6 ms·

These boom bust cycles are caused by fiat money, inflationary debt/spending, government stimulus and over regulation that causes false market signals and create

These boom bust cycles are caused by fiat money, inflationary debt/spending, government stimulus and over regulation that causes false market signals and creates bubbles, it’s not a capitalism problem, capitalism would be the solution.

BostonEnginerd 6y ago
Weren’t there a number of long painful recessions in the US during the 1800s - when currency was tied to gold?
- marcosdumay 6y ago
  Yes, and the most accepted theory nowadays is that gold-tied money was a leading cause of the ~10y cycle we saw at the 18th century. As soon as countries adopted fiat money, that one cycle mostly disappeared and even its timing became much more variable. But there are a lot of confounding factors, so this isn't the smoking gun it appears at first.
deleted 6y ago
[deleted]
gher-shyu3i 6y ago
Fiat money is the outcome of unfettered capitalism. The government needs money to pay its loans that it took with interest, so what does it do? Detach the currency from anything tangible like gold or other precious metals, then print more money as it desires, devaluing the hard work of people who are trying to save money. There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity. Market competition is good. Interest and usury are destructive dangerous practices.
- pram 6y ago
  Currency debasement is a pretty ancient phenomenon. It’s also not usury.
  - gher-shyu3i 6y ago
    The usury comes from the government taking loans with interest, so it is forced to print more money to cover its deficits which keep growing due to interest.
    - the_only_law 6y ago
      Funny enough this is exactly what happened my last EU4 game.
    - zo1 6y ago
      Printing money is the problem there, not interest. If you banned interest/loaning, you could still end up having inflation because government would print money (or do other things such as https://en.wikipedia.org/wiki/Coin#Debasement_and_clipping https://en.wikipedia.org/wiki/Coin#Debasement_and_clipping ).
      - gher-shyu3i 6y ago
        It's a combination of interest as well as printing money. Interest keeps the deficit growing, forcing the government to print money. If we switch to a non-inflationary currency not at the control of a single entity, these wouldn't happen.
- swiley 6y ago
  I'm pretty sure interest isn't prohibited in Christianity (not protestant Christianity anyway.)
  - gher-shyu3i 6y ago
    It was prohibited in early Christianity before the Church gave in and allowed it.
    - swiley 6y ago
      I'd like to hear your source for this.
      - gher-shyu3i 6y ago
        There's information on Wikipedia, even though Wikipedia is generally not a good source on nuanced religious topics. I found many incorrect things mentioned about Islam for example (I'm Muslim). > At times, many nations from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change). [1] So we see how the Church changed its opinion over time. They weaseled their way out of the prohibition, and today they don't say anything. Separation of Church and State also made it easier to engage in these sorts of practices. [1] https://en.wikipedia.org/wiki/Usury https://en.wikipedia.org/wiki/Usury
- zo1 6y ago
  So in the same paragraph you blame capitalism for something the government does without our consent? We have to at least assign blame equally, instead of picking and choosing which involved systems and actors to blame. Especially if we can't agree on the actual causes. On a side note: I have seen some good analysis/speculation/theorizing done about how interest/loaning would work in a world without government-regulation. Have a look, there may be some redemption in those concepts for you if you divorce them from government meddling (which I would posit, causes a huge chunk of all the evils we blame on capitalism).
  - gher-shyu3i 6y ago
    We have to move away from interest as an underlying mechanism, it's one of the root causes of the chaos in today's financial world. The superior model is investments, similar to how VCs invest in companies in exchange for equity. Loans are to be relegated to charity only. If we apply all this, loans will become close to non-existent. We have seen this successfully work because interest is prohibited in Islam, yet it was able to flourish especially in the Islamic Golden Age to push the boundaries of knowledge and science and exploration, during a time where Europe was in the dark ages.
    - Miraste 6y ago
      How do you reconcile your idea that Islamic banking systems will lead to no inflation with the inflation rates of countries that have large Islamic banks, which are much higher than the US?
- lottin 6y ago
  People don't save money. They save consumption, and the savings are in the form of money or other assets.
  - gher-shyu3i 6y ago
    If I have $10 from 10 years ago, they're worth less today. The government's incompetence and engagement in usury has caused my money to lose value.
    - lottin 6y ago
      They are pretty competent at getting inflation to the intended target. Maybe you're missing something?
      - gher-shyu3i 6y ago
        There shouldn't be a target. I don't want my money to be inflated artificially by the government.
        lottin 6y ago
        Okay, then say you disagree with the target, but don't say they are incompetent.
        gher-shyu3i 6y ago
        Why? The very fact that they are engaging in usurious loans is a sign of incompetence. Who ends up paying for it? The hard working people trying to save money.
        hedora 6y ago
        Save the money in a way that encourages economic growth (buy stocks, invest in a small business, etc).
- reedjosh 6y ago
  > The government needs money to pay its loans that it took with interest, so what does it do? Detach the currency from anything tangible like gold or other precious metals, then print more money as it desires. That sounds like a government problem--not a capitalism problem. Though I do agree that this is the heart of the fiat issue.
- JoeAltmaier 6y ago
  As population grows and goods get cheaper, it can work the other way too. That can make money more scarce and more valuable. Economics is complicated. Pointing to one lever and saying "I understand the whole machine" is lazy. I call it 'playing dot to dot'. If you just draw lines between any dots you please, you can make the picture look like anything you want. But there is a real picture there, it has lots of dots, and its worth understanding. Pontificating on the internet is not showing real understanding.
  - gher-shyu3i 6y ago
    That's why we also should use a bartering system to keep things in check, just like how societies survived for thousands of years. I'm not claiming to understand the whole machine, however, we know for certain there are rotten practices that make the machine unstable and also much more difficult to understand. Interest and usury are at the core, along with other things that are prohibited by Islam (e.g. selling things that you don't own and several more). Once those are removed, the system will become much more stable, fair, and better off for everyone.
sudosysgen 6y ago
You have to face reality at some point. Literally every single capitalist economy, any time, anywhere, with or without fiat money, at all practically possible levels of stimulus, and regulation, has gone through a boom/bust cycle. If anything, they got better since the introduction of Keynesianism, not worse. It's inherent to capitalism. Don't try to delude yourself.
- jerf 6y ago
  It isn't just "capitalism", it's inherent to economics, period. One of the valuable lessons of studying differential equations is just how easy it is to have cyclic behavior appear. Anywhere you have a the size of a change in velocity that is the negative of how far the value is away from some baseline... in other words, the second derivative is negative... you almost certainly have a cycle of some sort showing up. (Technically it can be avoided, but a lot of those ways are physically implausible.) Negative second derivatives are going to be pretty common. (It doesn't have to be "pure". "Simple harmonic motion" is the result of when the negative second derivative fully characterizes a system. There are, of course, plenty of systems that aren't as simple, and things get complicated... but where ever you get a significant negative second derivative you've got a system that is going to exhibit some sort of cyclic behavior, even the the cycles vary wildly in size, duration, how fractal the value behaves on smaller time scales, etc.)
  - sudosysgen 6y ago
    Economies do not necessarily have to follow differential equations with highly volatile second derivatives. In fact, historically, they haven't. This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices. And this loop is the unique and defining feature of capitalism. It didn't exist before capitalism, and in experiments like those of the Soviet Union, it didn't exist either, because there were no capital markets at all. What you're describing is a behaviour of capital markets, but due to a lack of perspective it's described as a behaviour of economies in general - and it isn't.

BostonEnginerd 6y ago

Weren’t there a number of long painful recessions in the US during the 1800s - when currency was tied to gold?

marcosdumay 6y ago
Yes, and the most accepted theory nowadays is that gold-tied money was a leading cause of the ~10y cycle we saw at the 18th century. As soon as countries adopted fiat money, that one cycle mostly disappeared and even its timing became much more variable. But there are a lot of confounding factors, so this isn't the smoking gun it appears at first.

deleted 6y ago

[deleted]

gher-shyu3i 6y ago

Fiat money is the outcome of unfettered capitalism. The government needs money to pay its loans that it took with interest, so what does it do? Detach the currency from anything tangible like gold or other precious metals, then print more money as it desires, devaluing the hard work of people who are trying to save money. There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity. Market competition is good. Interest and usury are destructive dangerous practices.

pram 6y ago
Currency debasement is a pretty ancient phenomenon. It’s also not usury.
- gher-shyu3i 6y ago
  The usury comes from the government taking loans with interest, so it is forced to print more money to cover its deficits which keep growing due to interest.
  - the_only_law 6y ago
    Funny enough this is exactly what happened my last EU4 game.
  - zo1 6y ago
    Printing money is the problem there, not interest. If you banned interest/loaning, you could still end up having inflation because government would print money (or do other things such as https://en.wikipedia.org/wiki/Coin#Debasement_and_clipping https://en.wikipedia.org/wiki/Coin#Debasement_and_clipping ).
    - gher-shyu3i 6y ago
      It's a combination of interest as well as printing money. Interest keeps the deficit growing, forcing the government to print money. If we switch to a non-inflationary currency not at the control of a single entity, these wouldn't happen.
swiley 6y ago
I'm pretty sure interest isn't prohibited in Christianity (not protestant Christianity anyway.)
- gher-shyu3i 6y ago
  It was prohibited in early Christianity before the Church gave in and allowed it.
  - swiley 6y ago
    I'd like to hear your source for this.
    - gher-shyu3i 6y ago
      There's information on Wikipedia, even though Wikipedia is generally not a good source on nuanced religious topics. I found many incorrect things mentioned about Islam for example (I'm Muslim). > At times, many nations from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change). [1] So we see how the Church changed its opinion over time. They weaseled their way out of the prohibition, and today they don't say anything. Separation of Church and State also made it easier to engage in these sorts of practices. [1] https://en.wikipedia.org/wiki/Usury https://en.wikipedia.org/wiki/Usury
zo1 6y ago
So in the same paragraph you blame capitalism for something the government does without our consent? We have to at least assign blame equally, instead of picking and choosing which involved systems and actors to blame. Especially if we can't agree on the actual causes. On a side note: I have seen some good analysis/speculation/theorizing done about how interest/loaning would work in a world without government-regulation. Have a look, there may be some redemption in those concepts for you if you divorce them from government meddling (which I would posit, causes a huge chunk of all the evils we blame on capitalism).
- gher-shyu3i 6y ago
  We have to move away from interest as an underlying mechanism, it's one of the root causes of the chaos in today's financial world. The superior model is investments, similar to how VCs invest in companies in exchange for equity. Loans are to be relegated to charity only. If we apply all this, loans will become close to non-existent. We have seen this successfully work because interest is prohibited in Islam, yet it was able to flourish especially in the Islamic Golden Age to push the boundaries of knowledge and science and exploration, during a time where Europe was in the dark ages.
  - Miraste 6y ago
    How do you reconcile your idea that Islamic banking systems will lead to no inflation with the inflation rates of countries that have large Islamic banks, which are much higher than the US?
lottin 6y ago
People don't save money. They save consumption, and the savings are in the form of money or other assets.
- gher-shyu3i 6y ago
  If I have $10 from 10 years ago, they're worth less today. The government's incompetence and engagement in usury has caused my money to lose value.
  - lottin 6y ago
    They are pretty competent at getting inflation to the intended target. Maybe you're missing something?
    - gher-shyu3i 6y ago
      There shouldn't be a target. I don't want my money to be inflated artificially by the government.
      - lottin 6y ago
        Okay, then say you disagree with the target, but don't say they are incompetent.
        gher-shyu3i 6y ago
        Why? The very fact that they are engaging in usurious loans is a sign of incompetence. Who ends up paying for it? The hard working people trying to save money.
        hedora 6y ago
        Save the money in a way that encourages economic growth (buy stocks, invest in a small business, etc).
reedjosh 6y ago
> The government needs money to pay its loans that it took with interest, so what does it do? Detach the currency from anything tangible like gold or other precious metals, then print more money as it desires. That sounds like a government problem--not a capitalism problem. Though I do agree that this is the heart of the fiat issue.
JoeAltmaier 6y ago
As population grows and goods get cheaper, it can work the other way too. That can make money more scarce and more valuable. Economics is complicated. Pointing to one lever and saying "I understand the whole machine" is lazy. I call it 'playing dot to dot'. If you just draw lines between any dots you please, you can make the picture look like anything you want. But there is a real picture there, it has lots of dots, and its worth understanding. Pontificating on the internet is not showing real understanding.
- gher-shyu3i 6y ago
  That's why we also should use a bartering system to keep things in check, just like how societies survived for thousands of years. I'm not claiming to understand the whole machine, however, we know for certain there are rotten practices that make the machine unstable and also much more difficult to understand. Interest and usury are at the core, along with other things that are prohibited by Islam (e.g. selling things that you don't own and several more). Once those are removed, the system will become much more stable, fair, and better off for everyone.

sudosysgen 6y ago

You have to face reality at some point. Literally every single capitalist economy, any time, anywhere, with or without fiat money, at all practically possible levels of stimulus, and regulation, has gone through a boom/bust cycle. If anything, they got better since the introduction of Keynesianism, not worse. It's inherent to capitalism. Don't try to delude yourself.

jerf 6y ago
It isn't just "capitalism", it's inherent to economics, period. One of the valuable lessons of studying differential equations is just how easy it is to have cyclic behavior appear. Anywhere you have a the size of a change in velocity that is the negative of how far the value is away from some baseline... in other words, the second derivative is negative... you almost certainly have a cycle of some sort showing up. (Technically it can be avoided, but a lot of those ways are physically implausible.) Negative second derivatives are going to be pretty common. (It doesn't have to be "pure". "Simple harmonic motion" is the result of when the negative second derivative fully characterizes a system. There are, of course, plenty of systems that aren't as simple, and things get complicated... but where ever you get a significant negative second derivative you've got a system that is going to exhibit some sort of cyclic behavior, even the the cycles vary wildly in size, duration, how fractal the value behaves on smaller time scales, etc.)
- sudosysgen 6y ago
  Economies do not necessarily have to follow differential equations with highly volatile second derivatives. In fact, historically, they haven't. This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices. And this loop is the unique and defining feature of capitalism. It didn't exist before capitalism, and in experiments like those of the Soviet Union, it didn't exist either, because there were no capital markets at all. What you're describing is a behaviour of capital markets, but due to a lack of perspective it's described as a behaviour of economies in general - and it isn't.