4 ms·

A more cynical view would be that the government is backed into an economic corner and need an ever growing level of consumer debt to prop up the markets and/or

A more cynical view would be that the government is backed into an economic corner and need an ever growing level of consumer debt to prop up the markets and/or currency.

chiefalchemist 3y ago
Why is that cynical? One of first things POTUS Bush #2 said in the wake of 9-11 was (effectively), "Keep shopping." It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead.
- vkou 3y ago
  > It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead. Any social contract operates on that principle. Government only exists because most people believe in its legitimacy. Law only works because most people follow most of it. Property rights only exist because most people respect them most of the time. Contracts only work because most signatories follow them most of the time. It's weird how fiat money is the one thing that gets singled out, here, when all the social agreements that actually make our society work are also artificial.
  - chiefalchemist 3y ago
    When a financial tradition (i.e., money) carelessly morphs into being a "social contract" red flags should be flying. Instead, we close our eyes and pray?
    - fineIllregister 3y ago
      Money has always been a social contract. Just because it's a "financial tradition" doesn't change that. Shiny metals are no more valuable to hungry people than numbers in a database. The myth of King Midas shows this is nothing new.
      - chiefalchemist 3y ago
        Noah. That's simply not true. Lyn Alden's "Broken Money" does a couple+ chapters on the history of money. "Cross cultural" transactions are essentially. You can't have a "social contract" across sometimes conflicting cultures. Long to short, this is why we eventually ended up using gold.
        fineIllregister 3y ago
        You absolutely can have a social contract across conflicting cultures. You just gave an example: commerce valuing gold is a social agreement. Another example is countries at war each other following the rules of war (not always, but even one instance makes your claim false).
    - _heimdall 3y ago
      What would a money look like without any social contract? How would we even enforce the basic principles of fungibility, durability, etc? All money is a social contract as far as I can tell. They're always based on the expectation that we as a society will continue to value an intermediary at a predictable price relative to things we may want yo buy or sell later.
      - chiefalchemist 3y ago
        Real money? Or fiat money? Real money would likely look like gold, or perhaps Bitcoin. Fiat money would be strictly social contract based, in a Bernie Madoff sorta way.
        vkou 3y ago
        > or perhaps Bitcoin. Why would it look like bitcoin, and not any one of a trillion near-identical forks of bitcoin? (Because there's an social contract, that by fiat decides which one is the 'real' one, just like how vkoubux aren't considered legal tender.)
        _heimdall 3y ago
        I'm not sure what would make some money "real", is that the same concept as hard money? Bitcoin isn't real money and no one actually tries to use it as money today. At best its a security, though realistically its more of a gambling chip than anything else. Bitcoin fundamentally won't work as money, even if it can be a store of value. Second tier networks like lightning are required, but those only work by abandoning core pieces of the bitcoin protocol and avoiding actually using bitcoin at all.
    - Dylan16807 3y ago
      You don't think traditions are social contracts?
- bilbo0s 3y ago
  Glad someone said it. What that poster outlined was not being "backed into an economic corner". Rather it is how our system is built. If everyone stopped spending and started saving we'd be in a world of hurt. I'll even go a step further and say that the entire world would get into trouble if consumer spending stops in the lead economies. So don't get me wrong, it doesn't have to be the US that provides the spend-y consumers, but somebody has to provide them. It can be China. It can be Europe. Whatever. But somebody has to spend.
  - tbrownaw 3y ago
    At a personal level, collecting IOUs works fine as a way to defer consumption (ie, you can save for retirement by putting money in a bank account or gold bars under your bed or whatever). At a whole-of-society level, that doesn't really work and "saving" had to take the form of warehouses full of stuff.
- _heimdall 3y ago
  I say its cynical mainly because in this context it was an alternative reason based on a distrust of the system and an assumption that there are ulterior motives. I do actually think the cynical explanation is more likely, but the government isn't going to tell is they're limiting late fees to make sure we keep racking up more consumer debt.
  - chiefalchemist 3y ago
    I don't see the need for any *assumption* about ulterior motives. The motives are clear, and certainly not ulterior. All I had to do is pull my head out of the sand, keep looking around, and take notes. You're spot on. Don't belittle your insights.
    - _heimdall 3y ago
      Well I appreciate that. I consider it an assumption of ulterior motives only because its sold as a consumer protection play. Basically, they're claiming specific motivations and I think there are unspoken motivations driving it instead. Definitely mincing semantics here though, and probably giving too much leeway to those making these regulations.
- selimthegrim 3y ago
  God help us if GW Bush had been the second President.
- deleted 3y ago
  [deleted]
Dylan16807 3y ago
Why do you think it needs to be "ever growing" to serve that purpose?
- _heimdall 3y ago
  Well our monetary system is based on a few assumptions that are important here. One is that a "healthy" level of inflation at 2-3% per year is needed. Another is that our money supply is based on debt, meaning that growing the money supply (the original definition of inflation) requires new debt to be created faster them existing debt is paid off. We can't have 2-3% inflation without creating more debt. Consumer debt is one of the forms of debt that creates new money, so I think its safe to assume we need that debt to be growing at a similar pace to keep up. If consumer debt disappeared entirely we would still need other forms of debt to pick up the slack, meaning on average we would still have the same level of debt per person to keep the system afloat.
  - Dylan16807 3y ago
    Oh, I thought you meant growing in real terms, not just inflation. If it only grows with inflation then it's not unsustainable. And the monetary system doesn't depend on inflation per se, it's just that aiming for slight inflation is the easiest way to avoid deflation.
    - _heimdall 3y ago
      Its not quite that simple unfortunately. Inflation can't be measured or controlled in such accurate detail that we can keep them pegged without any "real" growth. Debt will need to increase faster than inflation to keep a level of buffer in the system. The monetary system itself does actually depend on inflation. Inflation creates an incentive to spend and invest your money, and without both our system of money would collapse. Fiat currency and fractional reserve banking mean that the money requires flow through the system. The velocity of money is a bit of a controversial measure, though personally I don't understand why. Ignoring the specific measure though, our money must have velocity at some level and the system would collapse if velocity fell too low or increased too high.

A more cynical view would be that the government is backed into an economic corner and need an ever growing level of consumer debt to prop up the markets and/or currency.

chiefalchemist 3y ago

Why is that cynical? One of first things POTUS Bush #2 said in the wake of 9-11 was (effectively), "Keep shopping." It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead.

vkou 3y ago
> It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead. Any social contract operates on that principle. Government only exists because most people believe in its legitimacy. Law only works because most people follow most of it. Property rights only exist because most people respect them most of the time. Contracts only work because most signatories follow them most of the time. It's weird how fiat money is the one thing that gets singled out, here, when all the social agreements that actually make our society work are also artificial.
- chiefalchemist 3y ago
  When a financial tradition (i.e., money) carelessly morphs into being a "social contract" red flags should be flying. Instead, we close our eyes and pray?
  - fineIllregister 3y ago
    Money has always been a social contract. Just because it's a "financial tradition" doesn't change that. Shiny metals are no more valuable to hungry people than numbers in a database. The myth of King Midas shows this is nothing new.
    - chiefalchemist 3y ago
      Noah. That's simply not true. Lyn Alden's "Broken Money" does a couple+ chapters on the history of money. "Cross cultural" transactions are essentially. You can't have a "social contract" across sometimes conflicting cultures. Long to short, this is why we eventually ended up using gold.
      - fineIllregister 3y ago
        You absolutely can have a social contract across conflicting cultures. You just gave an example: commerce valuing gold is a social agreement. Another example is countries at war each other following the rules of war (not always, but even one instance makes your claim false).
  - _heimdall 3y ago
    What would a money look like without any social contract? How would we even enforce the basic principles of fungibility, durability, etc? All money is a social contract as far as I can tell. They're always based on the expectation that we as a society will continue to value an intermediary at a predictable price relative to things we may want yo buy or sell later.
    - chiefalchemist 3y ago
      Real money? Or fiat money? Real money would likely look like gold, or perhaps Bitcoin. Fiat money would be strictly social contract based, in a Bernie Madoff sorta way.
      - vkou 3y ago
        > or perhaps Bitcoin. Why would it look like bitcoin, and not any one of a trillion near-identical forks of bitcoin? (Because there's an social contract, that by fiat decides which one is the 'real' one, just like how vkoubux aren't considered legal tender.)
      - _heimdall 3y ago
        I'm not sure what would make some money "real", is that the same concept as hard money? Bitcoin isn't real money and no one actually tries to use it as money today. At best its a security, though realistically its more of a gambling chip than anything else. Bitcoin fundamentally won't work as money, even if it can be a store of value. Second tier networks like lightning are required, but those only work by abandoning core pieces of the bitcoin protocol and avoiding actually using bitcoin at all.
  - Dylan16807 3y ago
    You don't think traditions are social contracts?
bilbo0s 3y ago
Glad someone said it. What that poster outlined was not being "backed into an economic corner". Rather it is how our system is built. If everyone stopped spending and started saving we'd be in a world of hurt. I'll even go a step further and say that the entire world would get into trouble if consumer spending stops in the lead economies. So don't get me wrong, it doesn't have to be the US that provides the spend-y consumers, but somebody has to provide them. It can be China. It can be Europe. Whatever. But somebody has to spend.
- tbrownaw 3y ago
  At a personal level, collecting IOUs works fine as a way to defer consumption (ie, you can save for retirement by putting money in a bank account or gold bars under your bed or whatever). At a whole-of-society level, that doesn't really work and "saving" had to take the form of warehouses full of stuff.
_heimdall 3y ago
I say its cynical mainly because in this context it was an alternative reason based on a distrust of the system and an assumption that there are ulterior motives. I do actually think the cynical explanation is more likely, but the government isn't going to tell is they're limiting late fees to make sure we keep racking up more consumer debt.
- chiefalchemist 3y ago
  I don't see the need for any *assumption* about ulterior motives. The motives are clear, and certainly not ulterior. All I had to do is pull my head out of the sand, keep looking around, and take notes. You're spot on. Don't belittle your insights.
  - _heimdall 3y ago
    Well I appreciate that. I consider it an assumption of ulterior motives only because its sold as a consumer protection play. Basically, they're claiming specific motivations and I think there are unspoken motivations driving it instead. Definitely mincing semantics here though, and probably giving too much leeway to those making these regulations.
selimthegrim 3y ago
God help us if GW Bush had been the second President.
deleted 3y ago
[deleted]

Dylan16807 3y ago

Why do you think it needs to be "ever growing" to serve that purpose?

_heimdall 3y ago
Well our monetary system is based on a few assumptions that are important here. One is that a "healthy" level of inflation at 2-3% per year is needed. Another is that our money supply is based on debt, meaning that growing the money supply (the original definition of inflation) requires new debt to be created faster them existing debt is paid off. We can't have 2-3% inflation without creating more debt. Consumer debt is one of the forms of debt that creates new money, so I think its safe to assume we need that debt to be growing at a similar pace to keep up. If consumer debt disappeared entirely we would still need other forms of debt to pick up the slack, meaning on average we would still have the same level of debt per person to keep the system afloat.
- Dylan16807 3y ago
  Oh, I thought you meant growing in real terms, not just inflation. If it only grows with inflation then it's not unsustainable. And the monetary system doesn't depend on inflation per se, it's just that aiming for slight inflation is the easiest way to avoid deflation.
  - _heimdall 3y ago
    Its not quite that simple unfortunately. Inflation can't be measured or controlled in such accurate detail that we can keep them pegged without any "real" growth. Debt will need to increase faster than inflation to keep a level of buffer in the system. The monetary system itself does actually depend on inflation. Inflation creates an incentive to spend and invest your money, and without both our system of money would collapse. Fiat currency and fractional reserve banking mean that the money requires flow through the system. The velocity of money is a bit of a controversial measure, though personally I don't understand why. Ignoring the specific measure though, our money must have velocity at some level and the system would collapse if velocity fell too low or increased too high.