Simply cannot satisfy the debt hawks. They complain when the balance of trade is negative (caused by strong money) and they complain when the balance of trade is positive (caused by weak money). Which do you prefer, a positive balance of trade or a negative balance of trade?Japan, with almost zero natural resources, and just recently one of the more devastating natural (and man-made) disasters in recent history, is in no danger of not being able to pay its bills, and is one of the world’s great economies. It is Monetarily Sovereign. Contrast that with France, Spain, Greece, Ireland and Portugal, which do have abundant natural resources and have not suffered the tsunami/meltdown, teeter on the edge of bankruptcy, and require repeated loans (which merely delay the invitable). They are monetarily non-sovereign.
Which nations will come to the so-called "endgame" soonest? And what will that "endgame" be?
Now, do a bit of research. Find out WHY the U.S. is Monterily Sovereign, and what would have happened if we didn’t make the switch.
Rodger Malcolm Mitchell
Yup. I hope you too will get there.But, I assume you wish to opt out of receiving Social Security and Medicare, right?
Rodger Malcolm Mitchell
I think Davos is getting ready to use the M-word…
I really like Marc…but was it me or did Mark get an early start to St. Patty’s Day? 
Marc was off his game, it was very hard at times to listen to him. Unless Chris was talking to Marc at an odd hour of the night/morning in Asia?
So Japan prints their fiat own money… I get that. But it is still debt money… backed by a huge and growing pile of JGB’s. As the carry trade unwinds, and Japan’s currency weakens, it will further stress their economy, lowering GDP even more (they are in recession now) and lowering tax revenues. Everyone understands their negative demographics, and the fact that they are not the savers they used to be, meaning that there will be a waning internal demand for the bonds. The endgame for Japan will be much like the endgame for every other monetarily sovereign nation… with the central bank monetizing 100% of the new debt on an ongoing basis. Either that, or the big central banks will work with each other through swaps (much like US –> ECB now) to make it seem like there is outside demand for the bonds… just a shell game.
So the question really is… what happens after that? What happens when exogenous demand for bonds of the big economies dies and the dead bodies are kept alive by the printing press "machines" ? Does the money die, or do we all simultaneously agree to a do over? This time is not different. Money will die… PM’s will reassert themselves as money again… and their "prices" will go sky high as the bad (fiat) money drives the real (PM) money out of circulation and into vaults around the world. There will be nothing left for sale… those who did not lose faith in their currencies in advance, and think they still have savings, will be royally screwed.
Your ideas make no intuitive sense to me Rodger… in order for fiat currency to work, it’s scarcity integrity must be carefully attended to. Governments won’t do any better at this than the current spate of central banks. Scarcity integrity must be systematic (an interesting aspect of Bitcoin)… and I think the question of how our next monetary systems will work is of greatest interest.
Chris’ ideas make much more sense as they relate to the here and now. There is a certain amount of real wealth in the world… what Chris calls primary and secondary wealth… stuff that is dug from the ground, and stuff that is made from it. The amount of money has now grown way out of proportion to the amount of real wealth… and the denouement is upon us. The free lunch is what many of us have been eating for the last 30 years… it is not ahead of us… it is behind us.
[quote=RodgerMitchell]Yup.
I hope you too will get there.But, I assume you wish to opt out of receiving Social Security and Medicare, right?
Rodger Malcolm Mitchell
[/quote]
"Yup."I'll be G*d dammed if I'm going to commit inter-generational-tyranny so I can chase some effing white ball around 18 holes. I'll live within my means. I think I pegged you, the "net worther" of 1.3-1.9MM with a house mortgage of 500K, in the gated community, with the leased pretend-I'm-rich car [Moderator's note . . . .], playing golf at the club. If your better off than that and sucking on the tit of social welfare you should really be ashamed of yourself. There---your grandkids>>>>>>>>>>>>>>>>> Tied to a debt ball paying for your golf pro. And don't even tell me the usual line of cr@p I hear, "Gee I paid into it."
Medicare is the mastodon in the kitchen. And it doesn’t matter whether you call it Obamacare or Elvis-Presley care or I-don’t-care care, it can’t possibly work. ... And if a guy gets a heart operation, it could buy half your radio station and cost 150,000 bucks and he doesn't even get a bill. Come on. Wake up, America. [7:51]But the problem is, America doesn't want to wake up. Waking up equates to paying your own way. Why do that when you can shackle your kid and their kids to a debt ball? Psychopathy is measured by the psychopathy ✓ checklist which breaks into four different aspects. ✓ Being a manipulative person or a liar. (includes lying to yourself so you can live the good life and sleep at night). ✓ Callous, kind of a lack of empathy towards others. ✓ Impulsivity, or more specifically a lack of impulse control. (includes not living within your means when you know you are hurting others to do so.) ✓ Antisocial behavior, some kind of breaking rules, whether it be social rules or legal rules. So, how many ✓ marks would you give yourself????? [Moderator's note: This post is a violation of the forum guidelines. Personal attacks and name calling are not allowed. Appropriate corrective action with the user has been undertaken.]
I love Golf and you discribed my wardrobe to the T. My hair, not so much, it’s long, near a small pony tail as I rebel against my youth as my body is aging me now. I am considered a senior at many courses, and golf are at reasonable prices. I love the time spent with 7 of my other brothers hitting that little white thing about. 5 sisters too.
OK, that said, I have worked extremely hard during my lifetime, did my country proud during the Vietnam Conflict, played by the rules, and have a balanced retirement that has made me neither rich nor poor. Would I accept Social Security, Medicare, and whatever it was I paid into with my employer (I was self employed) ? Yes I would, and most likely I would use what I had too much of to pass along to those I love, more of what they have very little of. Honestly, I spend very little time on the haves and have nots. I just want it nice and easy personally. It’s time now, for me anyways.
BOB
God. You got it bad don’t you?
The Dark Triad is made up of the Machiavellian, the Narcissist and the Psychopath. You should read up on this and do some introspection.
In some instances, 2 out of 3 is bad.
[Moderator’s note: This post is a violation of the forum guidelines. Personal attacks and name calling are not allowed. Appropriate corrective action with the user has been undertaken.]
Everyone knows federal deficit spending causes inflation, and we’re right at the tipping point.
O.K., so there has been zero relationship between federal deficit and inflation since the Unites States became Monetarily Sovereign in 1971 – 41 years!. See: rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
And gosh, there has been zero relationship between federal deficits and inflation since 1952 – 60 years! See: research.stlouisfed.org/fredgraph.png
But surely, with the massive deficits we’ve had, and the big ones projected, those deficits will cause inflation in the near future. Everyone knows that. Oops: See: www.clevelandfed.org/research/data/inflation_expectations/index.cfm
Well, what will you believe, 60 years of data plus projections based on data – or intuition?
Yes, what? 
Rodger Malcolm Mitchell
There’s lots of money available for medicare. It’s just that 0.00001% of the population owns most of it.
"Living within one’s means", in the current kleptocracy, merely makes more wealth available for the elites to steal.
Yes, Zimbabwe is a great authority for you. I suggest you listen to everything Robert Mugabe’s bank tells you. And also believe him if he tells you he didn’t steal farm land from farmers and give it to people who had no clue about farming, and that didn’t cause the collapse of his agrarian economy. He’s a great source of information. It’s been fun. Not informative, but fun. See you in a few years. Meanwhile, if you want to learn economics, try: moslereconomics.com/2012/03/16/inflation-expectations/
Rodger Malcolm Mitchell
Rodger,
I’m rather disappointed in your responses. There is an expectation on this site that extraordinary assertions need extraordinary support. I agree that Mugabe stole farm land, but was that his only crime against his people? Am I to assume that had he not stolen farm land, that everything would be okay? Do you really believe that to be the case? What about all the other examples that Davos cited?
I read through some of your articles, trying to understand your point. I saw "monetary" and "sovereign" many times, but no real explanation of what exactly your theory entails. Would you be so kind as to post a link to a site that explains your theory? The Wikipedia site wasn’t too helpful http://en.wikipedia.org/wiki/Monetary_sovereignty. I’m interested in how it works and particularly where it has worked in history. It would also be interesting to see where the regimes that Davos cited went wrong.
As flawed as the Fed’s CPI calculation is, at least they have data presented in many forms to see how the index has progressed over time. Your link shows year on year changes for federal government debt versus CPI. Since there isn’t a correlation between these 2 graphed series, you assume that there isn’t any correlation between government debt and inflation. Let’s look at a longer time scale to see if any correlation becomes evident.
This link just shows the cumulative effects of the inflation index over time: http://research.stlouisfed.org/fred2/series/CPIAUCSL. Note the change in slope that occurred a few years before Nixon closed the gold window in 1971. This link shows the cumulative federal government debt: http://research.stlouisfed.org/fred2/series/GFDEBTN. Sorry that I couldn’t find a link at the fed site that contained both these graphs together. It would also be nice to see it on a semi-log scale so that small perturbations at the beginning of the rise become evident.
From my understanding of your theory, the amount of debt that the government carries is of no concern. How will the debt get repaid (without rolling it over to more debt)? How do you avoid the "Zimbabwe Syndrome"? Which demographic groups benefit most and which get the least benefit from this arrangement? (I’m generally looking at how fair this system is for the poor, middle, and rich classes for each of the generations it impacts from inception until its ultimate demise in the future.)
[quote=RodgerMitchell]
Yes, Zimbabwe is a great authority for you. I suggest you listen to everything Robert Mugabe’s bank tells you. And also believe him if he tells you he didn’t steal farm land from farmers and give it to people who had no clue about farming, and that didn’t cause the collapse of his agrarian economy. He’s a great source of information.
It’s been fun. Not informative, but fun. See you in a few years. Meanwhile, if you want to learn economics, try: moslereconomics.com/2012/03/16/inflation-expectations/
Rodger Malcolm Mitchell[/quote]
You’ve generated quite a bit of heat, but not too much illumination with your posts. To be fair, some of the posts directed at you were less than respectful. Nonetheless, I’d like to continue the conversation on this thread. If your theory has merit, I’d like to know more about it. Right now, I’m not convinced that it is more than a grand deception.
I hope you will treat me with as much respect as I give you.
Grover
1. Federal debt must be paid back by taxpayers. (But, because the federal government has the unlimited power to create the money to pay its bills, there is no need to ask taxpayers to do it.)2. Federal debt adds to the government’s interest paying burden. (Again, interest is no burden to a entity having the unlimited ability to create money.)
3. Federal debt uses up lending funds that otherwise would go to private needs. (But, federal spending adds money to the economy, making more, not less, funds available for private lending.)
4. By increasing the money supply, federal deficits reduce the value of money, thereby causing inflation. Readers of this blog have seen the graph (below) which shows no relationship between federal deficits — even large federal deficits — and inflation. Note how the peaks and valleys of deficit growth do not match the peaks and valleys of inflation growth:
Rodger: I went to your website. I’d ask my late dog Copper for economic advice before believing any of the above drivel. You should watch CM’s Chapter 16. CPI, where they back out food and gas from inflation. You sound as moronic as Ben Bernanke saying "we don’t have inflation."
Good luck buddy, you are going to need it.
Oh, and one more thing: Every country that tried this wound up in hyperinfaltion. (Again, interest is no burden to a entity having the unlimited ability to create money.)
And FTW: According to the government, who back out oil and food from "inflation" the dollar has lost 82% of its value since Nixon slammed the gold window.
So there you go genius. They create more money and YOU pay more. Why? Because your dollar is worth less than 2 dimes. And I’m not talking about what you may or maynot have smoked when you wrote that trash. And God, I hope you do get high and were high, because if not, I’m going to have to use the m-word.
This blows all that drivel you wrote ---- including your book — out the door. You should name your blog Monopoly Money & Why It’s Valuable. I hope you golf better then you "econ."
Some people fail to understand that the law of supply and demand applies directly to the value of our money.
When wages inflate it is harder to notice this. Now, with globalization and wages that have been flat since the 1970s as we compete against workers makeing 2 bucks a day one would have to be an utter moron not to grasp that this is a serious problem.
[Moderator’s note: This post is a violation of the forum guidelines. Personal attacks and name calling are not allowed. Appropriate corrective action with the user has been undertaken.]
The tipping point has no correlation to deficit spending… it arrives when the debt servicing costs finally become such a drag, due to absolute size, interest rate, or both, that they disable growth. The truth is, we have always grown out of our problems in the recent past. As you know, our present debt-based monetary system needs constant, exponential growth in order to be healthy. Most of us here believe that this growth will be forced on us in the future… but that it will be nominal (read inflationary) growth… not the organic kind (which is now impeded by the debt servicing costs, runaway socialism, and peak cheap energy, among other things). As well, the tipping point can be historically correlated to debt:GDP as per our friends Reinhard and Rogoff; http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640/ref=sr_1_1?s=books&ie=UTF8&qid=1332166138&sr=1-1
As I said before, I think this conversation is interesting in the context of possible future monetary systems… I would in fact like to see the FED ended, and the monetary creation mechanism back in truly "sovereign" hands. The mechanisms that enforce scarcity integrity, be it ties to PM’s, energy, or a basket, will be of utmost importance. Other than this context, your ideas are, in my opinion, nothing but magical thinking.
I’ve been trying to rationalize a way to collect Social Security and Medicare in the not too distant future, in the unlikely event that it still exists. Since being robbed by someone (government) doesn’t justify stealing from someone else, I need some help here. 
SS
We were very impressed to read the polite and informative posts of several users on this thread. They endeavored to present facts and data in the context of a civil conversation with a new user who had a differing viewpoint. Here at CM.com we have intense pride at the fact that we are a cut above the crowd. This type of civil, educational debate is the most productive way to increase knowledge and be persuasive to others who hold different opinions.
On the other hand, we were disappointed to read some of the other comments on this thread - written by more than one user - which used prying personal attacks, insults, degrading commentary, and crude characterization against a person whose only crime was holding a contrary opinion. Not only is this a completely ineffective means of persuading others, but fundamentally this is not what we are about.
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[quote=Moderator Jason]
On the other hand, we were somewhat disappointed to read some of the other comments on this thread - written by more than one user - which used prying personal attacks, insults, degrading commentary, and crude characterization against a person whose only crime was holding a contrary opinion. Not only is this a completely ineffective means of persuading others, but fundamentally this is not what we are about.
[/quote]Is it a personal attack, an insult, and degrading to place our children in debt—before they are born—or before they can even vote?
Is it a personal attack, an insult, and degrading to advocate that the system that has stolen from my grandparents, parents, ourselves and our children "just" and "good" system?
Evil is bad sold as good, wrong sold as right, injustice sold as justice. Like the coat of a virus, a thin veil of right can disguise enormous wrong and confer an ability to infect others.” ~John G. HartungIs it a personal attack, an insult, and degrading to sate, to the effect, that people on this blog don't know what they are talking about adn it isn't a good economic blog---but come over to my blog, I know what is right?
The frequent combination of insults plus lack of data and informed comment, make this blog essentially a time-waster. There are several good, informative economics sites, in which people not only understand economics, but discuss actual data. In addition to my site at www.nofica.com,Two quotes come to mind Einstein's and Hawking's:
“The world is a dangerous place. Not because of the people who are evil; but because of the people who don't do anything about it.”~Einstein
'The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge.'~Stephen W. Hawking:While I sincerely admire the "high road" at CM, I have to really question if being "politically correct" is correct when it entails slapping an iron debt shackle and chain to an unborn baby?
Not only is this a completely ineffective means of persuading others...I'd encourage you to consider reading "Steve Jobs" Jobs kept it simple. There were two sides of the ledger. People were Gods or, as FSN edited my last article ****heads. He didn't tolerate $*** work. He didn't sugar-coat $*** work. I really question how we got to where we got to. Do you ever wonder how this happened? We work from January until mid August to pay taxes. With circa 1970s wages because CEO's wanted cheap labor and now we compete against workers making 2 bucks a day. Someone walks in our collective living room and takes a proverbial on the carpet by saying this is a good system, a just system, a system by which we're really not working 8.5 months of the year paying taxes and going into debt trying to get by on 3.5 months of 1970s wages and I'm hearing that we should be uber polite? Funny, I didn't call the guy a moron, I thought I was being polite.
…almost as disappointing as the fact that no one from CM has come on here to address Rodger’s points.
I don’t post bc I’m here to learn, but I keep coming back to this thread and am disappointed to see no substantive replies to his point-by-point attacks.
Hmmm, actually I thought that Jim H and Grover made some very good points. If you go to Rodger’s blog there are a number of articles, and he linked some here, that explain his pov. www.nofica.com
The most of value I’ve been able to glean from the posts on his site is that fiat money is essential to his view of monetary policy. That’s what he means by "economic sovereignty". As to why he thinks that’s the ideal system, and why he isn’t tickled pink now, since that is our monetary policy, I haven’t quite figured out. If I do, I’ll let you know.
Doug
I have read the guy’s summary of monetary sovereignty - it seems silly that he suggests that people don’t understand such a simple concept: We can "create" money to pay off debts without anyone else’s permission, the Euros can’t - therefore they can default and we can’t(or shouldn’t have to, in his mind). His entire thesis seems to be based on some graphs that he claims show no correlation between deficit spending and inflation. How these figures came about or their validity is not something I would know.Instead of seeing other graphs to show inflation through the years and instigate some sort of "graph-off", I’d like to understand why his data may or may not be correct and/or why some other data would be more reflective of our financial history.
So, if the U.S. were to simply press a few computer keys and credit all of it’s debtors with their balances, that would cause mass inflation in the U.S.? Why, because they now have so much USD on hand that they would buy up American goods and/or investments, forcing a rise in prices?
I apologize if this seems amateur - I just really want to understand both sides.
Thanks