The Obama Presidency

Vid1:
Spent half his rant calling the guy insane, silly, subversive/anti-american. This isn't an argument. His argument is that sovereign power trumps economics. He's right that debt doesn't matter to an extent, eventually the currency will be devalued by hyperinflation when people lose faith in the American government and stability. There is no infinite resource, its like saying the market will continue forever upward, or that houses will always appreciate in value. We've learned the danger of both those myths, I really don't want to be here when/if we recklessly assume that dollar can be based purely on government fiat.

Vid2 I agree with Nixon. But here's where we're disagreeing or at least not arguing on effectively.
My argument is sovereign power supports fiat money (we agree) but there will be a limit someday (we don't agree?). That day isn't soon, its 50 years + away. That sovereign power is based purely in the faith in the stability of the United States government. By paying down our debt we create confidence and reenforce the faith of world that the United States is financially sound. We tax now, pay now and keep taxes lower in the long run (50 years +, well i fucking hope so) by doing so. Otherwise what does national debt to the United States represent other than a failure of accounting to put a value on something gained or lost?

GAH! You made me come back in. Diff-Chan is grinding his teeth right now.

Vid1: You're focusing on the trees (his opinion of the professor). Focus on the forest, his comments regarding US bankruptcy, the nature of non-convertible currency, and the true nature of the trade balance. Remember, the true cost of imports is exports. Hence the term "trade".

The US cannot go bankrupt. It cannot run out of US Dollars. It does not have to tax to raise dollars. It does not have to borrow to obtain dollars. It issues US Dollars at will so that users of the currency can obtain it. It issues US Treasuries to allow a benchmark "risk free rate" to be used and referenced in the markets, and to provide holders of US Dollars with a interest bearing savings account. It also uses US Treasuries as a tool to drain money out of the economy by making interest rates more attractive to "park your money" in. It only has to worry about hyperinflation, which arguably the US had already experienced in the 70s and early 80s. Government spending increases aggregate demand, which leads to increased employment, which leads to an increased output of goods and services. Inflation is too much money chasing too few goods. Increased output means more goods, not fewer. More employment means, to put it in your terms, a larger base of income tax revenues, draining money out of a growing economy via taxes. Government spending also is reduced during this time to not add too much more money into the economy.

Vid2: Nixon pretty much lies every second of this video which is probably why that generation didn't have a clue. But what he did granted the US monetary sovereignity over the world reserve currency. It can be argued that the US already endured its time of hyperinflation in the 70s and 80s as the world had to adjust from a gold based currency to a non-converitble fiat, paper currency. This inflation was also exacerbated by OPEC's price increases, which really makes sense because prior to 8/15/1971, we had essentially been engaging in a barter of gold for oil. After 8/15/1971, it was purely the US credibilty, military power, size of economy, size of population, investor laws, democratic society, etc,. backing that currency. The US Treasury yield curve was flat at 14% in the mid-1980s after Volcker did everything he could to battle this inflation, which was also put down by Reagan's (and Margaret Thatcher's) supply side economics (supply disruptions added to inflation because of existingly high demand not being adequately met with supply). Since that time US interest rates have been in a secular bull market reaching to near zero levels as recently as this past August. The natural interest rate for a non-convertible currency that the government prints at will is zero. Rates will probably increase a bit from here before stabilizing at some point.

Ultimately money is only needed as a lubricant for transactions. When people say their money has no "intrinsic value", they miss the point entirely. The real value, the intrinsic value lies in the goods and services being exchanged for that currency, which you obtained by providing goods and services yourself. Money is a token. When I have a token for public transportation, I don't stare at it and say "this has no intrinsic value, it is only a token" because I realize the real value lies in the transportation that I have the rights to receive.

If this economic system is to fail, it will likely require our military defeat on our homeland, ala what did in Imperial Europe. Considering that we are the only global power in history to have unrestricted access to both oceans, the world reserve currency, the largest navy every (owning the oceans and all trade/supply routes), the greatest technology both on Earth and in space, it will be a difficult task to accomplish though it is obviously not impossible.

Hol-up.

Gooch is nailing Diff-Chan?

Gooch what happens to us when/if the world at large says fuck dollars and start issuing everything in Yen/Yuan/Euro etc....? I do feel like peeps might get tired of our monetary dominance sometime.

Isn't Europe facing widespread economic uncertainty and dissent right now?

There's no uncertainty. Socialism is taking them straight down the same toilet that idiots on this board see as a the fountain of youth or some other mirage when they talk about social programs.

We're not always going to be a superpower. We're losing ground to the Chinese every year, once we've got a mature Chinese economic and education system we're gonna lose on the tech advantage, with the loss of Nasa's flights we're eventually going to lose on the space part too.

No one seems to want to bother matching our military might so we've got that. But economically we're on a gentle decline into well Europe.

Quote:

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Originally Posted by MarsKitten

We're not always going to be a superpower. We're losing ground to the Chinese every year, once we've got a mature Chinese economic and education system we're gonna lose on the tech advantage, with the loss of Nasa's flights we're eventually going to lose on the space part too.

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Once the Chinese economic and educational systems are mature, they're going to have a civil war on their hands. It'll be a billion person Tiananmen Square.

I think you over estimate the amount of oppression needed for a revolution. They're used to it and the chinese government isn't squeamish about having dissidents executed. So long no one starves or no one funds a revolution/faction inside (like the French did for us or we did for the taliban) ideological revolutions are rare, military coup is far more likely, but China seems to be immune from that so far.

It's a communist country. I don't think no one starving is in the cards. And these people that "are used to it" and won't revolt, despite going through an improved educational system haven't been born yet. What exactly are they used to?