Conquer Club

Lets play with a couple examples here.

Image we have a world of 10 people. Nobody has any money. On Day 1 everybody goes and makes something. Now they all have a thing. They used to take their things and trade them straight across, bartering. They decided to simplify it and create money. So everybody has something, wants something somebody else has, but doesn't have any money. So they all go to the bank and borrow $1. They go around, and buy and sell stuff. Now everybody has somebody else's thing, and $1. So they go pay the bank back. They still owe interest. Lets call this debt.

On day 2, everybody works, makes something. They want to trade again. So everybody goes and borrows $1. They buy and sell, pay back the $1, and now they owe the bank even more interest. People keep getting more things, cause they keep working, but they are slowly going into debt.

OR

Image we have a world of 10 people. Nobody has any money. On Day 1 everybody goes and makes something. Now they all have a thing. They want to trade, but make it easy. So they create this thing called money. It's not real. They give everybody $1. Everybody buys and sells their stuff. At the end of the day, they still have $1. They have no debt.

On day 2, everybody works makes something. They want to trade again. So everybody uses the $1 they already have and commerce ensues. Everybody still has $1, nobody is getting rich, but they are all getting stuff since they work each day.

Now, lets throw a hammer into these systems.

The 10 people all have kids and now there are 20 people. The 20 people all work, then the 20 people all go borrow money from the bank. This really sucks. Building an economy on debt, and in fact a world economy on debt, to the point where the entire world is in debt, is just silly.

or

The 10 people all have kids and now there are 20 people. The 20 people all work. So they disperse $10 to the economy. Commerce ensues. The money supply matches the demand.

Right now people treat "money" as if it's real, a commodity to trade etc. But Money isn't real. Right now there is a lack of money. The banks aren't lending. People are hoarding their money. Money was "lost" when the market crashed. But we still have lots of products to sell and buy. We have lots and lots of people that want to work. Only there isn't enough money.

People realize this. So the government decides to try and stimulate the economy by injecting cash into it. Great idea. Except where do they get the money? Oops...thats right...they borrowed it.

I believe control of money needs to be taken out of the power of banks and given back to the power of the people, the government. The supply of money shouldn't be controlled based upon the interest rate a bank will lend money to the people at, but instead the amount of money the government (people) put and take from circulation.

The government has 2 ways to inject and remove money from the economy. Taxes. I believe taxes should be monthly. And right now everybody would be getting a massive tax rebate. Because the economy needs money. If there is too much money in the economy, and you get inflation, then money will be removed from the system, and you will have to pay taxes.

bedub1 wrote:Lets play with a couple examples here.

Image we have a world of 10 people. Nobody has any money. On Day 1 everybody goes and makes something. Now they all have a thing. They used to take their things and trade them straight across, bartering. They decided to simplify it and create money. So everybody has something, wants something somebody else has, but doesn't have any money. So they all go to the bank and borrow $1. They go around, and buy and sell stuff. Now everybody has somebody else's thing, and $1. So they go pay the bank back. They still owe interest. Lets call this debt.

On day 2, everybody works, makes something. They want to trade again. So everybody goes and borrows $1. They buy and sell, pay back the $1, and now they owe the bank even more interest. People keep getting more things, cause they keep working, but they are slowly going into debt.

OR

Image we have a world of 10 people. Nobody has any money. On Day 1 everybody goes and makes something. Now they all have a thing. They want to trade, but make it easy. So they create this thing called money. It's not real. They give everybody $1. Everybody buys and sells their stuff. At the end of the day, they still have $1. They have no debt.

On day 2, everybody works makes something. They want to trade again. So everybody uses the $1 they already have and commerce ensues. Everybody still has $1, nobody is getting rich, but they are all getting stuff since they work each day.

Now, lets throw a hammer into these systems.

The 10 people all have kids and now there are 20 people. The 20 people all work, then the 20 people all go borrow money from the bank. This really sucks. Building an economy on debt, and in fact a world economy on debt, to the point where the entire world is in debt, is just silly.

or

The 10 people all have kids and now there are 20 people. The 20 people all work. So they disperse $10 to the economy. Commerce ensues. The money supply matches the demand.

Right now people treat "money" as if it's real, a commodity to trade etc. But Money isn't real. Right now there is a lack of money. The banks aren't lending. People are hoarding their money. Money was "lost" when the market crashed. But we still have lots of products to sell and buy. We have lots and lots of people that want to work. Only there isn't enough money.

People realize this. So the government decides to try and stimulate the economy by injecting cash into it. Great idea. Except where do they get the money? Oops...thats right...they borrowed it.

I believe control of money needs to be taken out of the power of banks and given back to the power of the people, the government. The supply of money shouldn't be controlled based upon the interest rate a bank will lend money to the people at, but instead the amount of money the government (people) put and take from circulation.

The government has 2 ways to inject and remove money from the economy. Taxes. I believe taxes should be monthly. And right now everybody would be getting a massive tax rebate. Because the economy needs money. If there is too much money in the economy, and you get inflation, then money will be removed from the system, and you will have to pay taxes.

Right on, semi-Ron Paul.

bedub1 wrote:Lets play with a couple examples here.

Image we have a world of 10 people. Nobody has any money. On Day 1 everybody goes and makes something. Now they all have a thing. They used to take their things and trade them straight across, bartering. They decided to simplify it and create money. So everybody has something, wants something somebody else has, but doesn't have any money. So they all go to the bank and borrow $1. They go around, and buy and sell stuff. Now everybody has somebody else's thing, and $1. So they go pay the bank back. They still owe interest. Lets call this debt.

On day 2, everybody works, makes something. They want to trade again. So everybody goes and borrows $1. They buy and sell, pay back the $1, and now they owe the bank even more interest. People keep getting more things, cause they keep working, but they are slowly going into debt.

OR

Image we have a world of 10 people. Nobody has any money. On Day 1 everybody goes and makes something. Now they all have a thing. They want to trade, but make it easy. So they create this thing called money. It's not real. They give everybody $1. Everybody buys and sells their stuff. At the end of the day, they still have $1. They have no debt.

On day 2, everybody works makes something. They want to trade again. So everybody uses the $1 they already have and commerce ensues. Everybody still has $1, nobody is getting rich, but they are all getting stuff since they work each day.

Now, lets throw a hammer into these systems.

The 10 people all have kids and now there are 20 people. The 20 people all work, then the 20 people all go borrow money from the bank. This really sucks. Building an economy on debt, and in fact a world economy on debt, to the point where the entire world is in debt, is just silly.

or

The 10 people all have kids and now there are 20 people. The 20 people all work. So they disperse $10 to the economy. Commerce ensues. The money supply matches the demand.

Right now people treat "money" as if it's real, a commodity to trade etc. But Money isn't real. Right now there is a lack of money. The banks aren't lending. People are hoarding their money. Money was "lost" when the market crashed. But we still have lots of products to sell and buy. We have lots and lots of people that want to work. Only there isn't enough money.

People realize this. So the government decides to try and stimulate the economy by injecting cash into it. Great idea. Except where do they get the money? Oops...thats right...they borrowed it.

I believe control of money needs to be taken out of the power of banks and given back to the power of the people, the government. The supply of money shouldn't be controlled based upon the interest rate a bank will lend money to the people at, but instead the amount of money the government (people) put and take from circulation.

The government has 2 ways to inject and remove money from the economy. Taxes. I believe taxes should be monthly. And right now everybody would be getting a massive tax rebate. Because the economy needs money. If there is too much money in the economy, and you get inflation, then money will be removed from the system, and you will have to pay taxes.

great examples. I was going to say "the gov't, through the people" and I see you covered that. Bravo

No, those examples are not great examples.

In every example, when 10 people have a thing they created that day, why do they then give their thing away at some point in exchange for the $1? This is where I think the examples all break down. Nobody would just accept that $1 in exchange for giving away the thing they made unless there was a law saying they had to. That is because the $1 has no value.

Trephining wrote:No, those examples are not great examples.

In every example, when 10 people have a thing they created that day, why do they then give their thing away at some point in exchange for the $1? This is where I think the examples all break down. Nobody would just accept that $1 in exchange for giving away the thing they made unless there was a law saying they had to. That is because the $1 has no value.

I make shoes. You make food. I trade you shoes for bread. You buy my shoes for $1. I buy your bread for $1.

Money is far easier to cart around that loads of beef or vegetables or coal. That is why.

bedub1 wrote:

Trephining wrote:No, those examples are not great examples.

In every example, when 10 people have a thing they created that day, why do they then give their thing away at some point in exchange for the $1? This is where I think the examples all break down. Nobody would just accept that $1 in exchange for giving away the thing they made unless there was a law saying they had to. That is because the $1 has no value.

I make shoes. You make food. I trade you shoes for bread. You buy my shoes for $1. I buy your bread for $1.

There are different values for each good, and those values are determined by the actions of those people. To say everything is a $1 would be applicable to examples for a command economy, and not anything like a free market economy.

BigBallinStalin wrote:

bedub1 wrote:

Trephining wrote:No, those examples are not great examples.

In every example, when 10 people have a thing they created that day, why do they then give their thing away at some point in exchange for the $1? This is where I think the examples all break down. Nobody would just accept that $1 in exchange for giving away the thing they made unless there was a law saying they had to. That is because the $1 has no value.

I make shoes. You make food. I trade you shoes for bread. You buy my shoes for $1. I buy your bread for $1.

There are different values for each good, and those values are determined by the actions of those people. To say everything is a $1 would be applicable to examples for a command economy, and not anything like a free market economy.

Idk about "actions" of the people but the person who makes it gets to decide how much it costs.

Unless they are some shitty-ass shoes that cost as much as food.

Army of GOD wrote:

BigBallinStalin wrote:

bedub1 wrote:

Trephining wrote:No, those examples are not great examples.

In every example, when 10 people have a thing they created that day, why do they then give their thing away at some point in exchange for the $1? This is where I think the examples all break down. Nobody would just accept that $1 in exchange for giving away the thing they made unless there was a law saying they had to. That is because the $1 has no value.

I make shoes. You make food. I trade you shoes for bread. You buy my shoes for $1. I buy your bread for $1.

There are different values for each good, and those values are determined by the actions of those people. To say everything is a $1 would be applicable to examples for a command economy, and not anything like a free market economy.

Idk about "actions" of the people but the person who makes it gets to decide how much it costs.

Unless they are some shitty-ass shoes that cost as much as food.

What I mean by actions is that value isn't inherently determined; it's determined by people subjectively (or through their actions like buying, selling, appraising the quality of that product, etc.)

The producer nor does the cost of production themselves really determine the price. The price also depends on other producers' undercutting his price, the quantity demanded by the consumers, and their varying amounts of willingness to pay for the product.

But ultimately if the producer wants to sell his tomatoes at $1000 a pop then that'll be the cost of them tomatoes.

I'm not saying your wrong, but it's still the producer's decision.

Army of GOD wrote:But ultimately if the producer wants to sell his tomatoes at $1000 a pop then that'll be the cost of them tomatoes.

I'm not saying your wrong, but it's still the producer's decision.

Sure, it's his decision, but his decision isn't the ultimate deciding factor of the price.

Hardly anyone is willing to pay $1000 for one, so by the consumers' actions he'll be forced to sell them for less--unless of course he wants to make no money and go under.

BigBallinStalin wrote:

Army of GOD wrote:But ultimately if the producer wants to sell his tomatoes at $1000 a pop then that'll be the cost of them tomatoes.

I'm not saying your wrong, but it's still the producer's decision.

Sure, it's his decision, but his decision isn't the ultimate deciding factor of the price.

Hardly anyone is willing to pay $1000 for one, so by the consumers' actions he'll be forced to sell them for less--unless of course he wants to make no money and go under.

I guess the ambiguity of the language or my ignorance of the correct usage of words is stopping us for agree.

HE decides the price. Factors such as demand, competition, etc. are all influences of his decision, but if he wants to sell them at $1000 bucks and go negative than that's his decision.

The monthly taxes thing seems like an administrative nightmare.

Army of GOD wrote:

BigBallinStalin wrote:

Army of GOD wrote:But ultimately if the producer wants to sell his tomatoes at $1000 a pop then that'll be the cost of them tomatoes.

I'm not saying your wrong, but it's still the producer's decision.

Sure, it's his decision, but his decision isn't the ultimate deciding factor of the price.

Hardly anyone is willing to pay $1000 for one, so by the consumers' actions he'll be forced to sell them for less--unless of course he wants to make no money and go under.

I guess the ambiguity of the language or my ignorance of the correct usage of words is stopping us for agree.

HE decides the price. Factors such as demand, competition, etc. are all influences of his decision, but if he wants to sell them at $1000 bucks and go negative than that's his decision.

Well, he does decide the price, but that isn't how price is determined.

D'ya know what'I MEAN?

thegreekdog wrote:The monthly taxes thing seems like an administrative nightmare.

Yeah really. And prices in many goods and services would probably jump because of the many businesses' added costs from dealing with monthly taxes.

Doesn't seem worth it....

PLAYER57832 wrote:Money is far easier to cart around that loads of beef or vegetables or coal. That is why.

Debit cards are even simpler.

Gov's or bank's job? How about neither.

And just who do you think controls those debit cards?

You guys are taking the example too far. It's not about the nuances of business and sales, and the costs of goods etc. It's about where does the money come from that is used for commerce.

I think the major flaw in your examples is that it assumes that the bank is independent of the rest of the "economy." The banker should be one of your ten people, and the interest he earns will be what he spends to purchase his bread and shoes. Furthermore, if we assume that your ten people are of reasonable intelligence, they'll quickly realize that they have to sell their goods at a slight profit in order to cover the cost of the interest they owe to the bank. This will result in some level of inequity in the wealth of the population, but it will retain some level of stability. If a few of the poorest people are all of a sudden unable to afford some of the other goods, demand drops and prices will have to respond.

When you introduce more people into this situation (i.e. children), more goods and services are available, but the money supply has not changed. Prices decline over time, though not in the devastating form of the deflationary spiral - it's more like the real-world manner of the price of computers.

Doc_Brown wrote:I think the major flaw in your examples is that it assumes that the bank is independent of the rest of the "economy." The banker should be one of your ten people, and the interest he earns will be what he spends to purchase his bread and shoes. Furthermore, if we assume that your ten people are of reasonable intelligence, they'll quickly realize that they have to sell their goods at a slight profit in order to cover the cost of the interest they owe to the bank. This will result in some level of inequity in the wealth of the population, but it will retain some level of stability. If a few of the poorest people are all of a sudden unable to afford some of the other goods, demand drops and prices will have to respond.

When you introduce more people into this situation (i.e. children), more goods and services are available, but the money supply has not changed. Prices decline over time, though not in the devastating form of the deflationary spiral - it's more like the real-world manner of the price of computers.

You are correct, the first example could be more proper if the banker was one of the 10 people. That still doesn't change the second example, and my belief that it's not the bankers job to control the supply of money, but the governments.

Also, you're assuming the people are all honest and not corrupt pieces of shit. What if one of the citizens try to steal a product from someone else, or starts printing their own money?

Basically the only difference between your two examples is the initial conditions. It really has nothing to do with Governments vs. banks, it's a question of whether people already have money or debt when they initially interact with others in the economy. It really is a question of what you define as your currency and how you relate it to your economic goods.

In the first example, the money supply is $10, and people naturally start to relate $1 to a day's supply of goods. Some of the goods are better quality or are more difficult to produce. Initially prices fluctuate until some goods are worth $2 and other are worth $0.10.

In the second example, a government comes in, hands everyone $1, and says that $1=one day's worth of bread. People then start to ask, "Who's bread? Albert's bread is a whole lot tastier and more filling than Joe's is. You start to have disagreements about the pricing of Peter's shoes. He says they're clearly worth 2 day's worth of Joe's bread ($2), but you really think they shouldn't be worth more than one day of Albert's bread ($1). Since people can't agree on how to price goods, they resort to pricing things in terms of Joe's bread only. Demand for the dollars falls and its value drops.

If you think the second example isn't realistic, read up on Venezuela's economic situation and the currency black market.