Where Does Your Money Come From (part 3 cont'd)

I've wasted way to much time with a loser who sits around calling me a liar.
Bye.

 

So in reality banks needed 1% reserves for the amount of loans they made. I don't lie, I simply explain the system as it is with out any other nonsense.

 

Yes, you got caught in one of your lies and bailed!! Good riddance!

 

Just to clarify for anyone who reads this.

In 2007 banks had less than $10 billion in reserves and made over $6.25 trillion in loans.

Now explain to me how a bank needs reserves to make loans!! LOL!!!

People get exposed in this forum with facts!! Now they are running like babies!

 

Between this one, the one about the creation of the Fed, and the one about the gold standard, this has been a great series of threads to read, minus the occasional devolution of the discussion into personal attacks and mud-slinging. Thanks everyone for contributing. One conclusion I've drawn from all this is that the idea of gold having an intrinsic value as money is a myth. Money and currency are really just abstractions of something valuable, which may be as concrete as labor to build a house or raise a chicken, but can also be in less tangible forms like arts and entertainment. I look at it like this: under a gold standard, if you need more gold, you dig it out of the ground. Under fiat, if you need more money you just have the government create it out of thin air and then "bury" it somewhere. The common criticism is that the government buries it in meaningless military conquests; but in the 60s they buried it on the moon. All that money buried on the moon spurred an entire industry of rocket scientists, engineers, pilots, and skilled laborers to design, build, and fly a rocket to the moon to get the money. Personally, I prefer the government bury the money in more useful places like infrastructure; but even flying to the moon turned out to have a more positive impact on society than digging in the ground for gold ever did.

Seems like the bottom line is - and this is crossing multiple threads at this point - some people trust "the government" to decide about what activities are worth producing money for, while others would prefer "the market" be the sole determiner of that. I see the negatives of the market being worse than the negatives of the government.

 

Another troll thread? Wish the mods would simply close this trash.

 

LOL!! I'm sorry you do not understand it.

 

The Libertarian's are all over this place. It's pretty easy to tell a Libertarian once they start saying crazy things about gold and go off on their anti-Govt rhetoric. And it's impossible to debate with them because they deal in a philosophical world that is not tied to any objective facts. They can not quantify their theories and when you ask them to, they will simply say that "you can't quantify economics because you can't predict human actions".

So basically their theory is... "Our theory works because we say it works". And even though not a single country in the entire world uses this theory they still believe there is some worldwide Govt conspiracy to destroy countries by using a much inferior system of fiat money.

Basically they still wear tin foil hats and collect canned goods.

 

Aren't comments like this by definition "trolling?"

 

Funny thing is I appreciate a lot of what the Libertarians have to say about individual freedom, etc. I do disagree with their idea that returning to the gold standard would fix anything. Whether it's gold, fiat currency, or offering handies... it all boils down to putting a carrot on a stick to encourage people to be productive or add value. I think your underlying thesis is that our currency is ultimately backed by American productivity, not the promise of dollars or gold. I agree with that.

 

Exactly, productivity is all that matters. The reason why countries choose fiat is because it allows their productivity to be represented by their own currency rather than a commodity that anyone in the world can find. This is why the EU created the Euro... they wanted a larger base of productivity to compete with the US and China. However the Euro is a disaster because they basically turned the countries in to states that are revenue constrained just like under the gold standard.

Greece is a perfect example of what happens under the gold standard.

 

Look at the opening paragraph... this is a Troll thread and is purely meant to keep asking the same questions... over and over.

 

No the US chose fiat because the cartel between banks and government known as the Fed is able to benefit the most at the expense of consumers and taxpayers by creating money out of thin air.

No, the Euro was created so that Europe could centralize its debt burden and continue financing its unrealistically lavish welfare state. Like all fiat currencies, the Euro is failing because it didn't have centuries of (at least partial) gold backing like the dollar did.

Greece was not under a gold standard at any time in recent history.

 

I never said they were. I was saying Greece's situation is comparable to what happens when countries are on a gold standard.

 

No it's not. There is not one example in history of something like that happening to a country on a receipt gold standard.

 

I'm not talking about a receipt gold standard.

 

So you're talking about fractional reserve banking?

 

No I'm talking about the gold standard.

 

Define "gold standard".

A currency that is backed 100% by a commodity is said to be a receipt standard.
A currency that is backed by less than 100% but more than 0% of a commodity is said to be on a fractional reserve standard.
A currency that is backed 0% by any commodity is said to be on a fiat standard.

So if you're not referring to a receipt gold standard, and you're not referring to a fractional reserve gold standard, what are you referring to? (A fiat gold standard is an oxymoron).

 

Fractional reserve standard is just a banking concept that means banks have to hold a certain amount of reserves based on their deposits. You can have a fractional reserve standard with gold or fiat.

I'm talking about the gold standard where a currency has a fixed exchange rate for gold and the gold is the basis for reserves.

 

I read your OP in the Fed thread and find your claim an interesting one, but as of yet unproven.

Source? That is definitely not how the idea was sold to the member states.

Are you saying if the Euro were backed by gold then the Eurozone wouldn't be experiencing a sovereign debt crisis?