First, to my original point, a fixed money supply does not allow for fractional reserve banking -- By definition, fractional reserve banking varies the supply of money. Second, I don't remember massive inflation caused by the sale of unregulated securities, though I do remember a massive speculative bubble bursting and an economic crash.
>> ^bmacs27:


Fractional reserve banking has nothing to do with the medium of exchange. Banks have engaged in fractional reserve banking since long before the abolition of the gold standard. A better argument is that the securitization of debt (deregulation of finance) has caused massive inflation by encouraging the underwriting of bad debt by allowing the risk to be sold off.

First, I'm not proposing anything -- I was just pointing out that inflation and speculative bubbles could be largely mitigated making the supply of money fixed. Second, a fixed money supply does not presuppose (or require) price fixing, so you can still use various property as a value store.
>> ^bmacs27:

Further, the video doesn't seem to explain that in our current system I can use my wages to purchase gold at market, and can thus use it as a store of value (if I actually believed it to be fairly valued against e.g. wages or real estate). In the government price fixing system you are proposing that wouldn't be possible, and the value of my gold would be subject to systemic risk (bad policy) just like currency is today.
>> ^davidraine:
I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is not true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.

To give a response to the video at large, I think it's intentionally trying to get people to misplace blame.

Why doesn't inflation cause wages to go up? Why do corporations get to raise prices, but labor never gets to raise the price of their labor? Is it because labor is in a weaker bargaining position?

Why is that? Could it have anything with decreased union membership?

Also, it sorta ignores the fact that the worst decade for the middle class in our lifetimes was 2000-2010, which also was a period of the lowest average inflation we've had since WWII.

Now let's get real about cui bono from inflation. If the bulk of your wealth is in assets like houses, stocks, commodities, etc, inflation doesn't hurt the real value of your holdings. Hell, in straight dollar terms, it makes your bottom line go up.

But what if you're an investment bank, and most of your wealth is comprised of debt owed to you? In this case, inflation is bad, very bad. Debts are issued in fixed dollar amounts for a fixed interest rate. Inflation means the dollars coming back into you are worth less than the dollars you doled out at the start of the loan. If inflation exceeds the interest rate you issued, you might actually lose money on the loan!

So it turns out that the bankers very seriously want hard money. If they could get away with it, they'd prefer to see deflation all the time, because that means the money coming into them is worth more than the dollars they paid out!

The only logical reason to think fiat currency might be helping redistribute wealth upwards is if you believe capitalism is a rigged game from the get go. But the answer to that isn't to get people mad at the government, it's to get people mad at the founding building block of capitalism -- banks.

>> ^davidraine:

>> ^crotchflame:
Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.
So what is it they're calling for here?

I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is not true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.


Fractional reserve banking has nothing to do with the medium of exchange. Banks have engaged in fractional reserve banking since long before the abolition of the gold standard. A better argument is that the securitization of debt (deregulation of finance) has caused massive inflation by encouraging the underwriting of bad debt by allowing the risk to be sold off.

Further, the video doesn't seem to explain that in our current system I can use my wages to purchase gold at market, and can thus use it as a store of value (if I actually believed it to be fairly valued against e.g. wages or real estate). In the government price fixing system you are proposing that wouldn't be possible, and the value of my gold would be subject to systemic risk (bad policy) just like currency is today.

>> ^davidraine:

>> ^crotchflame:
Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.
So what is it they're calling for here?

I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is not true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.


There's nothing about inflation or speculation that requires fiat money. You could argue that bubbles are made worse by fiat but they aren't avoided completely without them and a fixed money supply leaves you no monetary policy to readjust (this adjustment can both expand during a recession and contract to slow a bubble - which Greenspan famously didn't do). Most of the problems cited in this video are very real, but they're not directly the result of fiat but rather bad policy. It's like saying because people occasionally steer into things, cars shouldn't have steering wheels.

>> ^crotchflame:

Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.
So what is it they're calling for here?


I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is *not* true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.

>> ^xxovercastxx:

>> ^NetRunner:
But the more I think about it, maybe he was on to something. In a sense, he's right -- money isn't real.
Oddly, I was thinking about this just a few weeks ago.
It's not that money isn't real, though, it's that it's an abstraction. Prior to money people traded labor: You give me 10 fish (the product of your labor) and I'll give you an axe (the product of my labor).
All money does is give us a convenient way to carry "labor" around. I sell an axe for $5 and the money represents that labor contribution. Now I can buy $5 worth of fish from you whether or not you need a new axe.
I think it's one of those things that most of us know, but we never really consciously think about.
The only other way "money isn't real" that I can think of is that whole it's-only-valuable-because-we-all-agree-it's-valuable thing.


Honestly, that's textbook economics. It's part of why I'm so hard on people who talk about "fiat currency" as if that's not redundant. It's all fiat. Using gold as currency is still done by fiat. Money in any form is an abstraction, just like property.

In addition to my overall point (he gave up the game!), I was also trying to hint that if you're an atheist who rejects religious faith as a basis for moral doctrine, then you should also approach the doctrine of money & property with the same level of skepticism.

Maybe you can come up with some independent moral justification for property, but you shouldn't just start with property as an axiom from which all morality flows, anymore than the religious people shouldn't start with the word of God as the axiom from which all morality flows. Both are tautological faith-based arguments, and should be discarded.

>> ^NetRunner:

>> ^EvilDeathBee:
"There's no such thing as money. Money doesn't exist but you believe in it"
Seriously?

You know, that struck me as so mindbogglingly dumb I couldn't believe he said that out loud, much less on television.
But the more I think about it, maybe he was on to something. In a sense, he's right -- money isn't real. Money only works the way it does because we believe it will. You have to have faith in it, or it won't do anything.
The problem that creates for him is that if that is the definition of faith, then God is just as much of a man-made fiction as money is. He only exists through our collective belief in Him, and if we stop believing, He ceases to exist as a force in our lives.
Now of course, we could always go the same route we went with money -- set up an enforcement mechanism so that if people try to operate outside the monetary system, they get jailed. That'll make believers out of everyone, right?
Maybe someday we'll realize just how right that guy was...


We already have a system which forces people to operate within the monetary system. OK, it's not as extreme as your example, but courts only enforce contracts if parties agree to pay compensation/damages/etc in our government's fiat currency. It's called legal tender law

>> ^ChaosEngine:

All paper currency is perceived value. That's the point of it.If that's the point of a currency, then what's the point to your original post?
>> ^ChaosEngine:

It has no intrinsic worth, but it's part of the social contract that we collectively endow it with value.So WE collectively devalued the US dollar 98% the last 40 years? We did this... to further a social contract? So it helps people to free them from 98% of their wealth???
If anything, subscribing to a fiat currency based on debt is in DIRECT violation of any social contract.
>> ^ChaosEngine:

If you want to trade gold as a currency, go aheadCan't unless people have the right to refuse payment in US Dollars. Legal tender laws prevent it.
>> ^ChaosEngine:

It's just not a very good standard. Iron would be better.Let the market decide then. Iron ore is not fungible. Plus iron is consumed. Gold is held.
>> ^ChaosEngine:

If you have tonnes of iron, you can build stuff.
As for what you measure energy cost in, well, I don't know about you, but I measure energy in joules.
I'm starting to think you're not even being serious.

Stealing is the absence of an action, which is why it is a valid human right. I'm not stealing anything from you (of my own free will) so what other action do you wish me to perform? Healthcare, or food or water for that matter, is not the absence of an action but rather material goods. If you wish to claim such things are a right (a noble goal) then you would have to ensure that you can provide those things to the 7 billion inhabitants of this planet. I wish someone could do such things but it's clearly not possible -- hence why material goods or services can never be a "human right."

In reply to this comment by NetRunner:
You really should try to walk through why you think this is somehow a trap for people who think healthcare is a right.

I feel like I've been stolen from because my government taxes me. Send me a trillion dollars to raise an army to overthrow them.

Don't bother with the Paypal, I won't accept your fraudulent fiat currency. Gold bars are the only form of payment I'll accept.

C'mon, cough it up, this is a matter of human rights, and you have an obligation to me that extends beyond any form of government practical ideas about how to best guarantee those rights.


In reply to this comment by imstellar28:
We aren't talking about taxes we are talking about human rights. If it is human right you have an obligation to me that extends beyond any form of government, yes?

So, do you want my PayPal address?
>> ^NetRunner:

>> ^imstellar28:
Also, I'm feeling a little under the weather today. Can you guys go ahead and send $100 my way so I can pick up some medicine at the store?

Yes, as long as what we're really talking about is me paying my taxes, and that gets used to pay for your (and my) medical bills.

You really should try to walk through why you think this is somehow a trap for people who think healthcare is a right.

I feel like I've been stolen from because my government taxes me. Send me a trillion dollars to raise an army to overthrow them.

Don't bother with the Paypal, I won't accept your fraudulent fiat currency. Gold bars are the only form of payment I'll accept.

C'mon, cough it up, this is a matter of human rights, and you have an obligation to me that extends beyond any form of government practical ideas about how to best guarantee those rights.


In reply to this comment by imstellar28:
We aren't talking about taxes we are talking about human rights. If it is human right you have an obligation to me that extends beyond any form of government, yes?

So, do you want my PayPal address?
>> ^NetRunner:

>> ^imstellar28:
Also, I'm feeling a little under the weather today. Can you guys go ahead and send $100 my way so I can pick up some medicine at the store?

Yes, as long as what we're really talking about is me paying my taxes, and that gets used to pay for your (and my) medical bills.

Just wait until we start nano-manufacturing gold. =P

>> ^blankfist:

And the fiat currency system it rode in on.

>> ^rottenseed:

The planets align as we all come into agreement that everybody hates the federal reserve>> ^quantumushroom:
It's wrong to judge others by appearances, but look at these people: subnormal on the left who forgot to take the hanger out of his jacket and Sister Goofus on the right, nodding at the incoherent blather of Stuck-In-The-80s-Hairpoof in the front.
Can't fault dis-grayson on this one.



And the fiat currency system it rode in on.

I guess you can call what the Fed deals with "*money," even though at this point, it's barely a fiat currency, based on electrons on a computer screen and the wealthy few making arbitrage against the millions of fleeced sheeple.. err.. "hard working americans."

No. It may jumpstart it temporarily but as you print more money, the value of the dollar drops, and then we're stuck with inflation. And so to incentivize people to spend money in an inflated economy the Fed then in turn manipulates interest rates (cheap credit) and creates market bubbles that give the impression people are making more money because more money is available than before and there's no major change in interest rates, so it's cheap credit.

And so because credit is cheap we no longer spend from savings, but spend from credit. That means we don't save our money before buying that TV or buying that car, but instead buy it on credit. This poses a major problem because we become accustomed to living in debt, and we tend to spend more. And why shouldn't we when saving money means it will be devalued over time based on inflation.

Between 1813 and 1913 the cost of gold per ounce remained rather steady (approx. $30/ounce), and it wasn't until we abandoned a value backed currency (meaning currency that cannot be printed out of thin air like the Fed has been doing since 1913) that we saw increases from 1913 to 2010. Today gold is closer to $2000/ounce. This is why saving money in a bank is a bad investment (and so is saving your cash in a coffee can) and therefore people are incentivized to spend from credit and invest in risk retirement investments.

Capital is savings. Capitalism is spending from savings. What we have now isn't not true Capitalism, but rather spending from credit, i.e., spending from debt. And it's dangerous. Eventually the dollar bubble will pop, and we'll most likely be left where the Germans were after WWI with a worthless currency they burned in the winter to stay warm.

The largest scam of the fiat currency system, however, is who is rewarded and who is most strongly affected negatively. when money is printed, the government, the banks and the military industrial complex receives the money first and spends it before "inflation" drops the value. It then gets circulated through society, and the last people to have their cost of living adjusted for inflation tends to be those on Social Security. It's really an unfair and cruel system.

Anyhow, that's the gist of it as far as I understand it.

Looks like someone swallowed the red pill in a fiat currency system.