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View Diary: U.S. offers Ukraine loan guarantees and technical assistance (191 comments)

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  •  You realize that just printing money... (0+ / 0-)

    causes inflation, right?

    I realze you are oversimplifying to be brief and understandable, put printing more money than the economy (and for reserve currencies of which the dollar is king, foreign demand requires) leads to runaway inflation. Ask Zimbabwe. Or Argentina, Turkey or Brazil. Or the Weimar Republic. Higher inflation means higher interest rates, and so less borrowing, which hurts investment, both by individuals (principally in homes and in the U.S also education) and businesses. That means less jobs. Guess what the 1% won't be the ones out of work.

    On top of that the dollar is the dominant reserve currency. This effectively provides a subsidy to the US paid for by everyone who holds or uses dollars. And they hold and uses those dollars in the expectation that they will keep their value. If that is no longer the case, they will get rid of their dollars, which would worsen inflation further and reverse the subsidy. Britain abused the role the pound had as a reserve currency last century, and it cost them.

    So, 'creating dollars out of thin air' is basically true, but it only works if you don't abuse the trust people have in the currency, i.e. overdo it.

    I ride the wild horse .

    by BelgianBastard on Tue Mar 04, 2014 at 08:23:14 AM PST

    [ Parent ]

    •  Then why don't we have runaway inflation (3+ / 0-)
      Recommended by:
      corvo, River Rover, Involuntary Exile

      Because rinting money is pretty much what quantative easing was. When you look at the ballooning size of our debt that's all money. If what we've done so far isn't over doiing it then I don't know what it will take. Essentially the dollar is fine because everyone in the world needs it to be fine.

      If knowledge is power and power corrupts, does that mean that knowledge corrupts?

      by AoT on Tue Mar 04, 2014 at 08:34:54 AM PST

      [ Parent ]

      •   Because: (0+ / 0-)

        A) Deflation + Inflation = 0, a bit more inflation = +whatever.

        B) The world was terrified and hungry for dollars. The US and Germany actually borrowed at negative interest rates for a while. In laymans terms people paid the US to borrow their money.

        C) Oh, you don't know? No problem. Read up on Weimar Deutchland or Argentina etc etc.

        D) The dollar is fine because everyone needs it to be fine. Umm what? You think money is a confidence scheme? I think a finance minister in a developing - or formerly developing - country has a job for you.

        I ride the wild horse .

        by BelgianBastard on Tue Mar 04, 2014 at 10:15:02 PM PST

        [ Parent ]

        •  "You think money is a confidence scheme?" (0+ / 0-)

          To some extent yes. If people have confidence in money then said money has value. Certainly, there's more than just confidence, but the dollar retains it's value to a large extent because everyone needs it to, as you point out in point B.

          If knowledge is power and power corrupts, does that mean that knowledge corrupts?

          by AoT on Wed Mar 05, 2014 at 05:53:50 AM PST

          [ Parent ]

    •  So? "Printing more money than... leads" (2+ / 0-)
      Recommended by:
      AoT, Involuntary Exile

      Printing more money than the economy, what?

      More money than the economy can absorb, or use effectively?

      But we have idle resources, so nothing to worry about now.

      Right?

      Since we have unemployment, it's obvious we have too few dollars running about.

      •  One of the key problems that contemporary economic (3+ / 0-)
        Recommended by:
        corvo, katiec, Involuntary Exile

        theory doesn't seem to want to address is the incredible devaluation of labor. Because of automation and industrialization labor value is incredibly low, the demand just isn't there like it used to be. Under capitalism we should expect exactly what we're seeing now, a new descent into mass poverty and a return to the world of big business owning everything.

        One of the things people forget when they call this a return to fuedalism is that the worker was central to the feudal system. Labor was one of the most valuable resources available. That's why the noble class had obligations to the peasant class as well as vice versa. with the current system the ruling class as zero obligation to the working class.

        If knowledge is power and power corrupts, does that mean that knowledge corrupts?

        by AoT on Tue Mar 04, 2014 at 09:41:29 AM PST

        [ Parent ]

        •  Actually, this turns out not to be the case (1+ / 0-)
          Recommended by:
          AoT

          The devaluation of labor was deliberate policy going back to Ronald Reagan, who suckered the Reagan Democrats, northern blue collar workers, into supporting the 1%. It has been the weakening of unions and of financial regulation, and cutting taxes on the rich but not the poor, that allowed stockholders and top management to appropriate all of the gains from rising productivity since the 1980s to themselves, with nothing for workers and lower management. Also Alan Greenspan, the great inflation fighter, treating rising wages as the worst kind of inflation.

          Everything for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.
          Adam Smith, Wealth of Nations

          Back off, man. I'm a logician.—GOPBusters™

          by Mokurai on Tue Mar 04, 2014 at 04:21:13 PM PST

          [ Parent ]

          •  I meant the sort of economic theory (0+ / 0-)

            that claims to help people. Certainly, the devaluation of labor has been an economic policy goal.

            If knowledge is power and power corrupts, does that mean that knowledge corrupts?

            by AoT on Tue Mar 04, 2014 at 04:33:52 PM PST

            [ Parent ]

            •  Ah, you mean the real economists (0+ / 0-)

              like the Keynesians. Stiglitz, Krugman, Sen, and so on. It's easy to find their works, including current columns in prominent newspapers.

              Back off, man. I'm a logician.—GOPBusters™

              by Mokurai on Tue Mar 04, 2014 at 08:00:59 PM PST

              [ Parent ]

              •  I haven't seen any of them (0+ / 0-)

                put forward solutions to the devaluation of labor that is a consumer economy.

                If knowledge is power and power corrupts, does that mean that knowledge corrupts?

                by AoT on Wed Mar 05, 2014 at 05:51:16 AM PST

                [ Parent ]

                •  It goes back to Adam Smith (0+ / 0-)
                  Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.
                  The whole point of The Wealth of Nations is that wealth is not money, but the ability to produce what is needed, and get it to those who need it. This is not at all the notion of the consumer society organized to maximize corporate profit by spending on things that nobody actually needs.

                  What this country needs most in order to address the devaluation of labor is a good labor shortage, which is only possible with full employment, which is only possible with a serious jobs/infrastructure/education stimulus investment program. So we are back to Keynes.

                  Stimulus is only possible when we can overcome the obstructionism of the austerians, which means the filibuster on legislation in the Senate; the blue slip veto of judicial nominations to Federal courts in Red states; the gerrymanders of House districts and state legislatures; and the frequent Conservative majority on the Supreme Court. We know how to do all of those things, since there is a Progressive majority in this country, measured by positions on the issues, not by party identification.

                  What is missing on the Left is organized intensity. If we all voted all the time, our current logjam would be over. Well, we know how to do GOTV too. And some of us are on that in a way that Democrats have long failed to do.

                  Back off, man. I'm a logician.—GOPBusters™

                  by Mokurai on Wed Mar 05, 2014 at 07:10:14 AM PST

                  [ Parent ]

                  •  That is not what is meant by a consumer economy (0+ / 0-)

                    and you know it.

                    The stimulus based economic "solutions" are based on an infinite growth model that is fine short term but will kill us all in the medium to long term. Keynes will kill us just as sure as the Neocons.

                    If knowledge is power and power corrupts, does that mean that knowledge corrupts?

                    by AoT on Wed Mar 05, 2014 at 07:13:41 AM PST

                    [ Parent ]

                    •  Ah, no wonder you can't find economic solutions (0+ / 0-)

                      You don't believe in economics. No, I was not suggesting permanent stimulus. But never mind.

                      Back off, man. I'm a logician.—GOPBusters™

                      by Mokurai on Wed Mar 05, 2014 at 08:47:30 AM PST

                      [ Parent ]

                      •  I don't believe in Capitalism (0+ / 0-)

                        Because capitalism is an unsustainable system built of oppression, slavery, and genocide.

                        And if not permanent stimulus, then what were you suggesting? Because Keynes suggests stimulus every time the economy falls into a recession or depression, and that is inevitably going to happen, which means that there will always be another stimulus down the road, be it a year, or a decade, or two decades. Keynesian economics requires growth just like every other capitalist economics.

                        If knowledge is power and power corrupts, does that mean that knowledge corrupts?

                        by AoT on Wed Mar 05, 2014 at 09:04:12 AM PST

                        [ Parent ]

                        •  Not the case (0+ / 0-)

                          Proper economics would prevent asset bubbles, which were long thought to be part of an inevitable "business cycle". If we pop bubbles before they get out of hand, or better still prevent them from starting, then we only need one, count it, one stimulus to get out of this, the last crash-induced recession.

                          I have a plan for an Unbalanced Budget Amendment to do precisely that.

                          I also have an outline of a plan for a sustainable Buddhist economics.

                          But you have so far dismissed everything I have suggested, which suggests to me only that you are not listening and don't care about anything but your preconceptions.

                          Back off, man. I'm a logician.—GOPBusters™

                          by Mokurai on Wed Mar 05, 2014 at 05:59:09 PM PST

                          [ Parent ]

        •  Not true, not true at all (0+ / 0-)

          Go to any - any - traditional economy and labor is worth much less.

          For a long time the West, including the middle clas, benefitted from the fact that 80% or more of the world's population was cut off from the world ecinomy. India with it's self-sufficiency drive, China with Maoist nonsense, the Soviet Bloc,  Africa under colonialism or barely recovered from it, Latin America with it's own societal problems compounded by ideology abd malevolent influences from outside. Even countries like Spain and Portugal didn't plug into the world economy until the '80's.

          That's not to say that capitalism has no failures. It does. Let's fight to correct them. In Europe, in North America and everywhere else.

          But if you are just going to condemn capitalism, fine, I'll hear you out, but tell me what we should do, not just what's wrong. I want to hear an alternative.

          PS. REAL communism was never tried is not going to fly.

          I ride the wild horse .

          by BelgianBastard on Tue Mar 04, 2014 at 11:31:08 PM PST

          [ Parent ]

      •  No. Idle resources do not indicate printing money. (0+ / 0-)

        Quite the contrary.

        An expanding economy requrires more paper money and coins.

        Idle economies need deficit spending by government. That's my opinion, but that of Paul Krugman too.

        Anyway, back to your post: Simplified there are categories of money M0(zero) to M3.

        M0 is basically cash: bills and coins. You need enough to let an economy function. You may laugh, but there are quite a few places where you get say sweets instead of coins.  

        M1 is M0  + immediatedly accessible bank deposits. An example: a current account would be M1 but not M0.

        M2 is M1  + deposit that would generally require a slight delay. Example: A savings account.

        M3 is M2 +  longer/larger term deposits. Despite what you see in the movies you can't go into a bank and withdraw say $100k cash, even if you have that amount in your account.

        Bank-runs are a problem because, even if there is no real problem, M0 is much smaller than M2 or M3.

        Don't worry, I know you were snarking. Still, someone might read this or google it and learn.

        But seriously, just printing money (M0) has ruined more economies than I can count using my fingers and toes. Don't believe me? Good for you, do a search and read a bit. Then make a joke.

        I ride the wild horse .

        by BelgianBastard on Tue Mar 04, 2014 at 11:09:52 PM PST

        [ Parent ]

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