As opposed to rampant inflation and a perpetual debt spiral?
No, you buy as you produce, earn, and save up. I.E. You grow from profit instead of debt (which, btw, requires even more profit to overcome the interest.)
Yes there is. It's called cash and while you may find it hard to believe in this debt riddled economy people have done it before.
There were a lot of reasons and having an abundance of gold (post
1848) didn't hurt none either.
And my other post shows it a false 'example'.
In my other post I quoted your own source explaining they DID issue francs equal to gold inflows.
And yes it does have to do with multipliers, just as in any other country with fractional reserve banks.
You can 'wow' all you like but it's absurd to use a non paper alleged 'example' to claim what happens with paper.
'Everything else' isn't money.
"The fact of the matter is that the Hapsburgs spent themselves to death. The specie from the Indies in no ways ever came close to equaling the budget outlay."
"The other huge booms in New World precious metals - the Brazilian gold boom on the first half of the 18th century and the second ( Zacatecas ) Spanish silver boom under the Bourbons either had neutral ( in Portugal's case, which had an immensely immensely wealthy monarchy for half a century with little to show for it outside of fripperies like the Mafra ) or positive effect."
Not to mention the California gold rush that stimulated economies around the world. Farmers in Chile, Australia, and Hawaii found a huge new market for their food; British manufactured goods were in high demand; clothing and even prefabricated houses arrived from China. And one could hardly say it 'ruined' the host country either.
I suspect it was more like a legion of legal 'advisors' who pointed out a few, uh, 'problems' with it.
Surely you noticed the sarcasm.
Well, the second 'debt' was speaking of private individuals who go bankrupt. However, my point was that the 14'th doesn't address 'default', just the 'validity' of what you may, or may not, be 'obligated' to pay... assuming you can.
In the private sector there is a clear order of obligations in a bankruptcy. Well, unless it's a car company and the President decides to usurp law and play bankruptcy judge, trustee, and banker. But I wonder if there is any 'law' regarding government obligations.
Well, interest on the debt isn't 40% of revenues, at least not yet, so it could still 'operate' too. Just not 'everything'.
Oh, I learned a long time ago to not make that mistake.
It takes a while for the inflation effects to filter through, naturally, but--now that you mention it--less and less as we get more connected and sophisticated.
A big part of the Keynesian stimulus hypothesis depends on phase delay. They think they can borrow the money, spend it quickly, and create a big rebound before the people notice it's all a sham--that it has all been taken from their future.
Worked great, diddnit?
d
It wasn't a question of particular assets, the question was whether declining prices would hurt the economy by preventing people from buying stuff.
Lots of things are better, cheaper, and faster today. Most. Yet, people keep buying them.
That has never worked. It doesn't scale. As far back as the belt-driven looms in Britain around the 18th/19th century, financing was required.
That's a lot true. Sometimes it does work out.
French gold stocks were five times the expected value.
The Franc was still undervalued, and the graph on page 11 shows how much gold France accumulated.
Well, exactly. *In that case*, inflation caused all goods to go up in price, and when the Spanish royals went into wars, they couldn't finance it easily.
Some of that has to do with the general problems of mercantilism, but the silver accumulation created a massive disequilibrium. It's no different from South American countries running up debt without something to balance against it in trade or services.
I'm not familiar with the end of Portugal's empire period.
That's because something counterbalanced the accumulation of metal.
Well Jim, my field is power system protection, so yes, I don't post many circuits. I just come to this online cocktail party to stay somewhat up to date on electronics. I snipe at you (and others) in a futile attempt to keep the discourse civil around here (like spraying the cat with water to keep it off the couch). You are of course free to killfile me, but you and many others should consider being more civil instead.
You love making absolute declarations that are doomed to fail. And, in this case, you put it on the same line. Even if, for the sake of discussion, your claim "it doesn't scale" were true it says that in 'some' scale it works. So your preceding declaration is false by your own second declaration.
'Use' is not proof of 'required'.
'Money lenders' go back to at least biblical times. That isn't proof it's 'required' either and as Polonius in Act I, Scene 3 of William Shakespeare's Hamlet admonished "neither a borrower nor a lender be."
So the 'virtues' of it have been an item of debate for some time.
Now, I am not saying it's undesirable in all cases but was only responding to your previous doomed absolute "there's no other way."
The question then arises 'why one and not the other'?
'Expected' by who and based on what?
I think so too but that's a whole different matter than whether there's a 1-1 gold to franc reserve (which never existed for any paper currency) at the PEGGED price, which we both seem to feel was undervalued.
But, then, 'undervalued' based on what? It's a bit like Mercedes bitching that GM is 'cheating' by selling Cadillacs 'too cheap' and 'unfairly' taking their ('gold') market share.
Manufacturers can argue 'fairness' based on cost of goods sold and profit margin but government just say 'it is' based on whatever their 'policy of interest' is at the time, inflation, currency stability, unemployment, etc, in light of whatever the currently favored 'economic theory' might be.
The problem, as it were, is there was simply too much paper in the world, from all currencies, chasing a limited world gold supply which, of course, is why they were printing paper to being with.
It really is amazing how the seemingly simple concept of a 'medium of exchange' can become such an unfathomable quagmire and it does lend some sympathy for the ancient who wondered if it was really such a good idea to exchange his pig for that mysterious round thing someone called a 'coin'. He can't eat it, plant it, or live in it but they 'promise' it's worth something.
Just as the U.S. accumulated gold reserves when the dollar was underpriced by FDR at $35/ounce. And the reverse is why gold increasingly fled the treasury post 1952.
As I said, it's a market, of limited players to be sure but a market nonetheless, and part of the problem is 'price fixing', aka pegging the 'value of paper'. Over or under value your 'product' (paper) and people will buy or sell it accordingly.
That, of course, is part of the argument for fiat money but it's also arguable that the problem was de facto fiat money, from fractional reserves (despite claiming a 'gold standard'), to begin with. I.e. gold standard advocates might say that dropping the gold standard was simply an admission that the currency was worthless, so why keep pretending otherwise?
No, he who 'has the gold' that 'causes' inflation 'has the gold' to pay for it. It's 'the other guy' who suffers.
The Hapsburgs weren't 'ruined' because they 'got rich'. They were ruined because they were stupid and those opposed to massive deficit spending might say we're using them as a model.
You are the only person I've ever run across who claimed being 'rich' was 'no different' than deep debt.
Well, you're the one who claimed that thread 'covered it'. I just quoted it.
It's called free trade. He who has lots of gold buys stuff, which means people have to make the stuff and they get gold for the effort.
It's also the theory behind 'stimulating the economy' except, in that case, they just borrow tomorrow's money, robbing Peter, plus interest, to pay Paul.
The problem you keep trying to suggest only accrues if all you do is haggle over a fixed bag of goods. In which case the 'guy with the gold' (Hapsburgs) wins.
Like if steak increases 10% they decide you'll eat something less expensive so 'no inflation', or maybe it's 5%. Just depends on how many they 'divine' will 'chose' to downgrade.
And that's just the tip of the iceberg.
Blind faith is such a beautiful thing, unless you're driving the car.
That's false. There is no reason for productive enterprise to eschew debt just because they can. You have to be pretty sure it will help, but it's a perfectly good lever to pull if you need to grow.
"It doesn't scale" is the point - past some size of enterprise, you'll need something like that. Governance turns into something a lot like long and short puts on the company itself.
It was required. The people who didn't do that did not survive as an enterprise.
Of course.
That scene is intended to be comic, but yes. Debt was much scarier then.
you *really* have to know what you're doing with it. It's a dangerous tool.
There is no other way for modern levels of production. If you're making ... custom cowboy boots, you're probably better off without debt. I imagine a lot of folks here make custom stuff such that they use very limited finance, so I can certainly understand reluctance. I've been through a couple passes of VC stuff, so I'm less skeptical about it. Just arriving at a "how many units after time " thing was major.
By "no way", I mean that it has to work for *somebody*, or we end up back at 1790 levels of production, regardless of all the high tech. It's just not for everybody.
Generally, because for whatever reason, the additional gelt solves a bottleneck problem. In the cases where it rots in a trunk, it creates problems.
Don't go diving for it, but I've been through that damned paper now three more times, and have yet to see it. Feh!
Based on the actual reserves values of other nations.
Ah, okay. I think I understand your point then. To be honest, I think I got that metaphor from a podcast on EconTalk, so it may have even contradicted the paper. Might have been an error in the podcast.
"Undervalued" in the sense that other nations were unable to attract enough gold to print enough money to keep deflation at bay.
No, paper was in quite short supply*, which led to deflation. Prior to the explanation that France was hoarding gold, nobody had much of a clue why - the US was sterilizing too much money, but not in quantities that explained the deflation.
on a worldwide basis.
It is quite difficult. I wouldn't disagree at all.
yeah...
Possibly. Each permutation has glories and horrors.
I'll take their worthless currency, then. Goldbugs generally tend to be either traders ( they like commodities ) or Apocalyptic in outlook.
but that's not what happened, was it?
The Hapsburgs were severely Mercantilist, but it would be more around a century before "Wealth of Nations" was even written, so....
Interesting... no, that's close, but not quite it.
It's only different if you don't leverege. It's not clear that the Hapsburgs could have done any differently - the failure of Spain was most likely on rails.
Having money doesn't make problems go away, it just makes them weirder, so...
Sorry, just not versed on what happened with Portugal.
That's a lot of it. What people want though is for the overall money- climate to not be a drag on production. I'm pretty sure everybody wants that.
But we agreed that the Hapsburgs *LOST*, right? :) Especially at the game of Empire - although there are missions in Mexico that are still there from the original Central American invasion...
The s/n is forever changed, but if you've got thick skin and sharp filters there's lots to be had, more than ever in history. It's changing the world. In a good way (I think).
If you dig deeper you'll find a lot of the "recovery" jobs are temporary, of poor quality, low pay, part-time, or otherwise unsatisfactory. It's heart-breaking.
No, it isn't. Please, do try reading what's written and the actual logic of it, including your own writings. Now, you may have 'meant' something else but I can only respond to what you actually write.
Your original statement that began this portion of folly was an absolute saying there was "no other way." There were no caveats about "to achieve this or that" or "this level of , or any thing else. Just "no other way" and all I've did was explain there IS "another way" whether it suits your fancy about what 'level' or 'degree' of whatever is achieved. I didn't say 'the other way' was ideal, suitable for everyone, or anything else. Just that it is.
I didn't say they should but, again, by admitting "can" you show there is "another way."
A lot of people think so and there are also those who go down the tubes by it. And then we have "too big to fail." I'm just exploring the possibilities and absolutes don't help.
Well, I knew of at least one company that got into the hundreds of millions 'debt free'.
Poppycock.
LOL And our government doesn't scare you now?
And according to the rhetoric there are hundreds of thousands of literally terrified homeowners 'under water'.
There seems to be plenty of 'scare' to go around.
Btw, I know it's a buffoon line but it's such a good one ;)
Well, when I think of who's in Congress, that scares me.
Eeeeeeeh... maybe 1960 levels. It might not be so bad to only have 10 instead of 50 game cartridges.
I'm kidding but am not so sure that sticking the debt knife in up to the hilt is such a grand idea.
It seems to be a bit like Pringles: "betcha can't eat just one." Or maybe heroin is a better analogy.
Other than pirate movies it seldom 'rots in a trunk'
Well, as I said, I read the paper you posted and pasted that text in from it (in the other message, where ever the heck that was). It also coincided with my own sources but I always prefer to use the 'opponents' source if it confirms ;)
No sequitur. Just because X may be 'poor' is no reason for Y to follow suit.
But I know where you're getting that from. It comes from comparing U.S. reserves to French reserves and then observing 'their' economy is smaller than the U.S. economy. That, however, ignores what the pegged value of each currency is and, as a result, what the market will dictate for the buy/sell flow.
By "who and based on what?" I mean it's easy to see country A whine "damnit, your rate is too low" and country B shoot back "the hell it is, yours is too high." Then they'll argue about what each others domestic monetary policy 'ought' to be.
I think you probably remember correctly, at least I've seen papers make the same kind of arguments, but upon deeper inspection one finds that France was printing Francs roughly equivalent to gold inflow. The problem, a 'hindsight' thing, is their central bank was limited by law (I don't remember why) as to what it could do and the influx was not 'stimulating' (damn that word) internal investment so the monetary multiplier was lower than 'expected'. France had also just exited a period of hyperinflation and was determined to not let that happen again.
That's a gross oversimplification but I don't remember all the details.
Well, by 'other nations' you mean the U.S., but I went through that overvalued dollar exercise in the other post. Gold flooded in after devalued to $35.ounce and I'll bet 'the others' were bitching about that too, so who's cheating now?
I'll grant you that maybe nobody knew why 'then'. Of course, we're only presuming anyone knows why 'now' and I'm coming to the conclusion they never know why. It's only what the 'current theory' happens to be, and even that's debatable depending on which 'school' of economics the author adheres to.
However, according to the 'current theory' (one of them anyway) you can't say 'hoarding' because that's a deliberate act. The distinction is the U.S. was, by intent, sterilizing but France was 'inadvertently' sterilizing as a result of internal banking law that prevented the 'expected result'.
That doesn't make it any less of a problem but would explain why screaming "you're hoarding" didn't get anything but a response they're printing Francs in accordance with the 'gold standard agreement', because the 'real' problem was elsewhere.
The current system tries to address that with the floating currency exchange except China, of course, won't play ball.
Nice joke but LAW requires people take dollars and as long as it does no one is going to 'give them away'.
Not because they had gold. Gold only confers wealth, not brains.
So was Great Britain but they seem to have exercised considerably more wisdom. Of course, bad weather sinking the Armada helped. Talk about bad luck on top of doing everything wrong. Even Wile E. Coyote doesn't do that bad.
Huh? Debt IS leverage, so you can't 'not do it'.
There were lots of things they could have done but they didn't give a flying fig for domestic economics. Now, that's pretty much a characteristic of kings and queens but England did have a parliament ever increasing in power going back to the Magna Carta and was much better primed for the kind of 'entrepreneurial' economic expansion the New World made possible.
Well, yes. That's what I meant above about not conferring brains.
Sure.
Yes, but not because they got rich. They 'lost' because of incessant wars and a fragmented mismanaged country.
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