I would recommend you (legally ofc) download and read the CFA level 1 curriculum. It's a good helicopter view.
The governments of all countries 'print' new money at a steady rate; simultaneously devaluing all their currencies. They do this by issuing bonds, some of those bonds are bought up by the markets but most bonds are bought up by reserve banks using money that they printed out of nothing (mostly digitally). This issuance of new money devalues the savings of regular citizens and, most importantly, their salaries listed on their work contracts which are denominated in the national currency.
The government debts of all countries keep increasing ad-infinitum along with the interest on that debt. More debt with more interest means that the governments need to keep issuing more bonds to get even more money to use to pay back the old debts plus interest, which then increases the debt even more and guarantees that more future money printing/borrowing is necessary.
Countries don't strictly need to tax citizens since they can just print money, but the reason they tax citizens is to help keep inflation under control by reducing the supply of currency floating around the economy. The fiat currencies of all countries are inflating but this is not noticeable (to traders, economists, etc...) so long as all currencies inflate at a similar rate; the foreign exchange rates will be stable.
Governments give out increasingly large contracts to large corporations to produce systems, weapons, etc... that add no value to citizens' lives but merely exists to control and passify them. People who are in close proximity to government money printers have access to easy money. Those who do not have to work hard for it. Look up Cantillon effects.
At current tax rates, money cannot hop far from the government's money printer. Consider that every transaction between citizens is taxed at some rate... Say 30% (a mix of income taxes, sales taxes...) Start with $100, see how much money is left after just 10 hops between different people. After 1 hop, $70 is left to spend, after 2 hops $49 is left, after 3 hops $34 is left... After 10 hops, only $2.80 remains from that 100 dollars!
So not only is all money created by the government (or banks that are backed by the central bank which is also a government entity), but the taxation system ensures that money cannot travel too far from that government. It's a closed loop with monetary abundance near the source and extreme scarcity at the periphery. It puts the Cantillon effect on steroids. All artificial, little to do with the so-called free market. How can big cities afford to accommodate millions of people working bullshit office jobs that add no value? Big cities, by virtue of having millions of people, control huge amounts of collateral, which gives them access to bigger loans and bigger gov contracts, which puts them in the front row of the money printers; which makes their capital holders the biggest beneficiaries of Cantillon effects... With those powerful Cantillon effects, the business elite can afford to be inefficient and sustain millions of bullshit jobs.
This is barely scratching the surface. I could write a book about it... But nobody would buy it... Because the media is monopolized and nobody would know the book exists. Not only that, but nobody who has money to buy the book has an incentive to understand this information... And they certainly won't be recommending it to their friends...
The system is basically as unjust as it can possibly be while still just barely avoiding being exposed as such. Society has become an epic PsyOp; complete with eugenics and elite selection; selecting for increasingly delusional, hypocritical and/or oblivious leaders who can continue running the system while it becomes increasingly dysfunctional.
The moment when a business leader starts to notice that something is off is the moment that they get replaced by someone who is even more delusional/oblivious and who can take the company/organization to the next level, unimpeded by common sense or principles.
For the next phase, I predict AI is going to make the economy and the monetary system even more complicated. It's going to be even more unjust and even harder to explain. AI will be able to create alternative realities for us. It will control the flow of information in ways that will keep us trapped in hermetically sealed filter bubbles.
There are millions of people suffering in silence whose opportunities have been stolen from them and they don't even know what's happening. The current system is absolutely immoral. Please point out any flaw in my arguments.
You seem to have sampled a hodgepodge of modern monetary theory and neo-pacifist international relations theory. (Also, ignored the role of recession and default in money destruction.) That leads to a mix of correct and incorrect observations tied together incoherently. Within that context, you are right to be frustrated, but not by the state of the world but by your ignorance of it.
Introductory texts in money and banking (Mishkin) and international finance (Krugman or Pilbeam) would be advised. You may also benefit from reading Bagehot, who describes British central banking under the gold standard (and colonialism).
> given the current rate of AI progress, it's possible you may never read another contrarian comment like this again in your life and neither will any of your descendants
Given what AI was trained on, and its lack of understanding and tendency to hallucinate, I’d expect this to become the dominant form of AI-generated economics talk. It certainly is that way on Twitter, Reddit and YouTube already.
Central bank != government in most developed countries
>so long as all currencies inflate at a similar rate; the foreign exchange rates will be stable.
Exchange rates are not stable for a variety of reasons that are not purely supply-related
And this negates their conclusion how? To a layman it reads like a distinction without a difference.
You’re correct. It’s not generalisable to countries without an independent central bank. (And the U.S. Treasury absolutely mints coin.)
I’m sure population density is a variable in this equation as well, I just can’t figure out where to pin it.
When?!
> futures market obfuscated that and is controlled by a central bank
Where? FX trading in open capital account economies are between lightly and unregulated.
> sure population density is a variable in this equation as well
Total factor productivity [1].
[1] https://en.m.wikipedia.org/wiki/Total_factor_productivity
Diplomatic agreements between nations throughout history. Your land has water, mine has food, we set the value of trade and baseline the currency. The unavoidable cost is the minimum time and labor to transport and extract the resources.
The supply and demand indirectly adjust the transaction prices through multiple layers of exchange. Hence the border tariffs having an impact on exchange rate.
Simplified, but draws a picture.
If the government can keep issuing more bonds, essentially any time it wants, and it knows that the central bank will always be there and can use its infinite money supply to buy all of the bonds which the government chooses to create, then we can safely say that there is no meaningful distinction between the government and its central bank from the perspective of citizens. From their perspective, it's just new money coming out of a big state-controlled money printer.
> Exchange rates are not stable for a variety of reasons that are not purely supply-related
Yes but it's a fact that all countries aim to keep inflation at around the 2% to 3% mark. If a country just stopped printing money and backed it with gold (for example), then that country's currency would almost inevitably go up in the long run. Consider that the US dollar has lost 90% of its value in the last 50 years or so to inflation. This would show up on the forex charts as a sustained, upward trend if any country did this.
Just look at fixed-supply cryptocurrencies like BitCoin and DogeCoin if you need more proof of this effect... I hope we don't need to make the argument that DogeCoin succeeded on the basis of its economic efficiency... Using the electricity of an entire country to process a mere 4 transactions per second... It would seem that the fixed supply of DogeCoins and BitCoins contributed to massive price increase in spite of economic inefficiency.
BTW, didn't Gaddafi of Libya try to introduce a Gold Dinar currency? I'm sure this bears no connection to what NATO did to him after.
Did any country manage to abandon their national fiat system without its leaders being assassinated or overthrown in a violent coup? Kind of suspicious. Name one country on earth which isn't on the same inflationary fiat monetary standard. Most have a central bank and work much the same way, those which don't just use some other country's fiat... Some countries aren't shy about going the hyperinflation route... but no country will dare try the deflationary route. Why? Why is it that only decentralized currencies without leaders were able to achieve this?
False [1][2][3].
> didn't Gaddafi of Libya try to introduce a Gold Dinar currency
He also began using every other currency than dollars. That’s how rebalancing works.
> Did any country manage to abandon their national fiat system without its leaders being assassinated or overthrown in a violent coup? Kind of suspicious
Pegged currencies and currency boards exist. Also, what are you thinking of? Because we haven’t had a working economy with a fixed-supply currency since the Industrial Revolution, for obvious reasons.
> no country will dare try the deflationary route. Why?
Did you miss the Euro crisis? Austerity is forced deflation.
> Why is it that only decentralized currencies without leaders were able to achieve this?
Straw man. Every time crypto crashes, they’re hyperinflationary in real terms.
[1] https://indianexpress.com/article/business/economy/rbi-targe...
[2] https://www.ceicdata.com/en/argentina/consumer-price-index-i...
[3] https://www.reuters.com/world/middle-east/turkey-inflation-h...
One look at some of the history of austerity:
* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...
Yup! Unless you’re rich, deflation is historically cursed. (That said, I repeat that it hasn’t been proven to be bad.)
1. “Governments of all countries 'print' new money at a steady rate”
Most money is privately created [1]. While America creates money somewhat steadily [2], many currencies are more volatile [3] and show distinct regimes [4]. And while that error can be covered by expanding the definition of steadiness, steadiness between countries’ monetary policies simply doesn’t exist. America is tightening while China is loosening, for example. (This is basic balance of payments. The claim about FX rates being constant is trivially false.)
2. “some of those bonds are bought up by the markets but most bonds are bought up by reserve banks”
Depository institutions hold few Treasuries, relatively speaking [5]. The Fed owns close to half of outstanding Treasuries, but it’s currently a net seller [6].
3. “Countries don't strictly need to tax citizens since they can just print money”
I’ll throw in a misleading statement versus outright error.
Sure, a country could MMT. But that means you can destroy money only through recession, default and selling government bonds. Since the comment rails against debt, that leaves an economic policy that requires—when inflation arises—intentionally forcing recession (likely via spending cuts) à la Volcker.
[1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
[2] https://fred.stlouisfed.org/series/M2SL#0
[3] https://fred.stlouisfed.org/series/MYAGM2ARM189N#0
[4] https://fred.stlouisfed.org/series/MYAGM2EZM196N#0
[5] https://en.m.wikipedia.org/wiki/National_debt_of_the_United_...
There's a bunch of rambling in the post, but:
> The governments of all countries 'print' new money at a steady rate; simultaneously devaluing all their currencies.
Money in modern economies is done via credit creation at private banks:
* https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m...
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625
* https://rationalreminder.ca/podcast/132
> They do this by issuing bonds, some of those bonds are bought up by the markets but most bonds are bought up by reserve banks using money that they printed out of nothing (mostly digitally).
The first sentence and second sentence are in contradiction: is money created by the government or the banks? And couldn't the money created by private banks (who are part of the reserve system) be used for other things like mortgages, business loans, etc?
If you're talking about central banks (like the US Fed) and 'quantitative easing' (QE), then they don't buy bonds from the government, but on the open market. And there's a decent argument to be made that QE is in fact deflationary:
* https://www.pragcap.com/wait-qe-might-be-deflationary/
In most of the world, QE wasn't really done except for COVID, where governments needed to support people during lockdowns and the resulting economic slow/shutdowns.
And when QE was running in the US during the 2010s the CPI (and PCE) was quite low (as it was in most countries during that it period), which is in stark contrast to the predictions that right-leaning, hard-money folks made:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
* https://www.hoover.org/research/open-letter-ben-bernanke
> Governments give out increasingly large contracts to large corporations to produce systems, weapons, etc... that add no value to citizens' lives but merely exists to control and passify them.
Also roads, bridges, health care, education. Certainly weapons (just ask Ukraine and Taiwan and any country around the South China Sea).
A lot of folks say that the US spends too much on the military, but perhaps it is that other countries spend too little. NATO members have a agreement/guideline/target to spend 2% of their GDP on defence, but most members have not done that for years (if not decades)—and suddenly they are:
* https://www.nato.int/cps/en/natohq/topics_49198.htm
* https://aviationweek.com/defense-space/budget-policy-operati...
Perhaps it was a matter of the US picking up everyone else's slack.
> So not only is all money created by the government, but the taxation system ensures that money cannot travel too far from that government.
What about "reserve banks"? Does all of that "money that they printed out of nothing" go to buying government bonds… or perhaps some is used in the private economy? (This goes back to the contradictions in the first paragraph.)
Also, how many people work directly for the government (including teachers, building inspectors, food safety, etc), and then spend in their community: how separated is the barber of a DMV employee from "money created by the government" (which it really isn't: see above).
> How can big cities afford to accommodate millions of people working bullshit office jobs that add no value? Now you know.
Where I live, when right-leaning candidate Rob Ford ran for mayor for Toronto, Ontario, Canada in 2010 his rallying cry was about "stopping the gravy train" of waste. Turns out after an extensive audit he ordered, there's wasn't any:
* https://archive.ph/3vPyp / https://www.theglobeandmail.com/news/toronto/turns-out-its-n...
Of course his brother, now the premiere of Ontario, Canada, still goes on about waste at Toronto, but (two) thrid-party audits have (yet again) not find much:
* https://archive.ph/V56wn / https://www.thestar.com/opinion/star-columnists/audits-derai...
I think the GP has the same mindset as the Ford brothers.
And there's a reasonable argument to be made that more bureaucracy is needed in the US (where I'm guessing the GP is based in):
* https://www.noahpinion.blog/p/america-needs-a-bigger-better-...
> This is barely scratching the surface. I could write a book about it... But nobody would buy it... Because the media is monopolized and nobody would know the book exists. Not only that, but nobody who has money to buy the book has an incentive to understand this information... And they certainly won't be recommending it to their friends...
OP could self-publish a book or start writing a weblog/newsletter. Plenty of folks that put forward ideas explaining the conspiracies that trap people have had best sellers:
* https://www.goodreads.com/book/show/66499.The_Creature_from_...
* https://en.wikipedia.org/wiki/G._Edward_Griffin
> The system is basically as unjust as it can possibly be while still just barely avoiding being exposed as such. Society has become an epic PsyOp; complete with eugenics and elite selection; selecting for increasingly delusional, hypocritical and/or oblivious leaders who can continue running the system while it becomes increasingly dysfunctional.
Society is a victim to PsyOp where most of the sheeple^H^H^H^H^H^H^H people don't know what's happening. Yeah.
> The moment when a business leader starts to notice that something is off is the moment that they retire and get replaced by someone who is even more delusional/oblivious and who can take the company/organization to the next level, unimpeded by common sense or principles.
What does this even mean?
If you want to look at the "biggest errors" in the post consider breaking things down into the (semi-)rational and the conspiratorial, and consider how one may provide feedback into another.
If you disagree with the taxes being collected either vote to change how that government spends your money else vote with your feet and find another country. There are tax free jurisdictions. Why not go live there if the tax you pay bothers you?
Hopefully you can vote politically during elections, you can vote economically with every dollar you spend and you can vote with your feet by switching countries.
If you have an idea about some paradise that will operate much better under the economic rules you believe in ask yourself why this paradise does not yet exist if it is so much better. If your economic paradise does exist why not just move there? Surely those having your "wisdom" will be highly valued there.
Now I would agree about the immorality point here, but it’s a product of religious foundations of US, not the Hayek vs Keynes. If anything, printing money is more enabling of solving inequality, it’s just US chooses not to do so
Reminds me of cryptocurrency like WorldCoin, where an overwhelming amount of all minted coins goes back into the developer's pockets no matter what.
Really, the biggest difference is that a treasury can coordinate it's workers to meaningfully resolve economic deficiency. Cryptocurrency comes with no governance guarantees, zero regulatory oversight on developers, and no incentive to stabilize value. When you consider the basic needs of a governed economy, it's plainly evident why mints do what they do. Shaking your fist and complaining about it is the extent of the anarchist pipe-dream; nobody is going to read this or the parent's comment and invest their 401k in Ethereum.
Seems like highlighting crypto's deficiencies has made you tip your hand though. Regulate me once, shame on you. Regulate me twice, shame on me?
I guess nobody should be surprised that members of a venture capital fan club have only learned how to lie to people about money.