Random Guy

I like how folks think the US has nothing to gain from being the largest provider of natural gas to western Europe. Thanks for giving us a cold winter guys.

I don't recommend doge coin or time shares. This is financial advice.

Let's assume that Russia doesn't stop at Ukraine, despite the fact they can barely support ongoing operations, much less project power further (IMO). Regardless, for the sake of argument they are a mighty global military power intent on conquering the EU. 😈 Given that, in what way is the distribution of specialization in violence beneficial to the EU and the US? Generally, there is no meaningful military capability in Europe. There are too many languages for successful operations integration, and the financial system of the the Eurozone can't support increases to military spending (the so-called 'debt-brake' restricts EU state deficit spending at 3% of total spending [GDP] in the past year). The EU is trapped within liberal-imposed austerity, by structural design of the EU itself. The only correcting mechanism they have to protect themselves from financial bubbles is a fund of about €350B. Technically, national central bank purchases of state gov debt are illegal according to the Maastricht treaty itself. Instead of fixing these problems, EU member states join NATO and expect the US to provide 100% of defense capabilities. Meanwhile, the US economy becomes over-specialized in war and finance. We produce millions of military personnel and trillions of equipment in USD terms, while our spending on things like childcare, family support, certain forms of healthcare* are marginalized by comparison. The 'middle class' @nsplayr refers to doesn't really exist anymore. When we look at the largest components of wealth in the 'middle class', we see home equity (bubble) and pensions (remember, only 11% of private workers today have a pension, so these are mostly gov worker pensions). The bottom 90% of the wealth distribution is composed mostly of gov worker pensions and a housing bubble. So long as NATO exists, the EU has no incentive to properly integrate and increase their defense provision. Europeans literally ignore foreign policy as a concept, and even now, there is little interest within Europe in the conflict in Ukraine. People think it's the US' problem. I would argue this doesn't make much sense. The Europeans should be providing their own defense capabilities, as equals.

Re: fixed currency systems (such as a gold standard). The US current account is -$291B and it has ~8000 metric tons of gold, or $459B in terms of USD, given current prices per metric ton of $57M. How long do we think the US would be able to maintain gold outflows if import settlement is demanded in gold, especially when we consider domestic demand for USD conversion to gold? It's possible the US wouldn't be able to maintain a gold peg for even one year, maybe even a single quarter. I'm curious how you imagine the US fixing its currency to gold would turn out. Is the US gov depleted of gold a net win? Would something cause the US to be less reliant on imports? How would the US conduct domestic investment to reduce dependency on imports with gold settlement in place?

When the video claims that constraints in supply always lead to inflation (non-monetary inflation), we can provide examples of industries with very visible shortages but no price changes, typically because there is no relative power of producers or customer themselves hold power. Example, toilet paper and other sanitary paper products during the lockdowns. Despite frequently empty shelves prices were constant:

We can trace the origin of money from early civilization in Sumer through Egypt, Greece, and Rome. The video claims that what gave Roman coins value was the metal itself (with silver being more valuable than copper, because metal has intrinsic value). This is false. Here are excerpts from Desan covering the creation of money as instruments of 'value' (links available in earlier in the thread), and how the origin of value in fungible units was not the metal itself:

Thanks for sharing. I want to debunk alot of what's offered in this video, so I'm going to go through section by section, starting with the components that are most commonly misunderstood (myths), especially the 1921 hyperinflation in Germany. I know that most people here might not like Tooze as a source, instead many republicans rally around people like Scott Sumner, so I'll provide a link to his work as well. In short, the rise of national socialism in Germany was caused by deflation, not the hyperinflation which occurred over a decade earlier. This myth tends to be commonly understood by everyone in the US, while an actual understanding of money dynamics are not. In fact, the austerity policies following WW1 which were implemented in Germany were universally pursued and the largest contributor of deflation-induced political unrest which began in the 1930's. Which brings us to the first two sections of the video: coinage and the history of money in Rome & British Isles. What causes coinage to have value, why did rulers 'cry-up' or 'cry-down' their currencies, why was metal content often changed, and how did this affect prices. Generally, Desan is the best source for a modern understanding of coinage, although there are many others. The video begins with Rome, but this is some 3000 years later than the earliest recorded money known today, which is best represented in the clay tablets used for recording ledger entries in early Sumer (modern day Iraq). They even developed a method of signing ledgers, not unlike modern cryptographic hash functions (it's not ironic that many of these artifacts wound up in the personal libraries of bankers like J.P. Morgan, who themselves sought a deeper understanding of 'how money worked'). Many of us may have walked over the ground or even seen archaeological pieces of this society during our deployments and not noticed it, including the salt deposited throughout the territory, which accumulated over time from the irrigation ditches used to cultivate the land. The water from the Turkish mountains contains trace amounts of salt which became lethal to wheat and later barley over 2000 years of irrigation. It was these ditch digging activities which led to some of the earliest forms of money. Contrary to the video, we should really begin our investigation of money and inflation at the beginning, with the Sumer clay tablets, silver coinage, and barley unit of account. This was a monetary economy, with commodity money settlement (silver and barley), executed almost entirely with complex credit systems recorded on ledgers.

Why is posting about financial systems trolling?

Max pain @nsplayr

This is how money is created: A borrower goes to a bank to borrow money. The bank and the borrower sign a loan contract, which states that the bank will loan the borrower 100,000 dollars. The bank writes onto its ledger that it now owns a loan contract, market value of $100,000. The bank then writes into its ledger an 'Account Payable' of $100,000 and labels it deposits. That's it. $100k of freshly printed private bank money.

Everyone just be glad they don't own property in Canada:

Nothing about liberalism is compassionate. Treating individuals as labour inputs cannot be compassionate given basic properties of a human being, like family, community. CA purposefully under supplies housing because they don't want to live in a populated area. They don't want coastal CA to be like Hong Kong. If you mean that low interest rates drives up housing prices--yes, it does. But ultimately banks create the money they issue to home buyers, so house prices reflect whatever banks are willing to create. That's accounting convention--houses are priced according to comparables rather than some other metric, which produces a pro-cyclical dynamic: the more banks lend, prices go up, the more collateral prices go up, the more banks can justify creating money (larger loans). When the income of households fails to cover the interest burden, households take on short term debt to pay off their interest burden, which makes the system more susceptible to short term changes in interest rates. But the bubble dynamics of housing are much more complicated than that today, because the financial instruments themselves (MBS) serve as collateral for other money creation. A house of cards within a house of cards within a house of cards. This is why the Fed has placed itself in as a dealer in money markets via the Standing Repo Facility and Bond Purchasing program. Its has woven a web of interrelated debt structures which everything depends on but can't sustain itself. This is why @Lord Ratner is talking about there being 'too much debt', which is generally correct but an oversimplification--the wrong kind of debt (the wrong kind of money). Debt is money. You can't just reduce debt, that reduces money--the deficit reduction we see happening now may reduce the money supply far below the required amount needed to sustain the private debt structure.

Dollar's are money, and where do they come from?

I think people misunderstand that CA natives don't want people moving there, and they use their legal system to intentionally restrict housing, driving up home prices to increase their own wealth, and make the people moving to the state miserable in the hopes they will some day go home. And it's working, inflow to CA was negative for the first time last year. Honestly, CA natives just want to go back to a state of 1900's rural beach property and empty land.

What is a mother paid for her product, the child itself? Nothing. Keep in mind that this output is the source of all future output, but women aren't compensated for it. Mothers are not paid for that labour. Do you pay your wife a wage, according to a contract, and does she negotiate her wages with you, subject to terms of law? This is not a reference to the southern US. Slave economies were the basis of social organization for thousands of years, beginning before the Sumerians themselves. This is our point of contention--if banks do not print dollars, where does money come from? Who/what creates the money supply today? What is the process? This is classical monetary inflation (too much money chasing too few goods) and this was refuted by the Fed. Inflation is not just a monetary phenomenon, and supply is not the only factor contributing to price changes. The paper is linked earlier. The platinum coin denominated as $1T would be produced by the mint and purchased by the Fed. The Fed would mark up the TGA by $1T and put the coin in a glass case on the wall. This is Rohan Grey's PhD paper, the source of this discussion topic, it's worth a read. Not sure how this relates to the financial system as it exists today. Similarly I don't think this would pass for a sufficient explanation of an aircraft system today either. Yes. The bank balance sheet expands, liabilities are created, those liabilities can be used for making payments. A loan is a legal contract, and exists within a legal system. All the effects and dynamics of law apply. The underlying collateral, if there is any, as private property, rights to use of property, all are affected. The IMF makes lots of dollar denominated loans to states that can't create dollars except through exports or asset sales that it knows won't be repaid, those loans have binding legal properties which are then wrought upon the debtor state--and that debtor cannot call the IMF and say 'hey, this isn't a loan sorry'. The US Gov won't 'pay back the debt', because in accounting terms that doesn't make sense. So long as someone has a desire to save, separate of the desires or behaviour of the private sector, the gov is the only entity which can swap an interest bearing note for those deposits. This is covered in detail via the animated slideshow linked earlier in the thread (screenshot above). If we trace the unit of currency through the financial system, the answer to your question becomes self-evident. You don't have to hear it from me. Here I think you mean that liabilities are being created and the corresponding asset has no market value. Or, in the case where the bank has positive equity, it can write liabilities to its ledger and create money--its not purchasing a loan contract from a borrower, its using the empty space on its balance sheet created from past loans and other loans (assets) currently on its books. Indeed, the deferred asset the Fed is creating right now demonstrates that money does not always need to be a loan, the Fed is just marking up its liabilities and assets without any contractual obligation applied to any human being. It's literally risk-free money for banks created from nothing. If you repay all loans, right now, using existing deposits, what happens to the money supply?