Search found 66 matches

by johnfrmcleveland
Wed Apr 20, 2016 11:59 am UTC
Forum: Serious Business
Topic: Fictional Economics - Deflation in Basic Goods prices
Replies: 65
Views: 15442

Re: Fictional Economics - Deflation in Basic Goods prices

One thing you would see with deflation is a built-in incentive to not invest your money into production. When there is a limited amount of money, money itself becomes a (the?) limiting factor; all one has to do to profit is to sit on their money, at no risk of failure and no risk of inflation. One o...
by johnfrmcleveland
Wed Apr 20, 2016 5:53 am UTC
Forum: Serious Business
Topic: What is a reasonable return on capital
Replies: 39
Views: 14072

Re: What is a reasonable return on capital

So it looks like people think that typical long term returns of 9% are perfectly possible in future. I can see that if Walmart may be one of the low-risk options and so have lower returns, whilst many businesses have the potential for growth, and although some of these may not succeed so well, on a...
by johnfrmcleveland
Tue Apr 14, 2015 3:20 am UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

In order to fulfill my debt, I will have to pay off the 10k principal plus some amount of interest, let's say 1k for the sake of the example. Observe that the bank has just created 10k of money but 11k of debt. Nothing in the economy is creating additional money to make up for the difference of 1k....
by johnfrmcleveland
Tue Feb 24, 2015 7:07 pm UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

Sorry for the delay. Busy week. The difficulty of paying off all debt is that you would need to somehow take dollars from people who are legitimately ahead of the game, holding more dollars than debt. The bank-created dollars exist to pay off the bank-created debt, but some people are in debt while ...
by johnfrmcleveland
Tue Feb 24, 2015 6:53 pm UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

lorb wrote:What about interest? Do the $20 you borrow to eat pizza not increase to something like $21 of debt?


Whatever dollar you use to pay the interest is a pre-existing dollar, moved from somewhere else. So in effect, you have paid $21 for your pizza.
by johnfrmcleveland
Thu Feb 19, 2015 4:26 am UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

Although I think of my checking account dollars as "my money", it really ain't so. [translation: it's not part of M0]. My bank will give me "my money" back whenever I want, as long as I don't want to very often, and as long as nobody else wants to at the same time. If every depo...
by johnfrmcleveland
Thu Feb 19, 2015 1:10 am UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

Did you read any of those links I posted earlier? I'm not just making this up. I skimmed, but did not study, those links. The first one seemed to be a series of quotes from a bunch of other sources, followed by what seems to me to be a dumb "experiment" to find out how banks (or at least ...
by johnfrmcleveland
Sun Feb 15, 2015 9:00 pm UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

We can create credit. If you own a store, you can extend credit to a customer. You could even count this debt as an asset on your books. But that's not the same as creating money, because this credit cannot be freely transferred. And in this case, it's the customer that "created" the cred...
by johnfrmcleveland
Sun Feb 15, 2015 5:25 am UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

Right. In most circumstances, you will pay with a check A check isn't money. If it were, you and I could create money out of thin air. A check is a request that some entity that holds your money transfer it to some other bank. It's a needless complication to consider checks. Stick to dollar bills. ...
by johnfrmcleveland
Sat Feb 14, 2015 10:21 pm UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

The loan is the asset. Uh... if I want to buy a car and don't have the money, I go to a bank and promise to give them money later, in exchange for... what? To make this work, the bank has to give me something that I can take to the car dealership, or to my cousin's friend Albert, in exchange for an...
by johnfrmcleveland
Sat Feb 14, 2015 8:27 pm UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

Banks do indeed create money out of thin air - when you take out a loan for $100,000, the bank simply marks up your account by $100K, and creates a matching $100K obligation where you repay the loan (forget interest for now). On the bank's books, the loan becomes a $100K asset (borrower's obligatio...
by johnfrmcleveland
Sat Feb 14, 2015 3:48 am UTC
Forum: Serious Business
Topic: Can every debt be paid off?
Replies: 54
Views: 20124

Re: Can every debt be paid off?

Good topic! I hope I'm not too late. I am of the camp that considers all money to be a form of debt, so the only truly debt-free transactions one can make are barter transactions, where you immediately settle up with your goods. So, if you want to have money, then you have to have debt. And the more...
by johnfrmcleveland
Thu Aug 22, 2013 2:04 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

In reality, new money mostly enters the economy at the low end, going primarily to the poor and to labor, who spend it as they wish. You must be talking about the reality MMT wishes to create. In the real reality, new money mostly enters the economy at the very high end, being paid out to mega-corp...
by johnfrmcleveland
Sat May 25, 2013 7:33 am UTC
Forum: Serious Business
Topic: Best setup for a pure barter market
Replies: 40
Views: 15768

Re: Best setup for a pure barter market

What about the times people have created barter economies, and then watched currencies develop out of them? Is that not evidence? Has this happened? It's always been the assumption, but is the evidence there? http://www.nakedcapitalism.com/2011/08/what-is-debt-%E2%80%93-an-interview-with-economic-a...
by johnfrmcleveland
Sat May 25, 2013 3:38 am UTC
Forum: Serious Business
Topic: Best setup for a pure barter market
Replies: 40
Views: 15768

Re: Best setup for a pure barter market

Your spoiler example illustrates one of the problems with a barter economy, in that it is difficult to get maximum value for your goods when you barter. In the trade between the apple, banana, and carrot, the guy with the carrot might value both the apple and the banana higher than his carrot - but ...
by johnfrmcleveland
Thu May 23, 2013 4:49 pm UTC
Forum: Serious Business
Topic: General Economics Stuff
Replies: 118
Views: 44364

Re: General Economics Stuff

On a normal, cynical day, ha, I might say that the political nature of economic theory is more criminal than that -- people lying to serve some personal gain. I'm a little less cynical about it. If economists are out for their own personal gain, that probably just means "keeping their jobs.&qu...
by johnfrmcleveland
Tue Apr 30, 2013 7:27 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

MMT doesn't really take a position on this, outside of a job guarantee. And a job guarantee distributes money to the unemployed, who are then free to spend it as they wish. It's about as indirect as you can get, as far as government intervention goes. It's really no different than any other governm...
by johnfrmcleveland
Tue Apr 30, 2013 1:57 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

What makes you think MMT increases the amount of central planning? If you're embracing government stimulus of production via increased demand, then of course, you're having an increase in government planning since, due to their additional demand, the government is determining what gets made(whateve...
by johnfrmcleveland
Fri Apr 26, 2013 8:59 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

It's simply pointing out that centrally planned economies have well known downsides. And yes, economies very obviously vary in how much central planning they have, and equally obviously, MMT increases that amount . So, the point is quite relevant, and trying to dodge the point by protesting that no...
by johnfrmcleveland
Fri Apr 26, 2013 5:13 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Why do you people keep insisting that MMT relies on central planning? Where are you getting these ideas? I'm getting the ideas straight from the central premise of money creation to fund employment - this is massive central planning (not directly, but indirectly puts the government in complete cont...
by johnfrmcleveland
Fri Apr 26, 2013 2:17 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

MV = Py standard monetary theory gives (broadly - sorry to any real economists and mathematicans) dMV/dt = dPy/dt i.e. that big economic lever that a central bank has that it has a practical way of measuring directly inflates the prices of goods ...assuming all else stays equal. Also assuming that ...
by johnfrmcleveland
Thu Apr 25, 2013 7:02 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

MV = Py standard monetary theory gives (broadly - sorry to any real economists and mathematicans) dMV/dt = dPy/dt i.e. that big economic lever that a central bank has that it has a practical way of measuring directly inflates the prices of goods ...assuming all else stays equal. Also assuming that ...
by johnfrmcleveland
Wed Apr 24, 2013 6:40 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

read that article and nothing in its analysis of a static equation relates I'm no economist, but MV = Py as an equation to me is a omniscient view at a given point in time. All that article does is play with multiple static scenarios and proves nothing but that an omniscient deity can plan and cont...
by johnfrmcleveland
Wed Apr 24, 2013 11:32 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

If there is some incremental inflation due to a small rise in demand, would it even be noticed? Charts don't show the magnitude (if any) of the effects. They also don't take into consideration any other factors that might completely dwarf the effects of demand on prices. Yet despite all the things ...
by johnfrmcleveland
Wed Apr 24, 2013 6:38 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

That seems like a pretty simple explanation. Which part doesn't match up with 'what you're seeing on the ground'? The part that says every little bit of increased activity is going to result in a bit of inflation. As I understand it: For the most part, increases in activity in one area are going to...
by johnfrmcleveland
Wed Apr 24, 2013 4:34 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Tyndmyr wrote:Agreement and understanding are not at all the same.


No, they aren't, but you have to understand something in order to reasonably agree or disagree with it.
by johnfrmcleveland
Wed Apr 24, 2013 3:35 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Forget the curves for a minute. If they are correct, you should be able to explain to me, in plain English, why prices would go up even if there is no shortage of anything in the chain. If I own a steel mill and I need to increase my normal order for iron ore, why do you expect the per-unit price o...
by johnfrmcleveland
Tue Apr 23, 2013 12:42 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Aside from all the other problems, another issue you seem to be conveniently forgetting is the effect on the foreign exchange rate. Unless your country is already totally self-sufficient (which would actually be a pretty inefficient state of affairs for most countries), all that extra currency in c...
by johnfrmcleveland
Tue Apr 23, 2013 4:08 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

No, it doesn't. That's why they are curves, not points. And the curves can totally be shifted by a number of effects. At very, very simplistic levels, supply and demand may be explained as single points (usually as basic examples with goods, etc), but you get to supply/demand curves very rapidly. L...
by johnfrmcleveland
Mon Apr 22, 2013 11:32 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

But there is an increase in production, so the graph is wrong right there. Plus, there is an assumption of fixed resources, which is inapplicable. The only production that has changed is the production of money. In the long run some production will shift around to fit the new equilibrium, but you h...
by johnfrmcleveland
Mon Apr 22, 2013 6:06 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

I'm familiar with Austrian economics, and I find the theories to be at odds with the realities of actual economies. Austrian economics sounds good, and it's a seductive school of thought for ideological reasons, but it simply does not comport with the way our economy runs. It's a neat-looking plane...
by johnfrmcleveland
Mon Apr 22, 2013 5:46 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

If I buy two boxes of Cheerios at the grocery store instead of my normal one, is the price of Cheerios destined to go up a tiny bit because of increased demand? Yes. Econ 101. ...But you are trying to argue that because we have created new money from no where, that there will be no costs, it will b...
by johnfrmcleveland
Mon Apr 22, 2013 2:26 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

There is an increase in the demand curve without a corresponding increase in the supply curve. Prices must rise. Your entire argument is built around this increase in demand, but you are ignoring the obvious increase in price that follows. The "obvious increase in price that follows" is n...
by johnfrmcleveland
Sun Apr 21, 2013 7:05 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Two things here - first, we aren't making untrained people do skilled labor. That's completely off the mark, and it's just not how this would work. Second, you wouldn't be spreading around a set pile of existing wealth, you would be creating more wealth. New demand would induce new production, and ...
by johnfrmcleveland
Sun Apr 21, 2013 6:23 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Well, yes, less people exist in a given industry. Look at agriculture...it used to have something like a third of our workers in it. Now it's roughly a third of a percent. Yet, we're still a powerhouse in terms of food production. This is a GOOD thing. We want all the stuff without working for it. ...
by johnfrmcleveland
Sat Apr 20, 2013 5:06 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

Wrong. It is paying people to work more. Increasing demand is generally enough incentive to make people and businesses produce more. You don't want to bake more loaves of bread? Fine. Somebody else will. I honestly don't know where you got the idea that this was forced labor. Yeah, I work 40 hours ...
by johnfrmcleveland
Sat Apr 20, 2013 2:35 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

This is not a zero-sum game. You don't have to subtract production from one area to increase it in another. Besides, like I said, you aren't looking to produce anything. This is basically workfare – the important thing is that you distribute money to those who need it. Pushing production when there...
by johnfrmcleveland
Fri Apr 19, 2013 2:40 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

I am looking for a simplified version that uses math and the balance sheet to explain MMT. OK. The government has an accounting ledger. On one side is the number of dollars they have printed up and spent, and on the other is the same number, called "liabilities." But they are liabilities ...
by johnfrmcleveland
Fri Apr 19, 2013 2:11 am UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

We can get into the complexities of widget making machines and unemployment and maybe even add a gidget to the available goods. But I want to make sure we all agree the above scenario would happen. I can't agree to that. You're talking about a command economy, where the government does 100% of the ...
by johnfrmcleveland
Thu Apr 18, 2013 9:46 pm UTC
Forum: Serious Business
Topic: Modern Monetary Theory
Replies: 147
Views: 55112

Re: Modern Monetary Theory

This is why I dislike the use of widget examples - there's no link to reality.

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