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Friday, March 22, 2013

Inflation vs deflation VIII

As is probably becoming rapidly apparent, this debate over inflation vs deflation, despite its esoteric nature, is turning out to be much more practical and relevant than anyone would have previously imagined it to be. The events in Cyprus make this more a discussion of current events than a purely academic matter.  In his most recent post on the subject, Nate began with an admission concerning that we are both talking about the same definition of fiat in one sense of the term.
 Broad definition…  narrow definition…  it is readily apparent the broader definition is what I am referring to here. But one must remember that I am actually no longer using Mises’ definitions at all. I am defining money as it relates to the commodity competition… not its nature.  I call it fiat money not because it has government force behind it, but because it is that government force that makes the commodity win the commodity competition and therefore become the money.  Credit money doesn’t exist at all in physical form and thus doesn’t compete in the competition and is not actually money.  
Why he calls it fiat doesn't really matter for the purposes of this debate.  However, while he is right to say that credit money is not actually money, (you may recall that I defined it as a "money surrogate"), he is incorrect in stating that it doesn't exist in physical form.  It does exist; the paper dollars you hold in your pocket and the paper Euros that the depositors in Cyprus are presently unable to obtain are both representatives of a form of credit money.  Now it is true that the paper to mark all current credit claims are seldom, if ever, printed, this doesn't change the fact that some of them are printed and that they are actual physical representations of the outstanding credit claims.
What is important to note… and what Vox is missing… is that it when the credit money is created by time-shifting like this is not considered inflationary.  The interest is rewarding those who have saved, and it all washes out in the end.  The interest rate, which is the price of time-shifting money, fluctuates as demand for time-shifting increases and decreases… and that.. all by itself… mitigates the boom and bust cycle created by the lending.  As more people borrow, the price of borrowing goes up… bringing that number back down.  As fewer people borrow the price is lowered so more will borrow… bringing the number of borrowers back up.  We find a happy medium where the interest rate is moving around, but the purchasing power is relatively stable.  The risk banks take when leveraging money also influence that price… which we call the interest rate. All of this works together nicely.  Which is why when Mises talks about inflation he always talks about government. 
This is indeed how it is supposed to work.  It is how economists are taught that it works.  But it doesn't work this way and Nate is incorrect in stating that the creation of credit money is not inflationary.  There are several ways of demonstrating that this is the case.  The one I will utilize here is to look at the supply and demand curve and what happens when credit money is injected.

The creation of credit money always has an immediate effect on prices because it increases the applicable demand.  I shouldn't need to draw any SD curves, as we can see the effect that expanded home loans had in the housing market, that increased student loans have on the price of tuition, and even in the health care market, where governments borrow the money that is used to pay for the "free" health care delivered to indigent patients.  No cash is being printed, and yet credit money is being created, transactions are taking place, and prices are rising.  While these effects are localized to the relevant markets I suspect the reason why economists historically failed to connect them to the broad increase in price levels that is usually described as inflation is because until relatively recently, it was not possible to obtain general, pre-approved credit for even the smallest transactions.

The economists failed to anticipate either the "credit card" or the debit card, which allows the depositor to tap directly into the credit expansion system without the need to interfere with the expansion by withdrawing the physical debt markers.  And those few who did failed to grasp the full extent of the eventual consequences.  This is why the bankers and governments are so firmly against cash economies; it is actually less about control and tracking, (although obviously governments appreciate the potential benefits of the latter), but because a wholly digital system theoretically allows for unlimited credit expansion... from the traditional perspective.
That is how it is supposed to work.  And when its working like that… we can look at the amount of money in a given account that exists above and beyond the deposits in that account and we call it credit money.  Because it exists above and beyond the deposits in the account, it has no physical representation.  The coins, or dollar bills, do not exist.  I need you to be clear on this.  I have a checking account with say…$45,000 in it.  If I go to the bank and ask them for $45,000 in cash… they will laugh in my face.   However, debit cards are swiped, and the credit money is accepted exactly like cash is accepted.  That is the miracle.  And it is a miracle… of faith.  
The key phrase being "when it is working like that".  Nate is correct on all the details here, except that he is still failing to recognize that it is ALL the money in a given account that is credit money, not merely "the amount of money in a given account that exists above and beyond the deposits in that account".  This should be abundantly clear in light of the Cypriot situation, where the banks cannot open because, despite their nominal billions on deposit, they have literally no paper markers left to give out even though there are numerous levels of government that are capable of declaring fiat markers to represent those credit claims.  The problem is not that there is no government to print the fiat, but rather, the fact that no one wants to be stuck with the underlying credit claims.
So now that we understand borrowing and lending we can discuss what is wrong.  And what is wrong… is the central bank.   Central banks break the link between savers and lenders.  Rather than the deposits being the source that creates the leverage, you now have a central bank that is merely using the deposits to rationalize its decisions to expand credit.  The deposits of savers are reduced to mere justification.    
The central bank sits on high, and manipulates the interest rate… which eliminates its ability to mitigate the booms and busts of the business cycle.  Then on top of that… the evil bastards then set themselves up as the Credit Gods… passing out credit as they see fit… attempting to manage an economy every bit as much as the communists ever did, and failing just as spectacularly.
If you get nothing else… I hope and pray you grasp that.  
I can't argue with anything here, except to note that as has been demonstrated with MF Global, the deposits themselves are, quite literally and legally, loans from the depositor to the bank or fidiciary entity.
So if you have made it this far you now realize that the money in your checking account doesn’t actually exist.  its not that the banks just don't keep that much cash stored.  There isn't that much cash in existence.  Not even close.  
So now that the terror has sunk in… what is the urge that you’re squelching down right now?  Is it the urge to go borrow more money?  Or is it the urge… to go get your cash and stick it under your bed?
Exactly.  And now you see why Vox’s measure of the money supply is incorrect.   M1 is the real money.  M2 and TSM2 are close approximations of the purchasing power currently available… though obfuscated through shenanigans.  Z1… well Z1..  Is just a measure of claims on money.  It doesn’t reflect a limit on new future claims.  At best it can serve as an indicator of how much new credit money is being created.  Z1 will never be able to show deflation.  That’s because Z1 doesn’t show a credit limit… it shows a credit balance.  See if I have a $5000 credit limit on my credit card… and I owe $5000… then my credit card is showing up as $5000 on the Z1 report.  If I pay my credit card down to a balance of $2000, then my credit card is showing up as $2000 on Z1 which Vox would then say is a reduction in purchasing power of $3000.  This is incorrect.  My high credit is still $5000.  I can go spend that $3000 in credit money any time I want to.  Z1 is certainly a valuable tool, but it is a limited one.  Now… as has been said… one cannot print borrowers… so if the rate of credit growth is slowing, or going down instead of up it can mean bad things…for example the delivery system for new credit can be interrupted.  That said, if one considers the nature of the financial abomination that we have before us, I can certainly not fault Vox for going that way.  However, it is not where I go.
Here is where Nate begins to go more seriously awry.  M1 and M2 are not real money anymore than Z1 is, they are merely money substitutes whereas Z1 is a money surrogate that encompasses them both.  I recognize that Nate is not using the Misean definitions any longer, but I don't see that his rationale for refusing to do so is necessarily justified or even relevant to determining the inflation/deflation question.  More importantly, his distinction between credit limit and credit outstanding is, if not necessarily false, entirely irrelevant.  It is only credit outstanding that matters; the "limit" is an entirely artificial one that, in this case, represents the extent to which the bank is willing to enable Nate to expand the credit supply.  But that's not an actual limit in the sense that Nate's decision to not use his potential credit or even to pay down his outstanding credit is, which is the limit I mentioned in Limits of Demand when I proposed it as an alternative mechanism for powering the Austrian Business Cycle.  Nor is there any macro credit limit; this is why Bernanke and the European Central Bank imagine, erreoneously, that they can expand it indefinitely as they see fit.

But, as we saw in 2008, outstanding credit can and will contract.  Even a slowed expansion of the sort we have seen since 2009 can have a deleterious effect on an economy which depends on a reliable 2.4 percent growth rate per quarter.
The whole reason credit money works, is because there is a faith-based link from that credit money directly to cash.  Thus, the money, right now, is cash.  What you’re seeing is precisely what happened in the Great Depression.  People wanted their cash.  They hid it inside walls and buried it in jars.  Banks collapsed destroying massive amounts of credit money, but folks still wanted their cash.  But Vox fails to recognize a critical underlying difference between then, and today.  He looks at those in control… the government and the central bankers… and he sees them expanding credit.  He understands the system better than almost everyone, including the central bankers, and thus he uses that understanding to predict how the system will behave.  He expects it to behave the way it behaved in the 1930s. 
The link is stronger than Nate asserts.  These days, credit money is cash and cash is credit money.  And Nate also credits me with more confidence than I actually possess.  I know the system won't behave the way it did in the 1930s, in fact, that is precisely what concerns me most.  Unlike before, the banks are not being permitted to collapse, which is why Z1 hasn't collapsed yet either.  But the bad loans still exist even though they still haven't been written off.  We are in strange and unpredictable waters here.
I have to take you back again to the competition which Vox , to his peril, ignores. So we have these commodities battling it out in a competition of demand.  Not supply.  Demand.  The one most in demand wins and becomes the money.  The demand is the key.  People want that commodity.  They want it badly and everyone knows they want it badly.  So because everyone knows they want that commodity badly... everyone knows that they will be able to trade that commodity.  They have faith… faith friends… that they will be able to exchange that commodity in the future for other goods and services they require
That’s all good and well if we’re talking about something like Gold or Platinum or Silver.  People want it because of what it is… and what it is will not change.  But fiat money?  Well… they want it because of all manner of government related enhancements.  If it weren’t for those enhancements… they wouldn’t want it at all.  But those enhancements exist…  so long as the people have faith in that government. And that is why I define it as fiat money.
I suspect Nate has made a fatal error here, because recent events show that faith in government, in the banking system, and even in cash itself is rapidly dissolving.  Everyone now understands that the Cypriot banks don't have 7 billion cash euros in their vaults, but more importantly, they now also understand that the government can instantly make 10 percent of it disappear regardless of whether if it was in cash form or not.

And when money surrogates, money substitutes, or solid money itself disappears, that is a deflationary action.  Our continued differences of opinion notwithstanding, I think we've now covered sufficient theoretical ground that we can move on to the practical aspect of the debate, so I will conclude by asking Nate three questions. 
  1. If the expected outcome is, as he suggests, inflationary, due to the central bank printing presses why has the European Central Bank not simply used the bank holiday to print the required 13.5 billion euros and allowed its customers to withdraw as much of it happens to suit them?  
  2. Why is the ECB risking the Cypriot banking system, the wrath of the Russian depositors, and the fate of the European Union itself on these various schemes rather than simply printing the cash and permitting its withdrawal?
  3. Imagine an American analog, where a bank with billions in deposits but already emptied of all its cash was simply shut down without the usual FDIC shell game of "transferring its deposits" to another bank.  Would this be a deflationary action?

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137 Comments:

Anonymous trk March 22, 2013 7:57 AM  

by not allowing the ecb to print more credit, they want the banks to fail so that they can take 100% of deposits, not just the 10%

OpenID simplytimothy March 22, 2013 8:05 AM  

fascinating thread, lots to unravel. thank you both.

Anonymous Stilicho March 22, 2013 8:09 AM  

I would add that M1 markers are just claims on money as well. Turtles, all the way down.

Nate is correct that credit is faith based. So is M1 (just a promise to exchange your dollar for...another one just like it). So is gold for that matter, it just has a better track record and faith is more justified there. Faith in M1 is faith in government. Good luck with that.

On a lighter note, I am enormously amused by the resident inflationista extolling the virtues of fiat currency.

Blogger Nate March 22, 2013 8:29 AM  

"I suspect Nate has made a fatal error here, because recent events show that faith in government, in the banking system, and even in cash itself is rapidly dissolving."

hehehehe

oh ye.. of little faith.

Blogger Nate March 22, 2013 8:44 AM  

"On a lighter note, I am enormously amused by the resident inflationista extolling the virtues of fiat currency."

...

is THAT what you think I'm doing?

Anonymous David of One March 22, 2013 8:55 AM  

Holy Crap! .... Cool, lots of weekend reading. Thx.

Anonymous Vidad March 22, 2013 9:10 AM  

"I know the system won't behave the way it did in the 1930s, in fact, that is precisely what concerns me most. Unlike before, the banks are not being permitted to collapse, which is why Z1 hasn't collapsed yet either. But the bad loans still exist even though they still haven't been written off. We are in strange and unpredictable waters here."

That's where I am too. The distortions have become so systemic I no longer have a clear path forward. Before the last crack-up, I had confidence in my investing strategies... and most of them paid off well.

Now, however, I see only darkness.

Blogger JartStar March 22, 2013 9:14 AM  

Nate: Which is why when Mises talks about inflation he always talks about government.

Vox: ... expanded home loans had in the housing market, that increased student loans have on the price of tuition, and even in the health care market, ...

This is all government created and seems to make Nate's point.

Vox:The economists failed to anticipate either the "credit card" or the debit card,...

They did fail to anticipate it, but compared to the government induced inflation how damaging has credit cards or debit cards actually been?

Blogger Nate March 22, 2013 9:15 AM  

"Now, however, I see only darkness."

well we all see darkness... we're debating over the flavor of the darkness.

Anonymous Vitus_Bering March 22, 2013 9:19 AM  

"If it spends, it's money." - BoDean Hollis

Anonymous TheExpat March 22, 2013 9:20 AM  

"Now, however, I see only darkness."

well we all see darkness... we're debating over the flavor of the darkness.


Rocky road. Very, very rocky road.

Anonymous VD March 22, 2013 9:22 AM  

This is all government created and seems to make Nate's point.

Then you haven't understood it. Do you think home loans are fiat money?

Compared to the government induced inflation how damaging has credit cards or debit cards actually been?

M1: $2,472 billion
CC: $793 billion

If you look at the historical statistics, that $793 billion is equal to the last three years of M1 expansion.

Anonymous Stilicho March 22, 2013 9:22 AM  

is THAT what you think I'm doing?

Lighten up, Francis. It was a joke, but you are doing it in a very...left-handed sort of way. Hence, my amusement.

Blogger Nate March 22, 2013 9:26 AM  

"This is all government created and seems to make Nate's point."

Thanks. Good to see y'all are paying attention.

Blogger Nate March 22, 2013 9:29 AM  

"Then you haven't understood it. Do you think home loans are fiat money?"

***insert eyeroll here***

Do you think home loans are inflationary if they are offset by savers taking money out of circulation in return for interest?

Those home loans only become inflationary when GOVERNMENT pulls all the stops out and breaks the link between savers and lenders.

Anonymous Van March 22, 2013 9:31 AM  

I suspect many people think of inflation in simple terms - printing more money leads to each dollar having less value; supply and demand are either not considered, or are assumed to be static. A dollar becomes worth less because there arew now more of them.

But, of couse, increasing credit increses purchasing power, increases demand, increases prices, which is, in effect, inflationary. It doesn't matter if everyone's future purchasing power is reduced, thereby balancing everything out. Your end point may equal the starting point, but in between you'll have seen an inflationary period followed by a deflationary period.

I've been leaning to Nate, but point to Vox. (Unlimited points to Nate on the subject of Scotch vs, Bourbon)

At this point, either of you could be right. How much debt will soon be erased and how much money. Haqs recently been created?

Anonymous Daniel March 22, 2013 9:32 AM  

Lighten up, Francis.

Thanks, Stilicho. Now I'm only going to be able to view this debate with Nate playing the role of the pampered spoiled rich boy who can't get the plucky nerd's cool bike.

Pee Wee Herman's Big Deflation probably means something different to different people, however.

Blogger JartStar March 22, 2013 9:33 AM  

Before the last crack-up, I had confidence in my investing strategies... and most of them paid off well.

It's very frustrating. Over the last thirty years being diversified in asset classes and internationally was good enough, sure you'd be down a couple of years, but not too much and in about 3 years you'd be back in the green and making money again. Now, the rules appear to have changed.

Anonymous John Regan March 22, 2013 9:34 AM  

Yeah, Nate is way off. This is not existentialism, as in "real money exists" but credit money doesn't. Indeed these categories don't much matter, and I don't think Nate actually comprehends the significance of "fiat" either.

The "cash" Nate reveres because it has physical form and "exists" is no more "real" money than credit money is. That is the whole point, and the whole problem: there is no ultimate "redemption" for any monetary claim other than the imposition of burdens upon the polity by the government. Put another way, the monetary system we have relies on coercion and force to ultimately deliver whatever "value" it is promising. It is a profoundly sick system. One might even say satanic.

Where there IS ultimate redemption the incentives are very different. The opposite, morally. Value is not coerced out of others by the dictates of the sovereign, but rather resides in some commonly agreed upon commodity. Why any commodity should be commonly agreed upon is another discussion, but the point is that owing to this convention the monetary "power" consists of attraction, not coercion. Financial gain is voluntarily sought and voluntarily yielded rather than forced.

Thus inflation v. deflation in the present monetary system is a political discussion, not an economics one. To the extent the government becomes the handmaid of the many making demands upon the few you have an inflationary environment; to the extent the government becomes the handmaid of the few making demands upon the many you have a deflationary environment.

We're in a deflationary environment by this calculation, obviously, inasmuch as what is actually governing the world at this stage is a plutocracy, and a fairly parasitic group of plutocrats at that.

Anonymous Stilicho March 22, 2013 9:35 AM  

Those home loans only become inflationary when GOVERNMENT pulls all the stops out and breaks the link between savers and lenders.

I understand what you are saying here and it is perfectly valid in a system where only savings are loaned out by banks. It is actually FRB that breaks the link between saving and lending. It existed before government intervention in the banking sector. Government intervention simply injects it with steroids and protects the racket.

Anonymous Cryan Ryan March 22, 2013 9:39 AM  

Great discussion...but...

You both seem to agree there are too many variables to make a decent prediction...so...

I guess we just try to live out our lives and dump the mess onto our Obama-votin' kids.

Anonymous Vidad March 22, 2013 9:39 AM  

Latest derivative fiction:

"When an online debate over the economy reveals the absurdity behind modern banking... liberated and outgoing teenage tomboy Leela Tjimbi struggles with investing her lottery winnings..."

Rapey McRaperson's "Flavor of Darkness"

Blogger Nate March 22, 2013 9:42 AM  

"It is actually FRB that breaks the link between saving and lending."

No. Fractional Reserve Banking comes with inherent risks... those risks mitigate the damage FRB can do. But when government steps in to bail out the banks and save them from their Giant Stupid... then... then you have abomination.

And you can't get there without government.

Blogger Nate March 22, 2013 9:45 AM  

" Indeed these categories don't much matter, and I don't think Nate actually comprehends the significance of "fiat" either."

interesting.

Anonymous Vidad March 22, 2013 9:54 AM  

When everything is subject to confiscation/taxation/being disappeared into the ether... choosing asset classes is tough.

Blogger Nate March 22, 2013 9:56 AM  

"When everything is subject to confiscation/taxation/being disappeared into the ether... choosing asset classes is tough."

Things that are actually in your possession are clearly much more difficult to disappear / confiscate.

Anonymous Stilicho March 22, 2013 10:06 AM  

But that's not an actual limit in the sense that Nate's decision to not use his potential credit or even to pay down his outstanding credit is, which is the limit I mentioned in Limits of Demand when I proposed it as an alternative mechanism for powering the Austrian Business Cycle.

Ah yes, the limits of demand. Relevant portions:

It merely requires postulating three things: (1) the availability of debt increases prices, (2) there is a finite limit to the maximum consumable quantity of every consumer good available, and (3) money used to purchase debt-enabled goods cannot be used to purchase other goods that are not debt-enabled...

It must be understood that this is very different from the Keynesian concept of underconsumption. There is no shortage of consumption, in fact, the problem is rooted in the credit-based creation of consumers that cannot truly afford to be purchasing the consumer goods they are buying. It should be obvious that in the real world of economic scarcity and finite resources, there will always be material limits on consumption. Once the artificially enhanced demand limits are reached, or even worse, consumers cannot afford to service their debt on the goods they previously purchased, the boom will come to a hard and fast end.


I still have not found a flaw in that theory of yours. Of course, I'm inclined to agree because it answers my biggest question about the conventional Austrian business cycle theory, namely the theory that consumption patterns reverting to a norm causes the bust by exposing the malinvestment in capital goods (rather than being more of an effect of the bust). On the other hand, Keen has reached similar conclusions about the limits of demand for credit money (which probably caused a few Neo-Keynesian heads to explode since their models always postulate an unlimited demand for money).

Which brings us back to the subject at hand: the Fed's best efforts have not been able to significantly increase the demand for credit money despite the price being at historic lows. Much lower and the Bernank will have to pay me to borrow money and that would be the end of the banking system.

Blogger JartStar March 22, 2013 10:06 AM  

Do you think home loans are fiat money?

No, it's credit money but it's all the same whether fiat or some other form from what I'm gathering in this debate and the government did cause inflation of $Whatever$. The point being that it took the government to do it.


Anonymous Vidad March 22, 2013 10:06 AM  

@Nate

Totally. I killed my market holdings almost completely and converted my "retirement" accounts from previous jobs into round shiny things back in the beginning of '07.

The problem I have is that I want to expand my $$$ somehow, but the opportunities seem really thin. I've taken to planting fruit trees and building garden beds rather than investing in anything.

Stocks: Highly manipulated. Corrupt markets. HFT algorithms replacing people.
Gold/silver: Subject to confiscation, taxation.
Real Estate: Subject to taxation, seizure
Bonds: Untrustworthy. Corrupt markets.
Collectibles: Yeah, right.
Building a business: With this gov't? Hell no.
Treasuries: They pay nothing. Gov't is corrupt and will steal your money through inflation/taxation.
CDs: HA HA! Lend a corrupt bank money and they'll basically pay you NOTHING!

If there's something out there that looks good... let me know. I already tripled my meagre nest egg on commodities from '03 to 2010... but that's a pretty top-heavy way to go.

Blogger Nate March 22, 2013 10:13 AM  

Vidad... there is no good way to invest in the US right now. None.

Blogger JartStar March 22, 2013 10:21 AM  

Vidad... there is no good way to invest in the US right now. None.

Sucks. Sucks. Sucks.

My plan is a little bit of everything and pray that enough of them survive so my savings survives. But I am reminded of Matthew 6:19-21.

Anonymous Vidad March 22, 2013 10:27 AM  

"Vidad... there is no good way to invest in the US right now. None."

Nice to see my despair is well-founded. I feel the same way.

The decay and death is so systemic - if I had a chance to jump, I'd take it.

Anonymous Roundtine March 22, 2013 10:53 AM  

If people lose faith in the currency you get the extreme form of hyperinflation. This usually happens when a government is presumed dead: KMT money as the Communists are taking over, Confederate money as the Union wins, Hungarian currency as the Soviets roll in. Wiemar Germany had paramilitary forces, Free Corps and communists engaging in civil war.

You can get currency devaluation on the international market, a la Thailand 1997, but this is different than losing faith in the paper. And it works with small countries because hedge funds are much bigger. With the U.S. dollar you need a global panic out of the dollar, and I suspect that is unlikely to happen unless people also believe the U.S. is powerless, which can only come with a major military or strategic defeat. Eastern Europe falls back under Russian influence and NATO falls apart, China invades and conquers Taiwan, Japan or South Korea, or sinks the Pacific fleet and makes everything to the Philippines a Chinese lake. It could be financial in nature (defenses deteriorate, unwilling to go to war), but it needs to be expressed, the same way that one can say the housing bubble is going to burst and the banks are insolvent, but it takes the failure of Lehman to show people.

Anonymous Roundtine March 22, 2013 10:59 AM  

If you have a long enough time horizon: timber. Plant hardwood trees. They literally grow every year.

Anonymous Josh March 22, 2013 11:05 AM  

With the U.S. dollar you need a global panic out of the dollar, and I suspect that is unlikely to happen unless people also believe the U.S. is powerless

There also has to be somewhere for that money to flow to. So...people won't stop using dollars as the reserve currency unless a replacement reserve currency wins the competition.

And at this rate, that's not happening. Yet.

Anonymous Vidad March 22, 2013 11:11 AM  

@Roundtine

For sure.

I'll take your timber and raise you an additional harvest: Black walnuts can be lucrative for wood and nuts.

I currently let hickory trees come up around my yard, wherever the squirrels and kids plant them. Even if they're in the wrong place it's no big deal. When they're big enough for a tool handle, I can take them down and use them as needed.

Blogger IM2L844 March 22, 2013 11:22 AM  

Black walnuts can be lucrative for wood and nuts.

Yep. It's been many years, but last time I checked (back when I had about 20 of them) the wood harvest value for a properly grown mature black walnut tree was around 20 grand. I suspect it's significantly higher than that today.

Blogger Nate March 22, 2013 11:30 AM  

"There also has to be somewhere for that money to flow to. "

You mean like a russian or saudi commodity based currency?

Anonymous Roundtine March 22, 2013 11:31 AM  

I've been planning on growing black walnuts for years, I just need to settle down and buy some land.

Anonymous ODG March 22, 2013 11:35 AM  

"He's got this dream about buyin' some land,
He's gonna...give up the booze, and the one-night stands"

Anonymous Vidad March 22, 2013 11:41 AM  

"A place where his wood can grow... straight and tall
A place to cherish his nuts over all..."

Blogger Nate March 22, 2013 11:51 AM  

Stop that! Stop that!

You're not going into a song while I'm here.

Anonymous Stilicho March 22, 2013 11:51 AM  

and name it "Squirrel Heaven"

Anonymous Stilicho March 22, 2013 11:53 AM  

Stop that! Stop that!

You're not going into a song while I'm here.

+1 for Monty Python reference
+2 for not mentioning a shrubbery

Blogger Positive Dennis March 22, 2013 12:04 PM  

Here is my contribution to the debate.

What is Money?

http://www.prophecypodcast.com/journal/2013/3/15/what-is-money.html

Anonymous Vidad March 22, 2013 12:09 PM  

It just makes sense... she's got great... big... tracts of land!

Blogger Nate March 22, 2013 12:11 PM  

Something about the whole Castle in a swamp thing just feels so right in this discussion...

Anonymous Rally March 22, 2013 12:15 PM  

Gold/Silver: only subject to confiscation if they know where to find it. Much easier to hide than real estate.

Anonymous Asher March 22, 2013 12:17 PM  

@ VD

Then you haven't understood it. Do you think home loans are fiat money?

Something is money until it isnt.

Nate still hasn't given an actual reason why people accept fiat currencies that are backed by nothing more than the full faith and credit of the state.

Anonymous Stilicho March 22, 2013 12:27 PM  

Something is money until it isnt.

Let's leave the metaphysics out of it

Blogger Positive Dennis March 22, 2013 12:27 PM  

Vidad has a good point, where do you invest?

Most of us need to concentrate on what i call preinvestment.

http://www.prophecypodcast.com/journal/2013/3/13/investments-in-uncertain-times.html

Personally I plan to abolish my IRA in Jan 2014 (I am 59 1/2 in December 2013) and buy solar panels. This will provide the equivalent of tax free income by reducing non deductable expenses and the tax break from the solar will pay for the income tax on the IRA.

Anonymous Asher March 22, 2013 12:32 PM  

@ Stilicho

Evincing that you have zero clue what "metaphysics" means. Nate, not I, is the one withthemetaphysical view of money. The ilk have this nasty habit of taking the commonly accepted notion of a term and declaring it to mean the direct opposite of how it is construed elsewhere.

It's an impressive feat.

Anonymous Normal person March 22, 2013 12:41 PM  

Fixed it:

"Asher has this nasty habit of taking the commonly accepted notion of a term and declaring it to mean the direct opposite of how it is construed everywhere else."

Anonymous Van March 22, 2013 12:50 PM  

Elk have this annoying habit of making a commonly used path through my lawn, in direct opposition to the fact that I would prefer they cause damage elsewhere.

Impressions from their feet.

Anonymous Stilicho March 22, 2013 12:54 PM  

Biggie Smalls, Biggie Smalls, Biggie Smalls...

(hey, if it works for asher...0

Anonymous Stilicho March 22, 2013 12:57 PM  

how it is construed elsewhere.

You mean where your head is located? There's an app for that...

Seriously, asher, your head is so far up your ass that you can see breakfast

Anonymous Asher March 22, 2013 12:58 PM  

@ normal person

Except I dont and this comment is evidence that you dont know what the hell youre talking about. What I do is tweak existing d3finitions to make them better.

Consider my definition of "atheist":

Someone who limits rational arguments to discussion of cause and effect (usually physical)

Now, consider the dictionary definition:

Someone who believes there is no God.

Certainly, it would seem that the first should have some overlap with the second, right? I mean, if someone holds that humans arenothing more than atoms in motion then everything human is reducible to physical cause and effect.

Let's consider the case of someone who calls themselves both a Marxist and an atheist. Such a person reject one set of fantastical- I dont use that word in a pejorative sense - writings only to substitute another set of fantastical writings. As many previous thinkers have noted the marxist's communism is just his versionof thechristian's heaven.

So, my definition of atheist doesnt render an opposite meaning of the term so much as tweak it to make it better, more descriptive and more concise.

Anonymous Jack Amok March 22, 2013 12:59 PM  

I'll add a corollary to Vox's third question. Suppose a significant percent - let's say 10% in honor of the Cypriot Shenanigans - of the dollars in circulation were discovered to be counterfeit. Or suppose a major bank discovered a software glitch had over-credited depositors by 10%. Would these discoveries be deflationary?

Oh, BTW, does anyone remember what Nate said way back at the beginning of this about where money came from?

Anonymous Asher March 22, 2013 1:00 PM  

@ stilicho

You just perceive that because you immerse yourself in an intellectually inbred environment.

Stop the inbreeding.

Anonymous Van March 22, 2013 1:04 PM  

milk on a nasty habit from a 90s comedy starring a scary, mean, oppositional cunt who should be elsewhere.

Repulsive teet.

Anonymous Stilicho March 22, 2013 1:06 PM  

Asher, I see you're still stuck on brain fart

Anonymous Sigyn March 22, 2013 1:08 PM  

So, my definition of atheist doesnt render an opposite meaning of the term so much as tweak it to make it better, more descriptive and more concise.

There once was this "sharp" Asher stinker
Who used language with strangest of blinkers
With linguistic cleaver
He chopped up "unbelievers"
And minced them into rational thinkers

Anonymous Dan in Tx March 22, 2013 1:16 PM  

From inflation vs deflation to Asher's definition of atheist? I've been enjoying this debate/exercise very much, please don't derail it.

Anonymous Sigyn March 22, 2013 1:20 PM  

Hickory dickery, what have we here?
Old Asher's come trolling, so lend him an ear.
Dickery dockery, our party crasher
Would very much like us to talk about Asher.

Anonymous Asher March 22, 2013 1:28 PM  

@ sigyn

You are a vapid, little twit with about as much ability to produce an argument as are my toenail clippings.

Blogger Nate March 22, 2013 1:32 PM  

"Nate still hasn't given an actual reason why people accept fiat currencies that are backed by nothing more than the full faith and credit of the state."

Of course I have.

I assume you just didn't bother to read it.

Blogger JartStar March 22, 2013 1:32 PM  

Asher one of the hallmarks of good reading is coming to terms with the authors terms. If the author uses a word consistently and you understand it even it doesn't follow the common definition then discussion can still take place.

You are standing in the hallway of the atrium screaming, "They are using the words all wrong! They are using the words all wrong and I refuse to discourse with them!".

So far the entire inflation/deflation debate has circled around the definition of money and if they can come close enough to an agreed upon definition then they can continue conversing. You refuse to have the discourse unless someone agrees to your definitions, which might have little or no relation to the dictionary definition as shown by your atheist definition.

I can tell your are intelligent, but you refuse to leave your bubble out of fear.

Anonymous Sigyn March 22, 2013 1:36 PM  

Cry woe! cry out ruin! the day has arrived
When Asher has me of my ego deprived!
No sword could cut sharper nor nearly so neat
As to tell me I'm dumb as what grows on his feet!

Toll bells and bemoan me, for I am unmade!
My fate has caught up and my shame is displayed!
What more can I do when I've been called a "twit"
By a man who's so often shown he's full of it?

Blogger Nate March 22, 2013 1:37 PM  

Look its very simple.. you have a commodity backed system.... and you want rid of it so you can just print up all the money you want. So... you simply print up new bills... FRNs for example... which are backed by nothing. You distribute them to banks. As folks deposit their old commodity dollars... you collect them and destroy them. And as they make withdraws... instead of giving them commodity dollars.. you pass out FRNs. The people don't know any better... so they just go on about their business. To them a dollar is a dollar. What it represents means nothing to them. They just have faith that they will be able to exchange it.

Blogger Nate March 22, 2013 1:40 PM  

Poetry slam at VP...

May God have mercy on our souls.

Blogger JartStar March 22, 2013 1:42 PM  

Sort OT: Obamacare exchanges shoots for right above Third World in quality. It's quite possible that Obamacare could be a catalyst towards something far worse than just a symptom of the illness. When millions lose health insurance how complacent will they be?

Anonymous Sigyn March 22, 2013 1:50 PM  

Poetry slam at VP...

May God have mercy on our souls.


Blame fate, blame my husband, blame any but me
For I cannot speak once without poems, you see
Dearest Loki distilled down a dust to incline
Anyone who consumes it to speak all in rhyme
But his wife, with the brains of a chocolate malt,
Got confused and assumed the white powder was salt.

Anonymous allyn71 March 22, 2013 1:57 PM  

"You are a vapid, little twit with about as much ability to produce an argument as are my toenail clippings." - Asher March 22, 2013 1:28 PM

Asser you or your toenails have never made a cogent or relevant argument hear.

Continue on with regularly programmed Asperberger's outbreaks now for @ 200 posts on nothing. At the end it still won't be about you or equal Purple Badger, maybe next time it will work out for you. We all know your gonna try.

Blogger ashepherd March 22, 2013 2:04 PM  

Warning: Rant Ahead.
Anyone who claims that credit is not money lives in la-la land. I don't even know why you argue over the point.

Let me give an example. Suppose I am given all the "credit" I want such that I can buy anything I want for my entire lifetime and someone else will pay it back after I've left the universe. Is that "credit" not "money"?

Now you may say that's an impractical example. But I say that's the essence of what the US and possibly EU governments are doing. The so called "budgets" that these governments come up with are spending plans for the near future based upon projected future income. But there is no short-term accountability for their projections. The projected income isn't even a guesstimate or a WAG, but is pulled out of some dark place to suit the desires of the politicians and sold to the public through outright lies. So they give themselves the ability ("credit") to spend to their heart's desires without concern for the money being payed back because they have deceived themselves and others into thinking that future income will make it possible to cover everything (and if it doesn't then they just tell the computers to put more credit in the system).

That's why I don't care anymore about the US "budget" or any of the hue and cry about "cuts" which are in reality simply reduced increases and opportunities for government to punish the people without actually jeopardizing the bureaucracy.

To see it's a sham look no further than the balanced budget law. Why bother having it when the politicians have the power to change it at their whim without any accountability except a few outraged headlines that last a week or two. Laws like this are passed to make it look like your politicians are doing something when they actually have no intention of changing anything.

These arguments of ideal economies need to be trashed. There is no "free" market on any large scale - anywhere. All you have to do is take the red pill and look at your US Income Tax forms to see the very definition of market manipulation! The markets are meddled with every day in every way by the government for various purposes while people in ivory towers argue about the pros and cons of some ideal called capitalism.

The smoke and mirrors are really getting absurd.

Blogger Nate March 22, 2013 2:04 PM  

"But his wife, with the brains of a chocolate malt,
Got confused and assumed the white powder was salt."

Well... at least you could get a job in the Icelandic parliament. ( for them what do not know... Iceland requires its parliament to speak only in rhyme one day a year.)

Anonymous Asher March 22, 2013 2:06 PM  

@ nate

That's not an explanation of why people accept fiat money in the first place, eother. Whencommodity money is first introduced the people who accept it have to conceptually understand that it is backed by a commodity. If they have thecapacity toconceptualizethat thenthey almost certainly have the ability to conceptualize that it is not backed byanycommodity when itbecomes fiat.

One of the problems ofpaper money backed bya commodity is that either you have to keep printing more money that is backed by the same quantity of commodity, which dilutes the purchasing power of the current stock, or you get deflation. That is the reason for the movement toback the currency bysilver while under the gold standard.

Your basic explanation isthat people are stupid. That'snot a causal elanation

Try again

Blogger Nate March 22, 2013 2:08 PM  

" If they have thecapacity toconceptualizethat thenthey almost certainly have the ability to conceptualize that it is not backed byanycommodity when itbecomes fiat."

no.

They don't.

They barely have the ability to conceptualize themselves out of bed in the morning. But you're conflating two things that aren't related. I answered the question of how the fiat money gets into the system. Which is not what you asked.

You asked why they use fiat money.

This has already been answered in my previous posts.

Anonymous zen0 March 22, 2013 2:19 PM  

Why is the ECB risking the Cypriot banking system, the wrath of the Russian depositors, and the fate of the European Union itself on these various schemes rather than simply printing the cash and permitting its withdrawal?

Why, indeed.

Matthew Obrian shows how Ireland did it and recommends the same for Cyprus: Three Steps

Again, the benefit of all this financial sleight-of-hand was the central bank printed money for Ireland today, and Ireland didn't have to pay it back for many years. As Wolfgang Münchau of the Financial Times explains, it was a deliberately convoluted way of printing money for the government to hide that they were printing money for the government

Anonymous Asher March 22, 2013 3:13 PM  

@ Nate

I answered the question of how the fiat money gets into the system.

This is NOT what I asked. What I asked for was the causal mechanism whereby people come to accept fiat money. I am looking for cause and effect. One thing about people is that they are loathe to accept changes in the customary way of doing things and it seems to me that just saying "people are stupid" is a bit of a cop out.

Anonymous Noah B. March 22, 2013 3:18 PM  

"Everyone now understands that the Cypriot banks don't have 7 billion cash euros in their vaults, but more importantly, they now also understand that the government can instantly make 10 percent of it disappear regardless of whether if it was in cash form or not.

And when money surrogates, money substitutes, or solid money itself disappears, that is a deflationary action."


This certainly illustrates that deflation is a possible outcome, but another possible outcome is for Cyprus to break from the euro, go back to the Cypriot pound, and pursue an inflationary policy.

As interesting as this discussion has been, it still does not seem to be bringing us any closer to the question of whether inflation or deflation is more likely, and why. I've seen nothing to contradict the idea that the monetary system's fate is ultimately a political question.

Blogger Nate March 22, 2013 3:20 PM  

"This is NOT what I asked."

I know its not what you asked. Which is why I said... "this isn't related to what you asked."

I've already answered your question in my various posts in this debate.

And yes... "people are stupid" may seem like a cop out.. but never the less it is undeniably true.

Anonymous Noah B. March 22, 2013 3:25 PM  

"What I asked for was the causal mechanism whereby people come to accept fiat money."

That's where the word "fiat" comes into play.

By fiat, the government declares that taxes can only be paid in US dollars (and in electronic dollars at that, in most cases). By fiat, the government declares that anyone conducting business in cash or cash equivalents in large amounts is suspicious and will bring the force of government down on those who are caught doing business entirely outside of the banking system. By fiat, the government declares that the dollar is legal tender payment for goods and services. By fiat, the government declares that anyone creating an alternative system of currency is a criminal.

If you happen to be the leader of a major Middle Eastern country who begins demanding payment in currency other than dollars, your country is invaded, you are hunted down like a dog, and eventually hung for daring to challenge the hegemony of the dollar.

In short, government threatens people with force, and people comply.

Anonymous Noah B. March 22, 2013 3:27 PM  

And let's not forget the War on Drugs, which allows police to seize large amounts of cash or cash equivalents from individuals, and the presumption of innocence is turned completely upside down.

The government goes to incredible lengths to force people to lend their money to the banks in exchange for electronic nothingness.

Anonymous Asher March 22, 2013 3:49 PM  

@ JartStar

What a womanly depiction of reading. Why is it that so many of the ilk's comments stylistically resemble that of feminist comments?

No. When a good reader sees term usage that is incoherent, contradictory or does not comport with evidence then he points that out and offers a better usage. By your rules, I could cobble together a random assortment of letters and demand that everyone just accept them. When I give an alternate definition I argue in detail why it is better than competing usage.

Blogger Nate March 22, 2013 3:52 PM  

"By your rules, I could cobble together a random assortment of letters and demand that everyone just accept them."

So obviously you've never read Jabberwocky.

Anonymous Asher March 22, 2013 4:00 PM  

@ allyn

While Vox's posts contain robust arguments for his propositions I rarely see anything of the sort from the ilk. I am one of the only commenters who even bothers to do anything beyond making unsubstantiated pronouncements and the only one who does so on a regular basis.

You don't seem to understand what "argument" means. Hint: starting from the supposition that your positions are self-evident is not likely to produce a good argument.

Anonymous Sigyn March 22, 2013 4:09 PM  

So obviously you've never read Jabberwocky.

He only reads fiction, remember?

Blogger JartStar March 22, 2013 4:09 PM  

@Asher

I see your reading comprehension is terrible. So I will repeat myself:

If the author uses a word consistently and you understand it even it doesn't follow the common definition then discussion can still take place.

See the words "consistently" and "you understand it" you giant weeping vagina? It means you can still engage them even if their definition isn't as good as it could be.

term usage that is incoherent, contradictory or does not comport with evidence

This is a nice straw-man, but since you are too stupid to know how to read correctly you can't figure out that I'm not talking about a person calling a color red then describing it as blue in one sentence and then yellow the next.

By your rules, I could cobble together a random assortment of letters and demand that everyone just accept them.

You must certainly could so long as you use them consistently for the particular discussion.

My goodness you really do have asperger's or autism don't you? This happens ever day in conversation and people get by just fine and can figure things out.

User: When I click the button to load the results the diagram doesn't work right.

Me: You mean when you interact with the user interface, activate the event, and see the data grid view load it doesn't appear right?

User: What?

Me: You sound like a feminist using your words incorrectly. Get the definitions right and I will help you!

User: Do you not understand what I'm saying?

Me: Use the correct terminology! Use the correct terminology! Use the correct terminology!

Boss: You are fired you jackass.


Anonymous Sigyn March 22, 2013 4:10 PM  

I am one of the only commenters who even bothers to do anything beyond making unsubstantiated pronouncements and the only one who does so on a regular basis.

As with most actual atheists, arguments he rejects aren't REAL arguments.

Blogger JartStar March 22, 2013 4:12 PM  

This comment has been removed by the author.

Anonymous Sigyn March 22, 2013 4:18 PM  

If only my husband weren't away. Then he could conquer this thread and it would be infinitely better.

*sniffle*

Anonymous Peter Garstig March 22, 2013 4:30 PM  

The problem is not that there is no government to print the fiat, but rather, the fact that no one wants to be stuck with the underlying credit claims.

I suspect that's what Nate is missing.

Anonymous sprach von Teufelshunden March 22, 2013 4:40 PM  

Gordon Duff and Mike Harris discuss what is really going on in Cyprus, and more important, the surrounding geographical area. Particularly, the geographical topography, and what it contains. Understand, both of these guys are true experts in finance and banking. They know what they are talking about. All scandals, eventually come down to natural resources.

That is in the first hour (3/20/13). Now they warn you about what is coming in the second hour on 3/20, and what will follow on the next day 3/21. I'm going to warn you as well. Not all are ready for this. But you decide for yourself. Josh, et al, this is for you. Start acquiring your drugs of choice. "Buckle your seat belt Dorothy. We are no longer in Kansas!"

As I compose this, I'm re-listening to Harris on 1/08/13. In the second hour, he rants about being white, and the white coming minority. Very interesting. Especially in light of hour 2, beginning on 3/20. It is not as much now, and apparently soon to be white minority we are talking, and need to be concerned about. It is as Reagan alludes back in his U.N. speech. Not a concern for a white human minority, but starting to look like a simple human minority...

Blogger Nate March 22, 2013 4:50 PM  

Really?

And yet they printed up billions of those wretched underlying credit claims for Ireland.

crazy!! Just CRAZY!

And wait... Oh... look... The FED has printed up 200 billion of them in the last 2 months alone.

Terrified of being stuck with them... don't ya know.

Blogger Nate March 22, 2013 4:54 PM  

Dread...

put. down. the. angel. dust.

Anonymous Noah B. March 22, 2013 5:21 PM  

People make bank runs precisely because they would rather have paper-based credit claims than some entry in a ledger somewhere (electronic or otherwise).

Blogger tz March 22, 2013 5:29 PM  

Vidad... there is no good way to invest in the US right now. None. Something on the short side might work. Cash in most forms is shorting the USD.

Castle in a swamp a re-moat possibility.

Another question: Greece should have the intaglio presses, the ink, and the plates to quite literally print as many euros and needed (as long as we are going to ignore laws saying they ought not). Why don't they simply print up paper euros, maybe "oops" the "X" meaning the German printer. Or even duplicate serial numbers. They could pay off everything. (I asked this many moons ago).

Anonymous Asher March 22, 2013 5:39 PM  

@ JartStar

You show a complete lack of the understanding of language that has developed in the past six or seven decades. The chasm between what I understand and what you lack is massive.

See the words "consistently" and "you understand it"

The problem is that the words we use in actual language lie within a social context and how we use them in one conversation creates a legacy that lasts into subsequent conversations. Let's take that example, where someone just makes up a term and then starts using it in a conversation and conveys what they (gender nonspecific pronoun) mean by it in that conversation. Okay, that conversation ends and we go our separate ways. The next day we start up a new conversation on a different but related topic. I hear you inject that term and assume that you mean it in the same way you used it the day before.

But you don't. You explain to me that this is this conversation and that last conversation is over and now you have an entirely different meaning for the term. Further, in every new conversation you use that term you introduce a new and entirely unrelated meaning for that term.

What you are basically doing is attempting to resurrect the logical positivist project of setting up a conceptual framework where language is rigidly determinate and all terms have absolute meaning. Look, this is stuff I've spent hundreds of hours studying and researching. It is a theory of language that has been completely consigned to the dustbin of history and no philosopher of any tradition accepts it.

If you're interested in actually learning about this subject I would suggest starting with Quine's Two Dogmas of Empiricism and his Ontological Relativity. He is extremely concise, lucid and those essay are rather brief, not monstrosities like the blather produced by Sartre.

Anonymous Noah B. March 22, 2013 5:43 PM  

If only there were a market for aspie rants...

Anonymous Asher March 22, 2013 5:45 PM  

@ Sigyn

But you don't present any arguments. You just declared yourself in authority over me to tell me what scripture really means. I, on the other hand, am not a respecter of persons and did no such thing.

If you have an argument for your position then I am happy to hear it and consider any argument I make no more valid apriori than yours.

Also, you should damn well know that what I mean by "atheist" is not how it is customarily used. Most who call themselves atheists mock and scoff at various things they consider fantastical and then turn around and believe things equally fantastical.

Your claim was that since you CALL yourself a "christian" and I CALL myself an "atheist" that you have some special, god-given authority to tell me "what scripture really means". But there is no such authority mentioned in scripture and the passage you mentioned gave no such authority.

You distort scripture, are deceived and are arrogant by laying claim to such authority.

Anonymous Asher March 22, 2013 5:48 PM  

@ Sigyn

What's amusing is that your husband made the claim, maybe out of misunderstanding, that my references to scripture was a claim to authority, when I was making no such claim. You, on the other hand, were claiming some special, intuitive authority.

That's what cult leaders do, many "christians" do, and why I call myself a atheist. With "christians" like you it's a wonder that more people aren't atheists.

Anonymous Sigyn March 22, 2013 5:53 PM  

Let's take that example, where someone just makes up a term and then starts using it in a conversation and conveys what they (gender nonspecific pronoun) mean by it in that conversation. Okay, that conversation ends and we go our separate ways. The next day we start up a new conversation on a different but related topic. I hear you inject that term and assume that you mean it in the same way you used it the day before.

But you don't. You explain to me that this is this conversation and that last conversation is over and now you have an entirely different meaning for the term. Further, in every new conversation you use that term you introduce a new and entirely unrelated meaning for that term.


Day One, we're talking about dog breeding. Day Two, we're talking about Rosie O'Donnell. Day Three, we discuss people who complain too much. Day Four, how the Ilk trounced you in an argument.

The word "bitch" applies to all four subjects, and they clearly don't have the same meaning. Your ignorance of any of those three meanings doesn't invalidate the word.

Anonymous Sigyn March 22, 2013 5:54 PM  

*four meanings, not three. Math is hard for girls.

Anonymous Asher March 22, 2013 5:56 PM  

@ Sigyn

But the ilk almost never argue their positions. The description of word usage that I gave is part of what is known as arguing for a position.

The ilk don't do that; they pontificate, as if every position they hold is self-evident and beyond the requirement for justification.

Youre parading your ignorance and proudly wallowing in it. Frankly, that describes the bulk of the comments I see on this blog.

Anonymous Sigyn March 22, 2013 6:04 PM  

But you don't present any arguments. You just declared yourself in authority over me to tell me what scripture really means. I, on the other hand, am not a respecter of persons and did no such thing.

If you have an argument for your position then I am happy to hear it and consider any argument I make no more valid apriori than yours.


See? NO ARGUMENT WAS MADE ZOMG!!!

Asher, really, I'm not going back over that ground again. You didn't get it then, you don't get it now, and you won't get it later.

Also, you should damn well know that what I mean by "atheist" is not how it is customarily used.

Yeah, I'm aware of your problem by now.

You distort scripture, are deceived and are arrogant by laying claim to such authority.

You know, for someone who considers this a settled matter, and who insists I have no basis for anything you think I said, you sure want to fight about it every time you see me. It's almost like you think you lost and have something to prove.

What's amusing is that your husband made the claim, maybe out of misunderstanding, that my references to scripture was a claim to authority, when I was making no such claim.

No, he said what I said: That I rejected your non-Scripture based assertion that the Bible was perfectly clear to unbelievers.

You, on the other hand, were claiming some special, intuitive authority.

I'm beginning to think that "understanding" means "authority" in Asherese. That would explain a lot about why you carry on like you do.

That's what cult leaders do, many "christians" do, and why I call myself a atheist.

If I tried to live my life based on what crazy people think, I'd run around with tin-foil caps over my fillings.

With "christians" like you it's a wonder that more people aren't atheists.

Well, since you think being an "atheist" is a good thing, maybe you shouldn't be so upset about it.

Anonymous NorthernHamlet March 22, 2013 6:05 PM  

Vox and/or Nate and/or anyone else,

Are there any benefits from a foreign policy perspective for the US if it continually inflates until a strategic moment and then allows a deflationary scenario?

Anonymous Sigyn March 22, 2013 6:09 PM  

The ilk don't do that; they pontificate, as if every position they hold is self-evident and beyond the requirement for justification.

Okay, so let me see if I've got this straight: You think that every comment thread needs to start with a glossary, a bibliography, and logical proofs of any position that may or may not be taken during a discussion.

Is that what your complaint is?

Anonymous Asher March 22, 2013 6:15 PM  

@ Sigyn

You didn't get it then, you don't get it now, and you won't get it later.

Spoken just like a feminist; this sort of statement is their stock in trade. Jezzie.

That I rejected your non-Scripture based assertion that the Bible was perfectly clear to unbelievers.

Now you're just lying. I never made any such claim. I'm not even aware that the Bible says any human being is capable of understanding the entire Bible with perfect clarity. My position is that God does not place any one particular position to pronounce for others the "true meaning of scripture" and that everyone is capable of *some* understanding of the Bible.

The implications of your position is that those who call themselves Christians understand everything about the Bible, perfectly, and that those who do not adopt the label of Christian are incapable of any understanding. While that wasn't your direct statement that was the implication of your position. Such a position is found nowhere in scripture.

Further, God send his word to mankind so it's perfectly obvious that it was meant for everyone.

You claimed an authority for yourself that is found nowhere in the Bible.

Anonymous Asher March 22, 2013 6:18 PM  

@ Sigyn

Is that what your complaint is?

That's not the way argument works. Argument is a conversation, similar to any other conversation. There is no starting point, no conceptual "first thing".

You don't need some set of foundational axioms - again, these comment sections reek of the stale aftermath of logical positivism. All you need to do is take a position and argue for it and this is not something the ilk seem interested in doing.

Anonymous Asher March 22, 2013 6:30 PM  

@ Sigyn

What's bizarre is that it is the ilk that see language as something that is determinate, set in stone, not I, but then you turn around and attribute their position to me. If there are two competing understandings of a term then neither has priority and the better one wins out.

What's so bizarre about the ilk is that the current definition of "atheist" falls right into the leftist playbook and you guys can't even grasp that. The implication is that they are soberly rational and that you guys are a bunch of snake-charming lunatics. And you fall for it.

As I've asked a thousand times before: are you guys trying to lose?

Blogger Nate March 22, 2013 6:41 PM  

Asher... TZ challenged you several times to recreate these arguments in language that you think would be more effective... and you failed to do so.

Do you see how that costs you credibility in these complaints?

You bitch... but you offer no examples of how it should be done.

Anonymous Salt March 22, 2013 6:41 PM  

Sigyn, it's going to take days to get the smell of Asher out of your hair.

Anonymous Sigyn March 22, 2013 6:45 PM  

Spoken just like a feminist; this sort of statement is their stock in trade. Jezzie.

Hitler said cancer was bad, too. Good thing truth doesn't depend on the messenger or even the method, huh?

That I rejected your non-Scripture based assertion that the Bible was perfectly clear to unbelievers.

Now you're just lying. I never made any such claim. I'm not even aware that the Bible says any human being is capable of understanding the entire Bible with perfect clarity.


Isn't hair-splitting a tool used by feminists, you Jezzie?

My position is that God does not place any one particular position to pronounce for others the "true meaning of scripture" and that everyone is capable of *some* understanding of the Bible.

Well, then, you have no business telling me I've got Scripture wrong, since there's no "true meaning" of what I quoted you. It's not like you're in any position to pronounce the "true meaning" to me.

Booya.

The implications of your position is that those who call themselves Christians understand everything about the Bible, perfectly, and that those who do not adopt the label of Christian are incapable of any understanding.

Going to extremes: another feminist Jezzie tactic.

While that wasn't your direct statement that was the implication of your position. Such a position is found nowhere in scripture.

It's always more fun to argue against what someone "implied" than what they actually said, isn't it?

Further, God send his word to mankind so it's perfectly obvious that it was meant for everyone.

Including fools who'd rather bicker about the definition of every word than proudly admit they believe in the purpose of that sending?

You claimed an authority for yourself that is found nowhere in the Bible.

Okay, so you admit that you equate knowledge and authority.

That's not the way argument works. Argument is a conversation, similar to any other conversation. There is no starting point, no conceptual "first thing".

And in conversation, you don't halt everything and argue about whether a commonly used word actually means what everyone assumes it means. In conversation, you do not apply formal debate rules from millennia ago.

You don't need some set of foundational axioms - again, these comment sections reek of the stale aftermath of logical positivism. All you need to do is take a position and argue for it and this is not something the ilk seem interested in doing.

There's a solution for people not doing things the way you want them done. That solution doesn't involve screaming and stomping your feet and calling people silly names until they do it. It's called "go somewhere else".

Anonymous Sigyn March 22, 2013 6:48 PM  

Sigyn, it's going to take days to get the smell of Asher out of your hair.

It's not my hair I'm worried about. It's the carpet. He basically just trots into these threads and whizzes on the floor to get attention. If nobody notices, he starts dragging his butt.

His Lordship managed to break Fenris of these habits, but I'm starting to think Asher might not be smart enough.

Anonymous Salt March 22, 2013 6:50 PM  

Sigyn. I've never tried to house break a slug before. Good luck.

Anonymous VD March 22, 2013 7:18 PM  

As I've asked a thousand times before: are you guys trying to lose?

And yet, Asher, only the anklebiters are less effective arguing than you are. Seriously, despite all your grandiose statements, you've yet to convince anyone of anything. Are you trying to lose or are you simply inept?

Anonymous John Regan March 22, 2013 7:41 PM  

@NorthernHamlet:

"Are there any benefits from a foreign policy perspective for the US if it continually inflates until a strategic moment and then allows a deflationary scenario?"

Must attack the question here a bit.

It should be obvious that the US is having trouble inflating. Maybe the US wants to, maybe not. I think not, REALLY, but that's a complicated emotional position of our rulers.

Briefly. Inflation would benefit the debtor class - almost everyone - and hurt the creditor class, the people who have some legitimate moral claim to the efforts of the debtors, and who exercise a lot of political influence.

But you don't just snap your fingers and presto! inflation.

All new money is borrowed into existence. Vital to understand that. For you and for Nate. And Vox even, though I think he does.

Without new money there isn't enough money to pay the existing claims against money. Unless there is lending and borrowing there can't be any new money. Accordingly, without increasing debt current creditors will be screwed.

Real live flesh and blood people are essentially tapped out as far as borrowing and lending goes. That is what the subprime crisis meant.

The government then becomes the borrower of last resort, which is why US deficits exploded over the last few years.

So new money is coming online due to federal government borrowing. But so far this has produced no appreciable inflation. Maybe in the DC area.

There are political pressures both ways. On the one hand you have creditors who have some kind of entitlement to the efforts of those who "owe" them; on the other you have those whose efforts are being commandeered, and they are increasingly balking. Deflation is for the former, and inflation is for the latter.

It's an irreconcilable conflict, at least in any conventional way. Personally I think there's going to have to be a jubilee.

Anonymous zen0 March 22, 2013 9:44 PM  

You don't seem to understand what "argument" means. Hint: starting from the supposition that your positions are self-evident is not likely to produce a good argument.

Why do you assume everyone who comments is looking to press an argument? Let a post be a post, let a comment be a comment.

As Randy the male prostitute said to Mr. Lahey the drunken trailer park supervisor who fell backwards into the fridge, only substituting your handle: "Your f#ked, Mr. Asher!"

Anonymous zen0 March 22, 2013 9:53 PM  

Asher asserts: Further, God send his word to mankind so it's perfectly obvious that it was meant for everyone.

Another baseless assertion based on ignorance. It was specifically sent to a chosen group of people. Since then, it has been available for understanding depending on the level of commitment the seeker demonstrates.

Anonymous zen0 March 22, 2013 9:57 PM  

Sigyn confesses: His Lordship managed to break Fenris of these habits, but I'm starting to think Asher might not be smart enough.

When canines "scoot", it is imperative that one manually express their blocked anal glands, given that we are blessed with digital dexterity. A surical glove is recommended for the procedure, unless one want the "girlfriend experience" with their doggie.

Anonymous Sigyn March 22, 2013 10:07 PM  

Thaaaaank you, zen0. I'm going to sleep like a baby tonight.

Ass.

Anonymous zen0 March 22, 2013 10:21 PM  

Ass.

Ever your servant, Milady.

Anonymous Koanic March 23, 2013 12:06 AM  

There once was this Aspie named Asher
A self-fancied logical slasher
He missed all the lateral, with binary Adderal
Proved thought to his brain wouldn't transfer.

What powder, O Sigyn, of whitish was this?
Tho from the same place, we know it's not piss.

Anonymous zen0 March 23, 2013 3:54 AM  

@ John Regan

It's an irreconcilable conflict, at least in any conventional way. Personally I think there's going to have to be a jubilee.

The Biblical Jubilee, being a mandated and expected event, modified the behaviour that preceded it. Plus, God intervened to ensure an increase in produce immediately before the event, such that there was ample provision to survive its observance.

If a Jubilee took place now, one should expect massive starvations and upheaval (Barring divine intervention, of course).

Anonymous Toby Temple March 23, 2013 4:29 AM  

Finally! Something about the Inflation-Deflation debate.

Here is where Nate begins to go more seriously awry. M1 and M2 are not real money anymore than Z1 is, they are merely money substitutes whereas Z1 is a money surrogate that encompasses them both.

M1 is "material" cash, ergo real money.

The creation of credit money always has an immediate effect on prices because it increases the applicable demand.

So you are saying that creation of credit is inflationary.

Would you think the same way if creation of credit is done without government having significant influence in the process?

Anonymous VD March 23, 2013 6:51 AM  

M1 is "material" cash, ergo real money.

No. A credit note is material too.

So you are saying that creation of credit is inflationary.

Yes.

Would you think the same way if creation of credit is done without government having significant influence in the process?

What part of the "creation of credit is inflationary" did you not understand? Do you think the inflationary effect of large quantities of gold being mined is not inflationary so long as the government doesn't do the mining.

Anonymous Toby Temple March 23, 2013 8:34 AM  

What part of the "creation of credit is inflationary" did you not understand? Do you think the inflationary effect of large quantities of gold being mined is not inflationary so long as the government doesn't do the mining.

Remember that "Which is why when Mises talks about inflation he always talks about government."

Are you saying that the prices of gold went up because the supply of gold went up?

No. A credit note is material too.

A credit note is a credit note. A $100 bill is a $100 bill.

A $100 can buy you something. A credit note does not. It just tells you that you will receive money.

Blogger tz March 23, 2013 11:53 AM  

The sophists were about obfuscation and confusion, discussion is about finding a resolution (which may be disjoint, but with mutual understanding of the root difference). When someone is not merely stuck at the meta-communication level, but continues to the meta-meta-comm, and the meta-cubed-comm, they are not trying to communicate, as anyone who wants to go either downtown or to the country can tell which direction by the changing population density. If one wishes to clear the air, one does not blow smoke.

Blogger Nate March 23, 2013 1:18 PM  

"What part of the "creation of credit is inflationary" did you not understand? Do you think the inflationary effect of large quantities of gold being mined is not inflationary so long as the government doesn't do the mining."



Government removes the risk that chains down the threat of credit money.

It cannot be inflationary until those risks are removed.

Blogger Nate March 24, 2013 12:02 AM  

ok... I wrote up my reply... I went through and responded to each of Vox's paragraphs... and I have to say...

I hated it. It was effective... and amusing... and I got some good shots in... but honestly... it didn't flow worth a damn.

I'm scrapping it. I'll leave the paragraph by paragraph thing for Vox. He does well that way. I don't need to respond to each and every comment. I'll address the big ones as I need to to make my case... but if you're looking for a pissing match over what is or is not considered a credit limit... you're gonna be disappointed.

I'm starting over. No promises on a post date or time. It goes when it goes.

Anonymous Toby Temple March 24, 2013 12:46 AM  

I'm starting over. No promises on a post date or time. It goes when it goes.

BOOOO!!!! BOOOO!!!!

haha

Take your time, Nate. Everyone will be waiting for it.

No pressure there.

Anonymous David of One March 24, 2013 3:29 AM  

Nate,

You have triggered a realization through your "creation of credit is inflationary" ...

Credit and the charging of interest is inflationary at the outset of the arrangement. But I think there is a fundamental distinction about money that most of us, at least myself, that are conditioned so thoroughly so as to not realize ... the "ours" is hardly ever "ours", instead it is 'always' theirs.

Consider that nearly none of us have any accumulated direct holding of money in our possession at any given time.

Most of the time I carry nothing more than $60 cash on me. Often less.

The Bankers, on the other hand, almost always have all the "money".

Credit or Debit, the banks are always collecting a "fee" on every transaction.

It is inflationary in as much as fees associated on hard assets. Take for example the fees and costs associated with selling or buying a home, especially the Realtor's percentage.

Since a very young age I, probably like most people, realized that the Realtor's percentage inflated the cost of homes separate from other "market" forces. Most often accumulative and constant.

Back to Banks, people and "their" money ... they almost always have all the money all of the time. The use of 'our' money is associated with a fee or cost to us and/or other associated parties for any given transaction.

The simplest of transactions involve fees and taxes that depreciate the "money" thereby inflating the cost of goods and services.

Any card based transaction involves both fees (2.5% or greater) and taxes (2% or greater) ... if either or both the fees & taxes are increased minutely then the value of the "money" has decreased similarly while simultaneously increasing the cost of goods and services.

For me the realization that nearly all money is held, retained and 'owned' by the banks all of the time is significant. The vast number folk probably don't have more than $100 dollars of cash at any given time in their home. Especially in these days and times.

As a child I grew up when "plastic" of any kind was largely unknown. There was only cash or checks until the early 1960s. Because of the risk of robbery, plastic appeared to make sense over cash. It still does. Certainly there was the perception of status that was heavily promoted by the banks from the start. Keep in mind that automatic deposit was increasing in use around 1975 or so and probably wasn't in common use until about a decade later. ATMs were 'new' around 1982/83 ... during those early days ATM fees were illegal (at least in the state of Colorado).

My point is that I tend to think that "my money" is in the bank ... but after VD's recent post about a court case demonstrating that we don't really have any "money" in the bank ... it appears that most of us have no money in the bank legally or in reality unless it is in a safety deposit box.

Blogger Nate March 24, 2013 9:40 AM  

David... what you're realizing is what I am trying to drive home. The green slips of paper are the money.

The bank can go tits up... and you still have your green slips of paper and everyone will still take them.

Hell they'll be worth more... not less.

Blogger foxmarks March 24, 2013 2:04 PM  

And he who can issue more green slips, will. What was transacted by money surrogates and money substitutes can be transacted by green slips.

The surrogates and substitutes are a convenience, an extension of the charade of green slips.

We have not seen a dramatic switch from surrogates to slips because the people still have faith in the surrogates (and gov’t reinforces that faith with guns). What seems will matter is *how* green slips are issued to replace their substitutes. To issue some into the face of a run is so obvious that the people may begin to lose their faith. If I were a bankster, I would play for time and make the conversion more stealthily.

Anonymous Joe Doakes March 27, 2013 8:59 AM  

Why do people accept fiat money? I was born in 1959. By the time I was old enough to have my own money, none was backed by gold or silver, only promises. I have used those little green slips of paper all my life because there is no ready alternative, even in Minnesota, people don't take Canadian money as "real" money. It's FRN or nothing.


Anonymous Joe Doakes March 27, 2013 9:12 AM  

I work with the county Registrar of Deeds. Government desire to move minorities into houses through CRA drove No-Doc, Alt-A and adjustable rate loans 2000-2007. Home prices skyrocketed as more buyers with more dollars chased the same number of houses. Rising values led to equity refinance that funded boats and vacation homes.

All credit dried up in 2008 and home prices have plummeted as few buyers with fewer dollars chase the same number of houses. The drop in home values prevented refinance or sale and the tightening of credit caused end of home construction caused foreclosures and bankruptcies.

It looks as if credit money created by government fiat causes inflation and deflation. What am I missing?

Anonymous Joe Doakes March 27, 2013 9:17 AM  

Bank runs? The green slips of paper might not be real money, but it's the most real money I've ever known so yeah, I keep a handful in my gun safe, just in case.

In a Cyprus situation where ATMS are dry so people already are resorting to barter, what would I do with Kruggerands? Sell them to a coin dealer in return for what medium of exchange?

If the general public loses faith that FRN are real money, and the electrons in the bank are frozen or gone, what's the sensible alternative medium of exchange I should have in the safe?

By the way, Nate and Vox, would you please set up a link on the webpage for this series so I can re-read them more easily than scrolling through pages?
.

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