Wealth distribution

[HoreTore]

Well then, rather than just playing troll, why don’t you impart some real wisdom and insight to the problem?

Why don’t you actually contribute something rather than wasting everyone’s time.

You know, be relevant.

The only two things you have offered, is a claim that fractional reserve banking is a big, scary monster treathening our monetary system and that we would be better off on the gold standard.

I believe I have explained how fractional reserve banking is a fundamental part of how banks work(how else would they get money to loan out?), and how they have always worked, and that gold is just as arbitrary a currency as our current cotton is.

What more do you want to know?

[Myth]

I believe I have explained how fractional reserve banking is a fundamental part of how banks work(how else would they get money to loan out?), and how they have always worked, and that gold is just as arbitrary a currency as our current cotton is.

No one argues that this has always been the case. We are arguing that the ever growing debt will implode the system sooner or later. That it has always worked like that (banks are relatively new compared to our total years of history) doesn't make it right or good for us. If you think that the USA debt and the IMF/World Bank are good things then there is no point arguing. Sometimes I wonder if you are being incentivized to always state and bold/underline the mainstream position on every single topic in existence and ridicule any way of alternative thinking.

[HoreTore]

No one argues that this has always been the case. We are arguing that the ever growing debt will implode the system sooner or later. That it has always worked like that (banks are relatively new compared to our total years of history) doesn't make it right or good for us. If you think that the USA debt and the IMF/World Bank are good things then there is no point arguing. Sometimes I wonder if you are being incentivized to always state and bold/underline the mainstream position on every single topic in existence and ridicule any way of alternative thinking.

I have not made the claim that there is sufficient liquidity in the system at present. In fact, I am of the opinion that there's not enough liquidity, and that banks are allowed to operate at risk levels higher than what we need to have a stable market. I am also of the opinion that the various tools designed to hide/distort risk are incredibly dangerous, and undermines what stability there is in the market, and we saw the results of that in 2008.

My criticism towards you and Fisherking is your use of fractional reserve banking as explanation of the cause of it. That's what's nonsense and where you go wrong.

Also, reread my post. When it comes to fractional reserve banking, it operates now just like it has always done. The situation today is no different than in 1960, 1860 or 1760.

[Sarmatian]

My criticism towards you and Fisherking is your use of fractional reserve banking as explanation of the cause of it. That's what's nonsense and where you go wrong.

He is correct somewhat in a sense that if banks had higher reserves, we wouldn't feel the depression so much as banks would have been able to cover bigger part of their losses from the reserves, but that is definitely not the reason we had depression.

The problem with higher bank reserves is that it makes the amount of money in circulation smaller, thus making investments more expensive. So, if we, for simplicity sake, say that because of the depression the 100$ we had became 90$ and if banks had higher reserves we would have lost less. That's true, but the economy wouldn't have developed as much so we would have had only 90$ in the first place and lost 2$, bringing our current wealth to 88$ - a net loss. A lot of it is psychology, a subjective feeling of loss

Bigger problem with the banks, especially in the US, is the risk factor, which is what really needs to be addressed.

On to the topic at hand - we've seen that the current model isn't the best. It needs to be tweaked. Taxation needs to be more fair, but naturally, it's much more complicated than it sounds.

I'd prefer if the state took a more active role in promoting social mobility, and adjust taxes (specifically for the wealthy) accordingly to that effect.

[HoreTore]

He is correct somewhat in a sense that if banks had higher reserves, we wouldn't feel the depression so much as banks would have been able to cover bigger part of their losses from the reserves, but that is definitely not the reason we had depression.

Indeed, and that's what "not enough liquidity" means. The problem isn't fractional reserve itself(that would be absurd), but rather where the balance between access to credit and stability lies.

I would argue that 2008 showed us it's too far on the access to credit-side, and that we need to reign it back a little to the stability-side.


That's here the actual, sane discussion is. Screaming about "fake money", "return to the gold standard" and "money is debt" is nonsensical and does nothing else than to make a hard topic even harder.

[Fisherking]

The only two things you have offered, is a claim that fractional reserve banking is a big, scary monster treathening our monetary system and that we would be better off on the gold standard.

I believe I have explained how fractional reserve banking is a fundamental part of how banks work(how else would they get money to loan out?), and how they have always worked, and that gold is just as arbitrary a currency as our current cotton is.

What more do you want to know?

No you haven’t. No new information there. Unless you care to go back and edit some in.

Just drivel because you think you might be able to convince someone that you think you smell a conspiracy. So you couldn’t possibly watch a video so were on the same topic.

You seem to be either a crypto conservative or a raving paranoid on the topic.

But seeing as how you already know it all, please share you knowledge.

If you know how it works then you also know the pitfalls. Care to tell us any of those?

Why must the money supply be ever growing? What is the result when it stops?

Tell us about business cycles and what they do.

Show us why it can just go on for ever and ever.

[Ironside]

Why must the money supply be ever growing? What is the result when it stops?

If you have an increase in total wealth, then you'll need more money to facilitate it. Inflation is prefered since spending is prefered. One meassurement of how much money exists are how fast the money changes hands. The more hands, the more people has actually done something with the money.

A stopped growth would be problematic yeah. But that isn't exactly helped by the gold standard. The big flaw with gold standard are that it's a limited resource. That means two things. First, without finding more gold, the amount of money can't increase. That means that for me to get more money, someone else has to lose money. A 0 sum game instead of growth. The second is that gold may have a fixed price in that standard, but that doesn't mean that gold has a fixed price in reality.

Say that Indian gold jewellry is going up (again). Then you can get the funny situation that none wants to sell gold to the US for money, because Indian jewellry gives twice as much. Or the Swedish goverment sells the gold reserve to India for jewellry and gets payed twice as much. Then they'll ask the US to trade that money for gold. Repeat until the gold market breaks or people shuts down the market because you're breaking the system.

To put it simple. It's very easy to break the gold standard nowadays. Spain broke their own silver market historically. By finding too much silver in the new world.

[HoreTore]

If you have an increase in total wealth, then you'll need more money to facilitate it. Inflation is prefered since spending is prefered. One meassurement of how much money exists are how fast the money changes hands. The more hands, the more people has actually done something with the money.

A stopped growth would be problematic yeah. But that isn't exactly helped by the gold standard. The big flaw with gold standard are that it's a limited resource. That means two things. First, without finding more gold, the amount of money can't increase. That means that for me to get more money, someone else has to lose money. A 0 sum game instead of growth. The second is that gold may have a fixed price in that standard, but that doesn't mean that gold has a fixed price in reality.

Say that Indian gold jewellry is going up (again). Then you can get the funny situation that none wants to sell gold to the US for money, because Indian jewellry gives twice as much. Or the Swedish goverment sells the gold reserve to India for jewellry and gets payed twice as much. Then they'll ask the US to trade that money for gold. Repeat until the gold market breaks or people shuts down the market because you're breaking the system.

To put it simple. It's very easy to break the gold standard nowadays. Spain broke their own silver market historically. By finding too much silver in the new world.

To add to that: George Soros sure taught you Swedes how much fun it is with fixed values on currency....

[Myth]

Having worked for a US company in the past, and currently employed in a subsidiary of a pretty big corporation now ($2 billion annual turnover) I see this time and again - growth, growth, growth! Always growth. Growth is to be expected. 10% growth year-over-year. No growth? Manager's heads start rolling.

But you see, growth can't come faster than what the limits are of our physical planet and the finite resources we are exploiting. Sooner or later we will hit a wall, and some corporate douches will insist on more growth. It's going to be sad and funny at the same time.

[rvg]

But you see, growth can't come faster than what the limits are of our physical planet and the finite resources we are exploiting. Sooner or later we will hit a wall, and some corporate douches will insist on more growth. It's going to be sad and funny at the same time.

Even if the economy is stagnating doesn't mean that an individual company cannot keep growing. You can always take the business away from the competition and grow that way.

[Myth]

Doesn't change the fact that at some point we won't be able to grow because there won't be more resources to transform in actual goods/services. The artificial growth because of fake money can never be matched by actual goods produced. Even if you oust every other competitor and just have Megacorp PLC as the supplier of EVERYTHING they will still want growth.

[rvg]

Doesn't change the fact that at some point we won't be able to grow because there won't be more resources to transform in actual goods/services. The artificial growth because of fake money can never be matched by actual goods produced. Even if you oust every other competitor and just have Megacorp PLC as the supplier of EVERYTHING they will still want growth.

I doubt we need to worry about this scenario. While theoretically possible it is practically unattainable.

[Fisherking]

LOL and the liquidity disappears where?

What part of the lending process negates the 0 sum game?

The gold standard was only a means of international money transfer. It was fixed by governments to a fixed amount in gold. But in order to increase money supply, reserves had to be increased.

Fait money is not the problem, as long as people have confidence in the value of the currency.

The system is not the same as it always was. The Banking systems of the past were not in control of currency. Governments were.

The problem is when banks create the money (or credit/debt). Repaying the loans result in no loss to the economy. Interest =Bank profits spent on operating costs and dividends put some of the interest payments back into circulation.

Bank investment, however, acquires real property (wealth) and concentrates it into fewer hands. In the past investment banks and lending banks were separate. That has also changed.

Simple taxation can not reasonably make up the difference. Governments too are borrowers. Their taxation merely goes to service their debt. Governments don’t control their currencies today, Central Banks do.

At some point the whole thing has to tumble down. Be it governments defaulting or banks defaulting or both.

It produces inequities but it has worked to some degree for over 300 years.

Sure it has.

There have been collapses too in the past. Something left out of HT’s “it’s just the way its always been“.
These were just extremes in the cycle.
Too in the past everything was more localized. A particular bank might default depriving a community. Then it was whole nations. Today we have a globally interconnected system. What happens when it reached the breaking point. Do we need to test it?

We just need to find a better way of doing things.

Can’t we find a means to enrich those who produce wealth rather than those who simply make money available? Otherwise, we all become slaves to debt, if not on a personal level, at least on a governmental one.

Because if we don’t, we will surely end up with a barter system again.

[Husar]

A 0 sum game instead of growth.

It's still a zero sum game even with growth because if you gain money, the other person's money is now worth less even if you didn't take any of it away nominally. It's called inflation. That's why, when a bank gets your money and gives you 1% interest p.a. and there is an inflation of 2% p.a., the bank isn't really giving you money, it only compensates 50% of your loss.

[Beskar]

Please keep posts to an intelligible level above quoting an entire post and simply reply with "lol" or baseless answers or attacks. Thank you.

[Ironside]

It's still a zero sum game even with growth because if you gain money, the other person's money is now worth less even if you didn't take any of it away nominally. It's called inflation. That's why, when a bank gets your money and gives you 1% interest p.a. and there is an inflation of 2% p.a., the bank isn't really giving you money, it only compensates 50% of your loss.

There's quite a difference between growth and inflation. Since wiki gave me the numbers to calculate with. USA got about 30% more money between 2005-2009, while the combined inflation was about 10%.

The situation you describe can happen when the banking Prime rate is low and you have high inflation.

[Husar]

There's quite a difference between growth and inflation. Since wiki gave me the numbers to calculate with. USA got about 30% more money between 2005-2009, while the combined inflation was about 10%.

The situation you describe can happen when the banking Prime rate is low and you have high inflation.

I actually mistook growth in general with just growth of the available money. If the money is invested and the investment provides a proper value, then the inflation won't be as high as the percentage of new money. I was still aiming at the fact though, that humans usually do not compare themselves with others in absolutes but see how they do relative to others and in that sense the growing wealth gap means that while some are getting richer, others become poorer, relatively speaking. It may not be great but as Fragony likes to say, it is how it is.

[Andres]

I'm not an economist, but what little I do know about money is, that it is created when needed. When there's a high demand, money will be created. Banks will lend out more than they have. The difference between the interests they charge and the interests they give, is also creation of money. Fractional reserve banking is as old as banking itself, nothing evil or conspiracy about it. It's just one of the key elements of banking.

Concerning weatlh distribution, some random thoughts or ideas:

1) in our current system, shareholders own the company. However, shareholders are not the only stakeholders in a company. Wouldn't it be more fair to make the workers in the company co-owners and let them have a say in the decision making process? Wouldn't it be more fair to let all workers combined be co-owner of the business they work in? Or even further: once the investor has earned his money back, with a certain compensation (profits): shouldn't it then be so that the labourers get ownership of the entire company?

2) when we talk about countries, we all say that democracy is the way to go. Quid with multinationals who are, in reality, mightier than countries and who are able to influence governments? Shouldn't we install a certain system of democracy when a certain treshold is reached? Should this be government control or more a combination of 1) together with a say in how it's run by either a democratically elected body or a union of consumers?

3) Alternative for 2): when companies get too much power, shouldn't they be forced to shrink (split)? Shouldn't we make it forbidden for companies to grow beyond a certain treshold, since that would give them too much power; power that has no democratic legitmacy at all and which democratically elected bodies cannot control? Do such powerful multinationals belong in a democracy? If our governments become a joke compared to their power, are we then still living in democracies? Shouldn't we let go of our self-righteous attitude and our superiority complex vs. those parts of the world that are not, on paper, democracies "like us" (but we aren't!), and admit that we have a problem?

4) continuing on the line of thought of 3): is it ok for somebody to have so much wealth that he can exercise, de facto, power over thousands of people; power he didn't get from the people, but he simply has because he is wealthy? Shouldn't there be a treshold, a certain cap on how much wealth (=power, but not given by the people) one individual can obtain?

5) Meritocracy: does the possibility to inherit wealth belong in a meritocracy? Shouldn't we get rid of inheritance laws? Whatever you leave after your death, gets redistributed instead of handed over to the lucky bastard who came out of the right vagina? Kings and Queens get this critique, but doesn't that go up for sons and daughters of billionaires?

6) On top of 5): free education for everybody and banning of private schools. No more quality labels and "best schools"; all education public and of the same quality. Wouldn't that be more in the line of equal chances for everybody?

7) a basic income for everybody. We live in times of overproduction and technological innovation which leads to the disappearence of jobs. Is it still morally justifiable to let people rot, whatever their attitude in life (as if being poor is an attitude problem )? If we have the means to guarantee every human shelter, food, water, heating and education, then shouldn't we consider reaching that goal a priority above all?