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The separation of bank and state (pg. 3)
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| Krypton |
| quote: | Originally posted by Capitalizt
Krypt, the federal reserve is already counterfeiting our official currency to a far greater extent than any private bank could manage. |
The Federal Reserve, and only them, are the entrusted authority to inflate and deflate the money supply in order to keep price levels stable. If you didn't know, counterfeiting is someone who just wants to spend it for themselves...criminal fraud. This is macroeconomics 101...
| quote: | | I think competing currencies may fail because most people agree with you and think it's too radical of an idea. Most people would stick with what they know and be wary of an alternate currency. This being the case, what harm could come from legalization? People would stick with the dollar anyway right? They would stick with what they have faith in right? You're a market man..Have a little faith in the marketplace for a change. If the free market can't provide a suitable alternative to the dollar, the dollar will remain supreme. |
Businesses can already accept other forms of payment other than the dollar. But no business can reject the dollar as payment. "Alternative currencies" contribute to price instability. Again, if you don't want the dollar, go with the euro, or buy gold and silver. Try buying gas with silver coins. They'll only take it at face value.
| quote: | | While we're at it, let's legalize alternatives to the post office for first class letters. I'd be interested to see if Fed Ex/UPS could offer stamps for less than .44. They might succeed and they might fail, but I'm for giving them the chance. Are you against this too? ;) |
The US Postal Service operates at a loss. Why would they, in their right mind, lower the price of a stamp? |
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| Capitalizt |
| quote: | Originally posted by jerZ07002
exactly how does an issuer of private currency profit from this endeavor? |
Probably the same way the fed profits from it. The mint/bank would hold deposits (savings) for customers and charge interest on loans.
| quote: | Originally posted by jerZ07002
You don't think the USPS's distribution channels cause significant economies of scale leading to substantial cost efficiencies? |
No, any government agency is rife with waste, almost by definition. Secondly, we already pay for all the services we get. If you add up the cost we pay in subsidies to them (I believe around $1 billion/yr) in addition to what they charge customers for services, I'd be very surprised if a private company couldn't deliver mail at a much cheaper rate per capita.
| quote: | Originally posted by Krypton
The Federal Reserve, and only them, are the entrusted authority to inflate and deflate the money supply in order to keep price levels stable. |
ah, but have you been watching the news lately krypt? The fed has gone far FAR beyond this mandated role..buying worthless assets and printing trillions in new money to be loaned at near zero cost to companies and banks..taking actions that nearly doubled the national money supply in under 12 months.. This is not maintaining "price stability" krypt. It's a politically-motivated corporate bailout designed to prop up failed enterprises and prevent a natural correction..and it will lead to a huge decline in the purchasing power of the dollar in the coming years (price instability X 1000).
| quote: | | "Alternative currencies" contribute to price instability. |
I don't see how you can say that given that alternate currencies are illegal.
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Businesses can already accept other forms of payment other than the dollar. But no business can reject the dollar as payment. Again, if you don't want the dollar, go with the euro, or buy gold and silver. Try buying gas with silver coins. They'll only take it at face value.
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Yes, thank you for making my point. While nothing prevents many point-of-sale transactions today from being carried out in euros or pounds, legal tender laws ensure that Gresham's law, that bad money drives out good, remains in effect. If we repeal legal tender laws and allow alternatives to emerge, things will be reversed and we will have good money driving out bad. Unreliable currencies that don't hold their value will end up in the ash heap of history.
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The US Postal Service operates at a loss. Why would they, in their right mind, lower the price of a stamp? |
They wouldn't because they have no incentive to do so.. Like most government institutions, they are a monopoly and can freely ignore the demands of the market. That's why competition is necessary.
ok, I'm tired now. ;) Good debate folks..but I know I'm not changing minds...just making an attempt to answer the original question. Good night yall. |
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| Krypton |
| quote: | Originally posted by Capitalizt
ah, but have you been watching the news lately krypt? The fed has gone far FAR beyond this mandated role..buying worthless assets and printing trillions in new money to be loaned at near zero cost to companies and banks..taking actions that nearly doubled the national money supply in under 12 months.. This is not maintaining "price stability" krypt. It's a politically-motivated corporate bailout designed to prop up failed enterprises and prevent a natural correction..and it will lead to a huge decline in the purchasing power of the dollar in the coming years (price instability X 1000). |
You can't maintain price stability when huge banks with trillions of dollars in assets are dropping like flies, with people losing their deposits, life savings, etc.. They needed to be recapitalized which is exactly what the Fed did. The reason the has lowered the interest rate to almost zero is because liquidity in the market is near zero. No one is lending to each. The logical course of action is lower interest rates to increase lending. Again, this is macroeconomics 101.
| quote: | | I don't see how you can say that given that alternate currencies are illegal. |
I'm talking about if our money supply reverted your system of competing domestic currencies. Price instability would be impossible to maintain and our economy would suffer badly for it.
| quote: | | Yes, thank you for making my point. While nothing prevents many point-of-sale transactions today from being carried out in euros or pounds, legal tender laws ensure that Gresham's law, that bad money drives out good, remains in effect. If we repeal legal tender laws and allow alternatives to emerge, things will be reversed and we will have good money driving out bad. Unreliable currencies that don't hold their value will end up in the ash heap of history. |
As I said before, you can already buy gold, silver, euros, yen, pounds, etc., and convert them back into dollars any time you want. I really don't see what you'r going on about this 'alternative currencies'.
| quote: | | They wouldn't because they have no incentive to do so.. Like most government institutions, they are a monopoly and can freely ignore the demands of the market. That's why competition is necessary. |
As Jer said, the mail industry is based on economies of scale. They need a practical monopoly. Fortunately, because the USPS is nationalized, we don't have to worry about the effects of monopoly. Exorbitant prices and bad service. The price to send mail is not expensive at all and the reliability of the service is excellent. No competition needed.
| quote: | | Good debate folks..but I know I'm not changing minds...just making an attempt to answer the original question. |
I'm certainly not trying to change you mind, just righting what I think is wrong. |
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| Capitalizt |
| quote: | Originally posted by Krypton
You can't maintain price stability when huge banks with trillions of dollars in assets are dropping like flies, with people losing their deposits, life savings, etc.. They needed to be recapitalized which is exactly what the Fed did.
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In other words, the fed blew the bubble too big..causing banks to overextend with cheap money. The bubble popped and is now contracting from it's overinflated level..and rather than letting things reach a healthy and sustainable size, the fed is repeating history and blowing the bubble up again on a much larger scale.
| quote: |
The reason the has lowered the interest rate to almost zero is because liquidity in the market is near zero. |
The reason liquidity has dried up is because banks have loads of toxic assets on their balance sheets that haven't been liquidated. They made foolish decisions and are not being allowed to face the consequences of their actions. Once the liquidation takes place, lending will improve dramatically..but this will never happen while the fed/treasury are shooting banks full of painkillers and adrenaline to keep them limping along while carrying these baggages. The baggage needs to be purged and cut away, and the only way to do this properly (without more socialism, debt, and inflation) is with a painful recession and the bankruptcy/restructuring of insolvent firms.
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I'm talking about if our money supply reverted your system of competing domestic currencies. Price instability would be impossible to maintain and our economy would suffer badly for it.
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Again, our economy would not revert to anything unless it is superior to what we have now. We are really discussing theory here, and these questions can really be settled only by allowing competition to begin. Market participants always seek out the best of the best. They look for the best possible way of doing things..the most efficient and cost-effective way of doing business. If the dollar remains their choice for commerce, it will remain the standard. But if an alternative can hold it's value better and becomes the new standard, people should be allowed that choice. | quote: |
As I said before, you can already buy gold, silver, euros, yen, pounds, etc., and convert them back into dollars any time you want. I really don't see what you'r going on about this 'alternative currencies'. |
I'm "going on" about it because I believe economic prosperity will always improve when individuals are given more freedom to decide what is best for them. Yes I know some call these ideas wacko and unrealistic, but everything I've observed tells me that central planners can't manage any aspect of my life better than I can, and they can't manage your personal life better than you can, so whenever possible I say it's best to reduce their power and leave economic decisions in the hands of the people.
| quote: | | They need a practical monopoly. Fortunately, because the USPS is nationalized, we don't have to worry about the effects of monopoly. Exorbitant prices and bad service. The price to send mail is not expensive at all |
The thing is...How do you know? If no one else can deliver the mail – no competition exists – how can you determine if the rate is good, bad, or indifferent? |
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| atbell |
| quote: | Originally posted by Capitalizt
No. Yes. :)
I don't think we are ever going to have separation as long as legal tender laws are in place. All I'd like to see is a legalization of competition. Right now it is illegal to offer alternatives to the US dollar as forms of payment. If we legalize competition, it will be a bit ugly and chaotic for a while, but eventually some private currency standard would likely spring up. The most popular, convenient, and trusted forms of currency will eventually rise to the top and become the new standard. If competition had been legalized ten years ago, who knows what we might have today? We could have things like like E-commerce credits, Paypal Dollars, Google money, shopping cards redeemable at any time by mail for gold and silver..or even a universal private currency created by a few banks that is backed by a basket of commodities.. The dollar will always be around, but those who have no faith in it should have the option to conduct business with other free market alternatives that hold their value better. Right now, people don't have that choice. |
What about WOW crack gold? Or the stuff they use for second life?
Can't you be accept anything you want in exchange for your goods and/or services?
Check out Putin's speach about getting more than one reserve currency (posted in a new thread). |
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| atbell |
| quote: | Originally posted by Capitalizt
Those currencies are also being devalued..but they are legal tender and it's mandated that they be accepted as payment. People should be given the right to refuse them and use alternatives.
No need. Good money will drive out the bad. If a new car company sells cars that explode after a few days, they will be out of business in a matter of weeks without any government intervention. Consumers are the ultimate police officers.
It wouldn't because it's not their business. This is a matter between buyers and sellers.
It isn't being maintained today.:rolleyes: All world currencies buy less today than they did 10 years ago. The only difference is the degree of devaluation. |
I don't understand why you seem to think that this doesn't exist already, everyone already has the right to refuse and to accept what ever payment they want.
Don't want US$, selling in the US, put up an add on craigs list saying what you have and what you will trade it for, be they Euro's, pigs, google dollars, or Capitalizt credit.
EDIT: Don't we already do this in the form of Visa and Mastercard dollars? |
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| atbell |
| quote: | Originally posted by Capitalizt
Again, our economy would not revert to anything unless it is superior to what we have now. We are really discussing theory here, and these questions can really be settled only by allowing competition to begin. Market participants always seek out the best of the best. They look for the best possible way of doing things..the most efficient and cost-effective way of doing business. If the dollar remains their choice for commerce, it will remain the standard. But if an alternative can hold it's value better and becomes the new standard, people should be allowed that choice.
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This is not true at all. It is a very well documented fact that civilizations regularily revert to lesser states of organization. In fact the United States is an anomolus period in even recent human history (say the last 2500 years). The only country that has really 'been' for any length of time is China.
The situation you are describing, with multiple stores of value, is infact a reversion to a less efficient form of economics and would likely decrease the standard of living significantly. Once again, see Putin's speach (still haven't posted it yet).
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I'm "going on" about it because I believe economic prosperity will always improve when individuals are given more freedom to decide what is best for them. Yes I know some call these ideas wacko and unrealistic, but everything I've observed tells me that central planners can't manage any aspect of my life better than I can, and they can't manage your personal life better than you can, so whenever possible I say it's best to reduce their power and leave economic decisions in the hands of the people.
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This is crazyness, 'Always' is exactly the wrong word because it is far to easy to disprove. Standards have thier place, standards imply less choice, standards are a trade off of choice for efficiency.
What if we had more choice about how we measured things? Or even worse, how we defined measurements (yeah, well in this city a centimeter is six cubits biger then the largest stone that the youngest woman of birthing age can lift.)
Increasing choice in measurements would be a disaster for engineering and chemistry. This is only one case of many that disproves that point.
Case in point, central planners do your life better then you would on your own because they give you the engineered products and other fruits of standardization.
I know this hurts your notion of freedom but you've got to realize that until you are running through the woods on your own you are dependant on organization, which invovles planning, coordination, and other people.
Sorry. |
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| Krypton |
| quote: | Originally posted by Capitalizt
In other words, the fed blew the bubble too big..causing banks to overextend with cheap money. The bubble popped and is now contracting from it's overinflated level..and rather than letting things reach a healthy and sustainable size, the fed is repeating history and blowing the bubble up again on a much larger scale. |
Sorry but the fed had nothing to do with banks securitizing crap mortgages and selling them off to unsuspecting buyers.
| quote: | | The reason liquidity has dried up is because banks have loads of toxic assets on their balance sheets that haven't been liquidated. They made foolish decisions and are not being allowed to face the consequences of their actions. Once the liquidation takes place, lending will improve dramatically..but this will never happen while the fed/treasury are shooting banks full of painkillers and adrenaline to keep them limping along while carrying these baggages. The baggage needs to be purged and cut away, and the only way to do this properly (without more socialism, debt, and inflation) is with a painful recession and the bankruptcy/restructuring of insolvent firms. |
We're not talking about why there is no liquidity, we'r talking about how the Fed is trying to increase liquidity. We all know why there is no liquidity. Your solution, if we can even call it that, is to let the entire system collapse. Isn't it bad enough already for you?
| quote: | | Again, our economy would not revert to anything unless it is superior to what we have now. We are really discussing theory here, and these questions can really be settled only by allowing competition to begin. Market participants always seek out the best of the best. They look for the best possible way of doing things..the most efficient and cost-effective way of doing business. If the dollar remains their choice for commerce, it will remain the standard. But if an alternative can hold it's value better and becomes the new standard, people should be allowed that choice. |
We are reverting back to something which clearly failed. We have had a system of competing currencies. Each state printed its own currency, never mind foreign currencies. Why don't you acknowledge this?
| quote: | | I'm "going on" about it because I believe economic prosperity will always improve when individuals are given more freedom to decide what is best for them. Yes I know some call these ideas wacko and unrealistic, but everything I've observed tells me that central planners can't manage any aspect of my life better than I can, and they can't manage your personal life better than you can, so whenever possible I say it's best to reduce their power and leave economic decisions in the hands of the people. |
What if someone or some corporation decides what's best for them is to leverage 1:50 on sub prime mortgages. Are you telling me they shouldn't be stopped? Maybe we should let 9 year olds back into the coal mines? After all, they don't demand higher wages do they, which is the benefit of the mining company...right?
| quote: | | The thing is...How do you know? If no one else can deliver the mail – no competition exists – how can you determine if the rate is good, bad, or indifferent? |
Because I am a consumer who uses this service. If I refused to use it because the price is too high, then I'd figure out why that price was too high, and that would probably lead me to conclude that it's probably because of the monopoly. But because it is a PUBLIC monopoly, not private, they do not exhibit monopolistic behavior such as high price, low quality products/services. |
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| jerZ07002 |
| quote: | Originally posted by Krypton
What if someone or some corporation decides what's best for them is to leverage 1:50 on sub prime mortgages. Are you telling me they shouldn't be stopped? |
to the extent they can obtain the leverage from willing lenders, they shouldn't be stopped. If their risk tolerance is that high, and their position is fully disclosed, there is no reason to stop that investor. The current problem wasn't solely overleveraging sub prime mortgages, it was a transparency and overleveraging problem.
| quote: | Originally posted by Krypton
Because I am a consumer who uses this service. If I refused to use it because the price is too high, then I'd figure out why that price was too high, and that would probably lead me to conclude that it's probably because of the monopoly. But because it is a PUBLIC monopoly, not private, they do not exhibit monopolistic behavior such as high price, low quality products/services. |
Capitalilzt has a point on this one. It is not possible for you to determine whether 42 cents is too much for delivery of mail without either competition or a thorough study completed by an independent third party (which would likely result in some inaccuracies because of key assumptions needed to make the prediction about a fair price). You would be basing your idea of 'fair price' on what you think is fair, not what actually is fair.
I diverge from Capital with respect to whether competition would actually reduce the cost of delivery of first class mail. Mainly because the economies of scale necessary to deliver mail efficiently. If there was competition, the market would be fragmented, and it would cost a private company more to deliver to remote locations. On the other hand, the fact that east--hole wyoming is served exclusively by the USPS means that the cost of delivering each parcal is spread over a greater number of parcals because they are required to be funneled throug the USPS.
In any event, anyone is capable of sending anything by using either FedEx or UPS. Nothing stops people from sending regular mail through those companies, except cost. That fact seems to indicate that their distribution networks can't achieve the same cost reductions, and thus result in higher costs. |
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| Capitalizt |
| quote: | What if someone or some corporation decides what's best for them is to leverage 1:50 on sub prime mortgages. Are you telling me they shouldn't be stopped? Maybe we should let 9 year olds back into the coal mines? After all, they don't demand higher wages do they, which is the benefit of the mining company...right?
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I have no problem with child labor laws and other basic protections like that..but as far as corporations leveraging up, no they shouldn't be stopped.. Firstly, under a private standard, the fractional reserve system which permits them to create so much money wouldn't exist (or else it would be greatly restricted) which makes it much more difficult to create investment vehicles like that, but even if they manage to do extreme leverage with financial shenanigans, it wouldn't be a long term problem because they would be forced to face the consequences of their actions. In the absence of government intervention, those who make idiotic financial moves will quickly be put out of business. The only reason it happens today is because major banks have the implicit guarantee from the government (the lender of last resort) that they will not be allowed to fail.
| quote: | Originally posted by atbell
I don't understand why you seem to think that this doesn't exist already, everyone already has the right to refuse and to accept what ever payment they want.
EDIT: Don't we already do this in the form of Visa and Mastercard dollars? |
Not really.. The only choice people have is government notes due to legal tender laws. Private notes are illegal, there are many laws against private mintage, and precious metals have high capital gains taxes on them...so there are a number of laws and government barriers that prevent a true alternative from developing.
| quote: | Originally posted by atbell
What about WOW crack gold? Or the stuff they use for second life?
Can't you be accept anything you want in exchange for your goods and/or services? |
Hell no...If I could choose, I would only accept something that is widely accepted as a store of value. Stuff like WOW money would be practically worthless (and hence not chosen) by most people, so it would quickly die out.
| quote: | Originally posted by atbell
The situation you are describing, with multiple stores of value, is infact a reversion to a less efficient form of economics and would likely decrease the standard of living significantly. Once again, see Putin's speach (still haven't posted it yet).
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I really don't think so.. Markets tend to be extremely efficient in determining things when left well enough alone.. Waste and inefficiencies tend to drop away while the most effective solutions to rise to the top. Central planning by a group of folks who are far removed from microeconomic decisions can only hinder this process.
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What if we had more choice about how we measured things? Or even worse, how we defined measurements (yeah, well in this city a centimeter is six cubits biger then the largest stone that the youngest woman of birthing age can lift.) |
You don't need a government to legislate standards like this. The spontaneous order of the market is what standardizes most things. Just look at the IEEE. http://en.wikipedia.org/wiki/Instit...onics_Engineers <--f*cking AMAZING!!:eyes: :eyes: This is a completely non-profit, non government organization..It has thousands of members from hundreds of different industries, all with competing interests and ideas, yet due to rational self interest and the spontaneous order of the market, they have managed to come together and standardize virtually every aspect of modern technology. This group was formed voluntarily by market participants. It was not created because a benevolent government decided to impose standards..but because it is already in the interest of every market participant to have standards to work with. If we abolished the "official" metric system today, it would continue to be used indefinitely because it is the most efficient system that has yet been devised by mankind. When left alone, markets will seek out and embrace the best solutions. The idea that government needs to impose them is nonsense.
| quote: | | until you are running through the woods on your own you are dependant on organization, which invovles planning, coordination, and other people. |
Individuals can plan, coordinate, and cooperate perfectly fine without central planning. They were doing it long before organizations like the U.S. Government came into existence. :)
| quote: | Originally posted by jerZ07002
That fact seems to indicate that their distribution networks can't achieve the same cost reductions, and thus result in higher costs. |
Ah, but once the government monopoly on the service is eliminated, the Fed-Ex/UPS economies of scale will rise won't they? ;) We won't know if they can achieve the necessary cost reductions until competition is legalized. |
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| Krypton |
| quote: | Originally posted by jerZ07002
to the extent they can obtain the leverage from willing lenders, they shouldn't be stopped. If their risk tolerance is that high, and their position is fully disclosed, there is no reason to stop that investor. The current problem wasn't solely overleveraging sub prime mortgages, it was a transparency and overleveraging problem. |
I'm more referring to money managers leveraging other people's money, for example, the hedge funds and perhaps some pension funds.
| quote: | | Capitalilzt has a point on this one. It is not possible for you to determine whether 42 cents is too much for delivery of mail without either competition or a thorough study completed by an independent third party (which would likely result in some inaccuracies because of key assumptions needed to make the prediction about a fair price). You would be basing your idea of 'fair price' on what you think is fair, not what actually is fair. |
I don't know a single person who has stated, "I don't send mail because it's too expensive." USPS customers can at any time not use the mail delivery service. [/QUOTE] |
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| atbell |
| quote: | Originally posted by Capitalizt
Not really.. The only choice people have is government notes due to legal tender laws. Private notes are illegal, there are many laws against private mintage, and precious metals have high capital gains taxes on them...so there are a number of laws and government barriers that prevent a true alternative from developing.
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I'm thinking that these laws might be something interesting to know about. Any links? Any links to similar laws in other countries? (yeah, that last one's a streatch..)
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Hell no...If I could choose, I would only accept something that is widely accepted as a store of value. Stuff like WOW money would be practically worthless (and hence not chosen) by most people, so it would quickly die out.
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Of course you are only interested in things that are widely accepted as a store of value, we all are. My recomendations would be to get a feild, a distilery, and to begin making booze. In the Russian collapse of the 90's vodka and gas were the main stores of value.
I'm personally very interested in the notion of electronic currency and the implications it has on money supply. WOW has 10 million players and gold is redeamable for money (as far as I understand), so as long as there are WOW addicts it will have some value. A friend of mine briliantly pointed out how Blizzard got gold value drastically wrong in Diablo as it became worthless because of over supply. In that case everyone switched to using rings as currency.
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I really don't think so.. Markets tend to be extremely efficient in determining things when left well enough alone.. Waste and inefficiencies tend to drop away while the most effective solutions to rise to the top. Central planning by a group of folks who are far removed from microeconomic decisions can only hinder this process.
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And that's exactly what has happened over and over again. Currency, being an intangible anything that stores value, has been getting more and more centralized throughout history, not less. Markets got rid of the Frank, the Deutchmark, the Lira (italian?) and these notions were defeated in the early US stores of wealth.
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You don't need a government to legislate standards like this. The spontaneous order of the market is what standardizes most things. Just look at the IEEE. http://en.wikipedia.org/wiki/Instit...onics_Engineers <--f*cking AMAZING!!:eyes: :eyes: This is a completely non-profit, non government organization..It has thousands of members from hundreds of different industries, all with competing interests and ideas, yet due to rational self interest and the spontaneous order of the market, they have managed to come together and standardize virtually every aspect of modern technology. This group was formed voluntarily by market participants. It was not created because a benevolent government decided to impose standards..but because it is already in the interest of every market participant to have standards to work with. If we abolished the "official" metric system today, it would continue to be used indefinitely because it is the most efficient system that has yet been devised by mankind. When left alone, markets will seek out and embrace the best solutions. The idea that government needs to impose them is nonsense.
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But it is still a single standard that opperates without competition and, as you pointed out, operates very well without competition. Not to mention this is even bigger then a government, it is a single international GLOBAL body.
... But I thought: Central planning by a group of folks who are far removed from microeconomic decisions can only hinder this process.
The IEEE is a governing body, and it's not even democratic. (in fact I'd call it authoritarian)
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Individuals can plan, coordinate, and cooperate perfectly fine without central planning. They were doing it long before organizations like the U.S. Government came into existence. :)
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Yes, and they decided that damn, wouldn't it be easier if we just had one body that could do this? I bet people would live longer and better if we didn't have competeing fire departments and police forces, not to mention sewer systems and bus companies. |
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