IM Conversation

[owsley]

[ QUOTE ]
First there has to be acceptance of the currency, then there has to be a failure of that currency that is public enough to deter use of the currency, then there has to be investigation, arrest, trial, punishment and reimbursement. The market is generally not responsive enough to avoid the victimization of large numbers of people...

[/ QUOTE ]

orly? if you want to make a statement like that, you have to prove it. look at the production of cars, computers, or any other number of hard to assemble items. do you think that when you buy a $50,000 car you know it will work as advertised because of the government regulating it, or because audi, bmw, etc, have a reputation to protect? While that reputation is in good condition they will keep raking in the dough, when the quality of product declines they no longer make money.

[Luxoris]

[ QUOTE ]
[ QUOTE ]
First there has to be acceptance of the currency, then there has to be a failure of that currency that is public enough to deter use of the currency, then there has to be investigation, arrest, trial, punishment and reimbursement. The market is generally not responsive enough to avoid the victimization of large numbers of people...

[/ QUOTE ]

orly? if you want to make a statement like that, you have to prove it. look at the production of cars, computers, or any other number of hard to assemble items. do you think that when you buy a $50,000 car you know it will work as advertised because of the government regulating it, or because audi, bmw, etc, have a reputation to protect? While that reputation is in good condition they will keep raking in the dough, when the quality of product declines they no longer make money.

[/ QUOTE ]

It sounds like you are agreeing, not disagreeing. That the market is slow to respond to deterioration in quality (unless you get unfairly persecuted by 60 Minutes for BS "unintended acceleration" problems) doesnt refute the fact that it will be slow to respond to fraudulent currencies.

[The once and future king]

[ QUOTE ]
Did Copernicus get banned?

[/ QUOTE ]

Thats harsh. Im not saying I am agreeing with Lux, (in fact I agree with most of Boro's post) but his posts are much better quality than Copernicus.

I mean calling someone Copernicus, Id rather be called a father rapist.

For Boros analysis to be complete, it would have to discuss the carry trade.

Most of the money being pumped into the Global Financial systems is cheap Yen, Japan having an interest rate of 0.5%. Japan has the biggest trade surplus in the world but only 20% of it is from manufacturing, the rest is from financial "services".

[owsley]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
First there has to be acceptance of the currency, then there has to be a failure of that currency that is public enough to deter use of the currency, then there has to be investigation, arrest, trial, punishment and reimbursement. The market is generally not responsive enough to avoid the victimization of large numbers of people...

[/ QUOTE ]

orly? if you want to make a statement like that, you have to prove it. look at the production of cars, computers, or any other number of hard to assemble items. do you think that when you buy a $50,000 car you know it will work as advertised because of the government regulating it, or because audi, bmw, etc, have a reputation to protect? While that reputation is in good condition they will keep raking in the dough, when the quality of product declines they no longer make money.

[/ QUOTE ]

It sounds like you are agreeing, not disagreeing. That the market is slow to respond to deterioration in quality (unless you get unfairly persecuted by 60 Minutes for BS "unintended acceleration" problems) doesnt refute the fact that it will be slow to respond to fraudulent currencies.

[/ QUOTE ]

Provide some evidence that the market will be slow respond. There are any number of high quality brand names that have avoided counterfeiting and fraud which people can count on to produce a reliable product, what makes money different?

[BCPVP]

[ QUOTE ]
[ QUOTE ]
Did Copernicus get banned?

[/ QUOTE ]I was thinking GMontag.

[/ QUOTE ]
The inept use of the quote function with red responses was a Copernicus trademark...

[ianlippert]

[ QUOTE ]
Wal-bucks is just substituting the good faith and credit of an entity that relies on demand for its products for the good faith and credit for an entity that has the power to tax. Which is more reliable?


[/ QUOTE ]

But it wont just be wal-bucks on the market. A Free Market money system would probably consist of both inflationary fiat currency (so you inflationists can have your inflationist fun) and non-inflationary fiat currency, plus many forms of commodity money. If you are so confident that your money is the best then you should have no problem with a free market money system. Its just kind of annoying trying to disagree with someone when you are at the wrong end of the gun.

[ianlippert]

[ QUOTE ]
Of course it does. You started with the given that the initial state of the system made everyone happy, implying that that is the "right state". Everything that followed discussed changes to those initial conditions.


[/ QUOTE ]

Borodogs state was the 'right' state because it was the market state. People want to believe that there are certain states the market cannot achieve that would be better than market states. But how do you scientifically determine whats best for society. The problem is, is that there is no scientific way to determine the best society because we cant perform experiments and then go back and retest our hypothesis. There is, however, a scientific way to determine what people (and therefore society) value. We call it the free market. I would take it any day over a room full of intellectuals and beauracrats.

[ QUOTE ]
I assume you arent trying to confuse the issue of competing currencies and counterfeiting here. The problem with allowing competing private currencies is that to the extent they arent backed by something (including a governments power to tax) they are prone to fraud, and policing those currencies an uneccessary burden.

[/ QUOTE ]

A burden that is handled by professional money changers. Its going to take you one minute on the internet to determine which money is more valuable.

[ QUOTE ]
Trying to confuse the issue? But I was only addressing your characterization of any given level of interest rates as "artificial" which is a value judgement based again on your assumption that the initial conditions were the right ones.


[/ QUOTE ]

The free market works for bread and cars, why doesnt it work for the lending of money? If we lower the price of cars we get higher demand and lower supply and ultimately shortages. Why doesnt this occur for the lending of money?

[ QUOTE ]
No the correct amount is the amount needed to efficiently conduct business and allow for growth in the economy. Growth of the money supply commensurate with productivity increases isn't in and of itself inflationary.


[/ QUOTE ]

Growth in a stable monetary system just makes your dollars worth more. Money adjusts to the productivity in a society. There is no need to adjust it. Moneys only inherant value is as a medium of exchange, messing with the quantity will only lessen its value.

[ QUOTE ]
lower interest rates make investments more profitable.


[/ QUOTE ]

but makes lending money less profitable, the laws of supply and demand dont change just because you want to ignore one half of the equation.

[ QUOTE ]
Yes, the can and do, all the time.

[/ QUOTE ]

If they do then there is no point in lowering the interest rate in the first place. Investors will just make their calculations based on the 'real' rate of interest and invest at the old rate which will 'stimulate' the economy at the older regular rate.

[Leaky Eye]

Your whole conversation seems to assume production efficiency is fixed. Increased resource competition spurs improvements to production efficiency. Businesses that were profitable, but fail to adapt, die and are replaced with new more efficient businesses.

[Copernicus]

"Growth in a stable monetary system just makes your dollars worth more. Money adjusts to the productivity in a society. There is no need to adjust it.... messing with the quantity will only lessen its value."

Wrong. The velocity of money is not infinite. To accomodate free market economic growth either the velocity of money has to increase or the money supply has to increase. There are constraints on the velocity of money.

[bobman0330]

[ QUOTE ]
Borodogs state was the 'right' state because it was the market state. People want to believe that there are certain states the market cannot achieve that would be better than market states. But how do you scientifically determine whats best for society. The problem is, is that there is no scientific way to determine the best society because we cant perform experiments and then go back and retest our hypothesis. There is, however, a scientific way to determine what people (and therefore society) value. We call it the free market. I would take it any day over a room full of intellectuals and beauracrats.


[/ QUOTE ]

If one of the implied premises of Boro's argument is that the market allocates resources efficiently under all circumstances (or, more weakly, that it allocates them better freely than with any government intervention), then it's a circular argument, at least for the conclusion that the Fed is economically harmful.