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Why do you think it matters at all? The choice to pay interest on what is in fact a balancing item in the accounts is a political choice. Just don't do that an
by neilwilson 2y ago
Why do you think it matters at all?
The choice to pay interest on what is in fact a balancing item in the accounts is a political choice. Just don't do that and then those ratios are irrelevant.
We have a floating rate exchange system. Quite why people think ratios from a fixed exchange rate era remain relevant is difficult to understand.
Other than that is what they really want to go back to - one world currency with no variation and governments completely unable to direct resources for the benefit of their own people, rather than global capital.
The world has excess production. Where is the untapped source of demand that will replace the current net import nations? There isn't any. That's why those with excess production swap that excess production for promises, rather than physical output.
- Aeolun 2y agoThe ratio does not matter beyond giving some indication of when you’ll be printing as much money as your entire economy contains every year. It’s not that you need to do anything about it at all, but eventually your economy will completely collapse.
- imtringued 2y ago>It’s not that you need to do anything about it at all, but eventually your economy will completely collapse. The vast majority of money systems were designed to be disposable and to only last a few hundred years though.
- neilwilson 2y agoWhy and how will it “collapse”? If you want to use the “printing money” analogy because you can’t grok the correct credit and debit process then you have to accept that taxation “shreds money” and saving money (which is what a deficit is) “puts it in a drawer”. How does people putting money in a drawer cause a problem?
- imtringued 2y ago>That's why those with excess production swap that excess production for promises, rather than physical output. That's the thing. Mercantilism never really went away. It is just more subtle nowadays. The greek crisis can be boiled down to this: "Germany is exporting to Greece, because the absence of exchange rates makes German products unreasonably cheap in comparison to Greek products. Greece therefore buys from Germany, but Germany doesn't buy from Greece."
- Paradigma11 2y agoSo if Greece still would have had the Drachme, Germany would have bought more olive oil, Greece would have bought less machines and everything would have been honky dory?
- lazide 2y agoAnd Greece could go insolvent periodically to reset. Can’t do a reset on a currency that isn’t yours.
- Paradigma11 2y agoNobody would have lent Greece any money in Drachma.
- neilwilson 2y agoGreece would lend money to itself given Greece is the currency issuer of the Drachma. That happens automatically when government makes a payment
- lazide 2y agoHuh? They did all the time, albeit at higher rates. Do you think Greece never had any national debt before joining the EU? They’ve had multiple defaults, and then built up more debt, etc. long before joining. [https://www.toptal.com/finance/financial-consultants/greek-debt-crisis https://www.toptal.com/finance/financial-consultants/greek-d...] Same with Argentina, Brazil, etc. Someone is always willing to lend money, just rarely at the rate the country is willing to pay.