patrick.net

dublin hillz says

The solution to that would be implementing significant punishments on the so called strategic defaulters.

bad idea

indigenous says

Heraclitusstudent says

Storing money is not investment.

Why not?

Heraclitusstudent says

There was no deflation in 2008-2010.

Then explain my graph?

It seems your problem is you don't understand what an investment is.
And also what the difference between debt and money supply is.

dublin hillz says

The solution to that would be implementing significant punishments on the so called strategic defaulters.

This has nothing to do with strategic defaulters.

indigenous says

If someone is holding money most of them would put the money in a savings account. That money would then be invested by the bank. Even if they put it in a mattress anticipating growth in the value of money that is arbitrage.

That's the point. You don't even need to put it in a bank. You can just store in a mattress and still earn an interest. Why put it in a bank?

Deflation reallocates value in a way that is totally disconnected from value creation. As such it is as evil as inflation.

indigenous says

Any economist considers credit to be a part of the money supply.

Your graph shows a decrease in debt. Not all forms of debts are considered money. No more than stocks are considered money. Just because you hold a paper in exchange for your money doesn't mean you consider this paper "money".

In any case what is your point? There was a deflationary crisis in 2008 if no actual deflation. We saw financial institutions fail. We saw more of them close to failing. We saw the mass economic disruption. We saw the unemployment. All this would have been worse with actual deflation.

Heraclitusstudent says

Deflation reallocates value in a way that is totally disconnected from value creation. As such it is as evil as inflation.

Actually just the opposite value is value, money is the price.

Heraclitusstudent says

Your graph shows a decrease in debt. Not all forms of debts are considered money. No more than stocks are considered money. Just because you hold a paper in exchange for your money doesn't mean you consider this paper "money".

Not true for reasons I explained.

Heraclitusstudent says

In any case what is your point?

The point is that we had deflation and the world did not come to an end.

indigenous says

Actually just the opposite value is value, money is the price.

That's meaningless and doesn't address what I said.

indigenous says

The point is that we had deflation and the world did not come to an end.

Seriously? Were you there in 2008? Credit froze. Bank lending disappeared. The financial system WAS in a state of collapse. Were it not for the extraordinary measures that were taken to stabilize it, the entire thing would go kaboom. And even then we saw the results.

So again, in a context where these measures were taken, what is your point?

Start by studying the control theory, and basic differential equations.

indigenous says

If that were so why the fuck does the store accept your credit card?

This is such a stunning misunderstanding of why some loans are counted as money...

Heraclitusstudent says

That's meaningless and doesn't address what I said.

Bullshit, read the article...

Heraclitusstudent says

Seriously? Were you there in 2008? Credit froze. Bank lending disappeared. The financial system WAS in a state of collapse.

Look at the graph

Heraclitusstudent says

Were it not for the extraordinary measures that were taken to stabilize it, the entire thing would go kaboom. And even then we saw the results.

That is the Kool Aid that mutts like you have taken hook line and sinker

Heraclitusstudent says

Start by studying the control theory, and basic differential equations.

FUCK YOU, you Assume that you know something and that I don't. READ THE ARTICLE ASSHOLE.

Heraclitusstudent says

This is such a stunning misunderstanding of why some loans are counted as money...

I agree you must be stunned to say what you say.

indigenous says

Bullshit, read the article...

indigenous says

READ THE ARTICLE ASSHOLE.

Hey don't blame me if you are unable to explain a point.

indigenous says

Heraclitusstudent says

Storing money is not investment.

Why not?

Lets assume that population doubles in one's lifetime, from age 20-80. A dollar earned and stored in the ground for one years labor at age 20 could be exchanged for 2 years labor at age 80.

Why should my father be able to exchange 1 year of his labor for 2 years of my son's labor, assuming they do the exact same labor?

Not to mention productivity gains...

Heraclitusstudent says

Hey don't blame me if you are unable to explain a point.

Point well taken never argue with idiots...

indigenous says

Point well taken never argue with idiots...

Today we have established that:
1 - you don't understand what the money supply is made of,
2 - you don't know what an investment is,
3 - and you think a crisis that was forcefully stopped is proof that there was no crisis.

I think indeed we can stop the discussion here.

Heraclitusstudent says

dublin hillz says

The solution to that would be implementing significant punishments on the so called strategic defaulters.

This has nothing to do with strategic defaulters.

Why would the financial system be in peril if people honored their obligation to pay back the debts which in hindsight turned out to be linked to overvalued assets at a specific point in time?

Heraclitusstudent says

Assuming this is used to maintain the supply of money constant, explain how this would be "inefficient" or not "moral".

Like I said, it rewards debtors over savers. People who gambled and took big loans get rewarded for the gamble.
This is the purpose of inflation. Inflation rewards debtors at the expense of savers.

Heraclitusstudent says

Seriously? Were you there in 2008? Credit froze. Bank lending disappeared. The financial system WAS in a state of collapse. Were it not for the extraordinary measures that were taken to stabilize it, the entire thing would go kaboom. And even then we saw the results.

The people will say we just kicked can down the road, and postponed the inevitable. Sooner or later, people will realize whether it was a bad decision or not.

Of course, the banking system *seems* fine now, at the expense of other productive sector.

Tell me, do you ever think if we can get out of 0% interest rate or QE?

Watch this video:
http://youtu.be/fKviBNo76iI

gsr says

Like I said, it rewards debtors over savers. People who gambled and took big loans get rewarded for the gamble.

This is the purpose of inflation. Inflation rewards debtors at the expense of savers.

Debtors are also know as "investors." Productivity growth, innovation, and resource maximization are born of investment.

control point says

Debtors are also know as "investors." Productivity growth, innovation, and resource maximization are born of investment.

Then they should be rewarded by the market for taking those risks. The reward should not guaranteed by the government.

If we don't have the natural balance between risk and reward, we get into something like what had happened in 1929 and 2008.

gsr says

The reward should not guaranteed by the government.

The fact that people with those liar/stated income/hardly any money down loans were allowed to do their part to drive up real estate to its asinine valuations from 2004-2007 only to strategically default when they could not refi and market started to tank is what almost lead us to a collapse. And of course their collaborators the wall st firms that sold BS securities to worldwide investors went unpunished. I think this caused more image issues to united states than iraq war and abu graib. When someone does something like this their trustworthiness and credibility is shot.