Awesomelyglorious
Destroyer of worlds, reaver of souls
Joined: Dec 18, 2005
Posts: 14174
Location: Omnipresent
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 Posted: Thu May 17, 2012 9:40 pm Post subject: |
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| xenon13 wrote: | | The reason why people don't think they'll be paid back from Euro countries is because the Euro is so scarce, they realise it would be impossible for people to pay off their debts. The EU people continue to demand that euros remain scarce because they claim that money gets its value from scarcity, an Austrian bit of quackery if I ever heard one. It's just so stupid. |
xenon13, by "money gets its value from scarcity", do you simply mean that the value of a unit of currency is based upon the amount of other goods and services that can be bought per unit? If so, then this is just econ 101, regardless of whether you are Austrian or not. I mean, regardless of whether the ECB is running an overly tight monetary policy or not, nobody sensible believes that a currency can be inflated to oblivion and still retain value. If a national debt is 400% of GDP, and if in response, I increase the money supply by 500%, and give that 400% to the debt-holders, I haven't solved a problem, I've simply defaulted on my debt through inflation.
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ruveyn
Phoenix
Joined: Sep 22, 2008
Age: 76
Posts: 29326
Location: New Jersey
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| Posted: Thu May 17, 2012 9:56 pm Post subject: |
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| Awesomelyglorious wrote: | | xenon13 wrote: | | The reason why people don't think they'll be paid back from Euro countries is because the Euro is so scarce, they realise it would be impossible for people to pay off their debts. The EU people continue to demand that euros remain scarce because they claim that money gets its value from scarcity, an Austrian bit of quackery if I ever heard one. It's just so stupid. |
xenon13, by "money gets its value from scarcity", do you simply mean that the value of a unit of currency is based upon the amount of other goods and services that can be bought per unit? If so, then this is just econ 101, regardless of whether you are Austrian or not. I mean, regardless of whether the ECB is running an overly tight monetary policy or not, nobody sensible believes that a currency can be inflated to oblivion and still retain value. If a national debt is 400% of GDP, and if in response, I increase the money supply by 500%, and give that 400% to the debt-holders, I haven't solved a problem, I've simply defaulted on my debt through inflation. |
By Jove he's got it!
ruveyn |
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xenon13
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| Posted: Fri May 18, 2012 7:04 am Post subject: |
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| To say "the value of a unit of currency is based upon the amount of other goods and services that can be bought per unit" is not to say "the value of a unit of currency is based on the currency's scarcity". In the second case, an attempt is made to infuse an intrinsic value to the currency by making sure there's as little of it as possible. The first case is simply stating the definition of the value of a unit of currency. If currency obtains value not by being scarce but by the economy of the state in question doing well and that fact that taxes in that state must be paid in that currency, it doesn't mean that the first statement doesn't apply to it. |
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Burzum
Indeed
Joined: Apr 27, 2011
Posts: 1205
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| Posted: Fri May 18, 2012 7:58 am Post subject: |
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| xenon13 wrote: | | The reason why people don't think they'll be paid back from Euro countries is because the Euro is so scarce, they realise it would be impossible for people to pay off their debts. The EU people continue to demand that euros remain scarce because they claim that money gets its value from scarcity, an Austrian bit of quackery if I ever heard one. It's just so stupid. |
If Greece wasn't running such huge deficits (and covering it up) would they be in the situation they are in now?
The problem with the Euro has little to do with scarcity. It has to do with weaker economies sharing a currency with stronger economies, without any true political unity. Even your Keynesian friends will tell you that. |
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xenon13
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| Posted: Fri May 18, 2012 8:21 am Post subject: |
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Before the run on Greece, caused 100% by the nature of the Euro, Greece's debt to GDP ratio was 90%. It's estimated that it will be at 160% by the end of this year.
The run caused the first so-called bailout which demanded policies that shrank the GDP by 20%. The EU's internal devaluation policy also has the perverse effect of amplifying debts. Had Greece a normal currency this would have never happened!
The internal devaluation logic is as follows; Germany decided to make the workers pay in a bid to reduce the internal market to permit more exporting. This was a deflationary policy. This meant that the Euro periphery, that received loans designed to permit them to buy these new German exports, had more inflation than Germany did. This caused these places to be increasingly uncompetitive. So, Germany's answer to this problem is to force these places into a rapid deflation. A country that controls its own currency can devalue it and achieve the same results like that but as Greece cannot do this it must deliberately bleed the economy and cause massive unemployment in order to force wages down and deflate that way. Deflation amplifies debts and makes it even more difficult to pay. I don't think internal devaluation has ever worked anywhere.
It is quite a bit like the Austrians' cleansing depression to clear away the "malinvestment" though...
The scarce Euro is a problem because it caused the run on Greece to begin with. A currency based on scarcity is one where it seems logical to shrink economies, after all, it makes the currency more scarce. For a currency based on the size of the market though, this is total insanity. |
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Burzum
Indeed
Joined: Apr 27, 2011
Posts: 1205
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| Posted: Fri May 18, 2012 9:26 am Post subject: |
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| xenon13 wrote: | | Before the run on Greece, caused 100% by the nature of the Euro |
Uh, no. Greece's problem was caused by Greece. They hid their deficit from the EU in order to keep borrowing and now they are paying the price. |
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Oodain
big chief wulla bamboom alakaway
Joined: Jan 31, 2011
Age: 23
Posts: 5022
Location: in my own little tamarillo jungle,
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| Posted: Fri May 18, 2012 11:02 am Post subject: |
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| xenon13 wrote: | Before the run on Greece, caused 100% by the nature of the Euro, Greece's debt to GDP ratio was 90%. It's estimated that it will be at 160% by the end of this year.
The run caused the first so-called bailout which demanded policies that shrank the GDP by 20%. The EU's internal devaluation policy also has the perverse effect of amplifying debts. Had Greece a normal currency this would have never happened!
The internal devaluation logic is as follows; Germany decided to make the workers pay in a bid to reduce the internal market to permit more exporting. This was a deflationary policy. This meant that the Euro periphery, that received loans designed to permit them to buy these new German exports, had more inflation than Germany did. This caused these places to be increasingly uncompetitive. So, Germany's answer to this problem is to force these places into a rapid deflation. A country that controls its own currency can devalue it and achieve the same results like that but as Greece cannot do this it must deliberately bleed the economy and cause massive unemployment in order to force wages down and deflate that way. Deflation amplifies debts and makes it even more difficult to pay. I don't think internal devaluation has ever worked anywhere.
It is quite a bit like the Austrians' cleansing depression to clear away the "malinvestment" though...
The scarce Euro is a problem because it caused the run on Greece to begin with. A currency based on scarcity is one where it seems logical to shrink economies, after all, it makes the currency more scarce. For a currency based on the size of the market though, this is total insanity. |
wrong greece didnt go bankrupt only because of the euro
they had issues with tax evasion to luxembourg and other safe havens as well as standardized corruption on the governmental level in a way i havent seen before.
my collegues got out of a pretty serious arrest simply because of where he worked(and a smallish bribe)
i worked there for 6 months before the crash
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Fri May 18, 2012 11:06 am Post subject: |
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| Burzum wrote: | | xenon13 wrote: | | Before the run on Greece, caused 100% by the nature of the Euro |
Uh, no. Greece's problem was caused by Greece. They hid their deficit from the EU in order to keep borrowing and now they are paying the price. |
If we're completely honest, the problem was at least partially caused by the "shareholders in banks get the upside, the tax payers get the downside" policy made famous by the Greenspan put. People are currently concerned about a bank sector that may have to write down tends if not hundreds of billions in losses. Greece and its idiotic inhabitants should be raked across the coals repeatedly because they are guilty of being both dishonest and voting in a stupid manner.
Then again, who agrees to share a bank account with someone without checking their finances throughly first and without having any form of control over the other person's spending? If the Euro had been kept within the fiscally stable and responsible countries. Furthermore, if there was a clause that said "If you screw up your finances, you lose your right to make sovereign decisions and the democratic system is suspended" then it would have been a lot more stable. |
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ruveyn
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Age: 76
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Location: New Jersey
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| Posted: Fri May 18, 2012 11:09 am Post subject: |
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| TM wrote: |
If we're completely honest, the problem was at least partially caused by the "shareholders in banks get the upside, the tax payers get the downside" policy made famous by the Greenspan put.
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Privatize profits and socialize losses. The theme and credo of Crony Capitalism.
ruveyn |
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TM
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Joined: Feb 04, 2012
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| Posted: Fri May 18, 2012 11:11 am Post subject: |
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| ruveyn wrote: | | TM wrote: |
If we're completely honest, the problem was at least partially caused by the "shareholders in banks get the upside, the tax payers get the downside" policy made famous by the Greenspan put.
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Privatize profits and socialize losses. The theme and credo of Crony Capitalism.
ruveyn |
If you defaulted the banks, nationalized them and then recapitalized them, you'd get rid of a lot of the losses immediately. In such a move the people who have deposited money in the banks should be guaranteed by the state, but the shareholders should be booted out. If you make a shitty investment, you should have to take the loss. |
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ruveyn
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Age: 76
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Location: New Jersey
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| Posted: Fri May 18, 2012 11:18 am Post subject: |
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| TM wrote: |
If you defaulted the banks, nationalized them and then recapitalized them, you'd get rid of a lot of the losses immediately. In such a move the people who have deposited money in the banks should be guaranteed by the state, but the shareholders should be booted out. If you make a shitty investment, you should have to take the loss. |
The theme and credo of real capitalism. Crony Capitalism is an imitation which has displaced the real thing.
ruveyn |
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CSBurks
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Joined: Apr 30, 2012
Posts: 665
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| Posted: Fri May 18, 2012 1:27 pm Post subject: |
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| ruveyn wrote: | | TM wrote: |
If you defaulted the banks, nationalized them and then recapitalized them, you'd get rid of a lot of the losses immediately. In such a move the people who have deposited money in the banks should be guaranteed by the state, but the shareholders should be booted out. If you make a shitty investment, you should have to take the loss. |
The theme and credo of real capitalism. Crony Capitalism is an imitation which has displaced the real thing.
ruveyn |
It should be common sense that the market can't work when the state bails out the failures. If the government bailed out every failing business, the entire market would turn on its head and be rendered completely useless. In that system, we might as well call ourselves the New Soviet Union. |
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Joker
Sinn Fein
Joined: Mar 20, 2011
Age: 24
Posts: 7593
Location: North Carolina The Tar Heel State :)
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| Posted: Fri May 18, 2012 6:53 pm Post subject: |
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| I feel so agnry about the euro crisis and the effect it has had on the euro econommy Ireland has been in horrible shape even Spain has been suffering as well. Not really sure who to blame because I hate playing the blame game. |
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Fri May 18, 2012 7:39 pm Post subject: |
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| Joker wrote: | | I feel so agnry about the euro crisis and the effect it has had on the euro econommy Ireland has been in horrible shape even Spain has been suffering as well. Not really sure who to blame because I hate playing the blame game. |
It's very easy to point the blame, stupid f***ing voters, having a right to vote when they can barely tie their shoes. The countries involved are representative democracies, the people vote for people whom will represent their interests. By voting for representatives who make bad bloody decisions because said representatives promised the voters a higher standard of living that they couldn't afford, they are to blame for this entire debacle.
Government regulators failed at regulation, representatives failed at making good laws that would prevent banks from doing things like leveraging equity 70 times over and corporations such as AIG from overselling credit default swaps. Furthermore, they operated housing programs which drove up the housing bubble, neglected to control the flow of capital into the system through taxes and interest rates and failed utterly and completely at acting under fire when the financial crisis hit due to 30 years of horrible governing.
American politicians tend to say "If only we had a government as good as the people" well, the Euro zone and the US have a government that is as stupid as the people. The bailouts should have been higher, banks should have been nationalized 2 - 3 years ago, there should have been government infrastructure projects from day one and every republican in congress should have been told to shut the f**k up.
If you have a supply based economy, where jobs are free falling and you need to create jobs, cutting public jobs at a higher rate than the private sector can create them is retarded .I'm tempted to guess that the leadership of the republican party knows this and are letting the American people suffer to hurt Obama and the democrats. |
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Joker
Sinn Fein
Joined: Mar 20, 2011
Age: 24
Posts: 7593
Location: North Carolina The Tar Heel State :)
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| Posted: Fri May 18, 2012 7:43 pm Post subject: |
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| TM wrote: | | Joker wrote: | | I feel so agnry about the euro crisis and the effect it has had on the euro econommy Ireland has been in horrible shape even Spain has been suffering as well. Not really sure who to blame because I hate playing the blame game. |
It's very easy to point the blame, stupid f***ing voters, having a right to vote when they can barely tie their shoes. The countries involved are representative democracies, the people vote for people whom will represent their interests. By voting for representatives who make bad bloody decisions because said representatives promised the voters a higher standard of living that they couldn't afford, they are to blame for this entire debacle.
Government regulators failed at regulation, representatives failed at making good laws that would prevent banks from doing things like leveraging equity 70 times over and corporations such as AIG from overselling credit default swaps. Furthermore, they operated housing programs which drove up the housing bubble, neglected to control the flow of capital into the system through taxes and interest rates and failed utterly and completely at acting under fire when the financial crisis hit due to 30 years of horrible governing.
American politicians tend to say "If only we had a government as good as the people" well, the Euro zone and the US have a government that is as stupid as the people. The bailouts should have been higher, banks should have been nationalized 2 - 3 years ago, there should have been government infrastructure projects from day one and every republican in congress should have been told to shut the f**k up.
If you have a supply based economy, where jobs are free falling and you need to create jobs, cutting public jobs at a higher rate than the private sector can create them is retarded .I'm tempted to guess that the leadership of the republican party knows this and are letting the American people suffer to hurt Obama and the democrats. |
The propaganda machine is also to blame govermenet hates smart people by dumbing downs the masses they can controle the way the people vote it is quite sad. |
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