Top 10 Ridiculous Examples of Corporate Greed

[Andylusion]

Nevertheless, to claim a trade deficit must be covered by debt, is not logical. If I'm in China, and I sell you a TV, and you buy the TV, and you give me $200 (that you didn't borrow), and I give you the TV.... where is this debt? There is no debt.

Lol!! No , that's not how it works!!
From the US point of view it seems logical because it is the reserve currency.

Take a step back :
First :
total production = local demand + exports. (10 + 1)
total consumption = local demand + imports (10 + 2)

This is a simplification because you could actually have stock build up, which leads to other problems, so for this example I'll disregard it. In the above example you produced 11, but you consumed 12. This can't be right. The only way to offset the difference is through credit.

That's way too simplified to be of any value in this discussion. What about services, and investment, and non-tangible value?

But even beyond that, logic itself says this isn't true. Right now the US government ran a $425 Billion deficit, and Medicare and Medicaid is $600 billion. If we cut Medicare and Medicaid, the US government would be running a surplus of $175 Billion dollars.

Now, are you suggesting to me, that if we cut the US budget by $600 billion, and had a $175 Billion dollar surplus, that somehow.... we would still be going into debt because of the trade deficit?

How would you say this works? How would a budget surplus, still end up creating debt, simply because of the trade deficit?

 

[CultureCitizen]

are the one that claims debt is required for growth), then your entire argument falls apart.

Stop borrowing money.

Equally, according to you, debt is useful for growth. So the bank loans out the money to a private US corporation. By your own claims, they are producing growth. The private company uses the money to grow, expand, make new products, open another store, and so on.

And again, there is no "leak". Say the bank loans the money, and the private company is paying interest to the banks. So now like you say, the money is paying interest on the loan. But still, what can the bank do with the money? They can only spend, save and invest in the US with US dollars. At some point, the money comes back to the US. It must. It's not possible for it to just fly away and never return. Fiat currency, has no value other than what you can buy with it, and buy something you must at some point.

Lastly, it is not entirely surprising that a bank can be rated AAA, while it's customers are not. This isn't a big deal. If I'm a bank, I could have $100 Million in investments, while most of my customers are not nearly as credit worthy.

Stop borrowing money.
Done!! I only owe 11K of my mortgage.

Equally, according to you, debt is useful for growth.
IF used to acquire capital goods and infrastructure!!! I didn't say it was ALLWAYS good. It was meant to show you the devil is in the details!!! Debt to import consumer goods, while offshoring your capital goods == NOT GOOD.

They can only spend, save and invest in the US with US dollars.
Which is the reserve currency , so they can spend it anywhere !!

At some point, the money comes back to the US. It must. It's not possible for it to just fly away and never return.

Yes, eventually, if correctly allocated: as economists say , in the long run. And indeed, if it is borrowed to a bankrupt country that money will actually disappear.

 

[Andylusion]

They can buy real-estate, sure. Again, this isn't a bad thing. More people buying real estate is why values rise in general. Obviously if fewer people want to buy your home, the value of your home is going to fall.

That said, while it is true that foreign investors are buying property in London, it's not true that those investors are the cause of the price bubble.

And this is the problem: this creates asset bubbles. And even if it doesn't cause one, what makes a contry grow is increasing the amount of capital goods. Real Estate doesn't actually make a country more productive unless it is at the most basic level ( e.g. going from a hut to a proper house, but this is mostly because it improves the population's health).

Well typically investors do create growth. Typically it's a very good thing to have more investors.

Think about it.... how do construction companies figure out where they intend to build? Where prices are good. You don't see major construction firms, investing in Alaskan Tundra. Obviously because the value of the buildings they produce wouldn't be worth anything. No demand.

In a normal free functioning system, as investors bought property, and the values started to rise, this would create an incentive for construction firms to build in these locations. Resulting in an increased supply, which would counter the effects of increased demand.

Supply increases along with increased demand, and the result is a stable price growth. This is why you don't see price bubbles in Texas. Houston has no zoning laws at all. If someone wants to build more homes, they just do it. I don't think anyone can claim that Houston has no investors, foreign or domestic, and yet they don't have price bubbles.

But this hasn't happened in London. Why? Because the natural incentive to build more construction in London has been restricted by open-space laws, green-space laws, 'smart growth' policies, and so on.

Again, you restrict supply in the face of increasing demand.... you are going to get a price bubble with, or without foreign investors.

That increases the assets of a country but not the capital goods or its productivity.
Take a radical example : assume all that money went into a company like SpaceX.
Who is better off?
The country who constructed 200 high rises? Or the country that constructed a reusable rocket?

Huh? Both are better off. Are you suggesting that companies don't need buildings to operate in? That people are just as productive when they are homeless? Both is the answer.

 

[CultureCitizen]

Nevertheless, to claim a trade deficit must be covered by debt, is not logical. If I'm in China, and I sell you a TV, and you buy the TV, and you give me $200 (that you didn't borrow), and I give you the TV.... where is this debt? There is no debt.

Lol!! No , that's not how it works!!
From the US point of view it seems logical because it is the reserve currency.

Take a step back :
First :
total production = local demand + exports. (10 + 1)
total consumption = local demand + imports (10 + 2)

This is a simplification because you could actually have stock build up, which leads to other problems, so for this example I'll disregard it. In the above example you produced 11, but you consumed 12. This can't be right. The only way to offset the difference is through credit.

That's way too simplified to be of any value in this discussion. What about services, and investment, and non-tangible value?

But even beyond that, logic itself says this isn't true. Right now the US government ran a $425 Billion deficit, and Medicare and Medicaid is $600 billion. If we cut Medicare and Medicaid, the US government would be running a surplus of $175 Billion dollars.

Now, are you suggesting to me, that if we cut the US budget by $600 billion, and had a $175 Billion dollar surplus, that somehow.... we would still be going into debt because of the trade deficit?

How would you say this works? How would a budget surplus, still end up creating debt, simply because of the trade deficit?

I was talking about total debt ( private + public ) not just public debt.

 

[CultureCitizen]

They can buy real-estate, sure. Again, this isn't a bad thing. More people buying real estate is why values rise in general. Obviously if fewer people want to buy your home, the value of your home is going to fall.

That said, while it is true that foreign investors are buying property in London, it's not true that those investors are the cause of the price bubble.

And this is the problem: this creates asset bubbles. And even if it doesn't cause one, what makes a contry grow is increasing the amount of capital goods. Real Estate doesn't actually make a country more productive unless it is at the most basic level ( e.g. going from a hut to a proper house, but this is mostly because it improves the population's health).

Well typically investors do create growth. Typically it's a very good thing to have more investors.

Think about it.... how do construction companies figure out where they intend to build? Where prices are good. You don't see major construction firms, investing in Alaskan Tundra. Obviously because the value of the buildings they produce wouldn't be worth anything. No demand.

In a normal free functioning system, as investors bought property, and the values started to rise, this would create an incentive for construction firms to build in these locations. Resulting in an increased supply, which would counter the effects of increased demand.

Supply increases along with increased demand, and the result is a stable price growth. This is why you don't see price bubbles in Texas. Houston has no zoning laws at all. If someone wants to build more homes, they just do it. I don't think anyone can claim that Houston has no investors, foreign or domestic, and yet they don't have price bubbles.

But this hasn't happened in London. Why? Because the natural incentive to build more construction in London has been restricted by open-space laws, green-space laws, 'smart growth' policies, and so on.

Again, you restrict supply in the face of increasing demand.... you are going to get a price bubble with, or without foreign investors.

That increases the assets of a country but not the capital goods or its productivity.
Take a radical example : assume all that money went into a company like SpaceX.
Who is better off?
The country who constructed 200 high rises? Or the country that constructed a reusable rocket?

Huh? Both are better off. Are you suggesting that companies don't need buildings to operate in? That people are just as productive when they are homeless? Both is the answer.

Indeed. business need offices and warehouses and factories. But this is not what is being constructed in London and the US. In the case of London , many buildings are empty.

London’s empty towers mark a very British form of corruption | Simon Jenkins

I'd go for SpaceX

 

[Andylusion]

are the one that claims debt is required for growth), then your entire argument falls apart.

Stop borrowing money.

Equally, according to you, debt is useful for growth. So the bank loans out the money to a private US corporation. By your own claims, they are producing growth. The private company uses the money to grow, expand, make new products, open another store, and so on.

And again, there is no "leak". Say the bank loans the money, and the private company is paying interest to the banks. So now like you say, the money is paying interest on the loan. But still, what can the bank do with the money? They can only spend, save and invest in the US with US dollars. At some point, the money comes back to the US. It must. It's not possible for it to just fly away and never return. Fiat currency, has no value other than what you can buy with it, and buy something you must at some point.

Lastly, it is not entirely surprising that a bank can be rated AAA, while it's customers are not. This isn't a big deal. If I'm a bank, I could have $100 Million in investments, while most of my customers are not nearly as credit worthy.

Stop borrowing money.
Done!! I only owe 11K of my mortgage.

Equally, according to you, debt is useful for growth.
IF used to acquire capital goods and infrastructure!!! I didn't say it was ALLWAYS good. It was meant to show you the devil is in the details!!! Debt to import consumer goods, while offshoring your capital goods == NOT GOOD.

They can only spend, save and invest in the US with US dollars.
Which is the reserve currency , so they can spend it anywhere !!

At some point, the money comes back to the US. It must. It's not possible for it to just fly away and never return.

Yes, eventually, if correctly allocated: as economists say , in the long run. And indeed, if it is borrowed to a bankrupt country that money will actually disappear.

I'm all for the reduction of debt. The only person between the two of us, painting it as something other than bad, is you.

Debt to buy consumer goods is bad, regardless of where you buy the goods for. If you eliminated imports, and people borrowed to buy US built TVs, the same bad results would come from that.

You are implying that somehow imports is the program. Trade deficits is the problem.

No, borrowing period, is the problem. If I borrow to buy domestic goods, it's no different at all, than borrowing to buy foreign goods.

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

This isn't that hard. All US dollars come back to the US. ALL US DOLLARS.... ALL OF THEM.... Come back to the US.

If you doubt that, then you have a math problem...... Here:
FRB: How much U.S. currency is in circulation?

Total currency in circulation according to the Federal Reserve. $1.4 Trillion.

How much was the trade deficit?

United States Balance of Trade | 1950-2016 | Data | Chart | Calendar

It's been $40 Billion dollars a month, for the past 8 years. That's a loss of $3.8 Trillion dollars.

If the money wasn't coming back to the US, and at nearly the same pace that it's been leaving.... then we should have run out of all hard currency throughout the entire country, about 4 times over by now.

At the very minimum, if we were losing $40 Billion in currency per month (which is what you are claiming), then we should be faced with massive, catastrophic even, deflation across the entire economy.

Current US Inflation Rates: 2006-2016

Not happening.

 

[Andylusion]

Nevertheless, to claim a trade deficit must be covered by debt, is not logical. If I'm in China, and I sell you a TV, and you buy the TV, and you give me $200 (that you didn't borrow), and I give you the TV.... where is this debt? There is no debt.

Lol!! No , that's not how it works!!
From the US point of view it seems logical because it is the reserve currency.

Take a step back :
First :
total production = local demand + exports. (10 + 1)
total consumption = local demand + imports (10 + 2)

This is a simplification because you could actually have stock build up, which leads to other problems, so for this example I'll disregard it. In the above example you produced 11, but you consumed 12. This can't be right. The only way to offset the difference is through credit.

That's way too simplified to be of any value in this discussion. What about services, and investment, and non-tangible value?

But even beyond that, logic itself says this isn't true. Right now the US government ran a $425 Billion deficit, and Medicare and Medicaid is $600 billion. If we cut Medicare and Medicaid, the US government would be running a surplus of $175 Billion dollars.

Now, are you suggesting to me, that if we cut the US budget by $600 billion, and had a $175 Billion dollar surplus, that somehow.... we would still be going into debt because of the trade deficit?

How would you say this works? How would a budget surplus, still end up creating debt, simply because of the trade deficit?

I was talking about total debt ( private + public ) not just public debt.

Well private debt is irrelevant, because it doesn't matter where the goods are coming from. If you borrow, you are going to be in debt, no matter if the goods you borrowed to buy, are foreign or domestic.

If anything imported goods alleviates the debt risk, because the whole reason you buy something imported over the domestic product, is.... because it's cheaper. Lower cost, means less need to borrow.

 

[Andylusion]

They can buy real-estate, sure. Again, this isn't a bad thing. More people buying real estate is why values rise in general. Obviously if fewer people want to buy your home, the value of your home is going to fall.

That said, while it is true that foreign investors are buying property in London, it's not true that those investors are the cause of the price bubble.

And this is the problem: this creates asset bubbles. And even if it doesn't cause one, what makes a contry grow is increasing the amount of capital goods. Real Estate doesn't actually make a country more productive unless it is at the most basic level ( e.g. going from a hut to a proper house, but this is mostly because it improves the population's health).

Well typically investors do create growth. Typically it's a very good thing to have more investors.

Think about it.... how do construction companies figure out where they intend to build? Where prices are good. You don't see major construction firms, investing in Alaskan Tundra. Obviously because the value of the buildings they produce wouldn't be worth anything. No demand.

In a normal free functioning system, as investors bought property, and the values started to rise, this would create an incentive for construction firms to build in these locations. Resulting in an increased supply, which would counter the effects of increased demand.

Supply increases along with increased demand, and the result is a stable price growth. This is why you don't see price bubbles in Texas. Houston has no zoning laws at all. If someone wants to build more homes, they just do it. I don't think anyone can claim that Houston has no investors, foreign or domestic, and yet they don't have price bubbles.

But this hasn't happened in London. Why? Because the natural incentive to build more construction in London has been restricted by open-space laws, green-space laws, 'smart growth' policies, and so on.

Again, you restrict supply in the face of increasing demand.... you are going to get a price bubble with, or without foreign investors.

That increases the assets of a country but not the capital goods or its productivity.
Take a radical example : assume all that money went into a company like SpaceX.
Who is better off?
The country who constructed 200 high rises? Or the country that constructed a reusable rocket?

Huh? Both are better off. Are you suggesting that companies don't need buildings to operate in? That people are just as productive when they are homeless? Both is the answer.

Indeed. business need offices and warehouses and factories. But this is not what is being constructed in London and the US. In the case of London , many buildings are empty.

London’s empty towers mark a very British form of corruption | Simon Jenkins

I'd go for SpaceX

But you are looking at an artificially created situation.

Under normal free-market laissez-faire conditions, people would be building in response to demand.

You need to compare SpaceX to construction in Houston or other free-market systems.

When you compare SpaceX to London, that's not a free market system. By limiting the ability to construct building and develop the land for useful purposes, you artificially drive up the prices in those areas.

That artificial bubble, creates knock on effects, such as driving out buyers. People have been leaving the residential markets in London for a long time. As price dramatically increase, the costs of living there increases, which pushes people out of the market.

This is why homes are empty, and property is owned by absentee land lords, who are just investing.

Again.... this entire problem could be easily fixed. Remove the zoning laws, eliminate green-space laws, allow the builders to build homes. As the supply increases, the prices will go down. When the prices come down, two things will happen auto-magically. One, average people and business will be able to afford property in the city again. Two, investors will no longer want those properties, as the investment value declines.

Now unfortunately since there is already a bubble, it will have to pop, and that will cause a short term crash. But it will rebound as prices become affordable, people will buy.

 

[CultureCitizen]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

 

[Toddsterpatriot]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

Countries tend to accumulate excess reserves. That money isn't comming back

As piles of FRNs? Rolls of quarters?

 

[Andylusion]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

No, that money does come back. You don't seem to understand how reserve currency works.

Reserve currency, doesn't mean they have a big huge vault somewhere where scrooge McDuck swims through piles of $100 dollar bills.

Not how it works. Most of the reserve currency is in assets that are dollar dominated. Primarily Treasury securities.

It's the money the US government borrowed. By the way, you want to reduce how much reserve currency China holds? Just balance the budget, and start running a surplus, and China's dollar reserves will dwindle.

Now if you doubt that, all you have to do is look up how much US Dollar reserve currency the central bank of China has, and see they list roughly $2 Trillion in US dollar reserves.

Well we know from the fed, that there is only $1.4 Trillion in hard currency. So what the World Bank reports that China has, is a greater amount of US dollars, than what actually exists on the planet.

Moreover, if China had even half that much hard cash in Reserve, then finding a dollar in the US, should be like finding a Unicorn. We should be experiencing so much deflation from the reduced supply of dollars, that a new car should only be $100 by now.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

 

[Toddsterpatriot]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

No, that money does come back. You don't seem to understand how reserve currency works.

Reserve currency, doesn't mean they have a big huge vault somewhere where scrooge McDuck swims through piles of $100 dollar bills.

Not how it works. Most of the reserve currency is in assets that are dollar dominated. Primarily Treasury securities.

It's the money the US government borrowed. By the way, you want to reduce how much reserve currency China holds? Just balance the budget, and start running a surplus, and China's dollar reserves will dwindle.

Now if you doubt that, all you have to do is look up how much US Dollar reserve currency the central bank of China has, and see they list roughly $2 Trillion in US dollar reserves.

Well we know from the fed, that there is only $1.4 Trillion in hard currency. So what the World Bank reports that China has, is a greater amount of US dollars, than what actually exists on the planet.

Moreover, if China had even half that much hard cash in Reserve, then finding a dollar in the US, should be like finding a Unicorn. We should be experiencing so much deflation from the reduced supply of dollars, that a new car should only be $100 by now.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

Many countries with untrustworthy currencies will circulate FRNs as a parallel currency.
Hundreds of billions in physical currency that will never return.

 

[Andylusion]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

No, that money does come back. You don't seem to understand how reserve currency works.

Reserve currency, doesn't mean they have a big huge vault somewhere where scrooge McDuck swims through piles of $100 dollar bills.

Not how it works. Most of the reserve currency is in assets that are dollar dominated. Primarily Treasury securities.

It's the money the US government borrowed. By the way, you want to reduce how much reserve currency China holds? Just balance the budget, and start running a surplus, and China's dollar reserves will dwindle.

Now if you doubt that, all you have to do is look up how much US Dollar reserve currency the central bank of China has, and see they list roughly $2 Trillion in US dollar reserves.

Well we know from the fed, that there is only $1.4 Trillion in hard currency. So what the World Bank reports that China has, is a greater amount of US dollars, than what actually exists on the planet.

Moreover, if China had even half that much hard cash in Reserve, then finding a dollar in the US, should be like finding a Unicorn. We should be experiencing so much deflation from the reduced supply of dollars, that a new car should only be $100 by now.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

Many countries with untrustworthy currencies will circulate FRNs as a parallel currency.
Hundreds of billions in physical currency that will never return.

Yes and no. If the situation remains, then yes it will stay as an unofficial parallel currency.

Currently the only non-US countries using USD, are Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands, Zimbabwe.

The one thing you notice about nearly all of them, is that they are small, and poor. I highly doubt there are hundreds of billions, circulating in these countries.

Even so, in cases like Zimbabwe, or Ecuador, if the country ever recovers to the point they can implement their own currency, they will, and those dollars will return.

But let's even suggest for a moment that they don't. This is actually a good thing. We want more people to use dollars. The more countries that use our dollars, the more we have economic growth and influence. It's far easier for me to buy, or sell, to a country that already has actual US Dollars. That's a benefit to us. And it makes the dollar itself more valuable.

The value of Fiat Currency, is only in our ability to exchange our dollars, for goods and services. The more goods and services we can exchange dollars for, the more value the dollar has.

This is good thing. It really is.

 

[Toddsterpatriot]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

No, that money does come back. You don't seem to understand how reserve currency works.

Reserve currency, doesn't mean they have a big huge vault somewhere where scrooge McDuck swims through piles of $100 dollar bills.

Not how it works. Most of the reserve currency is in assets that are dollar dominated. Primarily Treasury securities.

It's the money the US government borrowed. By the way, you want to reduce how much reserve currency China holds? Just balance the budget, and start running a surplus, and China's dollar reserves will dwindle.

Now if you doubt that, all you have to do is look up how much US Dollar reserve currency the central bank of China has, and see they list roughly $2 Trillion in US dollar reserves.

Well we know from the fed, that there is only $1.4 Trillion in hard currency. So what the World Bank reports that China has, is a greater amount of US dollars, than what actually exists on the planet.

Moreover, if China had even half that much hard cash in Reserve, then finding a dollar in the US, should be like finding a Unicorn. We should be experiencing so much deflation from the reduced supply of dollars, that a new car should only be $100 by now.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

Many countries with untrustworthy currencies will circulate FRNs as a parallel currency.
Hundreds of billions in physical currency that will never return.

Yes and no. If the situation remains, then yes it will stay as an unofficial parallel currency.

Currently the only non-US countries using USD, are Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands, Zimbabwe.

The one thing you notice about nearly all of them, is that they are small, and poor. I highly doubt there are hundreds of billions, circulating in these countries.

Even so, in cases like Zimbabwe, or Ecuador, if the country ever recovers to the point they can implement their own currency, they will, and those dollars will return.

But let's even suggest for a moment that they don't. This is actually a good thing. We want more people to use dollars. The more countries that use our dollars, the more we have economic growth and influence. It's far easier for me to buy, or sell, to a country that already has actual US Dollars. That's a benefit to us. And it makes the dollar itself more valuable.

The value of Fiat Currency, is only in our ability to exchange our dollars, for goods and services. The more goods and services we can exchange dollars for, the more value the dollar has.

This is good thing. It really is.

You left out Panama.

I highly doubt there are hundreds of billions, circulating in these countries.

Countries like Russia, Venezuela and Cuba will always use dollars.

The most direct measurement, commercial bank shipments, the solid black line, suggests that
$200 billion has moved abroad since 1990, which would put the total at between $200 billion
and $400 billion, depending on the assumed initial value. The shipments proxy, the solid gray
line, suggests that about $350 billion moved abroad over the period, putting the total at $350 billion to $550 billion.25 Finally, the adjusted shipments and proxy figures, the dashed black and
gray lines respectively, suggest that about $550 billion moved abroad over the period, putting the
total at $550 billion to $750 billion. These ranges are, of course, large, though the simple
method proposed above in Section III.A.2 produces an estimate very close to the center of the
range.

http://www.federalreserve.gov/pubs/ifdp/2012/1058/ifdp1058.pdf

 

[Andylusion]

No they can't spend it anywhere. Reserve currency doesn't change anything. If I'm in China, and I have US dollars, I can't spend it anywhere. Maybe I can buy oil with it. Ok, but the person who sold me the oil from Saudi Arabia.... what can he do with US dollars? Nothing. Well maybe he can buy something from Norway or whatever. Ok, what can Norway do with US dollars? Nothing.

Have you been to these places? I have. You can't buy jack with US dollars. You have to convert to Euros. Or whatever the local legal tender is. You can't go to the UK and whip out your US dollars and buy stuff. You must buy with the local currency.

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

No, that money does come back. You don't seem to understand how reserve currency works.

Reserve currency, doesn't mean they have a big huge vault somewhere where scrooge McDuck swims through piles of $100 dollar bills.

Not how it works. Most of the reserve currency is in assets that are dollar dominated. Primarily Treasury securities.

It's the money the US government borrowed. By the way, you want to reduce how much reserve currency China holds? Just balance the budget, and start running a surplus, and China's dollar reserves will dwindle.

Now if you doubt that, all you have to do is look up how much US Dollar reserve currency the central bank of China has, and see they list roughly $2 Trillion in US dollar reserves.

Well we know from the fed, that there is only $1.4 Trillion in hard currency. So what the World Bank reports that China has, is a greater amount of US dollars, than what actually exists on the planet.

Moreover, if China had even half that much hard cash in Reserve, then finding a dollar in the US, should be like finding a Unicorn. We should be experiencing so much deflation from the reduced supply of dollars, that a new car should only be $100 by now.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

Many countries with untrustworthy currencies will circulate FRNs as a parallel currency.
Hundreds of billions in physical currency that will never return.

Yes and no. If the situation remains, then yes it will stay as an unofficial parallel currency.

Currently the only non-US countries using USD, are Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands, Zimbabwe.

The one thing you notice about nearly all of them, is that they are small, and poor. I highly doubt there are hundreds of billions, circulating in these countries.

Even so, in cases like Zimbabwe, or Ecuador, if the country ever recovers to the point they can implement their own currency, they will, and those dollars will return.

But let's even suggest for a moment that they don't. This is actually a good thing. We want more people to use dollars. The more countries that use our dollars, the more we have economic growth and influence. It's far easier for me to buy, or sell, to a country that already has actual US Dollars. That's a benefit to us. And it makes the dollar itself more valuable.

The value of Fiat Currency, is only in our ability to exchange our dollars, for goods and services. The more goods and services we can exchange dollars for, the more value the dollar has.

This is good thing. It really is.

You left out Panama.

I highly doubt there are hundreds of billions, circulating in these countries.

Countries like Russia, Venezuela and Cuba will always use dollars.

The most direct measurement, commercial bank shipments, the solid black line, suggests that
$200 billion has moved abroad since 1990, which would put the total at between $200 billion
and $400 billion, depending on the assumed initial value. The shipments proxy, the solid gray
line, suggests that about $350 billion moved abroad over the period, putting the total at $350 billion to $550 billion.25 Finally, the adjusted shipments and proxy figures, the dashed black and
gray lines respectively, suggest that about $550 billion moved abroad over the period, putting the
total at $550 billion to $750 billion. These ranges are, of course, large, though the simple
method proposed above in Section III.A.2 produces an estimate very close to the center of the
range.

http://www.federalreserve.gov/pubs/ifdp/2012/1058/ifdp1058.pdf

Interestingly, the first page, suggested exactly what I just said.

Second, economic stabilization and modernization appear to result in reversal of these inflows. Specifically, demand for U.S. currency was extremely strong through the 1990s, a period of turmoil for the former Soviet Union and for Argentina, two of the largest overseas users of
U.S. currency. Demand eased in the early 2000s as conditions gradually stabilized
and as financial in stitutions developed. However, this trend reversed sharply with the onset of the financial crisis in late 2008 and has continued since then.
​

So during a period of crisis, demand for US dollars goes up. That's exactly what you said before. Zimbabwe destroys their currency, and suddenly they are using Euros and Dollars.

Then as the economy stabilizes, and modernization happens, the flows reverse. Dollars start flowing back to the US, as the local currency gains credibility and acceptance.

If another crisis hits, then the flows reverse again, as people go back to what is considered stable and safe.

Now all that said..... your publication brings up a fascinating aspect I didn't realize before...

Many people, including myself, have been trying to figure out why the increase in the M2 base, has not resulted in the type of inflation we would expect. Up till now, I had always just guessed that the reason must be that the US economy is so large, that changes in the monetary base take longer to take effect.

But what if, as the link you provided suggest, there is a different aspect going on here. As with all things, the value is determined by supply and demand. The supply is the amount of money created by the government, and the demand is the public. We assume the public is static (increasing only with the birth rate and immigration), and drastically increasing supply, would cause inflation, where the value falls.

What I have not heard anyone suggest is, what if the problems in the EU, and in Latin America, and Russia and its trading partners.... is creating additional demand base. If dollars are being circulated more and more under the radar, then this would create additional demand, that would directly offset the increase in the M2 monetary base.

Now if that is true.... and I'm just connecting some dots that may or may not have anything in common.... that would seem to place us in a very dangerous position.

Because just as I quoted above, when these economies stabilize, they tend to reverse the trend. Dollars flow back to the US, as local currency takes over. The problem is, if too much currency flows back, then I would expect to see the inflation that we been waiting for.

If the economies in Russia, and Venezuela, and Argentina, were to stabilize, and go back to using local currency, the demand base for USD, would shrink. Unless the Federal Reserve has a plan to remove dollars from the monetary base.... The supply stays the same, but the demand base drastically falls.

That's going to cause problems, because everyone else still using dollars, the moment they see a spike in inflation, they are going to ditch those dollars, which will cause even faster inflows, which will cause more inflation, and the cycle will continue until there is a melt down.

Of course this is all speculation. But it all makes sense if there is a massive amount of USD, used by say Russia to by-pass sanctions, and Argentina to avoid their locked up import-export restrictions.... then that's a ton of non-reserve currency being used as normal tender. That demand would off set the increase in the money base. It all fits.... which is a little scary.

 

[Toddsterpatriot]

The fact that the US Dollar is the reserve currency changes it.
Countries tend to accumulate excess reserves. That money isn't comming back until those countries get rid of their excess reserves.
Second if A has a permanent trade deficit with countries B and C.
Countries B and C can swap their trade balances while A maintains its trade deficit.

Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 4 10
c 3 -4 0 -1
0
Trade balance a b c Balance
a 0 -6 -3 -9
b 6 0 -4 2
c 3 4 0 7
( sory about the format , this was pasted from excel )

No, that money does come back. You don't seem to understand how reserve currency works.

Reserve currency, doesn't mean they have a big huge vault somewhere where scrooge McDuck swims through piles of $100 dollar bills.

Not how it works. Most of the reserve currency is in assets that are dollar dominated. Primarily Treasury securities.

It's the money the US government borrowed. By the way, you want to reduce how much reserve currency China holds? Just balance the budget, and start running a surplus, and China's dollar reserves will dwindle.

Now if you doubt that, all you have to do is look up how much US Dollar reserve currency the central bank of China has, and see they list roughly $2 Trillion in US dollar reserves.

Well we know from the fed, that there is only $1.4 Trillion in hard currency. So what the World Bank reports that China has, is a greater amount of US dollars, than what actually exists on the planet.

Moreover, if China had even half that much hard cash in Reserve, then finding a dollar in the US, should be like finding a Unicorn. We should be experiencing so much deflation from the reduced supply of dollars, that a new car should only be $100 by now.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

All the money, even the USD reserves, all of it comes back to the US. All of it does.

Many countries with untrustworthy currencies will circulate FRNs as a parallel currency.
Hundreds of billions in physical currency that will never return.

Yes and no. If the situation remains, then yes it will stay as an unofficial parallel currency.

Currently the only non-US countries using USD, are Ecuador, East Timor, El Salvador, Marshall Islands, Micronesia, Palau, Turks and Caicos, British Virgin Islands, Zimbabwe.

The one thing you notice about nearly all of them, is that they are small, and poor. I highly doubt there are hundreds of billions, circulating in these countries.

Even so, in cases like Zimbabwe, or Ecuador, if the country ever recovers to the point they can implement their own currency, they will, and those dollars will return.

But let's even suggest for a moment that they don't. This is actually a good thing. We want more people to use dollars. The more countries that use our dollars, the more we have economic growth and influence. It's far easier for me to buy, or sell, to a country that already has actual US Dollars. That's a benefit to us. And it makes the dollar itself more valuable.

The value of Fiat Currency, is only in our ability to exchange our dollars, for goods and services. The more goods and services we can exchange dollars for, the more value the dollar has.

This is good thing. It really is.

You left out Panama.

I highly doubt there are hundreds of billions, circulating in these countries.

Countries like Russia, Venezuela and Cuba will always use dollars.

The most direct measurement, commercial bank shipments, the solid black line, suggests that
$200 billion has moved abroad since 1990, which would put the total at between $200 billion
and $400 billion, depending on the assumed initial value. The shipments proxy, the solid gray
line, suggests that about $350 billion moved abroad over the period, putting the total at $350 billion to $550 billion.25 Finally, the adjusted shipments and proxy figures, the dashed black and
gray lines respectively, suggest that about $550 billion moved abroad over the period, putting the
total at $550 billion to $750 billion. These ranges are, of course, large, though the simple
method proposed above in Section III.A.2 produces an estimate very close to the center of the
range.

http://www.federalreserve.gov/pubs/ifdp/2012/1058/ifdp1058.pdf

Interestingly, the first page, suggested exactly what I just said.

Second, economic stabilization and modernization appear to result in reversal of these inflows. Specifically, demand for U.S. currency was extremely strong through the 1990s, a period of turmoil for the former Soviet Union and for Argentina, two of the largest overseas users of
U.S. currency. Demand eased in the early 2000s as conditions gradually stabilized
and as financial in stitutions developed. However, this trend reversed sharply with the onset of the financial crisis in late 2008 and has continued since then.
​

So during a period of crisis, demand for US dollars goes up. That's exactly what you said before. Zimbabwe destroys their currency, and suddenly they are using Euros and Dollars.

Then as the economy stabilizes, and modernization happens, the flows reverse. Dollars start flowing back to the US, as the local currency gains credibility and acceptance.

If another crisis hits, then the flows reverse again, as people go back to what is considered stable and safe.

Now all that said..... your publication brings up a fascinating aspect I didn't realize before...

Many people, including myself, have been trying to figure out why the increase in the M2 base, has not resulted in the type of inflation we would expect. Up till now, I had always just guessed that the reason must be that the US economy is so large, that changes in the monetary base take longer to take effect.

But what if, as the link you provided suggest, there is a different aspect going on here. As with all things, the value is determined by supply and demand. The supply is the amount of money created by the government, and the demand is the public. We assume the public is static (increasing only with the birth rate and immigration), and drastically increasing supply, would cause inflation, where the value falls.

What I have not heard anyone suggest is, what if the problems in the EU, and in Latin America, and Russia and its trading partners.... is creating additional demand base. If dollars are being circulated more and more under the radar, then this would create additional demand, that would directly offset the increase in the M2 monetary base.

Now if that is true.... and I'm just connecting some dots that may or may not have anything in common.... that would seem to place us in a very dangerous position.

Because just as I quoted above, when these economies stabilize, they tend to reverse the trend. Dollars flow back to the US, as local currency takes over. The problem is, if too much currency flows back, then I would expect to see the inflation that we been waiting for.

If the economies in Russia, and Venezuela, and Argentina, were to stabilize, and go back to using local currency, the demand base for USD, would shrink. Unless the Federal Reserve has a plan to remove dollars from the monetary base.... The supply stays the same, but the demand base drastically falls.

That's going to cause problems, because everyone else still using dollars, the moment they see a spike in inflation, they are going to ditch those dollars, which will cause even faster inflows, which will cause more inflation, and the cycle will continue until there is a melt down.

Of course this is all speculation. But it all makes sense if there is a massive amount of USD, used by say Russia to by-pass sanctions, and Argentina to avoid their locked up import-export restrictions.... then that's a ton of non-reserve currency being used as normal tender. That demand would off set the increase in the money base. It all fits.... which is a little scary.

Then as the economy stabilizes, and modernization happens, the flows reverse. Dollars start flowing back to the US, as the local currency gains credibility and acceptance.

In many of those crappy countries, the local currency will never displace the dollar.

Many people, including myself, have been trying to figure out why the increase in the M2 base, has not resulted in the type of inflation we would expect.

Many people think there is a fixed relationship between Fed balance sheet growth and inflation. They look at supply and ignore changes in demand. During and after the crisis, demand for cash took off, that's why inflation hasn't.


Because just as I quoted above, when these economies stabilize, they tend to reverse the trend.

It said demand slowed, it didn't reverse.

That's going to cause problems, because everyone else still using dollars, the moment they see a spike in inflation, they are going to ditch those dollars

I don't think US inflation will impact foreign holdings of FRNs, especially because their domestic inflation is so much higher.

 

[EdwardBaiamonte]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

IBM grew to be the biggest most profitable company in history without debt, no idea what your income statement has to do with it?? Please think before you post, just once

 

[EdwardBaiamonte]

The problem is, if too much currency flows back, then I would expect to see the inflation that we been waiting for.

No idea why you say that given that we have a central bank to prevent inflation, and nowadays it has the power to do virtually anything it wants if basic tools don't work

 

[EdwardBaiamonte]

You seem to assume I supported the bailout. I don't.

why not???? you're a libturd and libturds support bailouts of failing human beings all the time despite no prospect of ever being paid back and huge moral hazard. The bank/money market/ insurance bailouts prevented a huge depression, were paid back, and required a huge huge loss by many owners, so were an obviousl great deal that libturds ought to support.

 

[EdwardBaiamonte]

Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

Child labor was/is a good thing where it exists since without it most of the children would be doing sex work and or scavenging in garbage dumps. Liberal interference in SE Asia caused the death of many children. Liberal ignorance kills.