Topic: when you run out of other people's money... (Read 4721 times)

You can't make debt just go away, as long as the government is using more than its earning you will have inflation - spending means SOMEONE is getting paid and THAT money goes to the market.

In time productive people will switch to BTC and other stuff and also try to avoid paying taxes.


In the end the leeches of the world are left with a lot of worthless paper.

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WASHINGTON (MarketWatch) — Federal Reserve officials are considering a new type of quantitative easing that will attempt to boost the economy without accelerating inflation, according to a report published Wednesday.

Analysts said the new approach would allow the Fed to move despite high oil prices.

Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates, according to a story in The Wall Street Journal.

This “sterilized” quantitative easing, would use reverse-repurchase agreements to keep the money from flowing to bank reserves.
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Why can't such measurement apply to Greece? The printed money is used to buy the debt, and that money is exclusively reserved for  finance the debt, it should not flow into the bank reserves, but make the banks' balance sheet much healthier: The toxic assets (or debt, or loss) are moved from bank's balance sheet into FED's balance sheet, so that banks can operate without worry

Let's suppose the Greek really spent others money, then, how to prevent other people from spending your money?

A capture fish and sell them to market, B pick fruits and sell them to market, both of them use exchanged shells to buy other products. But from one day, B just buy everything with a long term loan without pick enough fruits, what will happen?

1. The price of fruits will rise due to reduced supply
2. C will produce fruits due to rising prices
3. Fruit price get back to normal
4. B can not produce fruits any more since now the competition is hard (C took his job)
5. B will live on loan and accumulate huge debt

Both A and C thought the money are created by them (or corresponding to wealth created by them), so they can think that B is spending their money, but the essential part is: B is consuming A and C's products without providing any valuable things in exchange. Although B provide money as exchange, he did not contribute to the amount of consumable wealth

How much B should provide in exchange, is very difficult to judge. It is not decided by B's labor, but mostly decided by A and C's desire (if Greece can provide lots of petroleum, it is no problem at all). So, as long as A and C desire money, B can pay them with money, A and C will feel satisfied

A want others to buy his products as much as possible, but on the other side, he will feel unfair if B just buy his products by printing money, this is essentially a moral question, not an accounting or economy question

So, if A can not do anything about B, the only way to prevent B from spending A's money is: A spend the money he earned immediately and exchange to consumable goods, thus he will make sure no one can have access to his labor. But that is also not very practical, due to none of the consumable goods can be kept for long, and transportation and liquidation for them is also troublesome

Then he will realize that if he would like to hold the value in goods form, he will immediately face lots of risk, so finally maybe he still prefer holding the currency, but he will try all he can to stop B from buying his labor with loaned money

So who is the most clever guy here, B of course. He spent big, lived a good life, and have lost his job, thus he has nothing to pay the debt, what the banks can do is only write off his debt and keep going forward. And IMO, since both A and C has earned enough money in this process, they will feel satisfied anyway, why should they blame B? Of course when they start to spend their savings, they will find out that there is not enough goods in the market, but that is many years later, and if that is the case, B will find a job and payback his debt

We need more country like Greece to raise up the GDP for those export based countries 

Both 

Actually it is not robbery, but allure, since the consumption is always voluntary. Allure others into spending future income and trap them into debt, typical credit card company's business

My point is that the consumption should not deviate from the production too much, otherwise there will be imbalances in the system. If someone suddenly increased their production by a great margin and their consumption did not increase at the same pace, then either their products will drop in value due to oversupply, or someone else is going to have a debt due to increased consumption

It's also interesting to see Buffet's view, he pointed out 16 hours of working, but how about those people can working 24 hours (by using automation and computer)? Would those guys buy out every thing? Or any other people have to work 24 hours to keep their deficit from growing?

This crazyness has to stop, no one should work more than 8 hours, and they should even reduce working hours to 4 to increase the employment rate. Robbing other people through hard working does not change the fact that it is still robbery

No worry, easy to help ...
The story is located somewhere around Gilgamesh (http://en.wikipedia.org/wiki/Epic_of_Gilgamesh).
So it is not bronze age, they already used iron in those days. 

p.s.
Damned they will torture us for being on strange topics.

That's an interesting article, aside from the nonsense regarding "import certificates". However, he glosses over the important point that "intergeneration inequities" are a result of the legitimization of aggression (specifically taxation) in the form of government. In short, it's the government of Squanderville which is in debt, not the people of Squanderville; but the government is going to take what it needs to pay off that debt involuntarily from the people living in the area, even though they may not be the same people as lived there and voiced their approval when the bonds were issued and thus have no legitimate responsibility to pay it off.

In a free market you can't inherit other people's debts. Any estate which has more debts than assets is simply in default, leaving nothing to be inherited. The next generation always starts out with a clean slate.

Nay ... be fair!
When Adam and Eve shared the apple, who owned the land this tree grew on?
 ... how would I know?

At least I am sure Adam and Eve weren´t Chinese.
Why? ...
If they were Chinese they´d rather eaten the snake than the apple. 

 ... damned ... I forgot to explain a point about owning land.
Where does this ownership originate from?
Is it legel to sell something that never belonged to you?

Well they invented the word europe plus ... sorry for getting cynical ... they busyly bought german tanks and cold war was still very hot in those days. Nato and EU are somewhat interconnected.
Still the land register is not so much an issue, they badly need to collect taxes from those who could pay them. That is a core issue in greece these days.

Compare it to bitcoin where there is no central control.
Could be land is not so important but the gain you draw from it. So how about taxing the gain and leave the land as it is?

Why do you assume that only centralization can work?

My own property in the UK was unregistered when I bought it. The previous owners had sufficient papers for an uncontestable transfer. Basically the owners showed that their parents had bought the property in 1910, then willed it to them when they died. The owners also showed that they had "enjoyed uninterrupted use" of the property for over 12 years, which (at the time) was legally sufficient to show that no-one else had a claim on the property. It needed three documents, and was very straightforward: a property conveyance from 1910, a will, and a council tax statement.

Even if a seller doesn't have all the documents, you can buy insurance to protect yourself against the risk of buying a property that is not the vendor's to sell. In the UK, this insurance is not expensive, which suggests that there's not much risk.

After buying the property, we chose to register it. That was a big mistake. When we wanted to exchange a tiny sliver of land with a neighbor, this became a very expensive operation needing lots of lawyers and surveyors. If we had done the same thing with unregistered property, we could have done it with a handshake and some signatures on a sketch map.


In the UK, they tax the dwelling (the house), not the earth (the land). It's obvious (even to a council worker) whether or not there's a house.

Comparative advantage only apply to the situation that production can not keep up with the demand, thus increasing overall production efficiency is the concern. But after production speed has outpaced demand in modern times, how to increase the demand is the  question

In another word, "Demand=Big customer", if everyone will find a big customer, they will happily make a lot of money. Then who is this "Big customer"?   ---- Greece;) since they are the one that spend more than they earn, everyone that spend less than they earn is not a customer since they take more from you than they give you

In an island with only 2 people, both A and B produce 100 shells worth of products and consume 100 shells worth of products each month, it means that their production is equal to their demand. They will never get much richer. If A managed to make some savings, then B will accumulate same amount of debt (suppose their products can not be stored for a long time)

But, if A and B both can get 100 extra shells loan to spend each month, they will have more consumption, these consumption in turn will create some extra shells of earning for both of them, so after one month their income will increase to 120 shells, and as long as their income are increasing, their loan can also increase, this has been the case for most of the countries running fiat money today

Danger arises when one of them becomes more self-sufficient. For example A could produce whatever he want and he don't really need B's products since they are of low quality, he only need B's money to buy his products. In such a case, even B noticed that his sale towards A dropped quickly, as long as B has access to the loans, he can always cover up the hole with new loan and the whole process will take decades until it runs out of control

This is no big deal. If land isn't on the register, ownership is established by looking at past transactions on that land.

In the UK, some property is on the land register, and some isn't. It's possible to transact both kinds of land safely.

No land register, seriously?  What a joke. Maybe the EU should demand one instead of lower wages and subsidies.

Well the problem is they don´t have a cadastral land register. Thus they can´t tell whose land they would sell.

If the Greek government was to sell a few islands with self-sovereignty, the price received would be much higher.

Yes; I think that is almost certainly the case.


Again agreed.  I guess at the moment the Euro's problems are monetary not fiscal.  That hasn't made the fiscal problems go away though.  They're still there waiting in the wings.


I don't think I agree -- comparative advantage will find a way.

However, what does it matter either way?  Greece is manifestly not self-sufficient.  While they want to borrow German and French money they had better find a way to pay for it (or default).  Greece is neither producing something that they can sell to others nor defaulting on its debt.  Instead it's borrowing more.  That is a course that has an inevitable outcome.

Those islands are valuable because of their Greek history and culture, if they changed owner, the culture will not be there any more, then the island will not be attractive to travelers, just like any other small tropical islands

Maybe, those money has already been spent long time ago, now newly printed money are only used to refinance the debt and wait for production to keep up

Actually I think it is the central bank's tighten action caused the financial crisis, but why do they tighten? (They might concerned about the validity of the currency)


That is questionable, what if Greece can not impress Germany and France with their products/services? And why do they need to? They could live a life without any Germany and France products, only self sufficient. Ricardo's comparative advantage theory is no longer suitable for today's high production power

I see little difference between this crisis and the mortage crisis in the USA in 2008.
Banks exploit the hobo to take up loans they can't pay back. The only way banks can print money is by giving out loans.
They get bailed out anyway, so there is really no risk even if the hobo can't pay it back.  ( stabilizing feedback loop broken )

In the case of Greece, they take up huge loans and buy lots of stuff... like weapons from germany?.
So Germany and others keeps all the money, while greece keeps all the debt.

You'd think not having your own central bank would prevent the hobo greek from printing so much they ruin their economy.
This time they had LOTS of help to pull this off. In fact it would be much better if they had their own currency.
This would provide a feedback mechanism making sure their purchasing power would go down if they printed too much.  But the Euro won't budge even if they spend a ton.

The Greeks are so bad bla bla.. but on average they don't have a low retirement age nor high pensions and they work more than most other EU countries. So yeah I contradict myself. Sure the politicians in Greece haven't done a good job to build their country with all those loans, so the future prospects are not great. This might explain why they are targeted first. But then again, this isn't really about the Greek. This is just a symptom of the manipulation and failure of the whole system.

Greece like the banks must be allowed to fail and go bankrupt. For a country, the debt isn't really enforcable anyway.
The debt must be deleted. Greece starts with a clean slate, a new central bank and drachma 2.0. This is the way to do it.
They don't have to leave the EU, several countries including UK don't have the Euro so this is a non argument.

Each sovereign country with it's own government MUST have their own currency. The Euro destroyed that essential feedback loop holding their spending/trade balance in check. Over time all the countries should all go back to their own currency, unless they join together under a common government/budget.
The Euro should never have been invented in the first place. It's just an instrument to make the bankers more rich and create more inequality. You can claim hindsight is 20/20 but I'm damn sure several bankers saw this coming and knew how to exploit it.