Should the current monetary system be abolished?

It's not working, the current monetary system based on debt is failing miserably. What's the alternative? What has history taught us about how productivity should be rewarded. How do we keep a new system from failing? What type of system should replace the current system? What did our ancestors do different? What does economics mean?

Lots of questions I know, let's take it one at a time. First I think we should understand economics.

In it's simplest form it is production of goods and services for human survival. Stripped down to the basics it has nothing to do with money. Food, shelter, clothing, and safety is minimum IMO. "It's so easy a caveman can do it"

Well we're not cavemen, obviously it's more complicated than that so what is it now in modern times? Production of goods and services and the consumption of them I guess. Seems simple still but people spend years studying economics so I must be missing something.

I need help defining economics.

 

I don't think that you can.

Some sort of resource based system.

Had or were slaves, treated women as property, bartered, pillaged, stole, traded gold, I am sure there is more.

It also has to do with the analysis of commercial activities in a society, which means it can have a lot to do with money in it's most basic definition. Even cavemen had a very basic economy. Caveman produces meat(from hunt), Caveman distributes meat to healthy female in tribe in exchange for chance to make Cave-babies.

I don't know. We rise up and enslave the people that own Lamborghini and Apple, that way we can all be super cool and have a chance to make Cave-babies.

 

Osu,


Great thread Obewan, thank you! The fact that you are asking gives me some hope for the future of humanity.

Someone once defined economics as follows:
"There is not enough for both of us..."
All the rest is merely explaining!

Except that since the early '80es, we know that there is enough for you AND me; it does not have to be you OR me any longer.

The current financial (and monetary) system is designed for growth - growth in the monetary base.
Money is debt; it is created by agreement (a lending agreement)
BUT, at the signing of the agreement, only the principal is created.
Yet, interest must be paid, therefore, you and I are, by design, in competition with each other to scrape out the interest out of your principal to repay my interests due to the lender.

By design, you or me MUST go bankrupt!


It does not have to be that way...
I am having extreme difficulty to reconcile the place of humans in universe versus the "earning a living" the power structures of humanity would have us all believe is the "natural" order...

Forcing people to "earn a living" is part of the control tools a few humans are coercing the many with!


Osu!

 

One of the greatest civilizations on earth, was the Roman Empire. Eventually, the people in government started to indulge in way too much largesse for themselves & their cronies. As a result, since the concept of paper money was absent (which means they couldn't print more), they started substituting the gold content in coins with bronze. It took 200 years before the gold content had dropped below 10%. It's only been 80 years since the USA has been circulating additional currency as a means of staving off a ridiculously high debt, devaluing the dollar on a similar scale to what happened to the Roman denarii. At some point the foreign investors will lose hope of being repaid [with interest], and simply cut their losses. I suspect that prior to that event, the dollar (USD) will have been discarded as the default world currency. Once the USA starts printing money like there was no tomorrow, all hell will break loose with literal chaos in the streets, as by this juncture gov't will no doubt have lost the ability to keep law enforcement on their payroll (firefighters & EMS too).

I hope it never comes to this, but the idiots in DC don't seem to want to be truly fiscally responsible, instead trying to pass off a bunch of fancy paperwork to their constituents as a means of balancing the budget, which is actually nothing more than the equivalent to a magician's *smoke & mirrors* - anyone with a lick of sense has got to realize that deep cuts in federal spending is the only sane avenue to reducing the national debt (the first step to a healthy economy).

 

haha, great question Mitch... It has always been a cycle

Once upon a time, there was a gold standard, and one pound sterling was one troy pound of sterling (92%) silver... (what is the silver value -weight - of a British Pound today?)

The last time around was on Aug 15th 1971: the Nixon Administration reneged on the payment of its international obligations in gold, after The Treasury had been bleeding gold for over 2 decades... thus defaulting on the US debt & screwing the whole world!

LOL... wake up, it has started!


Osu!

 

There's various alternatives - most of the better ones are based on the idea that money is simply a representation of some other resource, such as labour, gold, etc. The problem now is that money has become an abstract in it's own right - you can make more money without actually adding any value to the system.

Simply that producing something, adding value to the system, should be more valuable than bouncing some numbers around and somehow making them add up to more than you started with.

There are no guarantees.

Ideally, a single, world-wide system based on value added to society. If you are doing something useful and productive, you should be rewarded according to the value you add. This is relatively easy to do with manufacturing and similar - harder to do with more intellectual professions where you might be producing information (research), diversion (entertainment) or similar.

Well, they had mammoths to hunt for one thing. A good basis for a sound economy is the mammoth.

Reflected-sound-of-underground-spirits.

Yep - but the problems start coming in when you move beyond those basics. Those are relatively easy to work out the value of, but if a doctor saves someone's life what's that worth? Is it a portion of the value that person will then add to the system, a set amount, something else?

At the moment it's intended to be the system above, where money's a representation of value. The problem is that it doesn't work that way in practice.

Nope, you're right, it is quite simple - unless you're a stockbroker. It does essentially boil down to supply and demand, the problem comes when you're trying to work out the nitty gritty.

See above - reflected sound of underground spirits.

Or read Making Money (Pratchett), that'll work too.

 

Government debts are a big problem, but private debts from companies and individuals are just as big a problem.

 

Osu,


Private debt is around 36 Trillions in the US whereas public debt (including entitlement liabilities) is well above 100 trillions.

The vast majority of this debt will never be repaid:
The private sector will walk away from it (look what is happening with pensions, etc...) & the government will inflate it away in a magnificent reward to short term irresponsibility and grand theft!


Osu!

 

That Governments are idiotic bastions of financial incompetence does not diminish the debts of us individually and the delusions of free enterprise exercised by Banks.

I know one fellow with debts of 50,000. Royal Bank of Scotland was 'loaned' money to the effect that it is owned to something like 88% by the UK Taxpayer.

Governements , companies and individuals should never have become caught up in the Cappaccino froth of easy credit - we are all guilty of this, and until we recognise that we have to live within our means, I see little prospect of improving the monetary system.

Even if a viable alternative was established, the process of dismantling the existing messy cat-splodge that is the fully the Globalised Corporate Banking and Finance Empire that rules us; to all intents and purposes simply not feasible in anything like a manageable timeframe with controlled outcomes i.e. we are most likely stuck with the horrendous mess of Banking that we have.

For sure there will be some tinkering around the edges e.g. LloydsTSB selling bits and pieces off to smaller entities - but the big and the small all have to borrow from each other using the existing laborynth of Swift, Faster Payments, BACS and report to institutions like Libor, be rated by Moodys, Fitches etc - and this is more or less just the UK picture.

 

Well first you need to know what we have now, and why it is failing.
We have a fractional reserve banking system, which means that a bank can lend more than it owns in assets, the banks have been deregulated so there is no distinction between an investment bank and an ordinary bank, and many of the former building societies got into trouble because they acted like investment banks and our currencey ( note I say currencey not money) is not backed by anything whereas it used to be backed by gold.and most of the economists in power are Keynsian in their ideologies, and they believe that they can spend their way out of debt.....you can check out some good clips about this

[ame="http://www.youtube.com/watch?v=E5VNAEmmBQM"]Why Gold & Silver? FULL MOVIE - Mike Maloney Tells All - YouTube[/ame]

and this about the Gold standard

[ame="http://www.youtube.com/watch?v=U71-KsDArFM"]The Secret of Oz - English - FREE.mov - YouTube[/ame]

 

Who should be able to create currency? Right now I believe in the US it's the Fed Reserve, but that is a private bank, right? Sure the government issues the bonds (gives permission) but it's the fed reserve that actually give it value. If I remember my history correct initially individual states had their own currency. It was created by the states government. Lincoln during the civil war created "greenbacks" to replace the demand notes to fund the war. That was very controversial as the interest was only payable in gold.

The problem I see with a debt based currency is inflation. I think this is how it works, The US Treasury issues bonds, say it's $10,000, and the Fed Reserve buys them they then issue notes (currency) you and I borrow money they only have to reserve I think 10% of that, so $9,000 is available. This of course is all electronic at this point. We then deposit the $9,000 into our account, our bank only has to reserve 10% of that money it can now loan $8,100 of that money. Now our bank loans out the $7290.00 cause it has to reserve 10% and so on and so forth.

So the US issued the original bond. $10,000
The Fed reserve loaned $9,000
Bank one loaned $8,100
Bank Two Loaned $7,290

Total Debt created $34,390.00

This could go on indefinitely, but I think in actuality it is limited to about nine transaction, however if you do the math it is an incredible debt. The only ones who are really making out good are the banks, They get free money and charge interest for it, and We the people pay for it in taxes and interest, slavery never ended it just has a new name, DEBT!

Edit: If you watch the first video it explains this in detail at 14 min. I was close but the video is better.

 

It is very convoluted, and confusing. I would suggest that if you are interested in what is going on then subscribe to a few Gold and Silver sites as they will give you valuable insights as to what is happening, including the manipulation of gold and silver.
The Federal Reserve is about as federeal as Federal Express, it is a private company comprising of various banks, Goldman Sachs and J.P.Morgan are both part of the fed .Look at the prime ministers of Greece and Italy both bankers with a link to Goldman Sachs, tony blair works for J.P.Morgan.so very murky

check out Gerald Celente

[ame="http://www.youtube.com/watch?v=3tyIVZqWm50"]Gerald Celente - Brian Sussman KFSO - 22 December 2011 - YouTube[/ame]
talking about the collapse of mf Global some valuable insights there and this guy is very good

[ame="http://www.youtube.com/watch?v=ZEMlAr51FdY&feature=relmfu"]Silver Update 12/22/11 SLV Shenanigans - YouTube[/ame]

I subscribe to them and I think that they give valuable insights as to what is really going on.but it is very confusing to try and discuss it, because it does look like a giant ponzi scheme with lots of big players...and it really does look like a big conspiracy theory, the illuminati and all that sort of thing.though really I think it's just plain old human greed

 

Your thesis hinges on the idea that debt is always bad, which is not true.

Unmanaged debt is bad, being in debt beyond your ability to repay that debt is bad, but debt in and of itself is often a useful tool, both at the individual and at the governmental level.

 

To jorvic, yes that's what I'm getting at, it is a big ponzi scheme, creating money out of thin air cannot be sustained.

I agree debt is necessary, an economy based on debt is unsustainable IMO, as it seems to be failing.

 

The current debt levels are unmanageable, and unsustainable.if you look at the Mike Maloney video you will see that US debt is turning parabolic...same is true in Europe. The keynsian idea that you can spend your way out of debt is not really holding true and a lot of folks are turning to the Austrian school of economics ,especially in Germany

[ame="http://www.youtube.com/watch?v=53NVsZG97DE"]The politics of debt and economics of disaster - YouTube[/ame]

This is a very good site for interviews with economists from all over Europe, although very pro gold ownership

While looking thru the site I came across this interview and thought it may be of interest to folks from the US

[ame="http://www.youtube.com/watch?v=j6M-Gl4rS6M&feature=related"]Bankrupt governments will break their promises - YouTube[/ame]

 

So do we go back to the gold standard? IDK does that mean that all currency will have to be backed by gold? let's take a look at that.

It's estimated that there is 10,000,000,000 ounces of gold in the world at present. The worlds currency is at approx $4 trillion US dollars. Gold would be 4 million dollars an ounce to back all the world currency. (check my math I'm not very good at it) I don't think much jewelry would be worn at that price.

 

The central banks are all buying Gold.now why would that be?
and the price of Gold and Silver is being manipulated, some say by "naked "short selling ( i.e. the derivatives market, paper silver and Gold not real silver and gold)

 

Because its value is going up, duh. It's what investors get paid for.

 

No Duh.it's value is going down if you care to look at the Gold price.or are you cleverer than you appear? do you know about the spot price?