A Thread for Monetary Realists

[editec]

A few points:

Fiat money and central banks are based on Gaussian (bell curve) distribution and reversion to the mean as economic truths.

Perhaps I do not understand what the above is attmpting to tell us

Are you suggesting that the distribution of money can be described as a bell curve?

I find that difficult to believe or for that matter, even understand.

I'd appreciate it if you'd explain what you mean more clearly.

If you meant that the distribution of Net Worth can be described as as a gussian distribution, (that seems plausible) then what is the mean, and what is a the standardard deviation from norm?

And even if that is so, I fail to understand your point.

Speak Englis or speak economics English, but please illuminate us as to your actual point.

Thanks.

Believe it or not, our systems of finance are based on a theory; a mathematical equation specific to the task.

I haven't a clue what the above is supposed to mean.

Now I do not fully know the vernacular nor could I give an accurate detailed account of it entirely (nor would I want to). Basically and I do mean very basically the system works on the principles of supply and demand with a few twists thrown in.

If you lack the words to descibe what you are saying, you lack the understanding too.

For instance back in the 1930's The Federal Reserve held back the money supply to prevent massive inflation after the wall street crash. According to Milton Friedman a Nobel prize winner for economics and well respected expert on finance (now deceased) this was the primary reason for the Great depression. That is the reality...

That is theory. It might be PART of reality.

The story the Fed tells something more along the lines of a complex uncontrollable force, that no one can see coming until after it hits caused it.

Incomprehensible word salad.

According to them and so many others who like the system of finance as it is, bubbles, busts, and crashes are a natural occurrence that follows a curve that can be shown mathematically to exist.

According to whom?

Now they cannot predict these occurrences despite all their evidence of it and knowledge of how, when and where it can or will occur. But somehow they can tell you right away after it happens exactly how it happened, what caused it and who to blame for it.

Chaos theory...read about it.

And the "who" is never the ones in charge of the money for some odd reason... Thats the BS..

Yeah, on this we agree.


Odd how the people in charge of our society are never responsible for the outcomes of their actions, isn't it?

The truth is all those things are a controlled system to keep the real wealth in as few hands as possible, while giving those who dabble in the game enough of an illusion to keep on playing.

The fundmental CLASSISM of the FED is this...you and I dfo NOT get to borrow money (read invent money out of our promise to pay back at interest) at the same rate as the banks which are the owners of the FED.

This COULD BE changed, ya know.

But if we did, then our society would be far different than it is today.

For one thing, the distribution of Net assets would be much MUCH flatter than it is now.

All the main players are only at risk from one another, and all the rest below them are at risk from the bottom, the top and their neighbors.

Not a clue what that means

Thats my simplified explanation, if you want a more scientific one I am sure some bank manager could give the official story in as much a detailed format as you need.

No bank manager I ever met understood even the most fundamental principles of economics.

They're filing clerks who do what they're told.

 

[gslack]

Perhaps I do not understand what the above is attmpting to tell us

Are you suggesting that the distribution of money can be described as a bell curve?

I find that difficult to believe or for that matter, even understand.

I'd appreciate it if you'd explain what you mean more clearly.

If you meant that the distribution of Net Worth can be described as as a gussian distribution, (that seems plausible) then what is the mean, and what is a the standardard deviation from norm?

And even if that is so, I fail to understand your point.

Speak Englis or speak economics English, but please illuminate us as to your actual point.

Thanks.

I haven't a clue what the above is supposed to mean.



If you lack the words to descibe what you are saying, you lack the understanding too.





That is theory. It might be PART of reality.




Incomprehensible word salad.





According to whom?




Chaos theory...read about it.




Yeah, on this we agree.


Odd how the people in charge of our society are never responsible for the outcomes of their actions, isn't it?



The fundmental CLASSISM of the FED is this...you and I dfo NOT get to borrow money (read invent money out of our promise to pay back at interest) at the same rate as the banks which are the owners of the FED.

This COULD BE changed, ya know.

But if we did, then our society would be far different than it is today.

For one thing, the distribution of Net assets would be much MUCH flatter than it is now.



Not a clue what that means

Thats my simplified explanation, if you want a more scientific one I am sure some bank manager could give the official story in as much a detailed format as you need.

No bank manager I ever met understood even the most fundamental principles of economics.

They're filing clerks who do what they're told.

Dude what is your deal? You start off insulting me, then gradually go back and forth from insulting me to agreeing with me....

From reading this I got that what you didn't understand you got angry and embarrassed over. Then you chose to insult me because of it. And what you DID understand you summarily agreed with but had to make sure it was on your terms...

Frankly I think you started responding to it as you were reading it. Thats the only explanation I can think of your back and forth insult me and agree with me BS. Either that or you are too high to maintain a consistent pattern of thought on this.

I agree with a lot of what you said regarding the system and all. However, you made it very clear that you think you are the guy everyone should check with before posting on this topic. And that makes you an azzhole in my book whether I agree with some of what you said or not.

Want a proper discussion or debate? Fine don't insult me from the start, don't try and condescend on or dictate to me, don't dismiss what you don't understand, and then try and not get mad at me because you don't understand it. Then perhaps a discussion can take place.... Oh and try to maintain a pattern in your responses, going back and forth like you did makes you look like an indecisive and uninformed dumazz talking out his azz...

 

[Neubarth]

I believe in the barter system. It is just hard to carry a pig in your purse when you go shopping.

Well it would sure be a conversation starter wouldn't it....

A good number of previously prosperous cultures used livestock for currency. The Vikings used cattle and even had a single rune which has a dual meaning of cow and money and is the first letter of the runic alphabet. It would be ideal for some of us country folk, but the urbanites would be at a serious disadvantage. I imagine metropolitan New York City would be a difficult place to pasture a herd.

Would a "Big Man" gain stature if he had more cows than the other men in the city?

Perhaps it is better to have millions in Electronic deposits in the bank? That way you do not have to deal with cow shit or dirty paper money.

 

[william the wie]

Well it would sure be a conversation starter wouldn't it....

A good number of previously prosperous cultures used livestock for currency. The Vikings used cattle and even had a single rune which has a dual meaning of cow and money and is the first letter of the runic alphabet. It would be ideal for some of us country folk, but the urbanites would be at a serious disadvantage. I imagine metropolitan New York City would be a difficult place to pasture a herd.

Would a "Big Man" gain stature if he had more cows than the other men in the city?

Perhaps it is better to have millions in Electronic deposits in the bank? That way you do not have to deal with cow shit or dirty paper money.

Except that such blips are more prone to loss and theft. Also the creation of such blips assumes somebody has a workable theory which is utter nonsense. The reason for the M0, M1 ... nonsense is that nobody has a real clue as to what money is or isn't. Most really big private sector purchases are made with stocks and bonds which ain't one of the Ms. In order for a fiat currency to work as advertised the following things have to be known within very tight limits.

The physical supply of currency within the economy. Needs to be known within roughly +/- 10%. Since our currency is also the currency of Liberia, Panama and Ecuador, the border territories of Mexico and Canada, the reserves of most central banks and most criminal cartels throughout the world I seriously doubt the data falls within acceptable limits of error.

The multiplier effect, how much the banking systems multiplies currencies. The Fed discovered in the meltdown that it had no idea what the banking was much less its multiplier during the meltdown. The importance of money markets and financial insurance industry as the biggest bankers was discovered by catastrophic failure. Worse yet it turns out that financial leverage, borrowing, has always been intertwined with structural leverage, derivatives. What fulltime experts thought was 10-30 to 1 multiplier was often more than a 1000 to 1 multiplier.

Velocity how many times the multiplied money gets turned over in a year. Friedman thought V was a constant but he was an academic who didn't get into the sausage making of real life finance. Other Nobel prize winners such as Samuelson and Hayek thought Friedman to be a genius and a workhorse but a bit of an innocent in some areas of finance. As it turned out when push came to shove he had neglected such things as letters of credit, a derivative that was used 5,000 years ago in Sumerian maritime trade before there was writing. Most of the derivatives now in existence pre-date the first coinage to reach Greece and recording in written form in about 625 BC.

So no, fiat currency is and has always been subject to catastrophic failure.