ve they've got something equally valuable that the bank can sell if the bor rower defaults on the loan.
vesting in extra production machinery either, particularly during a recessi on.
y guess is that you can't make sense of it - it's not a complicated point, but you, as a representative example of our crew of right-wing nitwits, may well have trouble getting your head around it. Understanding the truth doe sn't seem to be one of your strengths.
to anybody who can't prove they've got something equally valuable that the bank can sell if the borrower defaults on the loan." so obvious that I thou ght you must be trying to imply there was something wrong with banks doing that. Banks act in their own self interest. Nothing wrong with that. I a ct in my own self interest, and expect everyone to act in their own self in terest. Why would you think that anyone would not work in their own self i nterest. So is your point that banks work in their own self interest?
tion equipment. They may make loans to people that want to invest in produ ction equipment, but the banks do not invest.
The point I was making was that banks aren't venture capitalists, and the m oney stuck in a bank doesn't usually end up making the economy more product ive.
You've managed to miss that twice now.
Great ambition, I hope you do better at finding some to object to next time .
money stuck in a bank doesn't usually end up making the economy more produ ctive.
me.
Duh. You are right. Banks are banks and venture capitalists are venture c apitalists. But you are wrong about money stuck in banks. Deposits in ban ks are not stuck. The money is loaned out. It is never stuck. Whether it is making the economy more productive or not depends on the demand for capi tal and what other sources are available for capital.
And as far as being against supidity..............Well at least I do not cl aim that during a recession ,the GDP is slowly growing.
capitalists. But you are wrong about money stuck in banks. Deposits in b anks are not stuck. The money is loaned out. It is never stuck. Whether i t is making the economy more productive or not depends on the demand for ca pital and what other sources are available for capital.
claim that during a recession ,the GDP is slowly growing.
The phrase "The Great Recession" is - as I've explained - a slightly jokey stock phrase to describe the period from the end of 2008 to now.
If you read it literally, it's nonsense because the economy has been expand ing for most of that period, if nowhere near as fast as it ought to be.
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The fact that you don't recognise the phrase suggests that you are under-in formed. My using it isn't exactly persuasive evidence that I'm being stupid
Some of it does although not necessarily for the economy of the same country. Basically they loan it to where they think they can make the most money (in theory) and to maximise their bonuses (in practice).
The purpose of banks today is to make money from their retail customers by pressure selling them products they neither need nor want. The small print often meaning that any alleged benefits are entirely illusory.
The business side is different again. At the moment many large corporates are in effect cash rich and not investing in new premises, plant or employees until future growth looks more assured.
SMEs stand almost no chance of getting a loan today unless they don't actually need one in which case the banks will fall over themselves to try and loan them money at well above prevailing market rates.
These days it is moved around the world so that it is always in daylight (and I think that practice dates back to at least the 1970's).
Heck modern algorithmic high frequency trading means that some insane multiple of the worlds GDP is traded in shares every day and that the average time that shares are held is now 22s and falling rapidly. People are buying infrastructure to exploit asymmetric market knowledge by being a few 100m closer to a superfast node.
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We are sat on a knife edge of instability cliff with a very large UXB that will sooner of later go with a bang! When it goes haywire the greedy bankers implosion of 2008 will look like a picnic by comparison.
Problems arise when money or shares owned by banks is used by hedge funds to short sell and damage a perfectly sound business (or currency). It is a less than zero sum game. Shareholder value is destroyed for everyone except the prime market manipulator(s).
Data from the dismal science is always subject to unreasonable claims of precision followed by significant later revisions that far exceed the original claimed error bars they put on their first estimate.
t claim that during a recession ,the GDP is slowly growing.
y stock phrase to describe the period from the end of 2008 to now.
nding for most of that period, if nowhere near as fast as it ought to be.
informed. My using it isn't exactly persuasive evidence that I'm being stup id
I recognise the phrase, but your cite indicates the great recession was ove r in 2009. Your saying that we were still in a recession while the GDP was inceasing does not mean you are stupid, but does show imprecise thinking.
From Wiki.
According to the U.S. National Bureau of Economic Research (the official a rbiter of U.S. recessions) the US recession began in the United States in D ecember 2007 and ended in June 2009, and thus spanned over 18 months.[22][2
3] US mortgage-backed securities, which had risks that were hard to assess , were marketed around the world. A more broad based credit boom fed a glob al speculative bubble in real estate and equities, which served to reinforc e the risky lending practices.[24][25]
Actually, at this point, banks are really not all that concerned about deposits, except as to how much hassle they are. When they loan (and they really only want to loan LARGE amounts at a time) they just get free money from the Fed to do so. If they take in deposits, they have all these silly accounting standards, and regulations they have to deal with, so they don't make any money from them...
Slowman's a raging socialist and a usenet Aspie. Come to expect the dishonesty. His Intelligence Quotient (IQ) is high but his Emotional Intelligence Quotient (EQ) is low. When people meet such a person face to face it isn't long before they realize he's not normal and dismiss him. This makes such people desperate to convince others that their opinion is pure genius, which it is, void of common sense and practicality. That's why Aspies used to be called idiot/savants, and they also used to be institutionalized. Now we just have this problem. Jared Lee Loughner, James Eagan Holmes, Adam Peter Lanza
JL > QE is just a big socialist wealth JL > transfer scheme. In this case, it's JL > from the poor to the rich. JL > Expect bad things, longterm. G > How does this help George Soros? krw > Inflation + Arbitrage = Billion$ Did Soros actually BUY Obama?
Greegor's got this delusion that Asperger's syndrome is a lot more common than it actually is. If he'd ever met someone with the problem, he might think differently. He presumably hasn't met a raging socialist either.
A trifle ironic, coming from Greegor, though his more misleading claims mostly reflect his ignorance and self-delusion.
Printing money creates Zimbabwe-style inflation when there are no goods that the money could buy, or even factories which could produce the goods.
The story is different when the economy does not operate even close to its full capacity; when there are factories which would be willing to produce goods, and unemployed workers willing to work, but lack of demand keeps the factories closed. In this kind of a situation, and *only* as long as the situation persists, it is beneficial to print money.
A story from the Freakonomics book: a group of of New York yuppie families had founded a babysitting ring. A couple could babysit children from another family for an evening, and got a a coupon for doing so. When that couple wanted to dine out, or go to theatre or something, they could use the coupon to buy babysitting service from some other member family of the ring.
It then happened that a certain couple started collecting and saving the coupons, to earn a longer period of free nights, or for the sake of attending a film festival on several successive evenings or something. This created a shortage of coupons, and soon no-one was able to buy babysitting services from others. The child care ring was driven into recession.
Note that all the families were still willing to babysit kids of the others, and they were still willing to get free nights. But lack of coupons hindered their ability to exchange work.
A simplified story, but tells one aspect of how economy works...
Simplified stories are good. Too much is lost (obfuscated) by introducing terminology, abstraction, and cant. Genius is marked by brevity and clarity.
The babysitting story shows what happens when there isn't enough currency (coupons) in circulation to represent the total value that has been created (babysitting services).
That's not the US' current situation. We don't have loads of people willing to work but unable to get paid because there aren't enough dollars in circulation to pay them.
Our problem is mostly, due to increased risks, lower possibility of returns (e.g. higher taxes), and higher costs (e.g. Obamacare) (all related factors), creating jobs doesn't make economic sense, and neither does working (for more and more Americans).
Further, all of those factors combine to discourage people from buying stuff, producing as much, etc.
So, fewer people are working (partially explaining the growing income gap), fewer people want to work, and fewer people want to hire them.
I've never understood that argument--it seems to confuse price and value.
Suppose I go to the flea market and start selling gold coins for a dollar. As long as I have coins to sell, no one else can sell coins for more; I get all the business. Coin-sellers suffer. But it's terrible for me too.
Suppose I sell promissory notes for coins, increasing my leverage beyond my actual supply--that doesn't help either.
Now, suppose I panic the herd into selling, and once I've got them stampeding I let them drive the price even lower, then I cover my short (the promissory notes) by buying from them at a lower price than I sold for.
Okay, that parts fools from their money, but it's awfully risky. And it doesn't work if no one panics. If no one panics I sell a load of gold for nothing, and I'm wiped out.
Manipulating the price doesn't affect the intrinsic value. To abuse Buffett, if someone drives down the price of hamburger why wouldn't you just buy more hamburger? Over time the price recovers, and you make a fortune.
nds to short sell and damage a perfectly sound business (or currency). It is a less than zero sum game. Shareholder value is destroyed for everyone except the prime market manipulator(s).
James fails to understand quite a few real world phenomena.
George Soros understood the device rather better - he made a lot of money o ut of Black Wednesday
es deflation) and nothing else. But this isn't true.
ds that the money could buy, or even factories which could produce the good s.
o its full capacity; when there are factories which would be willing to pro duce goods, and unemployed workers willing to work, but lack of demand keep s the factories closed. In this kind of a situation, and *only* as long as the situation persists, it is beneficial to print money.
ilies had founded a babysitting ring. A couple could babysit children from another family for an evening, and got a a coupon for doing so. When that c ouple wanted to dine out, or go to theatre or something, they could use the coupon to buy babysitting service from some other member family of the rin g.
the coupons, to earn a longer period of free nights, or for the sake of att ending a film festival on several successive evenings or something. This cr eated a shortage of coupons, and soon no-one was able to buy babysitting se rvices from others. The child care ring was driven into recession.
others, and they were still willing to get free nights. But lack of coupons hindered their ability to exchange work.
terminology, abstraction, and cant. Genius is marked by brevity and clari ty.
But - as advertising illustrates - you can also be brief, clear and mislead ing, James Arthur does it all the time.
(coupons) in circulation to represent the total value that has been creat ed (babysitting services).
From James Arthur's bizarre point of view.
use there aren't enough dollars in circulation to pay them.
In fact that's exactly the problem, but Jaes Arthur's idea of "in circulati on" includes loads of dollars that are - in fact - sitting in banks waiting for an attractive investment opportunity which hasn't come up yet.
ns (e.g. higher taxes), and higher costs (e.g. Obamacare) (all related fact ors), creating jobs doesn't make economic sense, and neither does working (for mo re and more Americans).
Here, he is talking about perceived risks - which is to say the risk that h e and other - better off - right-wing nitwits perceive, which inhibit them from starting up new businesses or expanding existing businesses, and provi ding work for the numerous Americans would like to be working, or working l onger hours.
uff, producing as much, etc.
The people who aren't working , or aren't working for as many hour as they' d like are further discouraged from spending by not having the money to spe nd.
growing income gap), fewer people want to work, and fewer people want to hi re them.
There's not much evidence that fewer people want to work. There is evidence that quite a few people have given up trying. Sensible people give up afte r a few years of failure. I'm not that sensible, but persistently applying for jobs is no guarantee that you'll ever get one.
There is evidence that the "growing income gap", which has been growing sin ce Reagan got to power, represents a defect in the way the US political sys tem works. Back in 1786 the founding tax evaders set up an ostensibly democ ratic system with enough procedural complexities to let the people who owne d the country keep on running the country. From time to time the people who own the US display enough enlightened self interest, properly understood, to raise the living standards and education of the rest of the country, who work in their businesses and buy the products of their factories.
A well-educated and well-fed work force is more productive, and creates big ger profits for the people who own the country. Sadly they seem to have los t sight of this point around 1980, and it's been downhill ever since.
One of the best books I ever read had an exposition on the meaningless mush people build layering abstraction on abstraction. The author analyzes examples into their underlying physical reality, and rates statements according to the number of concrete, testable statements, actions, or actual objects referred to.
E.g., "Build a bridge to the future"(1) rates lower than "Tax you, and give it to my supporters."(2)
(1)(Builds nothing, there's no bridge, the future is an abstraction, and it makes no sense to build a physical bridge to something that isn't real, and comes whether you've build the bridge or not.) (2) (Tax is a real action, you are a physical thing, giving is another action, and supporters are also physical, real things, not abstractions.)
The hand-waving + abstraction combo has pegged my b.s. meter ever since.
A certain Wayne always impressed me with his savantish knack for distilling complex system specs down to a few (usually profane) truths, then programing it like a m@ther#$^&er (his lingo, sort of). In other words, stripping to the bare wood on the spot. Impressive.
upposed to signify that somewhere, somehow, there's a pile of stuff you mad e, facilitated making, brought to market, or otherwise increased the value of.
id enough to trade you currency for it--they bought it.
ty has more machines, goods, or whatever.
circulation and benefiting society. You've done a good thing.
not "using" it, the bank loans it out to someone who can.
This where he completely lost touch with reality. In a recession, the banks have to retain a lot more cash to cover potential bad debts.
how it works.
If only this were true in real life, rather than in some flat-earth economi c fantasy
as we create. Almost any serious macroeconomist would scoff at your simplic ity, and go off and print a bunch of money. That's working well in Venezual a.
Perhaps not, but it is working pretty well in the US.
sh people build layering abstraction on abstraction. The author analyzes e xamples into their underlying physical reality, and rates statements accord ingto the number of concrete, testable statements, actions, or actual objec ts referred to.
ve it to my supporters."(2)
it makes no sense to build a physical bridge to something that isn't real, and comes whether you've build the bridge or not.)
tion, and supporters are also physical, real things, not abstractions.)
Of course any politician that honest wouldn't have any supporters. they'd f igure that his (or her) chances of getting elected on that platform would b e zero, so there'd be no point in supporting him (or her).
The concept of James Arthur having a b.s. meter stretches the imagination. If he has one the needle has to be severely bent - probably wrapped around the spindle.
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