Maria Thomas48, you’ve laid out this completely useless, ill-defined imaginary framework that bears absolutely zero resemblance to how life actually works. You’ve essentially just conjured up a group of people obsessed with hoarding cash and then... you stopped there. And honestly, what am I even supposed to say to that—aside from noting that I don't have the patience for these kinds of childish fantasies? 🤷
Regardless, in this little system you've dreamed up, everyone can just save money by pulling currency out of the market. But let's be real—they can't do that forever. I don't mean to burst your bubble, but I have to point it out: people aren't immortal. And Santa Claus isn't real either.
The average salary here in America is $1.75, while the primary money supply sits at over $60 billion. Anyone could theoretically tuck away $10 every single month. But honestly, does that even matter? What is this thought experiment actually supposed to prove? 🤷 Not with the reality of things, certainly not. It seems to me you’re just fascinated by this accounting identity—this idea that savings and investment are two sides of the same coin. But look, for someone to invest, someone else has to save. One group saves, while the other invests. To have saving at all, you actually need—well, you need two parties. Saving is essentially just a transfer of consumption from the saver to the debtor. There isn't anything controversial about that.
I honestly don't see what's so difficult about this problem. If everyone just puts $10 into their savings account every month, then at the end of the year, everyone ends up with $120 in their accounts. Can we please move on to something actually challenging?
But seriously, why on earth would anyone bother trying to save a single dollar a day? 🤷
Just take a quick look at the history of hyperinflation and everything becomes crystal clear. There isn’t much mystery left once you peel back the layers. Keynesianism has failed in practice more times than I can count—so why should this time be any different? But people have an insatiable appetite for a free lunch, and there’s always some politician or economist ready to serve it up. It’s like those "miracle cures" for arthritis—everyone knows they’re snake oil, yet people keep lining up to buy them anyway. As for those equations of yours, I really have no interest in wasting my time debating meaningless, misinterpreted accounting identities. 😉
Comparing a legitimate scientific paper—one actually grounded in historical facts and hard data—to nothing more than mindless blathering that offers zero substance beyond empty rhetoric is frankly ridiculous. It isn’t even worth a response. Jerome Powell seems to be nursing political ambitions now, peddling all those "milk and honey" promises to anyone listening. It’s just cheap, bottom-tier populism.
Maria Thomas48 said:I'm not sure how much everyone here knows about this, but hyperinflation—the kind that hits when a government starts printing money like there's no tomorrow—is tied directly to the simultaneous expansion of credit. Basically, if you could actually decouple the creation of money from the lending process, we wouldn't be seeing hyperinflationary spikes. For it to truly spiral, the state would have to go completely overboard with the actual printing. That’s why the whole process needs to be handled by science, not just politicians making calls based on whatever is convenient for them.
I was reading through this thread about the gold standard, and I’ve been thinking. It seems like some people here would favor it just because it rewards savers—since money actually gains value over time—but that also ends up killing any incentive for investors to take risks. You kind of need to find a middle ground somewhere. Maybe we could allow for credit expansion for a while, and then once the debt starts piling up too high, trigger a return to the gold standard to stabilize things? Just loop it like that. A cycle to keep the economy steady.
Haha, that’s exactly how they’d manage to get rid of all the gold. Honestly, that’s pretty much why the gold standard collapsed in the first place.
Actually, no. Hyperinflation hits when the government starts printing non-credit money—basically just monetizing its own debt to plug a massive deficit. Inflation is a monetary phenomenon, sure, but hyperinflation? That’s a purely political one. 🧐
Jesse Sullivan2 said:It’s funny how "crises" always seem to leave certain people even richer than they were before. And honestly, looking at how the Roman Empire started falling apart because of their own economic choices compared to the crashes we've seen in America over the last century... man, you start to think there's always someone pulling the strings behind the scenes 😁
Like what was said above, America isn't going to just wiggle its way out of this current financial mess. We're all too deeply entrenched in this system, and honestly, the rest of the world is too. The only way things actually change is if the entire American public wakes up and shifts their mindset completely.
A staggering amount of wealth was wiped out during this crisis, yet even the ultra-wealthy aren't significantly poorer than they were before everything went south. It’s an undeniable truth that someone profits from every crisis, just as they do during any period of economic expansion. However, one should observe that it was precisely the expansive monetary policy that preserved the wealth of the top tier—whose fortunes had nearly been cut in half at the onset of the crash. If they hadn't resorted to printing money, the wealth of those elites would be substantially lower today, and the wealth gap would have narrowed.
When you crunch all the numbers and look at the big picture, wealth was lost in this crisis.
Investing requires savings—whether those are your own hard-earned dollars or someone else’s. You can't skip the saving phase if you want to play the game; you have to build capital before you can deploy it. And let's be honest, if you aren't actively investing that capital, you aren't seeing any real returns. It's simple math: when the general public starts ramping up their savings, interest rates inevitably drop—which, in turn, turns previously stagnant investments into profitable ventures. Just sitting on a pile of cash isn't a strategy; it's just stagnation. To actually see a return, you have to put that money into a bank, where the bank then lends it out to others. Even if you decide to stash your cash under a mattress—which, frankly, is just another way of participating—you are essentially increasing the real purchasing power of everyone else holding money. Eventually, falling prices trigger a surge in investment.
If you look back at almost any major crisis in history—from the fall of the Roman Empire right up to our modern era—you’ll notice a pattern: they are almost always preceded by massive monetary expansion. Without stable monetary aggregates, you simply don't get sustainable growth. In a functional system, money is earned the honest way—through hard work, actual sweat, and a constant drive to improve production. That is how a system should reward the productive members of society. These endless printing tactics? They have always, without fail, led the world straight into a crisis.
Increasing savings is essentially the same thing as boosting investment—they’re two sides of the same coin. You can't argue that ramping up savings somehow stifles investment; if anything, it’s the exact opposite. When people save more, there’s more capital available to fuel investment. Furthermore, in a deflationary environment, nominal interest rates tend to drop, and you see companies moving away from heavy debt—instead, they lean much more heavily on retained earnings to fund their growth (especially since falling prices naturally drag down operating costs as well).
So, you’ve concluded that a country's size isn't the issue—provided it actually runs efficiently. And you're basing that entire premise on some preliminary data. Personally, I don't need a spreadsheet to see that. Then you pivot, arguing that scale *is* an issue because you're seeing economic growth dip as countries get larger. My point remains unchanged: that specific claim of yours still holds water. What you’re actually measuring is how inefficient nations—and let's be honest, aren't they all somewhat inefficient?—drag down economic growth. You also seem a bit tripped up by the empirical fact that the curve representing the relationship between state size and growth isn't a strictly monotonic decline. That’s hardly a mystery, is it? In fact, I think it's already been explained elsewhere. 😬 And you're certainly never going to calculate that percentage. That much is certain.
brightlynx11 said:It’s definitely an issue, though. Plenty of research shows the ideal state size sits around 17% of GDP, which is a far cry from the average in the EU-USA where the government takes up about 35-40%. My point is that shrinking the government isn't easy—it requires shifting social preferences. People aren't going to vote for a party promising to cut their benefits just because they want to preserve what they already have. Libertarians in the US could dump endless money into campaigns, but they still won't win elections or shape economic policy. Don't get me wrong, I'm all for a prudential, minimal state. 🙂
Nobody is comparing the state to the market here; we're comparing different states. 😛
I'm pretty sure Andrew Booth29 mentioned somewhere that the government basically stepped in to play the role children used to fill...
That metric isn't made up; I actually use it. It’s called perform Envelopment analysis. My bad, maybe I should have said "relatively efficient." 🙂
The real issue here is that your entire premise simply doesn't hold water. States don't function optimally. Period. If they actually did, we wouldn't even be having this debate—you wouldn't need a white paper to tell you that. What you've actually gathered from your research is just a confirmation that states are objectively worse than markets when it comes to allocating capital and managing other trivialities.
... I believe Andrew Booth29 was even discussing at some point how the state has essentially stepped in to take over the role once held by children... ...
Exactly. Children have been subsidized and effectively turned into state property. They've become a public good, and as a result—Tragedy of the commons.
brightlynx11 said:If voters consistently pick parties that don't touch the size of the state, that's a social preference. If people want free college, healthcare, and everything else the welfare state provides, then the real challenge is figuring out how to pay for it. Look at Sweden—they have a massive state, but they make it work by being efficient and forcing market principles in other sectors to balance things out.
What choice does America actually have? Either slash spending—meaning cutting citizen benefits, slashing public sector wages, auditing procurement, etc.—or maintain current spending levels while boosting efficiency. Either way, shrinking the state doesn't guarantee you'll actually get more efficiency out of it.
Look, for twenty years, the same parties have held power in America by either maintaining or expanding social rights. It’s logical to say a large state is a social preference here. That's not some academic theory; it's just reality. Anyone in America running on a platform of cuts isn't winning an election. You'll always have one libertarian for every hundred socialists. 😁
And that brings us to the big question: how do you change social preferences? Through incentives—and not necessarily cash ones. Video: http://www.youtube.com/watch?v=3ELnyoso6vI Behavioral economics. 🙂
Libertarians in America can only take power if social preferences shift or through a revolution. Honestly, I'd bet on the second one. 😂
DISCLAIMER: My personal take is that if the state is inefficient, it's better not to crack down on the shadow economy—let people dodge taxes as much as possible if that money isn't being used for anything smart anyway. That income will eventually surface somewhere as effective demand. 😁
What I was actually trying to get at is this: if a government can honestly and efficiently deliver what its citizens actually want, then the sheer size of the state isn't the issue. Period.😁
brightlynx11 said:America is basically a welfare state. Total social safety net vibes.
Well, they kind of are. Derivatives evolved way too fast for any legislature to keep up, and you'd need global oversight to actually fix it. That's just too massive a logistical nightmare to pull off.
Heh, derivatives were mostly built by physicists. In theoryBlack-Scholes works fine. It's not about learning how to run the model; it's knowing when the model is garbage, which happens more often than those physicists realized. They were throwing Monte-Carlo simulations at things they shouldn't have. Result? Total failure in risk assessment.
In America, people struggle with basic grammar, let alone economics. I saw a segment on a news show where they asked 100 people what an interest rate is, and only two of them knew. Yet, 40% of them were carrying debt... wtf
I'm actually grinding on a project right now with some guys from IJF focused on this exact thing: finding the sweet spot for government size, efficiency, and how much it actually drives growth. Looking at the early data, I don't think the issue is how big the state is—people vote for the size they want, so a welfare state is just a social preference. The real killer is efficiency. If people want free education, fine, the government should provide it, but they need to do it without wasting everything. The problem here is that the inputs required to produce public goods are massive compared to the pathetic outputs we get. For instance, looking at the Global Competitiveness report, it claims America has a high quality of education in science and Math, yet our PISA math scores are absolute garbage. What's the reality? This country can produce one world-class mathematician in a million, but on average, it's failing to teach its kids basic math.
Are you seriously telling me that you need actual results—and preliminary ones at that—to conclude that if a state efficiently delivers what its citizens demand, there is no issue with the size of the state? 🤣 I suspect Keynesianism might be getting the better of you. ☕
Nicole Gomez38 said:Are you really one of those people trying to convince others that foreign-currency loans are a good idea? Why don't you mention the massive economic fallout of pegging a domestic currency to a foreign one—basically turning the central bank into nothing more than a glorified money changer—for the US Economy?
The US started rolling out this model back in 1991, and it took just ten years before everything hit the fan and they had to ditch it entirely in 2001. Beyond just having an impossibly huge external debt, there are plenty of other nasty side effects to this kind of monetary setup:
1. Unemployment skyrocketing (jumping from 6.1% in '91 to 15% by 2000) 2. Poverty rates climbing (simply because the economy is falling apart) 3. Stagflation (where prices for goods and services climb while wages drop and unemployment rises) 4. Domestic profitable industries being sold off to foreign corporations—who then lay off local workers and bleed all the profits out of the country 5. Foreign banks keeping local citizens trapped in a cycle of debt slavery
Why won't you admit that an economic meltdown and unmanageable external debt are the inevitable results of this type of monetary policy? This model was doomed to fail eventually because, frankly, it was unsustainable in the long run.
God forbid I actually hold most of those views—if I even hold any at all. It was just interesting to watch you gloss over certain facts without even a second thought. 😉
Nicole Gomez38 said:Douglas Reed3 is just a pawn for the establishment. As long as we stay tethered to the Euro—meaning the Federal Reserve essentially acts as nothing more than a glorified currency exchange—getting rid of the currency clause is an impossible dream. That clause isn't the root cause; it’s merely a symptom. If you want real change, you have to fight to overhaul the entire monetary model, because one simply won't work without the other. Douglas will try to convince you they're unrelated, but anyone with half a brain can see the connection.
"America needs to 'detach' itself from the Euro before it ends up just like Argentina!"
It’s good that you caught on to the fact that the Democratic Party is playing for the system (the banks)—they're firmly against abolishing the currency clause. And the Republican Party? They're the same way.
We also need to remember that Argentina actually had a banking system that was incredibly stable, well-capitalized, and utilized solid risk management—even while weathering significant recessions. Their collapse didn't happen because of market forces alone; it happened the moment the government scrapped the currency clause and forcibly converted loans and deposits into pesos (and did so using inconsistent exchange rates for different accounts).
Jerry Williams41 said:Anyway, Andrew Booth29, what’s your take on this claim from Pernar regarding libertarians and the monetary system?
Predictable. 🤣
It took me quite a while to truly wrap my head around what Dostoevsky was actually driving at in "Crime and Punishment." I suppose one never really stops learning—as long as they're still breathing. 😁
We might as well just send the police to raid people's homes and seize whatever cash they have stashed under their mattresses. Why bother stopping at the banks? We could just go after the predatory lenders, too—and even kids, teaching them a lesson by emptying their piggy banks.
What on earth? There isn't really a connection there, unless you're implying that both situations amount to theft—but even then, that’s a bit of a stretch for a comparison.
It seems we’ve fallen back into that old habit where tearing someone else's idea apart is much easier than actually coming up with something of our own. It’s funny how the definition of theft changes depending on who is doing the stealing. When it involves direct handouts to the public or residents who have been grinding away to pay off massive loans and crushing interest rates, suddenly it's "generosity." But when a handful of greedy idiots jeopardize the liquidity of the largest banks in the US, forcing the government to bail them out using taxpayer money just to prevent a total collapse? That’s suddenly not considered theft.
Here is a little moral hazard for you, since you seem so hell-bent on chasing it. 😬 How do you prevent people in high-level banking positions from acting purely out of self-interest when they know the government will eventually bail them out if things go south? When there’s a guarantee that the state will step in to cover their tracks, rational decision-making takes a backseat to reckless gambling.
The currency clause needs to be scrapped for all existing loans. Banks aren't even interested in offering new loans tied to the Swiss Franc anymore, and honestly, you have to ask yourself why.
The solution is simple: abolish the currency clause entirely. Declare it unconstitutional and force a full refund of every cent overcharged to debtors. That’s it. Period.
I’m not so sure that’s going to happen, and honestly, the thought of things moving backward like that scares me. If they could at least manage to eliminate variable interest rates on new loans, that would be a massive win to start with. Theoretically, there might be a way to do it—keep the dollar stable against the Euro and then just pull an average from the last several years to set a middle-ground exchange rate for the Swiss Franc. But let’s be real: I don't see the Hub ever agreeing to that. And honestly, it's not like the government has much leverage to force their hand anyway.
Look, property is property, an owner is an owner, and theft is—well, theft. Isn't it?
Since you're so obsessed with it, here's a little moral hazard for you:😬 how do you stop people in key banking positions from acting rationally when they know the government will just bail them out if they screw up because it absolutely has to?
The solution is to ensure the government doesn't bail them out. I honestly don't get why taxpayers would be "extracting" money from banks? If you have a problem with that, go write a letter to your local Congressman. In the US, the situation is actually the exact opposite—it's the banks that are bleeding the government dry.
neondriver5 said:It’s interesting how many people are quick to tear down someone else's methods while refusing to lift a finger themselves. It’s easy to spit on someone else's work; why don't you step up and present your own ideas? Sure, nationalizing banks isn't a realistic option right now. But let's look beyond our borders for a second—that's exactly what happened in the USA a few years back when some of the biggest banks buckled; taxpayers were the ones footing the bill for the bailout. Here, it would be the exact opposite: their profitable operations would just be "transferred" onto the taxpayers.😁 Look, I'm not saying this is the perfect solution, but something has to be done, and there are other ideas being floated here too. On this thread, we could really focus on the issue of the Franc.
A good starting point would be eliminating variable interest rates for new loans, forcing banks to tie the value of X to real economic indicators rather than leaving it to the whim of Bank management, and converting existing loans to a fixed rate based on actual exchange rates. If those things actually happened, it wouldn't cause any absolute losses for the banks; it would simply level the playing field between the lenders and the borrowers. You all seem to forget that behind these banks stands a massive army of lawyers and litigators, while your average Pero Perić just knows his monthly payment is $X and he needs to scrape together a few extra bucks from his pocket to cover the difference. That's pretty much the reality of it.
By that logic, why don't we just send the police to raid people's apartments and seize all the cash they're hiding under their mattresses? Why bother with banks at all? We might as well teach kids some hard lessons by raiding their piggy banks too.
