Don’t suppose we can know how a destiny will function…
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@bufton6 “So you’re actively encouraging the race to the bottom?”
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So tell me why anyone, anyone at all, makes more than the minimum wage? If an employer is not forced to pay one cent more than the legal minimum, why do they do it?
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If you understand that, you also understand why a minimum wage is unnecessary.
@CurtHowland So you’re actively encouraging the race to the bottom? You want no minimum wage in western countries? What about the demand side?
@CurtHowland Money, or a medium of exchange, is always necessary to satisfy the law of double coincidence. The stock market couldn’t function without some medium of exchange.
That said, a medium of exchange needs to be a commodity so that it keeps an objective store of value. Fiat money has no real value only an arbitrary value set by an arbitrary setter of values.
@MoneyIsSilver I’ve always wondered why no one points to the stock and commodity exchanges as examples of trade without using “money”.
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Ok, the stocks and commodities are denominated in currency, but it’s possible to make trades so as to end the day with no monetary change, just shifts in commodities.
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I’ve often used the example of “shares of Microsoft” as a possible private currency, but reality would likely only use dividend-paying stocks due to the “worth something by itself” property.
@captainameridawg “They’d prefer a currency that gains value over time.”
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There are graphs of prices over time, look at the price levels over the course of the 19th century.
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Even the terrible bank panics of 1836, the war of 1861, etc, are minor wobbles in a general decrease in prices as manufacturing, transportation and industry efficiencies increased. Everything simply cost less, so the “value” of commodity money increased.
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Then 1913 and the FED, Inflation! The real Hocky-stick graph!
@blade93ny “Im an accounting major, believe me when i say that accounting for energy is easier than accounting for money. Money is BS, pieces of paper.”
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Ah, there’s your error. You’ve mistaken the social function called “money” with the pieces of paper called “fiat currency”.
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When you realize they are not the same thing, you will understand exactly what Stef was talking about.
@blade93ny “What i meant was that there is one universal common denominator when talking about anything, food, clothing, tech, work (physical activity), stuff in general.”
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Indeed. Historically, people settled on gold.
@Bernd1964 Or “peak oil” is a myth, and the part is not over.
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Have you considered the destructive nature of losing 7/8 of everything you make to government? Have you thought of how much more productive you could be without that being taken?
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Have you thought about how you would invest your money not being wasted on bombs, wars and death?
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Then factor in steady deflation due to increasing productivity without the straight-jacket of regulation.
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I’d say 10% is an easily supported number.
@robfett read Mises-org, examine their archives, see their online books.
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It’s all there for anyone who wants it. The free market is real, it’s the state that requires belief.
@JAROSLAVAGINA “sounds no different than liberal progressivism.”
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Except for the gun to the head that liberal progressivism requires.
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Liberals, the “left”, were those who supported the individual, as opposed to the “right” which supported vested interests, were the “libertarians” of their time prior to their choosing to use the power of the state to enforce their edicts.
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So yeah, it does sound like the “good” part of liberal progressivism. Everyone has something they consider sacred.
@jjrglobal How inventive. I must remember that one.
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Fractional reserve only refers to demand accounts, not time accounts like CDs.
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In those demand accounts is only $20. The rest is loaned out, twice.
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The $190 in “deposits” does not exist. It is a paper entry devoid of reality.
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If either of the depositors in this scenario demands their money, the bank cannot pay them. They are bankrupt. Insolvent.
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And good riddance.
@CurtHowland
No on reserve $20, Deposits totaled $190 Douchebag
@jjrglobal “So thanks”
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Yep, multiples. On deposit in the example above, $20. On loan, $170. So with even just one cycle of 10% fractional reserve, the multiple is 8.5x.
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I’m glad I could help.
@jjrglobal Computers and electronic “cash” have merely made value transfers faster, they haven’t changed the nature of the beast.
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Banks carry balances with each other, as their customers deposit or withdraw, which are periodically cleared through the transfer of funds, be that gold coins, bullion, or “reserves on deposit with the Federal Reserve”.
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I see no reason that the same mechanisms would not work just as well in a completely free market in money, no matter the fiduciary media.
@CurtHowland
I understand the money multiplier and its effects perfectly, thats not what the argument was about. The argument was whether banks loan out multiples of their deposits or a percentage of their deposits and your example above proves my point perfectly. So thanks
@CurtHowland
You’re right, but my point was before computers or electronic cash.
@jjrglobal “in an all cash scenario?”
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Irrelevant. The same mechanism worth in cash or any other media. Let’s assume 10% reserves.
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I deposit $100. $90 is “loaned” and the person paid by that loan deposits that $90. $80 is then “loaned”.
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The bank has on its books $190 in “deposits”, and $170 in “loans”, yet only the $100 is real.
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Repeat that a few times, and you get the 9x multiplier, and why a few bad loans can ruin even the biggest bank.
@jjrglobal “My point is that back in the day before there were computers, there were only cash transactions right?”
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Wrong.
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Checks, lines of credit, etc, existed long before computers.
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What you ignore is contractual obligation. If I sign a contract that says they keep 100% reserve of my account, and they don’t, they are liable.
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If I say “loan it out” so I earn interest, and they do, that is my choice too.
@CurtHowland
you’re not going to address my second post and tell me how a bank could have loaned out more money than it had in an all cash scenario?
@jjrglobal “How long do you think fractional reserve banking has been around?”
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I have no idea when the first banker realized only a small number of people demand their money at the same time.
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However, prior to the moral hazard of the Federal Reserve and FDIC, the occasional bank-run would cause those who practiced fractional reserves to be shown for what they were, and non-fractional reserve banks survived and prospered.
@bufton6 “leaving more unemployment and more low paid here (the west).”
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“Couldn’t be lowered” why? Government interference through minimum wage laws.
@CurtHowland
My point is that back in the day before there were computers, there were only cash transactions right? Lets say a bank just opened in1920, the first customer deposited $1000, the bank cant loan out $10,000, it can loan out $900 and must keep $100 on reserve. The banks didnt have a printing press to create the other $9000. The same is true today. If every loans asset equaled its loan value and you added reserves to the asset value it would equal 100% of their total deposits.
@CurtHowland
How long do you think fractional reserve banking has been around?
@bufton6 “what will keep labour costs down”?
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Nothing will keep them down, and that is why the poor are the real beneficiaries of a free market. Unskilled labor benefits the greatest amount.
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Innovation and capital investment are the only ways to avoid paying “labor”, but that investment requires manufacturing and maintenance itself. Buggy-whip makers simply moved on to even more remunerative jobs dealing with cars, for example.
@jjrglobal Yes, it is a multiple of the deposit, because those loans themselves get deposited and re-loaned out.
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On paper it looks like there is a “reserve”, but that reserve is itself on loan.
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That’s why only a small percentage of bad loans (2008 housing “crisis”) can bring down even the largest banks, because one default means many times the loss of that one loan.