Re: [WDDM] Economics and Change

[Joseph Hammer <parrhesiajoe(at)gmail.com>]

Todays US dollar is back by about 1% real assets. It is 99% unbacked. That makes it comfortable to say, "Money is debt" for the fed. What makes the statement true is the existence of money with no corresponding wealth for it to represent. Even printing 1% extra makes that extra 1% debt. If you say that the 1% is not debt, then the Fed could say the 99% is not debt. They are the same in nature and effect, if not extent.

There is no way from where we are to the 100% backing that the theory supports. It is like saying,

Stage one, collect underpants

Stage three, profit

What is stage two? The most effective way to move towards 100% would be to drastically increase the interest rate... Or you could just take stuff from people.

You have to increase interest rates to get to 100% reserve, and you have to give out 0% interest loans at the same time?

What's stage two?

On Mon, Jan 17, 2011 at 2:19 PM, <Joshua N Pritikin> wrote:

On Mon, Jan 17, 2011 at 02:00:43PM -0800, Joseph Hammer wrote:
> The current position of the Fed on inflation is exactly what you are
> expounding.

Wrong.

Today's US dollar is backed by debt.

Binary economics posits money backed by present hard assets with a
present value and future hard assets with a future value.

> Central banks currently say that their money is non-inflationary. Why?

Because that's what people want to hear, even if it isn't true.

> All loans are "self-liquidating". All of them, fiat or non-fiat, gold
> standard or salt standard. That is the nature of a loan.

All loans are not self-liquidating. If I give you a loan to eat lunch,
that is not self-liquidating because it is consumed. You ate lunch and
the money is gone. When I say "self-liquidating," I am talking about
loans to purchase or develop capital assets with a substantial future
value.

In the future, I suggest you write shorter emails because it is of no
use to work out the implications of flawed initial assumptions.

Again, I recommend:

> > > > http://papers.ssrn.com/sol3/papers.cfm?abstract_id=928752