Modern Monetary Theory

Discussion in 'Markets & Economies' started by mmm....shiney!, Sep 14, 2019.

  1. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Inflation is a product of a fiat system.
    It's how the money printers rip us off. Theres nothing natural about it and no amount of inflation is good.
    If it was natural there would have been inflation during gold currencies.
     
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  2. Lovey80

    Lovey80 Well-Known Member

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    Um there was.

    the difference was that it ebbed and flowed based on the productivity at the time/location.
     
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  3. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Debasement of currency is not the same as price of goods moving up or down based on supply and demand. Not even related.
     
  4. leo25

    leo25 Well-Known Member Silver Stacker

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    You do realise there was inflation back when there was a silver standard... Large silver mines discovered, more silver enters the system, causing silver to be worth less.
     
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  5. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Finding silver deposits arent the same as printing dollars. In a fiat system inflation IS money printing.
    Youre comparing apples to oranges.
     
  6. leo25

    leo25 Well-Known Member Silver Stacker

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    Inflation is inflation, being more of it. You made a blanket statement that inflation can only happen with fiat. What you should have said is more excessive inflation can happen with fiat.
     
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  7. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Yes much more excessive and a different type. One is natural and gained by producing and expending labor, the other is debt.
     
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  8. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Finding a big gold deposit under a free market system has the benefit to enrichen an entire country.
    Creating inflation by printing debt from thin air doesnt enrichen anyone except the holders of the debt.
     
  9. leo25

    leo25 Well-Known Member Silver Stacker

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    Please explain the full mechanics how finding a heap of inert metal magically enriches a country?

    Also your point seems to be more focused on a free market system rather than a gold currency system. For example China could have a gold backed currency, but it will also nationalise their mines and thus continue to concentrate the wealth.

    Like the saying "it's not the size, but how you use it". The same can be said for a economic system, it's not what you use, but how you use it.
     
    Last edited: Jul 3, 2020
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  10. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    https://fee.org/resources/the-fallacy-of-money-is-wealth/
     
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  11. Lovey80

    Lovey80 Well-Known Member

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    The RBA owns 7% of the Australian bond market. The 2018/2019 deficit was down to less than 1bn. With big deficits expected this financial year and next coming out of Corona. The vast vast majority of the budgets are coming from taxes and what isn’t coming from taxes is more than 90% private money buying those bonds.

    If we could put in place mechanisms to ensure all this printed money wasn’t going to artificially inflate house prices and other asset classes such as shares, I wouldn’t have so much a problem with it.
     
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  12. Lovey80

    Lovey80 Well-Known Member

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    I think where Johnny misses the point is. In past times when gold and silver were brakes on the currency in circulation. Nations or even at a more micro level-areas became rich not through finding of deposits (though that helped temporarily as they could use that metal to trade for other goods and services). It was through economically efficient activities. If you were producing products that were better or cheaper than other places, the wealth flowed in that direction. It’s why we heard the stories about the man selling the picks and shovels to the miners was the one that made most of the money in a gold rush.

    But even in the absence of a gold rush. When a nation became productive the gold flowed towards them and created inflation. Prices went up, and with it wages. Making that nation or area less productive in comparative terms. Innovation and efficiencies were required to keep the gold from flowing back out again. We saw less severe bubbles and busts unless a bank over-did the fractional lending and the inflation was self correcting.

    Now we have multiple generations of economists, 99% of whom now all falsely believe they have the smarts to manipulate the economy through manipulation of the money supply. When has this ever not come to a disaster?
     
  13. leo25

    leo25 Well-Known Member Silver Stacker

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    Most central banks work as one system, so i should have just generalised and said central banks in general allow governments to spend (and for banks to increase debt). Central banks play shell games to make it look as if they are not directly adding money/credit into the system, so they indirectly buy government debt using "private" companies. Also central banks from country X will buy government debt from country Y and so on.

    Anywho you can be 100% sure if taxation dropped to $0 tomorrow, governments will have no issue spending at the same rate plus more.
     
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  14. Davros10

    Davros10 Well-Known Member Silver Stacker

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    https://dai.ly/x6i2tfp

    Andrew Marr's History of the World. Interesting story from about the 33.30 minute mark telling of the affect Mansa Musa's sharing of his huge wealth had on the economy of Cairo, which at the time was the world's largest gold market.
     
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  15. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    I was only comparing different types of inflation haha. Not too confusing I didnt think.
     
  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    How heavy do you reckon one of those gold sceptres would weigh? 6, 8kg? Fuck carrying them.
     
  17. Davros10

    Davros10 Well-Known Member Silver Stacker

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    I still wouldn't have been as keen to hand them over as Musa seemed to be.
     
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  18. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    One of my concerns around gold is the effect on the market when central banks start selling off their stashes.

    I think there’ll always be private and institutional demand, but CBs don’t need to buy, nor hold the stuff.
     
  19. leo25

    leo25 Well-Known Member Silver Stacker

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    I'm doubt they will ever get rid of their gold. Even though central banks work together, doesn't mean there isn't mistrust between them. And for that reason they will always want to have a plan B. You can't remove basic human nature.
     
    Last edited: Jul 4, 2020
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  20. 66rounds

    66rounds Well-Known Member Silver Stacker

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    If I'm not mistaken he made a return journey with a caravan of goods and attempted to trade the market back into productivity by removing as much gold as he could and returning home with it.
     

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