Taxes.

[MEZZANINE]

@ KMA

Printing money for the government to put into the economy ( essentially spend ), commonly known as 'quantitative easing' DOES immediately devalue the currency in question on an international basis, simply put the more you print the less each unit ( $, $, Euro etc ) is worth. The exchange rate drops, the cost of imports rises and since most so called 'developed nations' rely on cheap imports from 'less developed' nations the price of every day imported goods, everything from electronics to fruit rises, with these price increases the general cost of living increases and the currency is devalued in the home nation, the definition of inflation.

Printing money is never the solution, it's a risky gamble that has been tried several times, you get a short term boost from internal spending, in theory you get the potential to increase exports through lowered exchange rates, and the potential to encourage home made produce over imports as import prices rise by making home produce more competitive BUT from history we see in practice these potential benefits have never been achieved, and not achieving them has long term negative affects.






On the other funnier points you made...

Money created out of debt.. well sort of, every banknote says 'I Promise to pay the bearer on demand', currency is essentially a promissory note to facilitate trade and was originally backed up by precious metal reserves & assets, later it was backed up by other debts so that in theory if everyone repaid at once the promissory note could be honored, but now even that cant work, currency is essential bad debt, a debt that can never be paid, and we ignore that fact and still use it because we would have anarchy without it.

Money having no real value.. if you believe that then give all your money to me lol Money has the value we assign to it, in cases of hyperinflation we have seen the currencies of some failed nations become worthless and them reduced to barter, but so long as the vast majority of people honor it money has value.

Financial stability.. just lolz, there are only two ways this could ever happen, either to be self sufficient nation or to establish and implement a global single currency and economic policy, neither are practical.

[[KMA]Avenger]

On a side note, this article by an ex-hedge fund manager is a VERY good read: http://www.businessinsider.com/raoul-pa ... me-2012-6#

Click the link at the bottom that says "Click here for "The End Game" >", it's 31 pages but will not take you more than a couple of mins to read.

[ramen07]

What school of economics do you guys study at!?

University of Buffalo, NY, USA.

You raise to many points for me to be bothered to break it all down, so i'll just post a general reply.

Firstly, you can never run out of money, the trick to avoiding inflation and having loooooong term stability to economy is to make sure that the money is retired...regardless of how much you have in circulation....so long as the money that is in circulation was SPENT into the economy via works of all kinds...you can't just dump it in as they are doing now.

Exactly my point, which you claimed was wrong.

Also, you need to realise something, ALL money that is in circulation now was created out of debt...it was borrowed with debt attached. in the current debt based system, it is a fact that if you pay off the debt then the money supply dries up...do you understand that we borrow money that NEVER existed, was not created by labour...it is created out of NOTHING, it has NO VALUE (other than the peoples trust), and you are then forced to pay for it's use via taxes...i don't know how many ways i can tell you the same thing before you understand that THIS IS FRAUD! you try doing what banks do and see what happens!

Because banks were made TO FACILITATE THE USE OF MONEY. Don't harp on something because it does what it was created to do. Like Mezz said about not using currency- we would have anarchy without them.

What planet are you on!?! are you telling me that bits of paper with ink on it has inherent value? are you kidding me or what??

...Earth? Quit with your heavily emotional jabs and I might take you seriously and answer that.

Have you read and tried to understand anything of what i wrote above? Money is a means of exchange without the need to keep track of what we owe and who we owe it to. if you have a small community then battering for products and services is a viable way to live and get the things we need. past a certain number or if someone within said community does not want anything that is being offered but others want your wares then you can all agree together that something has value so as to allow the exchange of goods and services to take place so we can all get what we want and need to live....it's that simple. you can use monopoly money if you like...hell...you can even use dog crap if you all agree that it has value.

I don't take in everything you write as truth.

You know we don't ever deal with small community bartering when discussing macroeconomics.

If you cannot or are unable to understand that money (bits of paper and digits in your accounts) have no value, you have no idea what money is and should really do some homework of your own.

If you really believe money is only bits of paper and digits in accounts...I don't know, stop over-simplifying?

And seriously, cut the condescending elitist crap.

[[KMA]Avenger]

And seriously, cut the condescending elitist crap.

Look, firstly i have NEVER claimed you should trust my every word. i've admitted countless times here that i don't consider myself to be clever on any level. i have also admitted i skipped school as much as i could and never studied. i have also admitted i am self educated....so no need to assume that i think i am smarter or more worthy than you or anyone else. you misunderstand simple frustration speech for "condescending elitist crap".

2ndly, it is a fact we have a fractional reserve banking system...would you agree?

[[KMA]Avenger]

@ramen07: still waiting for a reply to the question below....

2ndly, it is a fact we have a fractional reserve banking system...would you agree?

[ramen07]

@ramen07: still waiting for a reply to the question below....

2ndly, it is a fact we have a fractional reserve banking system...would you agree?

Sorry, alternately didn't feel like posting and forgot to say anything about it.

Yes, we have a fractional reserve banking system.

[[KMA]Avenger]

@ramen07: still waiting for a reply to the question below....

2ndly, it is a fact we have a fractional reserve banking system...would you agree?

Sorry, alternately didn't feel like posting and forgot to say anything about it.

Yes, we have a fractional reserve banking system.

No problem....


If we both agree that we have a fractional reserve system-how can you deny that we pay for money that does not exist?

In banking at the moment, a bank can have only 10% of the money it lends in reserve, that means they are lending 90% of the money from thin air and charging you interest for borrowing....NOTHING.

I dunno about anybody else but in my book that is fraud.

[ramen07]

@ramen07: still waiting for a reply to the question below....

2ndly, it is a fact we have a fractional reserve banking system...would you agree?

Sorry, alternately didn't feel like posting and forgot to say anything about it.

Yes, we have a fractional reserve banking system.

No problem....


If we both agree that we have a fractional reserve system-how can you deny that we pay for money that does not exist?

In banking at the moment, a bank can have only 10% of the money it lends in reserve, that means they are lending 90% of the money from thin air and charging you interest for borrowing....NOTHING.

I dunno about anybody else but in my book that is fraud.

They're charging interest for you borrowing money that is already invested elsewhere. A sort of weight behind "you better pay us, because we're relying you on paying us". Didn't you say money as it is now is only debt and promissory notes to pay a debt? So if they're investing money elsewhere that that will return at least face value of the investment, the money is there, it exists. If the investment returns below face value, it's a bad investment, boo hoo. But lending is inherently risky, so I don't see a problem with a known risky thing being, well, risky.

I guess I'm trying to say that they're lending money which may or may not be there, but is expected to be there in the long run. If you look at the situation at one single moment, yes, it is technically lending money from thin air. But that's not the point of macro economics, is it

[[KMA]Avenger]

That's not how fractional reserve banking works.

FR Banking came into existence when it was discovered that the bankers were selling/borrowing/lending gold receipts for gold that didn't exist and then charging interest for money that does not exist anywhere in the system... it does not exist even as you say "They're charging interest for you borrowing money that is already invested elsewhere. A sort of weight behind".

When that truth became out it threatened to bring down the whole financial system, Governments were forced to pass laws to allow the banks to carry on the practice of fractional banking....it's as simple as that. go read the history books and the parliamentary and congressional records, it's all there how they legalised counter-fitting money into existence.

[ramen07]

That's not how fractional reserve banking works.

Taken from the fractional reserve banking wiki:

Fractional reserve banking allows people to invest their money, without losing the ability to use it on demand. Since most people do not need to use all their money all the time, banks lend out that money, to generate profit for themselves. Thus, banks can act as financial intermediaries — facilitating the investment of savers' funds.[2][34]

[[KMA]Avenger]

Also taken from Wiki (not that i have any faith in Wiki to give me the real history of banking and the system we have today. hence why i listed my sources as the parliamentary and congressional records).

Fractional-reserve banking is a form of banking where banks maintain reserves (of cash and coin or deposits at the central bank) that are only a fraction of the customer's deposits

Look, don't take my word for it and don't take what Wiki says as gospel. go read the records and see for yourself! Otherwise, even if you accept my word right here and right now without your own investigation as to the validity of the knowledge (regardless of the source) makes the knowledge worthless.

[ramen07]

Also taken from Wiki (not that i have any faith in Wiki to give me the real history of banking and the system we have today. hence why i listed my sources as the parliamentary and congressional records).

Fractional-reserve banking is a form of banking where banks maintain reserves (of cash and coin or deposits at the central bank) that are only a fraction of the customer's deposits

Look, don't take my word for it and don't take what Wiki says as gospel. go read the records and see for yourself! Otherwise, even if you accept my word right here and right now without your own investigation as to the validity of the knowledge (regardless of the source) makes the knowledge worthless.

Wiki is not gospel. That said, both parts we quoted say the same thing. But somehow yours makes it bad?

And on your history of banking...isn't history written by the winners?