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Money and banking. A try to understand.


ocoonassa

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Oct 14, 2010
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6,130
OK so far I think I have learned that money is a commodity that was created to replace barter. At first, as gold or metal coins, it had an actual intrinsic value. Apparently, people took to hoarding it in the goldsmiths vaults, and upon doing so would be given a written receipt declaring the value of what had been lodged. Before too long these notes themselves came to be used as money because they were lighter and more convenient than gold. All good so far. Seems that there couldn't be any civilisation without such a commodity as money.

What happened next though, was that the sneaky vault owners, God damn them, realised that they could make as much paper money as they liked, and that they could charge people gold to lend it out to them. Rather than legislate against this terrible and obvious scam, the powers that be (rich people), decided that it was a Very Good Scam, and they let it continue. After a while they made it so that the paper receipts didn't even represent gold anymore. And here we are today.

This appears to my catholic indoctrinated mind be a fairly immoral state of affairs. I really don't think it's what Jesus would have wanted at all. Therefore I am wondering what steps could be taken to put it right, and what consequences they might have. For instance, can we set everything to zero, and then start again with representative money that uses energy as its standard, measured in kilowatt hours? Is it possible to outlaw the system where private banks create the money supply out of thin air?
 


Cael

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Jun 19, 2006
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Your post doesnt mention Ireland. Sync will be along to move it...
 

eoghanacht

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Apr 18, 2006
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OK so far I think I have learned that money is a commodity that was created to replace barter. At first, as gold or metal coins, it had an actual intrinsic value. Apparently, people took to hoarding it in the goldsmiths vaults, and upon doing so would be given a written receipt declaring the value of what had been lodged. Before too long these notes themselves came to be used as money because they were lighter and more convenient than gold. All good so far. Seems that there couldn't be any civilisation without such a commodity as money.

What happened next though, was that the sneaky vault owners, God damn them, realised that they could make as much paper money as they liked, and that they could charge people gold to lend it out to them. Rather than legislate against this terrible and obvious scam, the powers that be (rich people), decided that it was a Very Good Scam, and they let it continue. After a while they made it so that the paper receipts didn't even represent gold anymore. And here we are today.

This appears to my catholic indoctrinated mind be a fairly immoral state of affairs. I really don't think it's what Jesus would have wanted at all. Therefore I am wondering what steps could be taken to put it right, and what consequences they might have. For instance, can we set everything to zero, and then start again with representative money that uses energy as its standard, measured in kilowatt hours? Is it possible to outlaw the system where private banks create the money supply out of thin air?
Ofcourse now that you've realised this 'They' will be coming to get you!

The only way of ever changing the system is a nuclear holocaust wiping mankind off the face of the earth or atleast putting a bit of manners on the few survivours.
 

Nipper

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May 19, 2009
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If you wanted to control Industrial Output of the world economy then the linking of currency to Carbon might be a way to go.

No one would fall for that though, would they?
 

eoghanacht

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Apr 18, 2006
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Does receipt of signals due to the wearing of pointy hats made of aluminium foil count as economics?
Papa Ratzy said people like you are like Nazi's. ;)

Ideas police now is it?
 

ocoonassa

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The only way of ever changing the system is a nuclear holocaust wiping mankind off the face of the earth or atleast putting a bit of manners on the few survivours.
I'm 50/50 on that eoghanacht but I still have hope. Don't let the bastards kill your hope.
 

ocoonassa

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Does receipt of signals due to the wearing of pointy hats made of aluminium foil count as economics?
Toland I often see you contributing on economics threads, and you seem to have a very good grasp of the jargon and terminology involved in the financial industry. I would hope that if what I am asking in the OP is offensive to you, that you would at least say why. I don't consider myself as part of the tinfoil hat brigade, I am just trying to understand how the current system could be improved upon. Your input would be appreciated.
 

dent

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[ame=http://www.youtube.com/watch?v=cRCzt0VH18w]YouTube - The History of Money - Part 2[/ame]
 

Toland

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www.aggressive-secularist.com
Toland I often see you contributing on economics threads, and you seem to have a very good grasp of the jargon and terminology involved in the financial industry. I would hope that if what I am asking in the OP is offensive to you, that you would at least say why. I don't consider myself as part of the tinfoil hat brigade, I am just trying to understand how the current system could be improved upon. Your input would be appreciated.
Even if it were offensive to me, that would not be an argument against.

My tin foil hat brigade remark was directed at Cael/troll, not you.

On my understanding, the money in your pocket is a quantity of guarantees that you are confident will get you a certain quantity of good in return for them.

Whether that confidence is backed by gold or by what you reckon is the reliability of the issuer of paper money is not all that relevant.

Even gold has no 'intrinsic' value.

Say someone discovered a massive gold seam in (say) Siberia, containing within easy reach the equivalent of the entire world stock of gold (if you melted down the entire world stock of gold and forged it into a cube, it would just about fill up a tennis court), then you could expect the rate of inflation to increase in any currency backed exclusively by gold.
 

ocoonassa

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On my understanding, the money in your pocket is a quantity of guarantees that you are confident will get you a certain quantity of good in return for them.

Whether that confidence is backed by gold or by what you reckon is the reliability of the issuer of paper money is not all that relevant.
So paper money is representing confidence in the value it bears. However I'm not so sure that it being backed by the word of men is reliable. I think that this may be relevant because men tell lies and are mistaken, they aren't pure like gold. When you add to this the fact that money can be conjured out of the air as debt, then it seems inevitable that more debt will be created than there is value in the world, and that this will always lead to bad things.
 

Toland

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www.aggressive-secularist.com
So paper money is representing confidence in the value it bears. However I'm not so sure that it being backed by the word of men is reliable. I think that this may be relevant because men tell lies and are mistaken, they aren't pure like gold. When you add to this the fact that money can be conjured out of the air as debt, then it seems inevitable that more debt will be created than there is value in the world, and that this will always lead to bad things.
Gold can also be a lot less (or more) valuable than it appears to be.

People lie and are indeed mistaken, but the can lie and be mistaken about gold.
 

sondagefaux

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Jun 2, 2009
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15,675
OK so far I think I have learned that money is a commodity that was created to replace barter. At first, as gold or metal coins, it had an actual intrinsic value.
It did? Why was gold intrinsically valuable? People valued it, even though it wasn't a particularly useful metal (although it does have its uses) in ancient times compared to iron or copper or tin. Gold's value doesn't seem intrinsic to me, given its lack of practical utility in ancient societies.
 

Malbekh

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Apr 30, 2009
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There's nothing wrong with banks, nor is there anything wrong with money. The issue is usury. It has always been the case that those that pay the highest rates of interest have been those least able to afford it.

Bringing in a form of Shariah banking as an alternative to the current system - but without the religious overtones - would in my view, be a step in the right direction.
 

Cassandra Syndrome

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Aug 23, 2009
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OK so far I think I have learned that money is a commodity that was created to replace barter. At first, as gold or metal coins, it had an actual intrinsic value. Apparently, people took to hoarding it in the goldsmiths vaults, and upon doing so would be given a written receipt declaring the value of what had been lodged. Before too long these notes themselves came to be used as money because they were lighter and more convenient than gold. All good so far. Seems that there couldn't be any civilisation without such a commodity as money.

What happened next though, was that the sneaky vault owners, God damn them, realised that they could make as much paper money as they liked, and that they could charge people gold to lend it out to them. Rather than legislate against this terrible and obvious scam, the powers that be (rich people), decided that it was a Very Good Scam, and they let it continue. After a while they made it so that the paper receipts didn't even represent gold anymore. And here we are today.

This appears to my catholic indoctrinated mind be a fairly immoral state of affairs. I really don't think it's what Jesus would have wanted at all. Therefore I am wondering what steps could be taken to put it right, and what consequences they might have. For instance, can we set everything to zero, and then start again with representative money that uses energy as its standard, measured in kilowatt hours? Is it possible to outlaw the system where private banks create the money supply out of thin air?
Yep. You summed it up well. Its a double barrel shotgun from hell. Fractional Reserve Banking and Fiat Currency.

Good article here about this issue

Fractional Reserve Banking
 

Cassandra Syndrome

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Aug 23, 2009
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16,908
Even if it were offensive to me, that would not be an argument against.

My tin foil hat brigade remark was directed at Cael/troll, not you.

On my understanding, the money in your pocket is a quantity of guarantees that you are confident will get you a certain quantity of good in return for them.

Whether that confidence is backed by gold or by what you reckon is the reliability of the issuer of paper money is not all that relevant.

Even gold has no 'intrinsic' value.

Say someone discovered a massive gold seam in (say) Siberia, containing within easy reach the equivalent of the entire world stock of gold (if you melted down the entire world stock of gold and forged it into a cube, it would just about fill up a tennis court), then you could expect the rate of inflation to increase in any currency backed exclusively by gold.
It takes years to mine Gold, so any discoveries can be priced into the future markets and inflation can be contained. Are you saying that instantaneous Printing Presses are much safer than years of mining gold?

Here are some FACTS

$1,000 in the year 1800 in the United States appreciated to be worth $2,000 by 1913 under the discipline of Gold.

In 1913 the Federal Reserve, the Central Bank of the US, was created.

$1,000 in 1913 depreciated to be worth just $40 today. During that time gold was completely removed as a mechanism to back the currency.

Thats reality. Thats facts for you. Switzerland, a country with 20% of its currency backed by gold, and up until 2000, had 40% of its currency backed by gold, never had double digit inflation even in the 70s and 80s.

You see, economics is a social science about how SCARCE resources are allocated efficiently between competing ends. Gold has relative scarcity. Printing presses, ink and paper do not.

Since Nixon dropped gold form the dollar completely in 1971 to fund the Vietnam war, global money supply has increased 10 fold, total debt has surged to a multiple of total savings which should be technically impossible as Savings and investing should be at parity.

Even in Ireland, total debt was 60% of GNP in 1970. Today it is at least 700%.

Again these are FACTS. The party is over, it is now mathematically impossible to service debt from our incomes.
 

ocoonassa

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Joined
Oct 14, 2010
Messages
6,130
Good article here about this issue
Thanks, that explains some things I'd been wondering about. I think most people don't know about all this. They'd be quare annoyed if they did I reckon.
 

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