How Money Works

[Atheist-Lite]

I found this article more enlightening.

Yet economists prefer their elliot waves and charts to the real cashflow economy. I guess they've a blind spot for reality? Schneider will now explain how economists have missed the largest franchaise and it's impact out of their charts?

[Gallstones]

This excellent example of how money works has been around since the late 1970s, and it makes many things clear. Among them, why I keep saying Libertardians don't understand economics.

Read it and comprehend. Many things that are now opaque and seem complicated will suddenly attain clarity and obviousness and simplicity.

http://www.slate.com/articles/business/ ... onomy.html

Schneibster, I'm sorry I don't know, what kind of tardian are you?

Anti-tardian. C'mon, this is first grade schoolyard stuff. Do you have anything to say that means anything, or are you just gonna hate on the librul 'cause he "wants to take your guns?"

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[Seth]

The greedy sociopath party got in there and spent it all on tax breaks for themselves and their pals and an unnecessary war and a fake scheme supposed to reduce drug costs that actually funneled money to more of their cronies. It's not crony capitalism, it's crony thievery.

This, of course, is crystal-clear revisionist idiocy.

It wasn't the Republicans who raided the SS trust fund,

What are you blathering about? Where the money went is obvious. Iraq, the Medicare prescription drug program, and the Bush tax cuts. That was the Bush administration. Every one of those three things was Bush's choice.

Talk about revisionist history, Bush didn't do the Bush tax cuts? OK. Whatever.

Once again, the raids on the SS Trust Fund began LONG before Bush took office, and have been going on literally since the system was put in place. The Trust Fund is filled with government-issued IOU's signed primarily by Democrats who needed more cash to fund more social welfare programs to buy more votes from the dependent class. Bush had nothing to do with that.

And if you cannot understand that a tax cut is not the same thing as taking money from the SS Trust Fund, then you're just too ignorant to bother with.

[Seth]

Meh. So bloody typical. People don't like the message, so they take aim at the messenger. And I don't know what Seth's deal is — he seems to be talking out of a six-sided mouth: economies don't have to be fair, but they DO have to be fair to the Japanese who don't want to spend and respect their wishes — Seth, do you even realize the internally inconsistent nature of your argument?

There's nothing inconsistent in my statement. Economies are not sentient creatures. They don't plan, they don't execute plans, they simply react to market forces and consumer demand. Governments, on the other hand, constantly try to meddle with economies, usually to the detriment of the people whose transactions make up the economy.

I think probably the most perceptive comment on Krugman was the following:

I believe the faulty assumption in the original example is that each coupon has to be for a fixed time frame, regardless of how low the scrip supply dips. A truly perceptive individual in the coop would see this and say, "hey, for one scrip ill babysit for two nights as opposed to one, because i really need those coupons". Another person may see this and say, "iill give you an even better deal!". At this point the individuals are free to bargain over the babysitting time each coupon is worth. Each would approach the "hoarder" and offer their babysitting deal, now the hoarder can get more worth out of each scrip than he put in, making them more likely to spend scrip again.

Eventually, through bargaining, the amount of babysitting time per scrip should settle on a value that may be different than the original, say two nights, rather than one, but this would have the benefit of keeping scrip in circulation with out having to issue more of it.

Correct. Or, someone might say, "I'll fix dinner for you and your wife at your home in return for a unit of babysitting next Friday night." That's how free markets react to shortages and surpluses. They come up with new products and services to fulfill new needs and demands while the old ones fade away. Eventually, the elderly couple who has no children stores up babysitting credits by loaning out their driver and limo to couples wanting to go to dinner in luxury in order to trade them to the younger folks for toilet cleaning and vacuuming services.

Which of course is the eternal debate between Keynesians and Hayekians, market regulation versus free markets.

Indeed. And Hayekians always win out, because Keynesian economics never work in the long term.

What I think gets over-looked in the rather soft sciences of economics and political theory is that most arguments center around a pair of conflicting but mutually necessary values. Those are the values of fairness (the bulk of capitalistic rhetoric) and the value of charity (socialism).

Wrong. Socialism is not a charitable value because socialism doesn't say "from each according to their altruistic and charitable instincts, to each according to their polite requests for voluntary assistance" (that's Libertarianism), it says "from each according to their ability, to each according to their need," with "ability" and "need" both being defined by government, which is, as everyone knows, nothing but pure force. Therefore, Socialism is actually not the "value of charity," it's the value of slavery to the collective, which is not, as you try to suggest, a "mutually necessary value."

The conservative makes the mistake in believing that if we can arrive at the proper formula which takes fairness into account in the proper way, then charity need not be attended to.

Absolutely untrue. Nothing in conservatism suggests that charity is not a proper component part of society. You are improperly assuming that socialism is "charity" when in fact, as I've explained, it's nothing at all like charity, it's slavery and naked government force.

This is false. This is false because, as a species, our evolutionary success depended on a synthesis between these competing values. They are both necessary — at a genetic level — for us to flourish and prosper as a species.

Your argument has failed on your first false premise: that conservatism does not value charity as a necessary component of a functioning society. This is completely untrue of both conservatism and Libertarianism, both of which place very high value on voluntary associations, voluntary actions, and altruistic impulses. More so, in fact, than Socialism, which is about "enforced charity" which is not charity at all, but is nothing less or more than slavery to the needs and desires of the collective, as Marx himself said in his famous quote, "from each according to his ability, to each according to his need."

Any politic which neglects one for the other, or tries to account for one with the other, will fail.

Which is why Socialism ALWAYS fails.

And with it, perhaps the entire species. Many pie-eyed liberals expect science and human goodness to prevail in our war against impending climate catastrophe. I think they are naively deluded. We face a potential extinction event of the first order, which will probably put an end to the dominance of the human species, to be replaced by something else. Sacrificing one or the other value, for petty political purposes, pushes us, as a species, that much closer to extinction. We are no longer fighting for "more take home pay" or "a lower tax rate". We are fighting for the survival of the species. And both sides are on the wrong side.

Meh. A little global warming ain't going to be that much of a problem, if we'd get off our asses and start trying to adapt to it rather than trying to prevent something that's going to happen no matter what we do in a panic today. The earth has been much hotter in the past, and it's been much colder. Of the two, I prefer tropical vegetation at the North Pole (which is how it used to be, based on recovery of fossils from the seabed) to mile-thick ice sheets covering everything north of Latitude 30 degrees North. So we won't have any ski slopes. So what? Big deal. Humans can adapt quite nicely to a warmer climate because we already have. As for polar bears, well, they evolved from non-polar bears, so they can adapt or die just like millions of species before them have done, and millions of species after them will do.

Adapt or die. Me, I'm going to stock up on sunscreen and little pink umbrellas for my Mohitos and wait to dabble my toes in the surf about five miles inland from where the surf is right now. If you don't want to get your feet wet, I suggest you move in and up a bit. Do it now, while there's still time...after all, you've only got about 100 years before the sea level rises, so don't dilly-dally and shilly-shally about.

[Seth]

"Eventually, of course, the co-op issued too much scrip, leading to different problems ..."
- P. Kruggman.

Could someone please, ask him, or explain what he meant by the three little dots since we appear to be at that part of the story right now?

No, we're not. You stopped reading too soon.

But to answer your question, if you issue too much scrip then there aren't enough babysitters. So you have to collect some, in dues usually, and burn it.

The article was written in 1998. I must have stopped half way through the second reading?

Economics stopped being true after 1998?

Krugman was not a credible source long before 1998.

[Seth]

Your cynicism makes you a tool of the sociopathic rich.

Whereas your gullibility and ignorance just makes you a tool.

[Seth]

No, we don't need time to tell anything. The sociopathic rich want all the money because they just want it, and if they get it they destroy the economy.

It's not the rich who "want all the money just because they want it," that would be the lazy dependent class non-producers.

That's what's happening right now; they've got all the money and they won't spend it.

That's because Obama is threatening to take their money away from them. Since it's theirs, they have a perfect right to not invest in the economy and not earn taxable income in order to starve the Obama cancer of what it needs to further its socialist redistributionist avarice. Look a it as radical anti-cancer therapy. As soon as the Obamanation is dead and the body politic has been saved from the cancer of Socialist Progressivism, the money will flow once again. It's not gone, it's just being denied to those who would steal it.

They can't; they're sociopathic and monomaniacal about money, that's how they got rich. They've paid to undermine economics and to infect people with cynicism so that we blame some nebulous "system" instead of them.

It's those who want to take what does not belong to them for their own selfish purposes who are the sociopaths here. Right now, the rich and the corporations are actually saving society from a fate worse than a temporary recession, they are saving it from the horror of Socialism by starving the wannabee socialist in the Oval Office of the money he needs to "fundamentally transform" this nation into Greece. Once the election is over, and Obama goes back to being unemployed, and his minions have been rooted out of government, the cash will flow and the economy will recover just fine because the wealthy didn't get wealthy by hoarding cash, they got that way by shrewdly investing in the economy and creating wealth and jobs for everyone, which is something neither Krugman nor you are capable of understanding.

It's just like if some idiot collected up all the scrip from the babysitting coop so no one had any.

No, it's like everyone in the co-op is hunkering down and not going out and saving their script until the Landlord stops coming around claiming 50 percent of the scrip for himself, so he can go out whenever he likes.

[Seth]

You're losing track of the analogy.

You'd need a propaganda campaign about how the co-op was trying to tax everyone's babysitting vouchers.

I took care of that, because that's exactly what's happening and it's exactly why people are sitting on their cash and not spending it...because Obama wants to take it and redistribute it to his cronies and to the dependent class so that they will vote for yet more largess from the public treasury.

Well, the rest of us, the productive class, aren't going to put up with that, so we're starving the Obamanation of it's lifeblood because we intend to kill it dead, just like we kill all cancers that come along.

[Seth]

The sociopathic rich want all the money because they just want it, and if they get it they destroy the economy. That's what's happening right now; they've got all the money and they won't spend it.

Hardly any money is stored under the mattress to quietly rot away. It is invested in things like factories, service providers, real estate that is rented out, and so on. The rich get richer mainly by buying and selling stuff. Their money keeps circulating all the time.

Except, as we can see from current events, when the Socialists and Progressives propose to tax it too heavily, whereupon they withdraw their investment capital from the markets and start living off their principal while awaiting a change of administration to one that's more friendly to wealth generation and more conducive to investment.

Capital flows away from taxation like water flows downhill. That is an axiom of economics that Krugman doesn't understand.

[Pensioner]

This excellent example of how money works has been around since the late 1970s, and it makes many things clear. Among them, why I keep saying Libertardians don't understand economics.

Read it and comprehend. Many things that are now opaque and seem complicated will suddenly attain clarity and obviousness and simplicity.

http://www.slate.com/articles/business/ ... onomy.html

I like it mate, have you ever read The Ragged Trousered Philanthropists by Robert Tressell, have a look.

http://www.gutenberg.org/files/3608/3608-h/3608-h.htm

[Schneibster]

Here's an inconvenient question about the lie that Fanny Mae and Freddie Mac caused the recession: did all these countries have Fanny Mae?



H/t to bonddad. Source.

[Schneibster]

You're losing track of the analogy.

You'd need a propaganda campaign about how the co-op was trying to tax everyone's babysitting vouchers.

Needless variables

Duh.

[Schneibster]

"Eventually, of course, the co-op issued too much scrip, leading to different problems ..."
- P. Kruggman.

Could someone please, ask him, or explain what he meant by the three little dots since we appear to be at that part of the story right now?

No, we're not. You stopped reading too soon.

But to answer your question, if you issue too much scrip then there aren't enough babysitters. So you have to collect some, in dues usually, and burn it.

The article was written in 1998. I must have stopped half way through the second reading?

Don't you understand?! Economics is an ETERNAL TRUTH! And the things that should be done to fix it are constant and unchanging, and exactly the opposite of those evil ibertardians think. That's the only rational solution, unlike the blind ideologies held by those that disagree with me!!!

Reality's liberal bias again.

Last time you went away whining about your butthurt because you had no evidence.

Looks like you're doing the "no evidence" thing again.

I predict butthurt shortly.

[Hermit]

Here's an inconvenient question about the lie that Fanny Mae and Freddie Mac caused the recession: did all these countries have Fanny Mae?



H/t to bonddad. Source.

"When the US sneezes, the rest of the world catches a cold."

[Schneibster]

The sociopathic rich want all the money because they just want it, and if they get it they destroy the economy. That's what's happening right now; they've got all the money and they won't spend it.

Hardly any money is stored under the mattress to quietly rot away. It is invested in things like factories, service providers, real estate that is rented out, and so on. The rich get richer mainly by buying and selling stuff. Their money keeps circulating all the time.

The big culprit in America is that public companies are obsessed with quarterly earnings. Investing in future growth often reduces profits short term. The enterprise has to spend money, say on additional staff or extra marketing, before any new revenues come in the door. And for bolder initiatives like developing new products, the up front costs can be considerable (marketing research, product design, prototype development, legal expenses associated with patents, lining up contractors). Thus a fall in business investment short circuits a major driver of growth in capitalist economies.

Companies, while claiming they maximize shareholder value, increasingly prefer to pay their executives exorbitant bonuses, or issue special dividends to shareholders, or engage in financial speculation. They turn their backs on the traditional role of a capitalist – to find and exploit profitable opportunities to expand his(sic) activities

Source

Looks like the CEOs get more money they don't have time to spend, and the corporate savings go up, and nobody has a job. Welcome to reality.