What happens when China demands debt payments in gold bullion?
Is China buying up enormous sums of gold in preparation of demanding her debtors pay their debts from a now significantly depleted global gold supply?
What happens next?
Could China force the habbening?
Or is it bunkum?
>http://money.cnn.com/2016/02/10/investing/china-gold/
>http://mobile.reuters.com/article/idUSKBN0UL13H20160107
US treasuries are denominated in US dollars. They cannot demand gold.
Also all treasuries have a maturity date. You can't just demand money whenever.
>>70697218
Is there an ounce of gold left in Fort Knox?
What would be the USA response?
>>70697218
The Chinese economy depends on the Yuan being worth less than the Dollar, that is why they buy our debt. While the US could easily denounce the debt, and use its massive fucking military to get what it wants, it would be more likely to have a large budget balancing, all welfare and social programs cut, and the debt paid off within 10 or so years.
If they demanded it all at once, everyone would just laugh, and it would hardly effect the American credit rating.
>inb4 talking about straya's irrelevant debt
>>70697343
You can't just de-engineer products and sell them through a state satellite company either.
Hasn't stopped China.
>>70697218
It's nothing. China needs the US to buy all their lead tainted chink shit. Without the US, China would collapse.
>>70697521
Thanks to those with s better grasp on currency than I.
Happening will be within a fortnight. Prepare.
>>70697456
Except "do something" in this case is coerce a more powerful foreign goverment to do something they don't want to do.
That is far different than build something with your own engineers.
>>70697218
If they ask for their mone back immediately, and they are serious. Gold or not gold... US General said the only recourse is war at that point.
>>70697715
See, I'd love to be truly comfy, but I've seen so many happening threads where literally nothing happens.
>>70697881
Do you think China has the balls to try and challenge or cripple the US?
>>70698031
Try to keep as much cash as you can on you. When it happens you won't be able to go to an ATM.
>>70698149
At least bait that hook Canada.
>>70699004
http://www.superstation95.com/index.php/world/1144
>>70697218
China is buying gold to hedge bets against US weakening the dollar to make Chinese held US treasuries worth less.
>>70699504
There has been talk of a gold backed yuan acting as a reserve currency in lieu of the weakening petro dollar. The chinks are betting in both horses.
America devalues currency through inflation, making Chinese held treasuries worth a lot less. China then points to the weakening dollar, and proposes gold backed yuan.
Or
America keeps the dollar at current levels, treasuries mature, and China makes a profit.
Bump for any thread that isn't garbage.
> what happens when China asks for their money
We tell them to come and take it.
>>70700545
Thanks for thread complement, I think?
>>70700748
>They demand their currency back in exchange for the shitload of USD they already have.
>American market inflates because of all of the American dollars back in America.
>Forced to adopt new currency.
>>70697218
Thanks Trudeau
>>70700748
What if they do?
>>70701110
It was. I passed 3 "who is white?" threads, 1 eternal anglo, and at a bunch of LGBT drama stirring.
Economic game theory is refreshing, and I've been practicing since the gold backed yuan rumors. Please, for the love of god, ask me anything.
>>70701192
Since US treasuries are in dollars, they can only be paid in dollars. As long as the dollar is not backed by bullion they will not be paid in bullion.
It would benefit the US to weaken the dollar before maturity in order to pay less when china dumps their US bonds, but as I've said before, weakening the dollar may allow china to propose a gold backed yuan reserve currency.
>>70701586
I think the problem may be we are running on the assumption China will play by the established rules.
>>70701677
China is very good at allowing short term losses in order to gain long term dominance. This is the only pattern I've been seeing. They would be willing to take a hit on $3 trillion in bonds because they have hedged their bets with bullion. Reading a couple of articles about swiss smelters shows that demand is about 38% higher than supply, and most of the gold is traveling east. I think they are playing the long game, but preparing for instability in global markets.
China and Russia have been hording gold for many years. China knows it's either them or US that crashes possibly this year. Alot of countries have already demanded payments in own currency for oil this year distancing themselves from the petrodoller. BRICS banks know shit is about to go down and prepping for economic warfare eventually heading back to the gold standard.
>>70697363
Some, not sure how much
I think most of the Government gold?
Is at the federal reserve of new York vault.
Jews like to be close to the source
>>70701978
Can I grab your opinion on this?
Don't know whether to be legit concerned or just more bullshit swirling on the web.
https://www.superstation95.com/index.php/world/1144
>>70697218
>>70697363
Chinks are basically dog eating retards. My gf is a masters in statistics and is basically retarded.
>>70697456
If your credit card company demands payment in anal sex instead of dollars you can legally tell them to fuck off.
"What if China demands gold?" is just "What if China tries to extort money form the US?". That's not the deal. If they want to start a war to try to seize assets they can, but they don't have any legal authority to.
>>70697218
Legally the T-Bills China holds do not entitle China to anything except the interest and principal upon maturity. The could sell the T-Bills on the open market, but that would drive down the dollar making US exports cheaper and thus more competitive.
>>70697218
>What happens when China demands debt payments in gold bullion?
we laugh and pay in cocaine instead
>>70702149
America can absorb the 3 trillion in bonds coming back. The problem is that everyone else is financially fucked, and will try to leave the dollar. The scenario presented in the article is probably the worst case, with a run on banks and stock crash.
There's not much left to fall back on after 2008. The emergency meeting, from what I gather, was in response to being sent to the kiddie table at the economic meeting, with Putin seated front and center next to Xi Jin ping ( or whatever his name is)
They are hoping Obama overreacts and makes a mistake. He's not an economist, and most of the Fed has admitting to not knowing exactly what they are doing.
I say a happening is at 40% with the happening described in the article at about 15%. We have a few bandaids left, but the chongs and russkies might be able to offer the world better economic certainty for investors. This kills the dollar.
>>70697218
>Chinese demands
It's like an ant hill making demands, not only can you not understand them, you don't care.
>>70699004
There is speculation that a 'glitch' will happen in the digital currency sphere when it all goes down. Could be tin-foil hat, doesn't hurt you to think about it.
>>70702657
Right.
We're still assuming China will play by the rules of international finance.
Why would China play by Jew rules if they think they can force the upper hand and make a play for the dominant currency?
How many major currencies are still backed by the gold standard honestly?
Is it all just imaginary numbers on a mainframe somewhere?
Appreciate t currency lesson though.
>not my strong suit.
Anyone want to through some devils advocate?
>>70703111
To clarify, china is poised to strike an economic deathblow, they are just trying to bait a response out of Obama in order to promote insecurity in the dollar and demand a new reserve currency.
>>70701288
Should we buy gold and horde it too? What about silver?
a new world bank is opening in china this week its over for us, they control us.
>>70703228
If china were to not play by the rules, it would hurt their chances at becoming a reserve currency by showing a disregard for established international law. In order to gain support, they have to play the game and look like the best place for investors.
A good investor can smell a trap, which explains why a lot of them are moving away from the dollar.
>>70703326
If you want a hedge against inflation but stock in companies with huge fixed debts.
If you want a hedge against the habbening buy small units of silver. If Lord Humungus finds out you have golds you will be killed and your shiny taken.
>>70703326
I'd look into it more yourselves then make a decision based on your findings.
Personally, I bought gold last year around 1085. It's now 1256, with a +20 dollar rise since yesterday. If a gold backed yuan becomes a reality, we may see gold as high as 20k an ounce before settling around 4k, where most people believe it should be.
If you can afford to sit on it while worrying about your own supplies of food, water, shelter, and bullets, I'd say it's a great way to store wealth for when the bad times pass.
We are in uncharted waters though, and this is just my opinion. I am no expert.
>>70703362
lol. The criminals that run the Chinese communist party are stealing everything and parking the money in real estate investments outside of China. China will fall and they will all escape and live off their holdings.
>>70703326
>>70703547
Also, what he said. They can make private gold ownership illegal and confiscate by force. They've done it before in the US.
In Greece they tried to prevent a run on the banks by only allowing 40 euros a day to be taken out.
Any affected country that relies heavily on food imports will be up shit creek as well.
Just some things to think about. There really is no good answer.
>>70703547
If the markets for dollars etc collapse, how do you capitalise on gold / silver reserves?
Do you physically hold the bullion you have bought into at your address?
>not being a smart cunt, genuinely want to knowing you only have the paper certificates showing you own $xyz in bullion stored somewhere else in the world, what is the benefit of that?
Isn't your investment then not worth the paper the certificate is printed on?
How can an investment in someone else's bullion possibly help you when
>1, you don't physically hold the precious metals, or
>2, the money they were worth is now unavailable and worthless?
Again, not taking the piss, trying to get my head around this.
>>70704184
You either want the metal yourself. Or you want a currency that is going to be backed by it
>>70704184
Paper gold and silver is referred to as etfs. In this kind of scenario we were talking about, they are worth nothing. You only own what you can hold.
Also, etfs are most of the reason the price of precious metals are artificially low. There is more paper gold than actual gold.
This kills the etf holder.
>>70704184
>>70704534
Woops, forgot to answer your question.
Paper gold is useful in trading large amounts.
>>70704184
What level of and type of collapse?
Hyperinflation: Stock in companies that borrowed heavily at fixed rates and spent it all on fixed assets like real estate and heavy equipment. The inflation will make repaying the debts cake and they'll have huge profits because they have all those assets for effectively free.
Habbening: Small silver coins/bars/tabs. Held at home. Spend slowly and carefully. If the hungry hoards find out your have money they will overwhelm you ant take it. No gold, when you get change from a purchase the wrong people will find out you hold gold.
When the shit hits the fan financially we're probably going to have to give them California. Hope they have fun shooting Mexicans.
>>70697729
Any more?
>>70704646
Solid advice. Pensions and 401ks are usually the first to be sacrificed as well.
If happening I'd invest in actual supplies you would need to live as well. If you have a "real" girlfriend or wife get them into couponing. I have an entire room that looks like a convenience store that she bought for pennies on the dollar, mostly free. Bitches love free shit, and it's addicting for them.
>>70704726
China is run by the Communist Party. The already know China a fucked. All the Party Elite want is to steal a fuck tone of money and park it in real estate. They do not want to take territory where they own real estate, that would fuck over the property values.
>>70704726
What does California have that could possibly interest the Chinese besides over inflated property prices?
Weren't they contemplating bankruptcy a few years ago?
Or is California considered so low tier value it's like chopping off a hand to save the arm?
>>70703054
And the one rational comment gets buried.
ITT idiots who don't know shit about basic macroeconomics. Scary that y'all are allowed to vote.
>>70704880
Well, they could hold American assets in china if we don't make good on our bonds. I remember reading about a ship being seized by another country because of lack of payment or something. Here's a link.
http://www.businessinsider.com/hedge-fund-elliott-capital-management-seizes-ara-libertad-ship-owned-by-argentina-2012-10
>>70697218
We say fuck you ching chong's suck our huge American dicks
>>70697343
Picture related. This is the Chinese gold market
>>70704965
the government is poorly run in california, but don't think that reflects the value of california or its workers.
california is money, they have vast resources from oil to nonstop growing seasons.
between silicon valley and hollywood they've produced probably most of the media you've ever enjoyed.
>>70705067
Sorry, I assumed people knew this.
I may have glossed over why china wants a strong dollar when the t notes mature. Stronger dollar=more "return."
(I'm aware that they will receive the same amount of dollars, merely stating that they wish to increase the value of the dollars they receive )
They are betting on both horses though. With all the gold they've been buying, if america inflates they can point out instability and promote a new reserve currency.
>>70703054
Sorry mate, forgot to reply.
Would selling the T-bonds on t open market collapse the USD?
Does China physically own enough USA debt to pull the rug out from under the states and deflate the dollar?
How would a sudden and massive flood of USA treasury bonds affect the states in terms of the national economy?
Or more importantly, the little bloke on the street?
>>70706041
US controls t bond payments. Ultimately they CAN decide not to pay, but that would make us look incompetent to global investors.
>>70705067
Some of us are trying to learn and understand.
Get stuck in, teach what you know and contribute, or fuck off with your bitching.
>>70706154
Also, to add, the treasury market is pretty liquid and deep, but not 3 trillion deep.
I think china sold about 500 billion in the last couple of years. Looks like a slow dump to me.
>>70705475
Didn't know that.
Thanks burger.
>>70706041
> Would selling the T-bonds on the open market collapse the USD?
No matter what China does America will still have their industrial capacity. If the dollar collapses all that will happen is everyone who holds dollar denominated debt will lose that money and suddenly American exports are super cheap, leading America to a massive export boom.
> Does China physically own enough USA debt to pull the rug out from under the states and deflate the dollar?
No, the Chinese Gov holds only about $1.2t of the Fed debt.
http://ticdata.treasury.gov/Publish/mfh.txt
> How would a sudden and massive flood of USA treasury bonds affect the states in terms of the national economy?
Depressed dollar, ginormous export boom because American goods would be cheaper than other options. American imports would plummet causing recession in countries that export to America, like China and Mexico.
> Or more importantly, the little bloke on the street?
The little bloke would benefit from the labor demanded by the export boom.
>>70706778
Thanks mate.
Appreciate it.
>>70706778
How does dumping T-Bills on the open market drive down the dollar?
>>70707120
T-Bills are how large volumes of American currency units are traded.
When they are sold they are exchanged for something else, like €, £, or ¥.
The normal rules of supply and demand apply, when US dollars are sold and something else is bought the relative values can change.
>>70697218
it's not that simple
for instance, countries may simply not honour their debt obligations to china at all, and just refuse to pay china anythign
gold is contrary to popular belief, one of the least stable tenders available
why?
because we simply do not know how much of it there is.
countries all CLAIM to have gold bullion reserves to provide a kind of surety against temporary de-valuation of their currencies, but no country (esp america) is willing to provide any proof
possibility one:
the amount of gold is vastly under the projected levels, countries have been secretly selling gold as jewlery to make money
when this is realized the price of gold will skyrocket; but then when nobody has any idea just how high the price SHOULD be, the market will be unable to trade gold at all because of lack of consensus on the value of it
causing a massive global rash, that will only be resolved when global stocks have been transparently re-evaluated
possibility 2:
there is much more gold in existence than anyone knows about
someone has been hoarding it secretly to inflate the price, and is selling it gradually at that inflated price (like diamonds, notice how nations don't trade in them)
one day someone stumbles on fifty tons of gold in a swiss vault and the price crashes
OR one country is secretly hoarding gold, and will declare this to crash the ecconomies of other countries
>>70707760
Yup, T-Bills are a debt instrument. There is nothing to stop the US Gov from printing a $1.2t dollar bill, mark all the T-Bills China holds as paid and cancel them, and put the bill into a DHL overnight envelope, and mail it to Beijing. The Chinks could even take it to a local CitiBank branch and deposit the note because it would be valid US currency.
What would happen if China threatened to reclaim anything US-owned under Chinese authority unless an equivalent portion of the debt was repayed?
>>70708393
China makes most if its money shipping cheap plastic crap to America to be sold in Walmarts. There is nothing that they could possibly gain through threats or intimidation that could possibly be worth derailing that gravy train.
>>70697218
USD are legal tender for all debts in the United States of America, public and private. End of story. No one can demand payment of any debt in the US in any form other than USD (for example, you can't even force performance of a labor contract, you can only sue for monetary compensation), least of all treasuries.
>>70708393
We just sold / leased two of our largest ports to the Chinese.
Fucking insanity.
There is a condition in the lease that after a decade (I think?) our navy has to ask the Chinese owners / lease holders for permission to dock at and use our own fucking port facilities.
>>70708977
If you have sold the debt though, does the crediting party have the ability to demand payment in whatever form they chose though?
I mean, if it is a USA debt held and owed in the USA, sure, use American dollars.
Can the buyer re-set the terms post sale?
Thanks Mate.
>>70709310
No.
>>70697218
That's not how it works. Let me tell you how it works.
>China sells a lot of stuff to the US, certainly more than the US sells to China
>Therefore China accumulates USD reserves
>China swaps their dollars for treasury bonds because treasury bonds bear interest and are equally safe
Exactly the same as any other holder of USD could do. If you don't like foreigners having claims on product of your country then you can stop buying cheap foreign shit, but really, it's all to the benefit of your citizens. Essentially you get the world's best terms of trade because everyone in the world wants to sit on USD denominated assets.
>>70709648
Fair enough.
Thanks for the explanation.
>>70708354
"money" relies fundamantally on the agreement that everyone will accept it, and that it has a predictable (though not neccicarily constant) value
inter-currency trade relied initially on by linking hard resources to currency, initially by making he coin itself out of a precious metal; thereby giving it a "base price", then by using it as a credit exchangeable for a set amount of hard currency eg. every US dollar being changeable for a set weight in silver; this worked better for practical reasons.
but this system was now honour based, because it rellied on nations being honest about the amount of bills printed AND that a country would not print more bills than they had hard resources to cash
but then it was fucked up by capitalists, who de-linked currency with hard resource
your cash suddely only had value relative to trade
for some countries this was great, because their currency magically became worth more as their ecconomy grew; and this snowballed until they had genuine ecconomic dominance
foolish smaller countries agreed to trade in "unbacked" currency, not seeing how it would ive long term dominance to the capitalist
after the world war there was a watershed moment, when the germans payed the "war debt" by simply printing more currancy, domestically being reduced to bartering; it should have occured to everyone at this point that ANY country could do this, but it didn't
capitalists used millitary force to ensure that smaller countries were forced to trade with "unbacked" currency, and that bartering was illegal
ask yourself this, why IS bartering illegal?
isn't it the fairest and simplest form of trade?
>>70705756
And then the first country to adopt this "new currency" will get freedom bombed.
Ahh the circle of life
>>70709788
I ask myself why so many fools conflate economics and morality.
Money is a claim on productive capacity.
>>70703083
>we laugh and pay in cocaine instead
Or opium. Pretty sure the sick man of Asia misses that high.
>>70697218
Basically OP, China and Russia dropped out of N.W.O. deal.
They are both fighting with leftist infections inside their countries.
They saw something scary is coming.
So... Now the Petrodollar War machine needs a target. Who will step up.
>>70709788
Good point, they were trying to crack down on the sharing economy or some shit a while I go, I seem to remember Labor making a bit statement about the sharing economy or something like that....wouldn't that be undermining our dollar?
>>70709788
Money is a tool of the state and gets its value from the need to pay taxes in the state's currency. This is how money has ALWAYS worked, before, during, and since gold standard periods. The USD won't be abandoned until America no longer has a tax obligation to satisfy in USD and the same is true for any other nations' currencies.
What are the benefits of a strong USD?
From what has been said in this thread, a weaker USD seems to me like a good thing.
>>70710041
but it's enforced by the state againsts the citizens by banning bartering, and enforced against foreigh nations by forces of agression
look at how the US forced japan to trade
it's a system that keeps a third of the word in poverty, because it creates terms of trade that disadvantage them with every transaction
hence they are forced to export raw materials which cannot be deflated, directly creating banana republics and all that goes with them
simply look at what america does to anyone trying to re-introduce "backed currency"
>>70710282
no it isn't a big mac will be 10 dollars, while a chinese man owns mcdonalds, making it out chemical ingredients. Fuck china, they want to lower us down to nothing and take everything, let them feel how it is to run the world, it fucking sucks, i give them 3 months till they say here take it back nothing make sense.
>>70710282
Stronger USD lets you buy more stuff from overseas in exchange for less of your own stuff.
Real terms of trade for your nation basically comes down to this:
>What imports can I get for my exports?
It doesn't benefit everyone in the nation all the time of course. Export industries benefit from a weak dollar. However, the nation as a whole stands to benefit if foreigners are trying to get and keep USD forever because you can import so many goods & services relative to exports.
>>70710282
Strong dollar mostly benefits the wealthy. The filthy poors are tricked into supporting strong dollar policies because it is supposed to lead to cheaper gas.
>>70698105
It would be self destructive. We'd move our factories to some other slave labor economy and they'd collapse without us.
>>70710239
well it's interesting, bitcoin was another watershed moment for the financial sector; bitcoin is a simple ponzi scheeme, because the value of the currency is build entirely on inflation
suddenly hundreds started appearing
this should have been a clear message to the general public "no unbacked currency is viable in the long term"
the US had a great depression because of hyper inflation, as did germany and mexico and many other capitalist states
a "sharing ecconomy" would destroy the control capitalist investment banks (there are two kinds of bank, traditional and investment; the latter making the former obsalete) have on the mortage market and household debt.
BUT, there is a huge problem with sharing ecconomies; you have to amas wealth in phisical form; for many reasons this is disasterous, basically it leads to one guy hoarding all the wood so nobody can build anything
(see: modern diamonds)
if we introduced "backed currancy"?
capitalists would sanction us, boycot us, and then bomb us.
fuck america
>>70710865
So it's pretty much just dick waving at this point?
>>70710358
>but it's enforced by the state againsts the citizens by banning bartering
Bullshit. Name one situation where I would actually be disallowed from bartering.
>it's a system that keeps a third of the word in poverty, because it creates terms of trade that disadvantage
Every other country's desire to save USD reserves is the reason the US has such great terms of trade (same for the other reserve currencies of powerful net importer nations). I agree, if people stopped to think about it they would riot in the streets. I remember an economist described it as the world's biggest case of war reparations that Japan has run such huge trade surpluses against the US since WW2.
>simply look at what america does to anyone trying to re-introduce "backed currency"
Tinfoil garbage. Commodity money or any other convertible currency scheme is economic suicide because it makes good policy unsustainable, not because it gives you a magical advantage over the US.
>>70710282
Weaker dollar is good for people who get their income in industries whose goods are traded globally (either export industries that export more, or domestic industries that have fewer imports to compete with).
Stronger dollar is good for everyone else (your income, which isn't tied to trade, buys more foreign imports).
From a macroeconomic point of view, a weak dollar is good for the entire economy in recessions, because it increases demand (from foreign countries that want to buy your cheap goods). A strong dollar is good in booms, because it reduces inflationary pressures (foreign imports are cheap, and that puts a cap on how much domestic producers can raise prices).
But most people are idiots and think a "strong" currency give you a big dick. We should really call it "expensive" dollar and "cheap" dollar to short-circuit the morons.
"Strong dollar mostly benefits the wealthy" is another nonsense explanation. In general weaker currencies are good for capitalists because weaker currencies fuel inflation, and inflation guarantees profits for capitalists (the value of their assets rises faster than the value of their debts). If you want a class-based analysis, strong currencies are mostly an obsession of upper-middle class retirees who are living on a fixed income (which declines in value with inflation).
>>70710242
basicall the value of money exists as a promise that each individual citizen will stay in debt, and yet now default
basically by using unbacked currancy we are forcing every australian into a massive loan scheeme where we pay interest to bank and lenders, to allow those same lenders to invest internationally on favourable terms
doesn't seem like a good system to me, it's immoral and it hurts the average australian enormously
the thing is the US CAN'T honour their tax obligations, we saw this in the GFC
it's not even based on the US taxation or the promise of future US taxation
I think it's based soley on the understanding that nobody is able to devest from the US market, and on that basis a "bank run" or US held debt is impossible
in primative terms, five people are owed a goat by ugg, the biggest caveman in the village
ugg only has three goats.
everyone knows ugg can't pay EVERYONE, but since ugg hits everyone who demads that they be paid imediately with a stick, and hits anyone who mentions ganging up on ugg; the situation is stable.
this is also aided by the liklihood of the people who are owed by ugg helping him fight anyone trying to laim their goat, because if they in takin uggs three goats, the other two vilagers will never be paid
>>70710970
They don't just "desire to save USD reserves" in an abstract sense, it's currency manipulation. China had no way to run perpetual trade surpluses without saving in USD. Now Japan is doing the same thing.
>Tinfoil garbage.
I agree that is should be tinfoil garbage, but you've seen Clinton's emails, right? The closest advisor of the highest-ranking foreign policy official in the most powerful country in the world actually believed that one factor influencing Sarkozy's desire to take out Libya was undermining Gaddafi's currency scheme ("to preserve French influence").
>>70710482
China wants a strong dollar.
>>70711489
Are you talking about public debt? Because public debt is exactly the same as money spent into existence except that it bears interest and therefore is a risk-free investment vehicle. There's no shortage of USD for the US government to swap bonds for reserves if for some reason they needed to. For example look how the Fed does QE: they just debit a securities account and credit a reserve account. (In other words swap your treasury bonds for reserves.)
The same is all true for the Australian government's capabilities with regard to Australian treasury bonds.
Promise of future taxation etc. is a fallacy. Government liabilities don't all have to be paid off and nor would we want them to be.
The only system in which there are hard limits on public debt and deficits is a convertible currency regime like the gold standard you're advocating. It would tie the government's hands (in terms of fiscal policy) such that economic recovery is impossible until the gold window is closed and it can ramp up its net spending. That's why I say convertible currency makes good policy unsustainable.
>>70710970
>Bullshit. Name one situation where I would actually be disallowed from bartering.
there are actually many, many of them,; and they are writen in stone in our laws
generally bartering on a community level (for instance swapping jam for fruit) is not punished, but that is simply because it is petty and impractical to enforce; however if it became widespread it would be cracked down on though tax evasion means (declaring income in kind honestly would trigger a arrest if too much income in kind was declared, if it was not declared you would be charged with tax evasion)
if a business only accepted payment in the form of barter, the reaction would be much more swift, you could not make a shop that only accepted silver as payment for instance
compaies trading in vitrtual credit (steam credit, itunes credit) are forced by law to link their currency with a "real" currency on a 1:1 basis, and not restrict transaction (to prevent sub-currency inflation), so if itunes decided to only accept bitcoin, it would be blocked
so you see it's an invisible line, because it's not often crossed; why WOULD someone break barter laws?
the only reason is out of fear of a imminant currency crash, and few people believe this is possible
>Tinfoil garbage. Commodity money or...etc etc
ah, well you would be wrong there I think
"backed currancy" is in fact the most sustainable (after backing with finite resources, which is only theoreticaly possible)
it remains stable because it cannot inflate or deflate, the price of goods flustuated in the paces of currency fluctuation in the market (eg. thing being more expensive in some places)
the amount leant can easily be controlled to stop there being more debt than capital
and it DOES give a magic advantage (or more accurately levels the field) with the US, because when someone in the congo exports wood, if they only accept payment in gold not US dollars, the US can't then print more money thereby devaluing the payment after it's made
>>70697218
Nothing, real economics don't work like that. But assuming for some reason they announced they're only trading in gold they'd hurt themselves a lot more than they'd hurt their trade partners.
>>70711777
>They don't just "desire to save USD reserves" in an abstract sense, it's currency manipulation. China had no way to run perpetual trade surpluses without saving in USD.
Yeah. Trade surpluses and net saving of the other country's currency is exactly the same thing.
>I agree that is should be tinfoil garbage, but you've seen Clinton's emails, right? The closest advisor of the highest-ranking foreign policy official in the most powerful country in the world actually believed that one factor influencing Sarkozy's desire to take out Libya was undermining Gaddafi's currency scheme ("to preserve French influence").
If true that is kekworthy.
>>70712353
public debt is limited by the necessity of a functional economy. eventually, fiat issue devalues the currency because the new circulation is typically credited to unproductive enterprise
gold standard doesn't limit government spending because credit still exists, as do other semi-liquid tradables. what it does is constrain government spending to things that are net profitable.
how AWFUL that government expenditures should be limited
further, convertible currencies would still have limitations, nonconvertability over a certain amount, nonconvertability by non-citizens, etc.
you're acting as if liquid transactions don't face hard limits. I get a call from my bank to fill out federal paperwork every time I want to transfer more than 10k. greeks and cypriots could only withdraw 100 euro per day.
>>70712353
it seems like you've studied this more than I have, go slow or you might loose me here
>except that it bears interest and therefore is a risk-free investment vehicle
but only if it is payable debt, this is half of the sub prime mortgage crisis no?
if you are trading debt on the basis that it will return interest in the furure (thereby inflating the value of held debt), you quickly create a situation where people are lent more than they can pay, then that debt is traded to people who don't know that the debtor can not in fact honour it
it's like passing the promise ugg gave you of a goat to someone else in exchange for a chicken
the chicken seller thinks they are getting a great deal because they don't know that the promise of a goat is worth less than one goat, because ugg owed more goats than he can pay
so in fact I think it DOES rely on the promise of perpetual debt, because the interst gain is factored into the overal debt value
>>70712370
So you acknowledge that currencies are supported by the forced tax liability imposed by the state?
>ah, well you would be wrong there I think
"backed currancy" is in fact the most sustainable
If it's so sustainable then why was the gold standard suspended every time the US needed to go to war or fix the economy? Do you really think a bit more currency stability is worth the uncontrollable unemployment and inflation-deflation cycles? Also worth a mention is how easily the wealthy can exploit such a system by extorting the government into paying higher and higher interest rates (note that bond vigilantism is not possible against a floating fiat currency sovereign).
It's just a terrible system.
>>70713092
>what it does is constrain government spending to things that are net profitable.
>how AWFUL that government expenditures should be limited
Sure, let the government operate like every other entity in the economy and respond pro-cyclically to recessions/booms. Let me know how that works out for you.
>>70713215
a bond owner who considers that the government is taking action to undermine his investment shouldn't be allowed to sell his holdings? are you on meth?
>>70713385
government is in the greatest NEED of a budget cut. spending more during a recessionary cycle doesn't cure the recession because it doesn't fix the misallocation of resources.
the government already spends 50% of gdp. you think increasing it to 60% is gonna fix a recession?
what school do you subscribe to, first of all? don't peddle this filth to someone not in the know without airing your dirty laundry
>>70713117
>but only if it is payable debt, this is half of the sub prime mortgage crisis no?
Public debt has no default risk (assuming it was issued by the currency sovereign). So the comparison to high-risk private debts is inappropriate.
>so in fact I think it DOES rely on the promise of perpetual debt, because the interst gain is factored into the overal debt value
Interest on public debt is indeed part of the government's deficit and yes it ends up causing the government to issue more debt. How much interest is paid is a decision usually delegated to central banks and it's not typically a problem, but worth being aware of. Paying zero interest (i.e. financing deficits by just crediting reserve accounts) is a perfectly acceptable alternative but it would remove a major tool that central banks use to set interest rates. It would leave interest rates at near-zero forever. (This is a viable policy choice.)
>>70713663
>public debt has no default risk
tell that to greece, italy, france, spain, cyprus, puerto rico, argentina, the city of detroit, etc...
>zero % interest policy viable
wew lad. removing the ability of a central bank to set interest rates removes several important features
1. moral hazard
2. sunk cost risk
3. opportunity cost risk
4. price signals
5. makes loans an issue of political favors rather than profitability
wew
l
a
d
>>70713215
yes, clearly currencies are backed by forced debt liability
that is what I said originally, that unbacked currency rellies on perpetual debt because it's the only thing that can sustain the interest value that is added to the value of traded debt
I think we agree on that
my point is that it's unsustainable because borrowing can only outstrip assets temporarily before there is a hyper-inflation cycle
that is exacly why the US suspended the gold standard, because it was the only way they could pay bullion to other countries (because those countries wouldn't accept US war bonds as payment like US companies would)
see interest works so much differently with a "backed currency" (is fiat currency the term for this?)
the poor can't be exploited by the banks or the state because nobody would buy debt at an inflated price (because I don't think backed currency can really inflate because it's entirely finite)
also nobody can really exploit a state that trades in resources/baced currancy exclusively; they can only refuse to trade with them.
that's because larger currancies can't leverage their debt-inflated currencies throug exchange rates like the US does
so I think it's a great system for small economies
>>70697218
You can't force payment with commodities only bank backed currencies are considered valid payments for debt.
>>70710186
Saudi and Iran will be devastated in the June 6th war and oil prices will skyrocket.
https://www.youtube.com/watch?v=FVvUmdy5JMM&nohtml5=False
>>70713663
>Public debt has no default risk
keep swallowing that economic blue pill the US is feeding you
public debt collapses are happening all over the world
look at greece, which can't pay state debt because it's hinged on public debt
they literally had to freeze public, corporate and individuals bank accounts to stop a cycle of hyper deflation
the more europe asked greece to repay, the more everyone realised greece couldn't
the currency will drop till it reaches the price of greece's phisical assets
that's what nobody is willing to say, because it's EXACTLY what happens when you use unbacked currency
that's why it's so unstable
>>70714359
hue hue hue
you mean the banks will only accept currency the banks control
but you CAN trade with other entities in comodity, and if that becomes widespread there will be a mass default on currency debt, because people have individual commodity reserves
the bank could only counter this by qhisical asset seizure, but at the point that mass-defaults are taking place, people could phisically resist these; and everyone would just forget about their debt leaving bankers in tears
it's a reality closer than you would think, because the banks have very liited ability to stop trade in commodity, and even less ability to seize commodity to pay currency debt
hence why banks keep people in debt who's debt eccedes their assets instead of siezing them
(see sub prime mortgage disaster)
if the banks start taking assets, they deflate the value of what is owed to them and quickly set a path to a revolution of some kind
>>70713459
I didn't say that. Are YOU on meth?
>>70714385
what le fuck man
>>70713557
>hurr durr recessions are only caused by misallocation of resources, and not by insufficient demand
Okay m8.
>what school do you subscribe to, first of all?
MMT/post-Keynesian
>>70713958
>tell that to greece, italy, france, spain, cyprus, puerto rico, argentina, the city of detroit, etc...
You listed a bunch of currency users and asserted that the same limitations apply to a currency issuer. Either you're deliberately trying to mislead or you're just retarded and don't understand the difference.
>>70714429
>Greece adopts euro
>Needs to borrow in a foreign currency
>Bond markets can drive up interest rates
>Greece can't do shit because they don't issue the Euro
>Public debt crisis
This can't happen to the US government.
>>70714625
If the world economy turns to bartering, then all debt will have been defaulted on for a long long time and the entire premise of debt is moot
>>70697218
They can't demand that. The gold standard was abolished during the reagan era.
>>70714940
an insufficiently productive individual cannot demand goods. you cannot spur greater production from an individual with 80 iq by flooding them with money, and destroying the monetary institutions that built the wealth and trust vested in the current currency and handing it to the idiot
>mmtkeynsian
that explains it
at least explain to new people that your viewpoint is one viewpoint with a historical context that remains to be validated.
>>70715050
PR and argentina do issue their own currency, actually. and they fell prey to the same faults as the previous countries. public debt DOES default. if you average out the risk, perhaps the risk is lowered compared to equities, if you're willing to discount "catastrophic failure" as a distinct type of failure vs recessionary events.
>>70715197
it's true that that is an issue, but it wasn't the cause.
the cause was simply too much debt they couldn't pay, and a rush to sell assets by foreign companies as understand it
the euro in fact helps them, because they can still buy and sell goods on favourable terms because nobody can refuse euros in the eurozone
if they had drachma, their own currency; it would have been infinitely worse, tey would have suffer hyper de-valuing as foreign debt repayments stripped currency from them
they would have had to print more money to remain a solubaly economy on the day to day level
basically a dustbowl depression
which is exactly what DID happen to america
so really it's hard to say it can't happen to america when in practice it already has once before, and it has happened to a multitude of countries besides
>>70715334
see I don't think it will, those who hold debt will keep pretending and trying to convince everyone of it's value, and will still trade with other people who hold debt
and since nobody will try to collect debt when it appears it wouldn't work, the less likely they are to try because it would only weaken their possition
>>70715050
>You listed a bunch of currency users and asserted that the same limitations apply to a currency issuer
seems reasonable to me, it happened to all of those countries, why couldn't it happen in the US today or tommorow
>>70716003
>at least explain to new people that your viewpoint is one viewpoint with a historical context that remains to be validated.
Oh I see. Only the economics that you disagree with needs to be declared before talking about it.
>PR and argentina do issue their own currency, actually. and they fell prey to the same faults as the previous countries.
Okay so some of your examples had fixed exchange rate systems. The same restrictions apply because their governments have to borrow in a foreign currency. Again, this is not true of a currency issuer.
By the way tell me what disaster you think would occur if governments spent by issuing reserves directly rather than pretending to finance themselves with debt instruments.
>>70716090
it amounts to price fixing. the 90 iq greeks are forced to compete at a high cost of labor with 108 iq germans. this gives germany preferential advantage in all industries, hence their low unemployment rate. the greek unemployment rate is 50%.
if prices were to fall in greece, they'd be employable again and they could find an industry in which they have advantage, like malaysia.
is the malaysian economy undergoing collapse because of their weak currency?
ffs, economies voluntarily LOWER their exchange rate and it's called cheating because of how advantageous it is.
the euro is NOT helping greece.
>>70716568
>disagree
it was for the benefit of the other anon. what you're saying is by no means considered true by most people. there's heavy debate at the high levels
>currency issuer
it relies on US reliability and credibility, as well as a cooperative host of other nations and trade deals to maintain its stability. which is precisely why the basket became a thing
we spend via deficit financing and you pretend we never need to pay it back. but that depends on US power, which the US is experiencing adistinct lack of.
but MMT BEGINS with the assumption that the US is invincible and eternal. GREAT PRIORS GUYS
>issuing reserves
if currency was tied to the price of gold, and the reserves were never issued, it would be the same as "deficit finance that never needs to be acually paid."
the hard gold standard is a recognition that fiat falls prey to a number of failures via incentives. in reality, there should be multiple market standards for currency. gold one among them.
if you think the economy is "fine" right now you're an idiot. we're king of the idiots at the moment, because our comepetition is a bunch of countries with sub 90 iq.
except for china.
if you really think the status quo can never change, you're an idiot
>>70714429
Greece in caught in the Euro though.
Whatvif Greece stood up and said,
>"Fuck it, we will pay in Drachma and you'll like it"?
Would they need to let the Drachma to downgrade much before beginning to rebuild?
What is the opinion on how Greece can save herself?
>inb4 pay dendts
>>70717024
>it was for the benefit of the other anon. what you're saying is by no means considered true by most people. there's heavy debate at the high levels
I know, but just because you and others deny reality doesn't mean I have to put editorial trigger warnings on my posts.
>we spend via deficit financing and you pretend we never need to pay it back.
So you don't want to let the private sector net save over time? Because that's what deficits are, whether they're financed directly or the government issues bonds.
>if you think the economy is "fine" right now you're an idiot.
I doubt anyone will say "yeah the economy is ideal today". The difference is where we see problems. For example I think it's pathetic that we've gone 30+ years without pursuing full employment and nobody cares. We're all living well below our means and the proof is high unemployment, stagnant growth, etc. despite having no real supply-side problems.
>>70717187
They can exit the euro and default or exit the euro and negotiate to pay their debnts in the new currency. The latter would probably be less politically difficult.
There's no solution as long as Greece stays in the euro, at least in its current form. Syriza and the majority of Greeks who want to stay are fucking idiots.
What's in your safe?
time to give them a taste of their own medicine
>>70717579
private doesn't save over time via deficit finance. the majority of the deficit is funneled into vested government interests, and what trickles down does so in bloated consumer sectors.
most economists dislike government spending except roads, but will also acknowledge that gov spending via contract is superior to government spending via nepotistic/cartel connections.
spending creates "prosperity" by increasing the margins of utility of each dollar, as does finance. even if those margins are .001% per trade, it gets more utility.
keynsians REFUSE to acknowledge margins. they ignore it. they'll spend billions on ridiculous shit like ipads for niggers who can't read, and claim the "multiplier" or some bullshit.
>bonds, etc
the difference is that bonds 1. ARE paid off and 2. bond investment controls the scope of government spendng and theoretically gets cut off when governments overspend on STUPID SHIT. which is why no one lends to argentina
>economy
you're the one who was supposed to fix it. keynsian policy has ruled the roost for about 12 years now.
>no supply side problems
what are affirmative action, lawsuits, obamacare, etc?
as margins grow thinner, improved efficiency is needed.
if the health ofthe economy was determined by abundance of land and food, africa or SE ASIA would be the best ones. providing this abudnance via government finance can't make america wealthy because GETTING IT FOR FREE FROM THE LAND didn't make africa of se asia rich.
we need improved efficiency. we're not getting it, in large part because of keynsians
