How severe was that multiple claim to the same dollar idea I was talking about?

[phattonez]

I'll just post a few nice images I've found.

But be wary about this last graph because it does not take inflation into account.

Maybe fractional reserve banking is a problem.

Dr Bernanke or: How I Learned to Stop Worrying and Love the Banks « deflationite.com

 

[Mach]

Fractional banking is a multiplier, it's therefore not *the problem*. In fact, comparing the growth and prosperity of non-fractional vs fractional bank based economy, the pathetically small non-fractional results compared to fractional would lead one to the conclusion that the problem was in fact, that it was not "fractional".

If you're going to strap a ramjet to the top of your car and drive it, I think it's common sense to assume you're going to need to install some new safety features to account for the faster acceleration, the innate danger of a jet heat/noise, and the tremendous velocity you'll find yourself at. Regulating banks appropriately is common sense.

Only a Libertarian or Republican would suggest it's their right to right to drive that ramjet through the school crossing where your kids are without any changes whatsoever because, you know, those changes limit their individual freedoms. As they spill their coffee, instead of hitting one kid, they wipe out 25 and explode in a fireball on the nearby parked school bus for another 42 dead and wounded. But boy was it free and liberating to ride around without extra precautions. YEeeeeeeehhhhhhawwww!!!!

Look at it this way.
A> Bob from his house can run a $5M business in his spare time. But he's got a lot of legal regulations to ensure he meets as a runs his business.
B> Tom 100 years ago with similar lot in life, was making horseshoes, aside from a small tax there were basically no regulations.

Some people think Bob is doing more with his life, liberty, and prosperity.
Some really do think Tom is the guy that's more free.

What's it gonna be. Smithy with **** in the streets, death to plagues, and life expectancy for 40 - but hey, you can smoke in the pub?

 

[phattonez]

Fractional banking is a multiplier, it's therefore not *the problem*. In fact, comparing the growth and prosperity of non-fractional vs fractional bank based economy, the pathetically small non-fractional results compared to fractional would lead one to the conclusion that the problem was in fact, that it was not "fractional".

And where are these results and you can you compare results where only fractional-reserve banking was the difference?

If you're going to strap a ramjet to the top of your car and drive it, I think it's common sense to assume you're going to need to install some new safety features to account for the faster acceleration, the innate danger of a jet heat/noise, and the tremendous velocity you'll find yourself at. Regulating banks appropriately is common sense.

Easy libertarian response: what land owner would allow you to do that on their land?

Only a Libertarian or Republican would suggest it's their right to right to drive that ramjet through the school crossing where your kids are without any changes whatsoever because, you know, those changes limit their individual freedoms. As they spill their coffee, instead of hitting one kid, they wipe out 25 and explode in a fireball on the nearby parked school bus for another 42 dead and wounded. But boy was it free and liberating to ride around without extra precautions. YEeeeeeeehhhhhhawwww!!!!

Again, no property owner, especially one with kids crossing their land, would allow me to do that.

Look at it this way.
A> Bob from his house can run a $5M business in his spare time. But he's got a lot of legal regulations to ensure he meets as a runs his business.
B> Tom 100 years ago with similar lot in life, was making horseshoes, aside from a small tax there were basically no regulations.

Some people think Bob is doing more with his life, liberty, and prosperity.
Some really do think Tom is the guy that's more free.

What's it gonna be. Smithy with **** in the streets, death to plagues, and life expectancy for 40 - but hey, you can smoke in the pub?

What a terrible argument. Going back to the rules and regulations of that time period does not mean that we regress to the level of technological innovation of that time period. Come on, you can do better than that.

 

[Mach]

And where are these results and you can you compare results where only fractional-reserve banking was the difference?

I thought it was just math. It's a what...3-4x multiplier (Depending on reserve %)?

Over time, that's simply going to build a bigger economy, faster...as long as the economy is a relatively good economy. If it were entirely corrupt for example, that would indeed be detrimental. So the question is, if you ensure a relatively good economy, more (to a point), is just going to be better. You'd have to show that a modern economy cannot effectively utilize 4x the money...gonna be tough. But worse, if you allow no regulation, the chances that it CANNOT utilize 4x the money efficiently goes up (as did the risks of riding a car with a jet on the roof). Any such economic plan is self defeating.

Easy libertarian response: what land owner would allow you to do that on their land?

So now to go to work I have to identify the rules and regulations required by each individual landowner of the patchwork of land owners that own the land from point A to point B? Shoot me now because that's certainly not my idea of freedom. Good gods. Maybe they will each charge tolls too. One was an environmental nut and only allows vehicles over a certain MPG. Your easy response is easily reduced to absurdity. You know how long it takes to get thigns patched through just from the house, to senate, to exec? Let's make it 30 power players that have ZERO accountability to the public. You really think anything approaching a practical system could emerge?

Again, no property owner, especially one with kids crossing their land, would allow me to do that.

Sure, they wouldn't allow it because it's absurd to allow it (and see above).

So logically if it's absurd for an individual to not allow it, it's absurd for a public/government to not allow it. So why precisely are you against government regulation (not allowing it) against absurd, harmful, behavior?

What a terrible argument. Going back to the rules and regulations of that time period does not mean that we regress to the level of technological innovation of that time period. Come on, you can do better than that.

Over time, it does. I'm skipping ahead, here's what happens.

EconomyA is funded with 1x money, a relatively good economy.
EconomyB is funded with 4x money supply, a relatively good economy.

Compound that additional funding (and loses), over time, all the additional innovations B takes part in, the cumulative effect of innovations over time (I.e. electricity leading to telecommunications leading to the internet, or vacuum tubes leading to practical computers leading to semiconductors leading to PCs on every desk, etc>), the faster global market share you accumulate, etc. The entire economic growth potential realized at roughly 4x the horsepower.

Do that over 50 years, or a hundred years (we are talking about long term economic ideal policy right?).

Without a doubt, the boostrapped economyA will be further behind in technology and wealth than economyB at the SAME time on the graph. And what if China adopts economyB and we adoptA?

Economic prosperity is essential to freedom when competition exists. I mean, the Amish have their economyA and it runs fine. But they live at the mercy of economyB, lucky for them, we've currently got plenty of land and compassion, and the largest military in the known universe.

 

[phattonez]

I thought it was just math. It's a what...3-4x multiplier (Depending on reserve %)?

Over time, that's simply going to build a bigger economy, faster...as long as the economy is a relatively good economy. If it were entirely corrupt for example, that would indeed be detrimental. So the question is, if you ensure a relatively good economy, more (to a point), is just going to be better. You'd have to show that a modern economy cannot effectively utilize 4x the money...gonna be tough. But worse, if you allow no regulation, the chances that it CANNOT utilize 4x the money efficiently goes up (as did the risks of riding a car with a jet on the roof). Any such economic plan is self defeating.

That's just a bubble and the inflation (multiple claims to the same dollar) eventually has to be realized and the system will defeat itself. Have you heard of the term malinvestment?

So now to go to work I have to identify the rules and regulations required by each individual landowner of the patchwork of land owners that own the land from point A to point B? Shoot me now because that's certainly not my idea of freedom. Good gods. Maybe they will each charge tolls too. One was an environmental nut and only allows vehicles over a certain MPG. Your easy response is easily reduced to absurdity. You know how long it takes to get thigns patched through just from the house, to senate, to exec? Let's make it 30 power players that have ZERO accountability to the public. You really think anything approaching a practical system could emerge?

Companies wouldn't buy strips of land to build roads on? You think you would have to go through umpteen pacels of land to get to work? Seriously?

Sure, they wouldn't allow it because it's absurd to allow it (and see above).

So logically if it's absurd for an individual to not allow it, it's absurd for a public/government to not allow it. So why precisely are you against government regulation (not allowing it) against absurd, harmful, behavior?

Because it goes too far and they have no way of knowing which regulations are successful and which are too burdensome.

Over time, it does. I'm skipping ahead, here's what happens.

EconomyA is funded with 1x money, a relatively good economy.
EconomyB is funded with 4x money supply, a relatively good economy.

Compound that additional funding (and loses), over time, all the additional innovations B takes part in, the cumulative effect of innovations over time (I.e. electricity leading to telecommunications leading to the internet, or vacuum tubes leading to practical computers leading to semiconductors leading to PCs on every desk, etc>), the faster global market share you accumulate, etc. The entire economic growth potential realized at roughly 4x the horsepower.

Do that over 50 years, or a hundred years (we are talking about long term economic ideal policy right?).

Without a doubt, the boostrapped economyA will be further behind in technology and wealth than economyB at the SAME time on the graph. And what if China adopts economyB and we adoptA?

Economic prosperity is essential to freedom when competition exists. I mean, the Amish have their economyA and it runs fine. But they live at the mercy of economyB, lucky for them, we've currently got plenty of land and compassion, and the largest military in the known universe.

Except that's just a bubble. Why don't we just allow banks to create their own money, then we'd grow rich even faster. Surely there must be a problem, right?

 

[Lord Tammerlain]

Companies wouldn't buy strips of land to build roads on? You think you would have to go through umpteen pacels of land to get to work? Seriously?

They might try, but being able to buy the land that would make a toll road profitable could be very difficult. They could have an easy time buying the majority of the land required only to have the final few landowners jack up the price or refuse to sell at any price. Making all the land bought before useless as a toll road. The risks involved in building toll roads are very high without government assistance regarding guarantees and purchase of land (emminient domain).

 

[Missed AB]

That's just a bubble and the inflation (multiple claims to the same dollar) eventually has to be realized and the system will defeat itself. Have you heard of the term malinvestment?

Malinvestement has to do with depreciating assets. It has to do with the difference between net and gross assets. It has to do with the government inflating the economy to a point of unsustainablity.

For example, a government may attempt to stimulate the economy with public works projects. When the government stops the public works projects, that is the end of the job. The workers are now the unemployed. It then cost lets say 20B to build some bridges, roads, and a toll plaza. What is the upkeep on the road, bridge, and plaza and the employee cost to keep it operational? How much money does the toll plaza bring in? If it looses money, and the bridge cannot be sustained by the income from the toll plaza, that is the malivestement. The bad investment. The failed concept. The depreciating asset.

 

[phattonez]

They might try, but being able to buy the land that would make a toll road profitable could be very difficult. They could have an easy time buying the majority of the land required only to have the final few landowners jack up the price or refuse to sell at any price. Making all the land bought before useless as a toll road. The risks involved in building toll roads are very high without government assistance regarding guarantees and purchase of land (emminient domain).

I guess you would create a contract whereby you offer a contract that the company can go back on at any time before construction starts or a certain date approaches, something like that. Basically, the family would continue to live in the home even though they are under contract to sell at a certain price if the company wants it. If the situation you talked about occurred, then the company would not have to buy the house and the only money they would have lost would have been in legal fees and any engineering that was done. Not too big of a deal. Was that clear?

 

[phattonez]

Malinvestement has to do with depreciating assets. It has to do with the difference between net and gross assets. It has to do with the government inflating the economy to a point of unsustainablity.

For example, a government may attempt to stimulate the economy with public works projects. When the government stops the public works projects, that is the end of the job. The workers are now the unemployed. It then cost lets say 20B to build some bridges, roads, and a toll plaza. What is the upkeep on the road, bridge, and plaza and the employee cost to keep it operational? How much money does the toll plaza bring in? If it looses money, and the bridge cannot be sustained by the income from the toll plaza, that is the malivestement. The bad investment. The failed concept. The depreciating asset.

It is not just a depreciating asset. People make bad investments all the time, but there's not malinvestments. Malinvestment has a specific definition among Austrian economists.

Malinvestment is a concept developed by the Austrian School, a non-mainstream school of economic thought, that refers to investments of firms being badly allocated due to what they assert to be an artificially low cost of credit and an unsustainable increase in money supply, often blamed on a central bank.

Malinvestment - Wikipedia, the free encyclopedia

That bit about monetary inflation is what differentiates malinvestments from the more general bad investment.

 

[Lord Tammerlain]

I guess you would create a contract whereby you offer a contract that the company can go back on at any time before construction starts or a certain date approaches, something like that. Basically, the family would continue to live in the home even though they are under contract to sell at a certain price if the company wants it. If the situation you talked about occurred, then the company would not have to buy the house and the only money they would have lost would have been in legal fees and any engineering that was done. Not too big of a deal. Was that clear?

That could work for some properties and some potential sellers, not all of course would want to be legally tied to a contract that could prevent them from selling their house to someone else. So in a quite a few cases it would have to actually purchase the property it wanted and not just offer a potential sale if things turn out ok. Most likely it would have to offer incentives to make such a contract acceptable to potential sellers. I know I would not put my house up for a potential sale 12 months down the road and the uncertainty that would cause, should I look for another house to live in, or not, what if I find the perfect house and put a bid on it expecting the company to purchase mine only for them to back out.

It is a good plan but has a large number of issues with it that would not make it work much better

 

[phattonez]

That could work for some properties and some potential sellers, not all of course would want to be legally tied to a contract that could prevent them from selling their house to someone else.

Hence time limits.

So in a quite a few cases it would have to actually purchase the property it wanted and not just offer a potential sale if things turn out ok. Most likely it would have to offer incentives to make such a contract acceptable to potential sellers. I know I would not put my house up for a potential sale 12 months down the road and the uncertainty that would cause, should I look for another house to live in, or not, what if I find the perfect house and put a bid on it expecting the company to purchase mine only for them to back out.

It is a good plan but has a large number of issues with it that would not make it work much better

I haven't seen a good criticism of it though. If there'a time limit, then what's the problem?