The value of money has dropped by two thirds in 30 years

[mashman]

Banks don't print money, govt does, but yes that's the problem in a nutshell.

It's an easy fix, really. Banks in NZ have to have 17% of their funds in real cash, just change the ratio slightly. To 100%.

'Course, you'd struggle to get a mortgage, but you'd be living within your means, eh?

Maybe not in physical format, but they do use fractional reserve banking to "print" 9 times that which they have "borrowed".

It is an easy fix, but if money is involved, it'll never be fixed. What about the Oz banks?

That's only because people are too stupid/stubborn to realise that they don't actually need to use money at all, more it slows down progress... hence you wouldn't have a mortgage, just a roof over your head.

Why complicate it?

[Ocean1]

Maybe not in physical format, but they do use fractional reserve banking to "print" 9 times that which they have "borrowed".

That's what I said. But it's not 9 times, and it's not what they've "borrowed" it's cold hard investment cash. I also said they should be required to stump up with more, not sure what level is good but as it's an inherently inflationary practice it needs to represent a ballance that maintains inflation at GDP.

It is an easy fix, but if money is involved, it'll never be fixed. What about the Oz banks?

So it's an easy fix, but it's not an easy fix because it involves shit you don't like?

And what about the Oz banks?

That's only because people are too stupid/stubborn to realise that they don't actually need to use money at all, more it slows down progress... hence you wouldn't have a mortgage, just a roof over your head.

Why complicate it?

Sounds way more complicated your way to me. But I'm not a dirty communist hippie.

[flyingcrocodile46]

That's what I said. But it's not 9 times, and it's not what they've "borrowed" it's cold hard investment cash. I also said they should be required to stump up with more, not sure what level is good but as it's an inherently inflationary practice it needs to represent a ballance that maintains inflation at GDP.

That is simple enough (but not regarded as expedient). You reverse the link and let the increase in GDP drive the process. Add and subtract to suit.

In other words... no pay no play. But the problem with doing this is that much needed wealth transfer to the few would have to stop in order to be able to operate an economy on such a fragile margin of stimulus and error. No fat for the fat cats

[mashman]

That's what I said. But it's not 9 times, and it's not what they've "borrowed" it's cold hard investment cash. I also said they should be required to stump up with more, not sure what level is good but as it's an inherently inflationary practice it needs to represent a ballance that maintains inflation at GDP.

cold hard investment cash, in what sense? that money is plucked from thin air at some ratio. Got a source for that required reserve ratio of 17%? Had a look see and can't find it.

So it's an easy fix, but it's not an easy fix because it involves shit you don't like?

And what about the Oz banks?

It's nothing to do with shit that I don't like. It's holds us back, simple. It creates silos... and competition isn't always a good thing.

Well they're the main banks in the country, what's their required reserve ratio?

Sounds way more complicated your way to me. But I'm not a dirty communist hippie.

In which case, put your trust in me and I'll see you right comrade... don't sweat the detail, I got dat shit for ya.

[mashman]

No fat for the fat cats

but but but, they'll leave the planet and take all of the money with them.

[neels]

All of this will continue while the trading in the theroetical value of things continues.

The US financial crisis was caused in part by the trading on the theoretical value of debts taken out by people who would never have the means to pay them back, much like investing in a NZ finance company lending people money for cars they couldn't afford.

You only need to look at the share market and the valuing of companies based entirely on what the return on investment will be (assuming things continue as they are), and the value of assets they actually own when it all turns to shit and the receivers are called in.

[SPman]

but but but, they'll leave the planet and take all of the money with them.

Please.......

[flyingcrocodile46]

All of this will continue while the trading in the theroetical value of things continues.

The US financial crisis was caused in part by the trading on the theoretical value of debts taken out by people who would never have the means to pay them back, much like investing in a NZ finance company lending people money for cars they couldn't afford.

You only need to look at the share market and the valuing of companies based entirely on what the return on investment will be (assuming things continue as they are), and the value of assets they actually own when it all turns to shit and the receivers are called in.

The days of expectation that companies equity comes anywhere near the value of their shares is long gone. If they weren't bought, stripped and sold three decades ago it was because their share value was already well in excess of any assets they had.

[neels]

The days of expectation that companies equity comes anywhere near the value of their shares is long gone. If they weren't bought, stripped and sold three decades ago it was because their share value was already well in excess of any assets they had.

Yep, which leaves us with this....

[Zedder]

All of this will continue while the trading in the theroetical value of things continues.

The US financial crisis was caused in part by the trading on the theoretical value of debts taken out by people who would never have the means to pay them back, much like investing in a NZ finance company lending people money for cars they couldn't afford.

You only need to look at the share market and the valuing of companies based entirely on what the return on investment will be (assuming things continue as they are), and the value of assets they actually own when it all turns to shit and the receivers are called in.

What has changed a lot also is peoples wants and needs. They have become more sophisticated and there's no longer a place for a one on one barter system in the so called civilised world. What was once a worker from the fields bartering his grain for other food is now a multi layered process of exchange.

In order to change the financial system then, people would need to become less refined and that's a very hard concept for many, who have been "spoiled" for so long, to accept.

[Ocean1]

That is simple enough (but not regarded as expedient). You reverse the link and let the increase in GDP drive the process. Add and subtract to suit.

It's a good control philosophy. I'd be looking at ways to rigidly define GDP, it's the only weakness I can see.

But the problem with doing this is that much needed wealth transfer to the few would have to stop in order to be able to operate an economy on such a fragile margin of stimulus and error. No fat for the fat cats

For those fat cats money is an asset, if it doesn't return interest nobody would lend it, no investment capital for SMEs and no mortgages. Outside of that, yes some people make a tidy sum from manipulating systems designed to regulate the economy and, in some cases redistribute wealth. But almost all of the fat cats I know are simply succesful businessmen, they didn't invent the system, they're honestly just trying to maximise the return on any capital they've managed to accumulate. The inequitable shit we're both bleating about is mostly related to the govt practice of using public money to prevent the loss of that capital in poor or dishonest investments. The public didn't take that risk, the loss belongs with the investor as much as any income an investment might return. As for banking, you can only try to make sure that regulatory measures have negative feedback control inputs that maintain a stable environment which represent a socially desirable goal.

The other inequitable shit I was bleating about is the govt practice of simply printing money to fund election bribes. Or anything else. For every 1% of the value of the economy they print my assets and savings shrink 1% in value. So do yours. And man, do they have a lot of fucking expensive votes to pay for.

cold hard investment cash, in what sense? that money is plucked from thin air at some ratio. Got a source for that required reserve ratio of 17%? Had a look see and can't find it.

In the sense that it's actual cash, deposited with the bank by individuals in exchange for the interest it generates. The bogymen don't get to keep all of that extra money you pay off your mortgage mate. The money plucked from thin air is in fact govt generated, and as I said while the practice is inflationary I don't have a problem with it as long as it's control is linked to inflation.

And no, I don't have time, but I found it, so you can,

It's nothing to do with shit that I don't like. It's holds us back, simple. It creates silos... and competition isn't always a good thing.

Hoe does it hold us back?

What's a silo?

And no, you're correct, in a healthy modern society small children and sick adults are exempt from some forms of competition. Our society's definition of sick represents a societal contagen, we're no longer healthy enough to shelter the genuinely sick from Darwin's law.

Well they're the main banks in the country, what's their required reserve ratio?

17%. Don't matter who owns them, they all have to play by NZ rules.

In which case, put your trust in me and I'll see you right comrade... don't sweat the detail, I got dat shit for ya.

Fuck that's well generous of you, dude. Just send cash, cheque are so 60's, I'll be at home.

[mashman]

It's a good control philosophy. I'd be looking at ways to rigidly define GDP, it's the only weakness I can see.

When you live in a world that's financial and you have a country that has internal economy that does not use a financial system, then you can regidly define GDP .

In the sense that it's actual cash, deposited with the bank by individuals in exchange for the interest it generates. The bogymen don't get to keep all of that extra money you pay off your mortgage mate. The money plucked from thin air is in fact govt generated, and as I said while the practice is inflationary I don't have a problem with it as long as it's control is linked to inflation.

And no, I don't have time, but I found it, so you can,

Where do individuals get the cash from? Are you saying that private banking institutions do not pluck money out of thin air? What's the point of having inflation if the money that is linked to it matches inflation?

Hoe does it hold us back?

What's a silo?

And no, you're correct, in a healthy modern society small children and sick adults are exempt from some forms of competition. Our society's definition of sick represents a societal contagen, we're no longer healthy enough to shelter the genuinely sick from Darwin's law.

Consider 2 cancer research companies. They both have their own research and are both doing things slightly differently, however their intermediate results aren't shared between each other because there's money to be made, I mean economic advantage in having the cure. I'd rather they were cooperating instead of working in silo's for financial advantage. Money is holding back cooperation and associated with that, the silo's stop IP from being shared and advancing the understanding of others. Now apply that model to shampoo, technology, food prep, chemicals, drugs, footwear etc... it's SLOOOOOOOOOOOW and holding us back due to a lack of knowledge sharing.

heh... I'm all for competition when it's in regards to sport, but not where profit is the motive. It's counter-productive, see the above examples.

17%. Don't matter who owns them, they all have to play by NZ rules.

Must be an admin nightmare.

Fuck that's well generous of you, dude. Just send cash, cheque are so 60's, I'll be at home.

No problem, glad to help. I doubt you'll like the conditions attached as cash and cheques won't be required... but in the short term, it'll essentially be helicopter money wired to your account. Granted that's not cash, but it'll be digi cash in hand as we'll deal with tax for ya.

[Ocean1]

When you live in a world that's financial and you have a country that has internal economy that does not use a financial system, then you can regidly define GDP .

Yep. As far as the real world’s concerned it’ll be zero.

Where do individuals get the cash from?

I know this always seems to be hard for you to assimilate, but they earn it.

http://www.thefreedictionary.com/earn

earned, earn•ing, earns
1. To gain especially for the performance of service, labor, or work: earned money by mowing lawns.
2. To acquire or deserve as a result of effort or action: She earned a reputation as a hard worker.
3. To yield as return or profit: a savings account that earns interest on deposited funds.

Are you saying that private banking institutions do not pluck money out of thin air?

Almost certain there’s no private banks in NZ. I think they’re all publicly listed companies. Possible exception of PSIS and any of the old co-ops.

As for where fiat money comes from, it depends on the country but it’s always controlled by the govt.

What's the point of having inflation if the money that is linked to it matches inflation?

The point of matching currency to GDP is to eliminate inflation. That, in turn makes it impossible for govt to simply print money to pay for shit, they’d have to actually attempt to stick to the budget they were hired to implement.

Consider 2 cancer research companies. They both have their own research and are both doing things slightly differently, however their intermediate results aren't shared between each other because there's money to be made, I mean economic advantage in having the cure. I'd rather they were cooperating instead of working in silo's for financial advantage. Money is holding back cooperation and associated with that, the silo's stop IP from being shared and advancing the understanding of others. Now apply that model to shampoo, technology, food prep, chemicals, drugs, footwear etc... it's SLOOOOOOOOOOOW and holding us back due to a lack of knowledge sharing.

So, where do the resources come from to do the research? In fact how would you even fabricate the company in the first place? Ask a bunch of really clever people around for a nice cuppa and a talk about cancer cures? I think you’d find that every single person you asked would have a dozen better offers the next day, they didn’t sweat their ring out getting those qualifications and subsequent experience for nothing and they’re not about to start because someone thinks it a nice idea that they don’t get paid.

Nope, the only system in history that’s ever been as effective in sustaining growth as the commercial competitive model is that same economy under the extreme competition of war.

heh... I'm all for competition when it's in regards to sport, but not where profit is the motive.

If it wasn’t for profit nobody would get paid, nobody would invest in anything. Profit isn’t evel and competition isn’t the bogyman. The only viable motive for the common dislike of both profit and money itself is the need to shift the blame for a lack of personal performance.

Must be an admin nightmare.

Dunno, I think it’s probably reasonably straightforward. I suspect the complicated bit is pandering to all of the many and diverse interested parties who expect to tweak the system in their favour.

No problem, glad to help. I doubt you'll like the conditions attached as cash and cheques won't be required... but in the short term, it'll essentially be helicopter money wired to your account. Granted that's not cash, but it'll be digi cash in hand as we'll deal with tax for ya.

So, no real help then? Just more pretend shit.

[Brian d marge]

As for where fiat money comes from, it depends on the country but it’s always controlled by the govt.

this is true to an extent , the problem is what happens after the money is created , its based on perceived value so can flow in and out at a drop of a hat , go up or down etc
One of the biggest problems is the fractional rate , mean watch how quickly a bank can turn 10 dollars in to 80 dollars , remember that the newly formed 80 dollars is all on the computer ! ( more or less) and now will be looking to do some work i.e be lent out again !

take 10 , keep 17% in the bank ala da rulz , leaves you with 8.3 , now lend this out at the fractional rate of say 9 PLUS added interest of say 6% and bingo 80

(( 8.3+(8.3x6%) x 9 = 79.1 not bad eh , now that 80 dollars is in turn lent out at the same rate , , 718 dollar , from the original 10

Now this is a little simplistic , as there are taxes and stuff banks have to pay , but it show how much worthless money is entering the system and by making it move , ie lending it out , profits , taxes and investment happen ,,all good ...except

A; you now have a large debt ( savings... bad ....debt good )
B ; you now have a shit load of money in the system all looking for work and driving the prices of everything up , eg houses


If something is broken or doesnt work , dont do it

Stephen

[Ocean1]

As for where fiat money comes from, it depends on the country but it’s always controlled by the govt.

this is true to an extent , the problem is what happens after the money is created , its based on perceived value so can flow in and out at a drop of a hat , go up or down etc
One of the biggest problems is the fractional rate , mean watch how quickly a bank can turn 10 dollars in to 80 dollars , remember that the newly formed 80 dollars is all on the computer ! ( more or less) and now will be looking to do some work i.e be lent out again !

take 10 , keep 17% in the bank ala da rulz , leaves you with 8.3 , now lend this out at the fractional rate of say 9 PLUS added interest of say 6% and bingo 80

(( 8.3+(8.3x6%) x 9 = 79.1 not bad eh , now that 80 dollars is in turn lent out at the same rate , , 718 dollar , from the original 10

Now this is a little simplistic , as there are taxes and stuff banks have to pay , but it show how much worthless money is entering the system and by making it move , ie lending it out , profits , taxes and investment happen ,,all good ...except

A; you now have a large debt ( savings... bad ....debt good )
B ; you now have a shit load of money in the system all looking for work and driving the prices of everything up , eg houses


If something is broken or doesnt work , dont do it

Stephen

I find myself agreeing. Mostly. Disturbing.

Except I believe that 17% is net, the bank's not allowed to have debts exceeding 83% of current deposits at all times, not simply before outgoings somewhere near the begining of the fiscal year.

Still sounds like a lot don't it? Except the real effects aren't negative enough to nescessarilly ban the practice outright. After all most people wouldn't get a mortgage otherwise, and inflation's not so high that you can point the bone squarely at fractional reserve practices for the world's fiscal plight.

I don't understand what the consequences of a radical drop are. Whatever, I'm not convinced house prices would plummet to more "reasonable" levels just because you've made made cash scarcer.

On a related note I was pleased to hear some grumbles of dissatisfaction amongst the front benches last month at the performance of local body's costs wrt new residential developments. Mutterings of changes to territorial authorities statutes, no less. I've been sharpening my pitchfork.