Utah to reinstate Gold as a currency?

[Guy Incognito]

The point being that there will still be buying if price goes down with time (the computer industry is an example of this) because there are time and other (such as emotional) constraints that must be taken into account. This is one of those behavior assumptions in economics I have concerns about, the idea that people are rational and will behave solely on a price/value equation. Sure some simplification is necessary for modelling, but it will always be a simplification.

You're creating a straw man, mega. Nobody says that price/value is taken in a vacuum. Those emotional and intangible factors you are referring to are what creates value in the first place.

Values are not determined rationally. Nobody is arguing that, that is your strawman (a typical strawman, and I think based on a incomplete and superficial understanding of economic theory). Values are determined in an emotional, almost arbitrary process, then acted on accordingly. Thus the big claim of economics is a tautological one, almost a trivial one.

But economics is not, as you seem to think, based on the principle that value is determined by strictly rational factors.

 

[ARealConservative]

Bank runs would be worse without the fractional reserve banking system. It is the "fractional reserve" part that protects us, because of it banks are required to keep a fraction of the deposits in reserves. If we didn't have a reserve banking system then banks would be less likely to withstand any runs. The alternative to a fractional reserve system would be if banks couldn't lend out any short term deposits, which would result in a significant reduction of funds available to lend, which would result is less economic growth.

The fractional reserve banking system is a good thing.

preposterous! the term bank runs implies people taking more out then the bank has on hand. this is only possible under a fractional system. if reserves = 100% of deposits, no amount of bank run would prove problematic.

and I'm not saying fractional reserve lending should be abandoned either

 

[CriticalThought]

Quite a breakthrough in battery technology.....:shock:
sorry, no battery exists that can be used for heating a house, hand warmers maybe.

That would be why I said, "as our technology develops". :roll:

 

[Slartibartfast]

You're creating a straw man, mega. Nobody says that price/value is taken in a vacuum. Those emotional and intangible factors you are referring to are what creates value in the first place.

Values are not determined rationally. Nobody is arguing that, that is your strawman (a typical strawman, and I think based on a incomplete and superficial understanding of economic theory). Values are determined in an emotional, almost arbitrary process, then acted on accordingly. Thus the big claim of economics is a tautological one, almost a trivial one.

But economics is not, as you seem to think, based on the principle that value is determined by strictly rational factors.

Ahh I musunderstood the argument then, my bad.

 

[Guy Incognito]

Ahh I musunderstood the argument then, my bad.

Mega, you're a better man that I. Stay classy

 

[imagep]

preposterous! the term bank runs implies people taking more out then the bank has on hand. this is only possible under a fractional system. if reserves = 100% of deposits, no amount of bank run would prove problematic.

and I'm not saying fractional reserve lending should be abandoned either

If reserves = 100% of deposits, we wouldn't have much of a banking system, or an economy. Banks wouldn't be able to meet the demand for borrowed money, checking accounts would become much more expensive, consumers wouldn't be able to borrow as much money, retail sales would drop, construction would drop, car production would drop, factory orders would drop, thus unemployment would become worse, creating even less demand, less production, fewer jobs, more unemployment, and this would keep cycling until we had a 3rd world economy and standard of living.

I'm glad that you arn't suggesting that the fractional reserve lending system should be abandoned. It's helped to create wealth in this country.

 

[ARealConservative]

If reserves = 100% of deposits, we wouldn't have much of a banking system, or an economy.

Anything less amounts to a fractional reserves though, hence the name fractional.

 

[nonpareil]

You're creating a straw man, mega. Nobody says that price/value is taken in a vacuum. Those emotional and intangible factors you are referring to are what creates value in the first place.

Values are not determined rationally. Nobody is arguing that, that is your strawman (a typical strawman, and I think based on a incomplete and superficial understanding of economic theory). Values are determined in an emotional, almost arbitrary process, then acted on accordingly. Thus the big claim of economics is a tautological one, almost a trivial one.

But economics is not, as you seem to think, based on the principle that value is determined by strictly rational factors.

To add to the post: we now like to use "utility fuctions". But it's not very easy to determine all the things that people value, and it must neccessarily be different from person to person.