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Re: Some questions about Economics.

Sharingan_Nightmare — Tue, 02 Jun 2009 03:02:05 GMT

banned has got the idea. what im saying is the interest would seem to accelerate the growth seeing as people would buy even when they dont have the money at the time but in the long run they end up spending more and buying less not increasing demand.

Re: Some questions about Economics.

banned — Tue, 02 Jun 2009 01:33:53 GMT

Sharingan_Nightmare:
okay, what im referring to when i say a direct stimulus is something that is immediately redistributed throughout the economy, like when banks and credit card companies make their income, some of it goes right back out into peoples paychecks and stuff like other companies, but they also pool additional gain which is not spent, usually for backups incase of some sort of loss or increasing their output. This money becomes STAGNANT and either doesnt flow around or is "seeming" to flow around yet what it is its applied to a different avccount which starts the process over and increases the pool.

Hmm. Let me see If I understand correctly. Are you saying that when lending institutions make a profit, that profit isn't being immediately invested into the economy, but is being saved for when they need to compensate a loss or to be invested for future production?

If that's the case, the fact that those companies aren't immediately demanding resources in return for their profits means that demand for goods hasn't been effected by them. The cost of purchasing the goods that the company would have otherwise purchased (had it not saved it's profits) is not made greater by them increasing the demand for that good. In other words, people don't have to spend as much while the company saves for the future.

Re: Some questions about Economics.

nirgrahamUK — Tue, 02 Jun 2009 01:25:24 GMT

sounds like he's got a hang up about consumer borrowing...

Re: Some questions about Economics.

liberty student — Tue, 02 Jun 2009 00:46:22 GMT

Sharingan_Nightmare:
let me rephrase. it doesnt become stagnant, but it becomes part of a never ending false growth. because even though the growth would SEEM to benefit the economy as a whole it just creates more instances of debt and loss for customers. it really doesnt help anything.

Can you provide an example? It's really hard to follow this.

I think a big problem is that economics is generally a value free science. So when you say "benefit" or "doesnt help" that's hard for me to understand.

As a businessman, I always want to do things that benefit and help, because that is how I make a profit.

Re: Some questions about Economics.

Sharingan_Nightmare — Tue, 02 Jun 2009 00:24:44 GMT

let me rephrase. it doesnt become stagnant, but it becomes part of a never ending false growth. because even though the growth would SEEM to benefit the economy as a whole it just creates more instances of debt and loss for customers. it really doesnt help anything.

Re: Some questions about Economics.

liberty student — Mon, 01 Jun 2009 23:30:46 GMT

Sharingan_Nightmare:
This money becomes STAGNANT and either doesnt flow around or is "seeming" to flow around yet what it is its applied to a different avccount which starts the process over and increases the pool.

Velocity can increase the volume of trade, which theoretically better orders scarce resources with each trade, and marginal increases aggregate prosperity, however, money does not become stagnant. This is a mainstream economic myth.

Re: Some questions about Economics.

Sharingan_Nightmare — Mon, 01 Jun 2009 23:13:02 GMT

liberty student:

Sharingan_Nightmare:
im saying the gain isnt going into direct stimulus into the economy.

What is direct stimulus?

Sharingan_Nightmare:
i mean in a way it rotates, but it also stagnates within the company at some point or another.

I don't believe I understood this point. How so?

okay, what im referring to when i say a direct stimulus is something that is immediately redistributed throughout the economy, like when banks and credit card companies make their income, some of it goes right back out into peoples paychecks and stuff like other companies, but they also pool additional gain which is not spent, usually for backups incase of some sort of loss or increasing their output. This money becomes STAGNANT and either doesnt flow around or is "seeming" to flow around yet what it is its applied to a different avccount which starts the process over and increases the pool.

Re: Some questions about Economics.

liberty student — Mon, 01 Jun 2009 22:38:57 GMT

Sharingan_Nightmare:
im saying the gain isnt going into direct stimulus into the economy.

What is direct stimulus?

Sharingan_Nightmare:
i mean in a way it rotates, but it also stagnates within the company at some point or another.

I don't believe I understood this point. How so?

Re: Some questions about Economics.

Sharingan_Nightmare — Mon, 01 Jun 2009 22:33:38 GMT

liberty student:

All voluntary trades are for selfish purposes. If you don't want to pay interest, don't carry a balance on your credit cards.

its not about what i want. im saying the gain isnt going into direct stimulus into the economy. i mean in a way it rotates, but it also stagnates within the company at some point or another.

Re: Some questions about Economics.

liberty student — Mon, 01 Jun 2009 21:58:58 GMT

Sharingan_Nightmare:
The money you pay them in interest is a SELFISH gain on the owners of the visa company

All voluntary trades are for selfish purposes. If you don't want to pay interest, don't carry a balance on your credit cards.

Re: Some questions about Economics.

Sharingan_Nightmare — Mon, 01 Jun 2009 21:54:36 GMT

"My guess is that credit cards become the middle men in a much larger and more complex economy. so that visa or master card pays the store, but the consumer is obliged to pay the credit card company at a later time.. So the credit is extended to the consumer. but the credit company pays the store. And so I guess now that I've written out my idea on the matter, that we are talking about the same thing. Is this how credit cards work? do they have cash on hand to pay the store, or does the store also extend credit to the credit card company? "

Well my friend in a way you are indeed correct, they are middle men, but they actually do not help the economy. They as a matter of fact HURT the economy due to the debt they end up causing, ideally the system would work to promote economic stimulus just as loans would, but the truth of the matter theres always variables. One, people falsifying their income level then they end up not being able to afford to repay the ccc (credit card company). Bank loans are the same way except for the income falsifying, the difference here being maybe someone gets hurt and a hospital bill gets added into the stack, then they cant pay their loan etc, etc, etc.. Its issuing an amount of money to a person by making them pay back more than they originally had to, paying for the earlier payment with "gratitude". The problem however, is most credit cards ie visa and mastercard and such that aren't debit cards are their own seperate account. The money you pay them in interest is a SELFISH gain on the owners of the visa company and such, seeing as they started as, and technichally ARE STILL, privateer companies. So the people end up spending MORE money on a singular purchase in which theyd have more money to be able to spend on more things if they DIDNT have to pay the interest that disappears into the pockets of the ccc's. The credit card company''s issue this money because they have money they pay, and just make profit off the money they pay. The stroes dont credit the ccc's. So, in retrospect, in the end, it ends up hurting more than it helps. but the owners of visa and such appreciate you lining their pockets with gold! :D

Re: Some questions about Economics.

Jon Irenicus — Wed, 04 Feb 2009 05:37:13 GMT

2. Saving, but that isn't really the issue. The problem is that the fractional reserve system which places the savings at the bottom of an inverted pyramid. The articles I linked to explain it better than I can.

5. Basically eventually money will have to change hands. So long as the institution issuing the credit card can insure that that money will be forthcoming, e.g. out of its own reserves, credit cards are fine.

And I left 4 out because it'd take more painstaking analysis than I currently have the wherewithal for, though I'm sure someone else will respond to it.

Re: Some questions about Economics.

Attackdonkey — Wed, 04 Feb 2009 05:26:55 GMT

and btw you missed #4

Re: Some questions about Economics.

Attackdonkey — Wed, 04 Feb 2009 05:26:23 GMT

2. So to clarify, it isn't the chinesse gov't that has ben lending, but private citizens, Investing?

5. but as I understand it, (and I haven't yet read the theory of money and credit) credit is just faith that you'll pay it back, for example, I have a credit account at a few stores I trade at in my town. I can go in get something off the shelf, the store owner makes a note of it, and I walk out with whatever I wanted, and he trusts me to come back in later and pay him.

My guess is that credit cards become the middle men in a much larger and more complex economy. so that visa or master card pays the store, but the consumer is obliged to pay the credit card company at a later time.. So the credit is extended to the consumer. but the credit company pays the store. And so I guess now that I've written out my idea on the matter, that we are talking about the same thing. Is this how credit cards work? do they have cash on hand to pay the store, or does the store also extend credit to the credit card company?

I guess I'm just gonna have to do some research because the crux of the question seems to be how exactly do credit card companies operate?

Re: Some questions about Economics.

Jon Irenicus — Tue, 03 Feb 2009 18:56:47 GMT

On 1, that is how I learnt it too - fractional reserve banking.

On 2,There have been numerous Austrian articles on China, including this one and this one.

On 3, I would guess he means there isn't enough gold in the world or something stupid like that.

On 5, they're fine, so long as the credit comes from the bank's reserves, i.e. whatever gold (or other commodity) it holds.

This is a good compilation of links on monetary econ in general.