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Borsuc



Joined: 29 Dec 2005
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Borsuc
revolution wrote:
It is generally easier to convert all goods and services into a common agreed form to facilitate efficient trading. Hence we have money. It is not evil, it is about efficiency of trading and, in general, society is better able to progress with money as a bartering system.
this is a pretty childish view of money. Under that view, how would money get into the system in the first place? In a more real sense, money is debt.

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Post 30 Nov 2009, 20:07
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Azu



Joined: 16 Dec 2008
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Azu
Borsuc wrote:
Under that view, how would money get into the system in the first place?
It gets made out of practically nothing Razz so we must trust the government to be honest about it.

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Post 30 Nov 2009, 21:03
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ManOfSteel



Joined: 02 Feb 2005
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ManOfSteel
Precious metals have historically been used as money. They were replaced by banknotes not so long ago.
In the US, banknotes were imposed (literally) by an executive order signed by Roosevelt.

For a long time, banknotes were still backed by gold stored in central banks safes and the value of money was based on it -- the famous Gold Standard.

However this became impractical and a hindrance on growth, so today banknotes are backed by, well, nothing at all.
As Azu said, you must trust governments that have, most of the time, a monopoly on printing them.

So money's *real* value = cost of paper & printing + trust in your government or in the US/EU/Japan governments.

Ask Zimbabweans how much they trust their currency and their government, hmm.
Post 01 Dec 2009, 00:32
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Borsuc



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Borsuc
Azu wrote:
It gets made out of practically nothing Razz so we must trust the government to be honest about it.
No that still doesn't answer my question. yes, the government can print money, but who gets the money? Them? Why have taxes then?

The thing is that it doesn't quite work that way. Government issues treasury bonds, which have to be "paid back" within a certain time frame (say 10 years). They pay it "back" with taxes. Some sort of a special "loan".

Without loans or debt there would be no money. Without debt, where would the money get "injected"? We all know money can't be 'mined' like precious metals.

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Post 01 Dec 2009, 03:51
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Azu



Joined: 16 Dec 2008
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Azu
Borsuc wrote:
Azu wrote:
It gets made out of practically nothing Razz so we must trust the government to be honest about it.
No that still doesn't answer my question. yes, the government can print money, but who gets the money? Them? Why have taxes then?

The thing is that it doesn't quite work that way. Government issues treasury bonds, which have to be "paid back" within a certain time frame (say 10 years). They pay it "back" with taxes. Some sort of a special "loan".

Without loans or debt there would be no money. Without debt, where would the money get "injected"? We all know money can't be 'mined' like precious metals.
That's why some people think it should be something useful (or at least rare) in itself.

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Post 01 Dec 2009, 08:45
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Borsuc



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Borsuc
Azu wrote:
That's why some people think it should be something useful (or at least rare) in itself.
Still flawed. If it has to be mined, and mining is not proportionate to its value, then the ones who own the drilling corporation would get rich easily. In fact, so easily, that some people may not even want to trade for that precious material.

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Post 01 Dec 2009, 20:03
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sleepsleep



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sleepsleep
to be frank, i don't understand why gold is so special???
and i think fasm sources worth more than gold.

we all been intoxicated with such idea since we all small. and it is the gold mining company goal to make us believe gold worth more than life.
yeah gold shines, (pretty) but marble, crystal, diamond, even the silver stuff also looks nice.

and let say if we ditch the perception "gold worth more than life" then eventually, we will come to another point,

"what actually worth on earth" ?????????????????????????

then we see life itself, knowledge, insight, ideas, technology, sharing... and more.
Post 01 Dec 2009, 20:33
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Azu



Joined: 16 Dec 2008
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Azu
Borsuc wrote:
Azu wrote:
That's why some people think it should be something useful (or at least rare) in itself.
Still flawed. If it has to be mined, and mining is not proportionate to its value, then the ones who own the drilling corporation would get rich easily. In fact, so easily, that some people may not even want to trade for that precious material.
Hence my previous suggestion of
Azu wrote:
replace money with something useful in itself, like, say, power(not the political kind)


E.G. electricity, or stored chemical power like batteries, gas, etc.




Although I'm not sure how such a system would be implemented lol (might be to bulky). So maybe that's a dumb idea too. Ah well.




sleepsleep wrote:
to be frank, i don't understand why gold is so special???
and i think fasm sources worth more than gold.

we all been intoxicated with such idea since we all small. and it is the gold mining company goal to make us believe gold worth more than life.
yeah gold shines, (pretty) but marble, crystal, diamond, even the silver stuff also looks nice.

and let say if we ditch the perception "gold worth more than life" then eventually, we will come to another point,

"what actually worth on earth" ?????????????????????????

then we see life itself, knowledge, insight, ideas, technology, sharing... and more.
Rare minerals can be used as currency since even a small amount has high value, so it is easy to trade them back at forth. But like Borsuc said, the mining corporations get too much advantage.
If you want something for prettiness there are way cheaper alternatives.

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Post 01 Dec 2009, 21:11
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ManOfSteel



Joined: 02 Feb 2005
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ManOfSteel
Borsuc wrote:
The thing is that it doesn't quite work that way. Government issues treasury bonds, which have to be "paid back" within a certain time frame (say 10 years). They pay it "back" with taxes. Some sort of a special "loan".

What treasury bonds have to do with the type of money we've been talking about here?
Yes they are loans and they're usually issued by the government to finance the public debt. But what do you mean by payed with taxes? Who pays taxes to whom? BTW, some bonds are traded internationally, so no taxes here.
Post 01 Dec 2009, 21:23
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Azu



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Azu
ManOfSteel wrote:
Borsuc wrote:
The thing is that it doesn't quite work that way. Government issues treasury bonds, which have to be "paid back" within a certain time frame (say 10 years). They pay it "back" with taxes. Some sort of a special "loan".

What treasury bonds have to do with the type of money we've been talking about here?
Yes they are loans and they're usually issued by the government to finance the public debt. But what do you mean by payed with taxes? Who pays taxes to whom? BTW, some bonds are traded internationally, so no taxes here.
The citizens pay taxes to whichever country they belong to. Then the countries trade the money with eachother.

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Post 01 Dec 2009, 21:26
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ManOfSteel



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ManOfSteel
sleepsleep wrote:
to be frank, i don't understand why gold is so special???

Anything difficult to mine/extract will really do: gold, silver, gemstones, oil, uranium. Whatever...

If you want a moneyless society, you must put an end to *any* form of *exchange* and only *distribute* products. Nothing else will work. All you'd get otherwise is barter, which is not practical and is virtually impossible in an industrialized world like ours.
Needless to say there cannot be any private property of the means of production for your moneyless society to exist.
Post 01 Dec 2009, 21:34
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Azu



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Azu
ManOfSteel wrote:
sleepsleep wrote:
to be frank, i don't understand why gold is so special???

Anything difficult to mine/extract will really do: gold, silver, gemstones, oil, uranium
, and brain tumors!

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Post 01 Dec 2009, 21:49
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Borsuc



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Borsuc
ManOfSteel wrote:
What treasury bonds have to do with the type of money we've been talking about here?
Yes they are loans and they're usually issued by the government to finance the public debt. But what do you mean by payed with taxes? Who pays taxes to whom? BTW, some bonds are traded internationally, so no taxes here.
If the gov cease to issue new bonds, money would fall out of circulation. Completely.

Let's assume there is only one country for simplicity. The gov issues treasury bonds, and gets money for free from the Fed (which is private). It uses money in whatever way it pleases, but it has to pay it back after the term (i.e it is "destroyed" just as it was "created"). The way it pays it back is from its income: taxes. So actually it's not "free" money any more than a loan is "free" money, since it has to be paid back (let's ignore interest which is rebated).

For example: suppose that we have people producing stuff, but no money in circulation. How do you inject the money?

Simple. Someone takes a loan, in this case the gov, to buy others' products. Similarly others will take loans to buy his products. In the end, he pays it back. With the interest he gives back early, the bank can buy something from him, so he can pay it back fully afterwards (interest is paid first, then principal).

Nevertheless, after the loan is paid back by everyone, and assuming no one takes loans anymore, there would be no money in circulation at all. Money is never permanent, it's just debt.

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Post 01 Dec 2009, 22:44
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Azu



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Azu
How about this.. just leave all of the money in circulation how it is and don't make any more until we've paid back the dozen or so trillion we already owe.

Sound like a good plan?
Post 01 Dec 2009, 23:04
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sleepsleep



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sleepsleep
let say i formed a new country.
so i want to introduced my own currency, so, i asked bank, lend me 5 billion, bank said, ok, here, your 5 billion, but you need to pay interest 500million per year. i said ok.

so, i put the whole money 5 billion in my country, so end of the year, i owe the bank 5 billion plus another 500 million interest.

now, the market only got 5 billion circulated, where would i find another 500 million to pay as interest. (assumed i want to settle my country debt to the bank now) u see the problem here??

the problem with our current monetary system is like above. where you gonna find "extra invisible money" to pay as interest??

interest kills the monetary system but, without interest, on what reason bank should loan you the money, and how about the legal documentation, processing fee, and bank staffs gonna get their salary?
Post 01 Dec 2009, 23:26
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sleepsleep



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sleepsleep
ManOfSteel wrote:
sleepsleep wrote:
to be frank, i don't understand why gold is so special???

Anything difficult to mine/extract will really do: gold, silver, gemstones, oil, uranium. Whatever...

If you want a moneyless society, you must put an end to *any* form of *exchange* and only *distribute* products. Nothing else will work. All you'd get otherwise is barter, which is not practical and is virtually impossible in an industrialized world like ours.
Needless to say there cannot be any private property of the means of production for your moneyless society to exist.


let me have a few days brainstorm to really think what you wrote above.
thanks.
Post 01 Dec 2009, 23:30
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Borsuc



Joined: 29 Dec 2005
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Borsuc
Azu wrote:
How about this.. just leave all of the money in circulation how it is and don't make any more until we've paid back the dozen or so trillion we already owe.

Sound like a good plan?
The money you have is already a loan. It's not like it appeared in people's pockets magically. So they can't "leave it alone", consequently, they tax the shit out of you so they can pay back their debt (it seems it's catastrophically at the moment though).

sleepsleep wrote:
so, i put the whole money 5 billion in my country, so end of the year, i owe the bank 5 billion plus another 500 million interest.

now, the market only got 5 billion circulated, where would i find another 500 million to pay as interest. (assumed i want to settle my country debt to the bank now) u see the problem here??
No problem as far as I can see.

The interest you pay is part of the bank's profits, it's not destroyed money. The bank can use that money to buy something from you, so you receive that money, paying back the full amount later. Consequently, the bank also gets a product from you -- that's profit for ya'.

Example: you loan $1000, with 10% interest. You do what you do and pay off the interest (it's usually paid before the principal), so you give the bank $100. You have $900.

The bank then uses the $100 to buy something from you: you receive the $100 back, but lose a product (you sell it). You now have $1000.

Then you pay back the principal, and the money is destroyed.

--> no money in circulation anymore, but the bank won a free product. (obviously, if you used that money, you would have stirred some economic activity as well).

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Post 01 Dec 2009, 23:35
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sleepsleep



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sleepsleep
Quote:

No problem as far as I can see.

The interest you pay is part of the bank's profits, it's not destroyed money. The bank can use that money to buy something from you, so you receive that money, paying back the full amount later. Consequently, the bank also gets a product from you -- that's profit for ya'.

it is the biggest problem.
assume this happen on several million people.

each interest charged on loan makes the circulated money lesser and bank is the biggest winner in the end.
and bank don't actively use those money to buy something from people, they use those earned interest (profits) as loan to another customer.
the way they did it right now will make the money lesser and lesser in market. and eventually nobody is capable to fully settle their debt.

maybe i need to put up a calculation sort of on a loan that only charges 1% interest yearly on 10 million population, let assume bank uses 50% of its profits to purchase and another 50% to fund new loan.
then we can really see the total money in market after 10 years, and how much people owe their bank.
Post 01 Dec 2009, 23:50
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Azu



Joined: 16 Dec 2008
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Azu
Borsuc wrote:
Azu wrote:
How about this.. just leave all of the money in circulation how it is and don't make any more until we've paid back the dozen or so trillion we already owe.

Sound like a good plan?
The money you have is already a loan. It's not like it appeared in people's pockets magically. So they can't "leave it alone", consequently, they tax the shit out of you so they can pay back their debt (it seems it's catastrophically at the moment though).
What I mean is, don't make any more debt until it is already paid off.
And how does taxing help with that? Taxing just means taking the money back away from the citizens after they've earned it from you through hard work.. you don't end up with any more money than you started with, just unpaid labor!

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Post 02 Dec 2009, 00:43
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Borsuc



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Borsuc
@sleepsleep: yes that is true that it is used in more loans, that is why depressions happen (they deposit the interest, because deposits are used for loans), but if people stopped lending, then the banks would simply start to buy stuff from people or take away things if they couldn't pay their loans. The interest is merely a "I give you % of my work, because of your services (the bank's services)".

Azu wrote:
And how does taxing help with that? Taxing just means taking the money back away from the citizens after they've earned it from you through hard work.. you don't end up with any more money than you started with, just unpaid labor!
Think of a loan: what you get must be paid back. All money in circulation is a loan -- the first one comes from the government. It has to pay it back, yes to ITSELF (or rather, to the Fed, which is the central private bank in the US).

When the government CREATES money, which is actually a digital account, (the Fed actually does it) it also issues a treasury bond with it, which says that the amount it issued has to be paid back to the Fed (to destroy the money). The interest the Fed gets is rebated I think, but let's not complicate this further.

Of course people take loans if they expect to be able to pay it back, which means they must have some income. The government's income is taxes.

When the government creates money, that is not "free money", because a loan is not "free money". What is free, however, are taxes, but that's how governments work.


Here's an example to make it clearer:

Suppose there's no money in circulation. To inject money, the government issues a treasury bond and gives it to the Fed, which creates $1000 out of thin air (really).

The government then uses that money to pay someone for a product. At this point, the government has just got a product. (remember this)

Now, that product maker has $1000 in his pocket, let's say he deposits it in a bank. Someone else takes a loan of $900 (10% are reserves in this example), and uses it to buy another product from that guy. That guy now has $1900 in his account (his $1000 deposit + $900 from the sold product). He uses this money + $100 from his deposit to buy something from the second guy, giving him $1000 (he's left with $900 in his deposit only).

The second guy now pays off the interest from his loan (he made a $900 loan, remember?), and gives $90 to the bank (10% interest), which means he has $910 left from $1000. The bank staff uses this money to buy something from the first guy (not the one who took the loan). The first guy then uses that money to buy something from the second guy.

So the second guy now has $910 + $90 = $1000, and he can pay back his principal (he already paid interest) and have $100 leftover.

The $900 is destroyed when the loan is paid back leaving him with $100. The first guy did not withdrew all of his deposit, though, and still has $900 in his account. (he couldn't before take out more than $100, because of the loan, since $100 was the only remaining in the reserve).

The second guy has $100 left (he had $1000 but lost $900 principal of the loan).

Total: $900 deposit + $100 = $1000, the original amount the government issued.

Now, it can go on and on, but at some point the government has to tax them to pay it back. After a decade without the government issuing new bonds, let's say all of the money goes to the state through taxes, so the state can now pay off the bond (which had a lifetime of 10 years in this example).


What conclusions we draw from this lengthy example:

1) The government got a free product. "free" because of taxes being its income -- but notice that it actually got the product before taxes, since it was a loan -- taxes are only used to pay it back.
2) The second guy bought something from the first guy at $900 (his loan).
3) The first guy bought something from the second guy at $1000 ($900 second guy's loan + $100 from his deposit).
4) The bank staff bought a product from the first guy, with the interest of the second guy's loan.
5) The first guy then again bought from the second guy using the interest he received from the bank.

so you can see, economic activity existed even though money was just temporary debt.

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Post 02 Dec 2009, 02:24
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