this is 100% false if I fix your tire and you hand me an IOU for $50, that IOU is now currency and I can trade it to someone else my proof for this is an existence proof: PEOPLE ACTUALLY DO IT https://twitter.com/SixDegreesOfBob/status/1188951828479635457 …
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4/ ok, so since the us dollars in your pocket are all fake and have no value, please hand me 200 of them and I will give you a pork chop from my farm, which has real value deal? https://twitter.com/SoSayethBob/status/1188954224677122048 …
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6/ (a) you're moving the goalposts ; the topic is "is fiat currency actual currency?" (b) I trust US fed because they have done a very good job for the last 40 yrs of keeping currency supply closely aligned with the size of the US economy, meaning no deflation / min inflation
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7/ So the only reason dollars have value is because ~7 billion people think they do, and because EVERYONE is incentivized to keep it that way? Also, what percent of your net worth is in paper bills?https://twitter.com/tigerboy74u/status/1188955281947938816 …
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8/ so go ahead and buy gold what's stopping you? are you upset that other people won't go along with your scheme? other people are allowed to have opinions, preferences https://twitter.com/SoSayethBob/status/1188955519513288704 …
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9/ Also, I never said that we need them. This entire thread started when you asserted > Money that is "loaned into existence" doesn't exist. and I believe I have proven that wrong (if you still disagree, send me all of your green paper pieces please)
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10/ Productivity has gone up massively. If a guy in 1910 can stamp 1 widget per hour for $1/hr, is it not reasonable that in 2010 stmaping 10 per hour he earns $10/hr ? https://twitter.com/SoSayethBob/status/1188960814633373697 …
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11/ But, of course, if I'm going to assert this, it would be good if I had some data. Please look at chart No. 1427. Money Income of Families—Median Income in Current and Constant(1997) Dollars in constant dollars, we see income go from $20k to $44k https://www.census.gov/prod/99pubs/99statab/sec31.pdf …
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12/ note again: this is CONSTANT DOLLARS. So we're seeing that people produce 2.2 times as much / earn 2.2 times as much over 50 years. Extrapolating to 100 years, that's a 5x. Population has done a 3.5x wealth increase x population increase = 20x compared to your figure of
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13/ whatr was it? a 2500% increase in the money supply? or, in other words ... 25x ? OMG, OMG, OMG we're seeing money supply grow by 25x while the economy grows by 20x ...over a century
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14/ I addressed maturity transformation earlier when I said that we trade apples for oranges all the time, at ratios that are not 1:1 ... and "dollars today" vs "dollars in 1 year" are like apples and oranges. https://twitter.com/sconzey/status/1188964682691940353 …
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15/ Now, your SPECIFIC example is a bit of a cheat because you're not announcing the maturity transformation until after the IOU has been accepted. In reality when I buy a debt note (a bond that pays principle in 20 years) I know the transformation when I buy it.
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16/ Trade is good. Trade creates value. Farmer A has more apples than he wants. Farmer B has more oranges than he wants. Letting them trade creates utility for both of them. Same with "money now" vs "money later". >>>
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17/ When I was 25 I wanted to buy a house, but had no money. I wanted a loan. Now that I'm 48 I have a fully paid off house and have surplus cash that is doing me no good. I want to make loans. This is maturity transformation. This is trading apples for oranges THIS IS GOOD
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18/ I've already asked in this thread and gotten no answer: what percent of your net worth do you store in cash? I ask this every time, and no one EVER answers. Odd. https://twitter.com/SoSayethBob/status/1188960072409341952 …
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19/ > that's fucking moronic basically argument from ignorance: "I can't understand what utility others see in it, therefore there's definitely no utility" have you investigated "price stickiness" yet? https://twitter.com/SoSayethBob/status/1188959406471270400 …
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20/ If the Fed prints $50 million while the size of the real economy grows by $50 million, there is 0% inflation let me give an example https://twitter.com/Bobthewelder3/status/1188968660888702976 …
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21/ We all agree, I assume (hope) that the exchange rate of apples to dollars depends on the number of apples out there, and the number of dollars chasing apples? If we keep dollars constant and double apples, prices of apples denominated in dollars fall. If reverse, rise.
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22/ If we have 300 million Americans and each has 1 dollar and each wants to buy 1 apple today with that dollar, and we have 300 million apples <handwave> the market clearing price is $1/apple.
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23/ If we add 50 million new Americans through birth / immigration / cloning, and each has the same apple demand curve, and we don't introduce any more apples, prices climb. But say that 1 in 1000 Americans grows apples, and grows 1,000 apples each. Pop growth -> apple growth
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24/ So we still have one apple per person. HOWEVER we have failed to increase the money supply. There are 350 M people who want 350 M apples, but only 300 M dollars. Apples are now 85 cents each, and wages have likewise dropped by 15%. When pop grows we need to grow $ supply
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25/ and deflation is BAD. When your boss tells you "new deflation figures are in, we need every employee to accept a 1% paycut...but good news, it's only nominal not real" no one is happy.
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26/ Fed doesn't run a deficit, US gov does. Agree, if the Fed increases money supply faster than population, we get inflation. However MODEST INFLATION IS GOOD. Far better than deflation. https://twitter.com/Bobthewelder3/status/1188970092551430146 …
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27/ That's not "hidden" inflation. That's regular inflation. Inflation only hurts two ways: 1) cash holdings 2) UNCERTAIN inflation prevents ideal business investment https://twitter.com/Bobthewelder3/status/1188970092551430146 …
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28/ The utility in inflation is not "wow, it's great that we've had 10,000% when you compound it over years". The utility is "it's always better to have +0.2% per quarter than -0.2%". So you aim to have errors on one side of the target.https://twitter.com/tigerboy74u/status/1188970535524261895 …
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29/ I've explained this. * deflation is QUITE BAD * modest predictable inflation has almost zero downside * therefore you should always aim slightly at the pro inflation side of the target, to avoid bad deflation 100% of the value is avoiding deflationhttps://twitter.com/tigerboy74u/status/1188971108776599552 …
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30/ OK, maybe not 100%. Some minor part of the utility of inflation is that it lets moderately unsuccessful businesses and moderately defective employees stay in place and avoid painful "creative destruction" that would otherwise be required.
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31/ I've said "sticky prices" several times.https://twitter.com/tigerboy74u/status/1188971518815899649 …
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33/ But to expand for folks who don't want to read the whole thing: imagine a firm making widgets with productivity X. Measured in apples, it produces 1,000 apples worth of value per week.
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