It would seem that using the printing press on currency always leads to trouble ( inflation, assault on savings ect ) , can you ever justify printing money?
Dustin S. Jussila: It would seem that using the printing press on currency always leads to trouble ( inflation, assault on savings ect ) , can you ever justify printing money?
No.
Abstract liberty, like other mere abstractions, is not to be found.
- Edmund Burke
nirgrahamUK:met Wilmot of Rochester ? maxliberty?
I'm fairly certain Maxliberty is against issuing fraudulent notes. But unbacked notes are not by necessity fraudulent, nor is FRB. Really, the only point of contention is how much transparency is required for such things not to be considered "fraud", and what agreements are implicitly made between a bank and its constituents.
Wilmot of Rochester:However, my point was more of one that fractional reserve banks are just more innovative, more profitable, and generally better than this Rothbard-warehouse concept.
Rubbish. FRB is nothing more than an elaborate ponzi scheme. People who want returns on savings will use time-deposits. Those who participate in FRB will find they take a large risk for little gain (being able to withdraw on demand).
Wilmot of Rochester:I think in a free market, it will be more transparent - though I think it already is pretty transparent - that banks take your money in loans and lend that money out to receive a profit so they can stay in business and pay you for participating.
That's not necessarily FRB. A time deposit is functionally the same as this scenario, you just can't withdraw on demand.
nirgrahamUK: and printing and issuing unbacked deeds to homes is entirely justified?
and printing and issuing unbacked deeds to homes is entirely justified?
Gotta love the mental disconnect that people have when it comes to relating money to any other form of property.
Peace
banned: Wilmot of Rochester:I think in a free market, it will be more transparent - though I think it already is pretty transparent - that banks take your money in loans and lend that money out to receive a profit so they can stay in business and pay you for participating. That's not necessarily FRB. A time deposit is functionally the same as this scenario, you just can't withdraw on demand.
Beware, a time deposit can also be fractional; if a bank pays loans in gold certificates beyond its actual gold holdings.
Of course, that form is very unstable, because the certificates will actually be redeemed, and can not exist without a central bank.
banned: Wilmot of Rochester:However, my point was more of one that fractional reserve banks are just more innovative, more profitable, and generally better than this Rothbard-warehouse concept. Rubbish. FRB is nothing more than an elaborate ponzi scheme. People who want returns on savings will use time-deposits. Those who participate in FRB will find they take a large risk for little gain (being able to withdraw on demand). Wilmot of Rochester:I think in a free market, it will be more transparent - though I think it already is pretty transparent - that banks take your money in loans and lend that money out to receive a profit so they can stay in business and pay you for participating. That's not necessarily FRB. A time deposit is functionally the same as this scenario, you just can't withdraw on demand.
You don't know what a ponzi scheme is if you think what I'm talking about is a ponzi scheme - at least not in the traditional sense where investors are paid back with their own money and not actual profits.
A large risk for little gain? What risk? And if by gain you mean not having to shell out several hundred dollars to use some warehouse every year, well... Sounds good to me.
And I am talking about withdrawing on demand, I'm also talking about printing new money to add to the money supply. It is fractional reserve banking and what's more, it works.
existence is elsewhere
Wilmot of Rochester:Stocks are ponzi schemes.
Then you don't know what a ponzi scheme is.
Wilmot of Rochester:It is fractional reserve banking and what's more, it works.
To do what?
JonBostwick: Wilmot of Rochester:Stocks are ponzi schemes. Then you don't know what a ponzi scheme is. Wilmot of Rochester:It is fractional reserve banking and what's more, it works. To do what?
I edited my previous post to make a better comment. I wasn't thinking as clearly when I posted the other one - though that isn't to say stocks aren't ponzi schemes, or at least very similar. I think, in fact, that the current stock market system is very much similar to that of a ponzi scheme - though not to every single point and some stocks (many stocks) do legitimately pay back on profit from investments.
To do what? Well, to efficiently lend more than would otherwise be capable thus providing for long streams of growth and keeping the price of money stable.
You're going to tell me you don't benefit directly or indirectly from a bull market?
Wilmot of Rochester: To do what? Well, to efficiently lend more than would otherwise be capable thus providing for long streams of growth and keeping the price of money stable. You're going to tell me you don't benefit directly or indirectly from a bull market?
Seriously?
An artificial boom is a false boom and causes a real bust. I'll take that to mean you aren't familiar with Austrian Business Cycle theory. Are you familiar with John Maynard Keynes?
Wilmot of Rochester:You're going to tell me you don't benefit directly or indirectly from a bull market?
Oh, I see.... Rochester is not defending FRB on an economic or moral ground. He's simply in favor of FRB because it causes massive booms, which he can profit from, and then massive busts, which don't affect him because he's Mr. trader-extraordinaire. That makes sense.
"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."
rochester:I wasn't thinking as clearly when I posted the other one
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
You asked two different questions:
Is it ever a good idea?
Yes, if you're a crook in control of a currency and you want to rob people blind, I guess it would be a good idea from that perspective.
Can you justify printing money?
I guess if you're a criminal, it would be justified in your own mind. Otherwise no--not a chance.
Wilmot of Rochester:You don't know what a ponzi scheme is if you think what I'm talking about is a ponzi scheme - at least not in the traditional sense where investors are paid back with their own money and not actual profits.
You dont know how FRB works if you think it's not a ponzi scheme. In a FRB, deposits are basically a cash pool which depositors can withdraw from regardless of whether the bank actually holds "their" money. If a bank doesn't have enough of one client's money to pay out on demand, they take from other depositers "investors". Interest earning deposits are just a smokescrean to this, and fixed interest deposits only aggrivate the situation, as people are essentially subsidized from the risk of loaning out money by not having their deposits affected by it with other depositer's money.
Wilmot of Rochester:A large risk for little gain? What risk? And if by gain you mean not having to shell out several hundred dollars to use some warehouse every year, well... Sounds good to me.
No, I mean losing all of your deposits. Loans are risky, giving multiple people , for lack of a better word, "ownership" of the same asset is equally risky.
That is why FRBs need to be federally insured.
Wilmot of Rochester:And I am talking about withdrawing on demand, I'm also talking about printing new money to add to the money supply. It is fractional reserve banking and what's more, it works.
If you enjoy business cycles it works.
JonBostwick: Seriously? An artificial boom is a false boom and causes a real bust. I'll take that to mean you aren't familiar with Austrian Business Cycle theory. Are you familiar with John Maynard Keynes?
No, I'm plenty familiar with it, I just disagree with the bastardized version proposed by Rothbard.
The Mises-Hayek theory is a synthesis from Mises' Theory of Money and Credit and Hayek's later works. Maybe Roger Garrison could explain it better,
This needed liquidation does not imply that “a panic would be not altogether a bad thing,” a judgment that DeLong also attributes—via Hoover—to Mellon. What Mellon (or Hoover) called a panic, Hayek called a “secondary contraction,” meaning a self-reinforcing spiraling downward of economic activity that causes the recession to be deeper and/or longer-lasting than is implied by the needed liquidation of the malinvestment. Hayek argued, in effect, that the “ideal” policy would be one that allows the needed liquidation to proceed at market speed while the monetary authority curbs the secondary contraction (the panic) by maintaining a constant flow of spending. In terms of the equation of exchange (MV=PQ), Hayek argued that the ideal policy was to keep MV—and hence PQ—constant by increasing the money supply (M) just enough to offset declines in money’s velocity of circulation (V). Hayek used the word “ideal” in recognition that the monetary authority may lack both the technical ability and the political will actually to implement that policy. (It would lack the technical ability because it would have no way of getting timely information on the changes in money’s circulation velocity; it would lack the political will because pulling money out of the economy when eventually the velocity begins to rise is a politically unpopular thing to do.) But in any case, Hayek and the Austrians generally regarded the secondary deflation as “altogether a bad thing.” (In Hayek’s later writings, he favored a decentralized monetary system—in which market forces, rather than an ideally managed central bank, would govern changes in the money supply.)
But of course, Hayek wasn't familiar with the Mises-Hayek theory, because printing money is bad, but reseting the economy to ground zero is good.
banned: You dont know how FRB works if you think it's not a ponzi scheme. In a FRB, deposits are basically a cash pool which depositors can withdraw from regardless of whether the bank actually holds "their" money. If a bank doesn't have enough of one client's money to pay out on demand, they take from other depositers "investors". Interest earning deposits are just a smokescrean to this, and fixed interest deposits only aggrivate the situation, as people are essentially subsidized from the risk of loaning out money by not having their deposits affected by it with other depositer's money. No, I mean losing all of your deposits. Loans are risky, giving multiple people , for lack of a better word, "ownership" of the same asset is equally risky. That is why FRBs need to be federally insured. If you enjoy business cycles it works.
First, I really do hate this cut and paste style of argument, not only does it lose all context, it takes away from any flow of rhythm in a reply and allows for much less contributive statements than would otherwise be the case.
Now, I'm not going to argue about whether fractional reserve banking is a ponzi scheme or not. I will say, however, a ponzi scheme, as classicaly understood, is one where investors are paid back by other investors, and not by profits or expected profits - for the simple fact that it's not a business, it's a scheme. If you want to call it a ponzi scheme, fine, but it's a ponzi scheme that works and provides for the necessary amount of liquidity for a modern economy to run while paying back investors with an almost infantesimal risk of losing out.
That's right, I said it, risk. It's something that bankers do a pretty good job of managing on average - forget the rare mishaps and look at the probabilities. So sure, there's a risk when dealing with a bank, but most people seem to be (and justifiably so) perfectly fine with taking that risk because the benefits are so much larger to them economically - a mutually beneficial transaction. And as far as insurance goes, banks that aren't given the moral hazard of federal insurance seem to do just fine and act rather prudently, thus balancing and improving their asset investments through diversification and higher scrutiny.
Wilmot of Rochester:But of course, Hayek wasn't familiar with the Mises-Hayek theory, because printing money is bad, but reseting the economy to ground zero is good.
Hilarious you world propose a so called Mises-Hayek theory and then decry Mises's approach as "resetting the economy to ground zero;" a revealing phrase in itself. (revealing that you conflate the economy and the money supply, for example)
You seem to have proposed a Keynes-Mises-Hayek theory, where in we deliberately create bubbles then attempt to save ourselves from them.