollar as a result of the popping bubble, noting that the value of the dollar had not actually changed in any considerable way, and it created a perfect situation where prices were set to bounce back up.

The rich can't buy it all up cheap for a dollar if the price doesn't deflate down to a dollar now can they?

With a TRUE deflating currency they couldn't freaking buy it on the cheap because it wouldn't REALLY be freaking cheap! You explained this yourself numerous times!!!! Start thinking about what you say for christ sakes. Each dollar simply holds more real value, just because you think of "1" as a small number doesn't mean the amount of purchasing power held in that 1 dollar is small. That's why things aren't really any cheaper, just like you freaking said remember? So they don't have the ability to buy anything cheaper than normal because all people are paying that price and there's no reason to assume they would be able to sell those assets for a much higher price than what they paid. Get it yet?

But Americans don't have any cash reserves! They have debt! Even the government itself doesn't have cash reserves!

Oh great, so you think if simply keep printing more money then you reduce the amount of debt held by each person at the expense of the savings held by everyone else? You do realize that is thievery whether it affects rich people or not? The people who chose to get themselves into debt knew what they were doing when they chose to get into debt, it was their own risk they chose to take and they need to bear the personal responsibility of that decision. The Government also has no right to monetize their debt and convert it into inflation at the expense of our savings and hard earned wealth. They should learn to balance their god damn budget instead of stealing wealth from their citizens in this deceptive way in order to pay for their nonsense. Once again I must point out that you are applying a quick fix solution whilst ignoring the deeper problem.

Well it makes perfect sense. We have fractional reserve banking. That's how our money is created. When the money supply went to take a dump, they needed people to take out more loans to make more money!

Actually, let me enlighten you about why the Federal Reserve really handed out trillions of dollars to large banks around the time of the collapse. THE BANKS OWNED THOSE TOXIC ASSETS. Those banks were on the verge of collapse, not the dollar. They had pushed the limits and they were experiencing the blow back from those terrible financial decisions. But of course all those banks are "too big to fail", they can't be allowed to fail because their collapse would probably have a lot of other undesired consequences. So instead of bailing out all the mortgage owners and every day citizens who got caught up in the bursting bubble, the Federal Reserve decided it was more important to hand out trillions and trillions of dollars to banks which they have close connections to, banks which they have interest in, banks which are or were controlled by people who work with the Federal Reserve. The entire corrupt banking cabal BAILED EACH OTHER OUT.

And actually I am done here. I can't bring myself to respond to you any further, I have reached my limit. For all I care you can consider yourself the winner of this debate, I just can't stand to argue with you any more.

reply to post by ChaoticOrder


Well sorry to see ya go yo, but I was having fun debating ya.

There was no cars or boats or private-jets for $1

Actually I think there were minus the jets!

It's an excruciatingly slow process

Well that's not how it works with debt. You won't see a lot of gradual price decline. You have to make your loan payment EVERY MONTH. You can't just lower your prices to whatever you want. You have to charge at least enough to make the loan payment. And many businesses are already close to going broke at current prices WITH inflation. Even a tiny bit of deflation would cause many of those to close up. They can't sell it for gradually less than they already are.

That's why you won't see the prices gradually drop. You'll see a tiny drop as profits are cut. But if they still don't make enough to pay the loan then the business will just randomly shut its doors one day. Seriously this happened to my wife during the collapse. She went into work, everything was fine, the banked called at noon, and the building was locked up by the end of the day. Default. She was out of a job.

They didn't even have time to think about lowering prices. They couldn't make their payments at the prices they were already selling at! Let alone gradually lower prices lol.

We saw a lot of that with retail stores during the collapse as they went broke. One day it's open, the next day it's boarded up. Same thing with Detroit too. The cars never gradually came down in price. They stayed expensive, and then all of a sudden, what do you know, they're broke!

And if you're arguing it was that bad and it wasn't deflation? Oh God help us if we ever actually DO see "real" deflation then. I can't imagine the pain it will cause.

With a TRUE deflating currency they couldn't freaking buy it on the cheap because it wouldn't REALLY be freaking cheap!

It wouldn't be cheap to the people that just went bankrupt. But remember the few elite rich people that had reserves? It's still cheap to them. The house goes down in price as their reserves go up in value remember?

The people who chose to get themselves into debt knew what they were doing when they chose to get into debt, it was their own risk they chose to take and they need to bear the personal responsibility of that decision.

But you don't understand. That's how it's supposed to work. They were doing the right thing. There's nothing wrong with taking out a loan. We have a debt based system where our money is created when you borrow the money! If nobody borrows then there's no cash to hoard! It never comes into existence!

Also, you're going to ruin the economy to get a deal on a fancy car? Seriously? If people stop borrowing the whole economy shuts down. Not just MY economy but your economy too! Sure you'll have a lot of cash hoarded up, but so what? Everyone will stop buying stuff from the place you work too! You'll go broke too! You'll have to use your hoarded cash just to survive. You won't be going around buying super fancy things with it.

Unless maybe you're a super elite! But you won't be able to buy anything with your hoarded cash. You'll have to go around and look for whatever food scraps you can buy. Grocery stores close too when everyone stops borrowing. Doesn't matter how much cash you have hoarded when there's no food! Remember. It's the food we want! Not the money!

Sure you could stock up on a couple years of food and buy some land. But if the economy collapses there will be riots. Since you're the only one with food. Where do you think the poor people are gonna loot? Your fancy car won't matter when they're eating your face! They're hungry too. What are you gonna do, buy a bomb shelter? Lol yeah I guess you could. Sounds real nice having all that hoarded cash living in a bomb shelter lol! Sure what we got isn't better than that?

See, wouldn't it be nice if the borrowers didn't stop borrowing and just kept the nice economy we have going? Last I checked, nobody is trying to eat me.

That's why the elite lowered the interest rate. Sure they'll take advantage of some cheap land, but not really. Even at prices as low as a dollar they were still having trouble selling houses. Even the elite don't want to live in a bomb shelter in Detroit. They need the poor to keep borrowing so they have a nice economy to live in too.

reply to post by ChaoticOrder


Also, I never said I had a problem with an alternative currency. WTH? I think alternative competing currencies are great idea. I just don't think a gold ONLY currency is a good idea. Something that Ron Paul said he has supported in the past. This alternative currency idea is much better than a gold standard. I was just saying watch out if Paul goes back to saying gold ONLY and does a bait and switch on us.

I was just pointing out that we kinda already do have alternative currencies. I mean if you want to put your money into silver or gold you're welcome to do it, there's nothing stopping you. There's just a lot of hoops to jump through if you actually want to buy something at the store with that gold.

Yes it would be good if we could get rid of those hoops.

reply to post by ChaoticOrder

Very well stated, ChaoticOrder. It is clear you too have a full understanding of the Federal Reserve and their "money from debt" scam perpetrated on the American public.

The Federal Reserve-A Corrupt Institution

"Mr. Chairman, we have in this Country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the Fed. The Fed has cheated the Government of these United States and the people of the United States out of enough money to pay the Nation's debt. The depredations and iniquities of the Fed has cost enough money to pay the National debt several times over.

"This evil institution has impoverished and ruined the people of these United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Fed and through the corrupt practices of the moneyed vultures who control it.

"Some people who think that the Federal Reserve Banks United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lender. In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into states to buy votes to control our legislatures; there are those who maintain International propaganda for the purpose of deceiving us into granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.

"These twelve private credit monopolies were deceitfully and disloyally foisted upon this Country by the bankers who came here from Europe and repaid us our hospitality by undermining our American institutions. Those bankers took money out of this Country to finance Japan in a war against Russia. They created a reign of terror in Russia with our money in order to help that war along. They instigated the separate peace between Germany and Russia, and thus drove a wedge between the allies in World War. They financed Trotsky's passage from New York to Russia so that he might assist in the destruction of the Russian Empire. They fomented and instigated the Russian Revolution, and placed a large fund of American dollars at Trotsky's disposal in one of their branch banks in Sweden so that through him Russian homes might be thoroughly broken up and Russian children flung far and wide from their natural protectors. They have since begun breaking up of American homes and the dispersal of American children. "Mr. Chairman, there should be no partisanship in matters concerning banking and currency affairs in this Country, and I do not speak with any.

"In 1912 the National Monetary Association, under the chairmanship of the late Senator Nelson W. Aldrich, made a report and presented a vicious bill called the National Reserve Association bill. This bill is usually spoken of as the Aldrich bill. Senator Aldrich did not write the Aldrich bill. He was the tool, if not the accomplice, of the European bankers who for nearly twenty years had been scheming to set up a central bank in this Country and who in 1912 has spent and were continuing to spend vast sums of money to accomplish their purpose.

"We were opposed to the Aldrich plan for a central bank. The men who rule the Democratic Party then promised the people that if they were returned to power there would be no central bank established here while they held the reigns of government. Thirteen months later that promise was broken, and the Wilson administration, under the tutelage of those sinister Wall Street figures who stood behind Colonel House, established here in our free Country the worm-eaten monarchical institution of the "King's Bank" to control us from the top downward, and from the cradle to the grave.

"The Federal Reserve Bank destroyed our old and characteristic way of doing business. It discriminated against our 1-name commercial paper, the finest in the world, and it set up the antiquated 2-name paper, which is the present curse of this Country and which wrecked every country which has ever given it scope; it fastened down upon the Country the very tyranny from which the framers of the Constitution sough to save us.

Congressman McFadden on the Federal Reserve Corporation Remarks in Congress, 1934 AN ASTOUNDING EXPOSURE

reply to post by autowrench


Man you people really are some work around here. You let your hate for the person get in the way of what they're actually saying or something lol? Ya'll don't know how to have a fun debate.

I just spent a page of posts trying to explain how the Federal Reserve debt scam really works and the reason we have so much debt is because we must perpetually borrow forever to keep the economy going because if we don't the money dries up causing debt deflation and bust cycles. It only explains everything the US gov has tried to do to save the economy.

Then tried to explain why competing alternative currencies and not just a simple gold standard is needed to fight the fed because ChaoticOrder didn't understand the debt scam. Then you come in and say they're the ones that really understand it? lol WTH.

Well okay whatever. All that's important is all agree with each other that it's a scam. That's all that really matters.