Not all Occupy protesters are lazy unemployed bums

[cybercoma]

No it doesn't change liquidy, it provides more.

This doesn't make any sense. How do you provide more liquidity, but not change liquidity? It changes liquidity by providing more.

For example with that much liquidity in the market it sends very clear signals of what kind of grain to put in production, when to sell, whether to keep it in storage for x amt. Of time, whether to invest in more machinery/inputs, etc, in the market you can't have the price constantly rising or people will lose money when they go short and buy back in. What your proposing makes price discovery impossible, and hurts growth.

And that liquidity is artificial. Instead of it being more buyers on the market looking for grain, it's more buyers on the market looking to gamble. It sends a false message about all of those things you mentioned and drives up the price, starving thousands, if not millions, of people in developing countries that can't afford to have their food expenses rise from 70-80% of their income.

What I'm suggesting is that people who actually buy grain futures (and this is only an example of a single commodity) actually be buying them because they have a interest in grain. Someone sitting in a Tower in Manhattan doesn't need 700 silos full of grain and isn't going to use them. Now, I'm not suggesting that these investors be pushed out of the market completely, but they've gone from a small fraction of the traders (somewhere around 20% in 1998) to the majority of traders (roughly 75-80% as of two years ago). The market should be regulated so that the amount of speculators is limited to a certain proportion of the whole. That way the trade is primarily based on the commodity itself and not some artificial numbers game that these traders are playing to try and get rich.

[cybercoma]

Better than saving and investing nothing for retirement. Perhaps people should build smaller houses drive older cars and save some money?

That's beside the point. You said these investors are creating value for people's retirements. The majority of people have little to no investment (< $10,000) for retirement. The people they're creating value for is themselves.

[blueblood]

This doesn't make any sense. How do you provide more liquidity, but not change liquidity? It changes liquidity by providing more.

And that liquidity is artificial. Instead of it being more buyers on the market looking for grain, it's more buyers on the market looking to gamble. It sends a false message about all of those things you mentioned and drives up the price, starving thousands, if not millions, of people in developing countries that can't afford to have their food expenses rise from 70-80% of their income.

What I'm suggesting is that people who actually buy grain futures (and this is only an example of a single commodity) actually be buying them because they have a interest in grain. Someone sitting in a Tower in Manhattan doesn't need 700 silos full of grain and isn't going to use them. Now, I'm not suggesting that these investors be pushed out of the market completely, but they've gone from a small fraction of the traders (somewhere around 20% in 1998) to the majority of traders (roughly 75-80% as of two years ago). The market should be regulated so that the amount of speculators is limited to a certain proportion of the whole. That way the trade is primarily based on the commodity itself and not some artificial numbers game that these traders are playing to try and get rich.

You don't change liquidity, there is either more or less. You can change the amount of liquidy.

Do you think there is a cap on the amount of buyers in the grain market place? Nope, the more the better. Those people in developing countries now have incentive to produce their own food and there is incentive for foreign investors to put land around the globe I to food production. Those people in developing countries actually become richer as a result as more are employed in food production.

But they do have an interest in that grain, they are interested in the demand of that grain and how they and their clients can make some money by cashing into that demand. That's why the person in the tower in Minneapolis, Kansas city, or Chicago always rolls over their contract because they don't want to take x amount of b trains with grain, so the sell those contracts to people that do. The farmer, and the brokers clients benefit. You forget that there's a two way street here, if demand drops for those grains, the price drops faster because those managers don't want to be stuck taking grain they don't need so they unload this contracts at a discount thus benefitting the buyers of the grain. It is very efficient and works very well.

The market is related, supply and demand regulates it. And what is wrong with getting rich, more rich people is a good thing.

[blueblood]

That's beside the point. You said these investors are creating value for people's retirements. The majority of people have little to no investment (< $10,000) for retirement. The people they're creating value for is themselves.

Is getting a x% return on a 10,000 investment creating value? Yes or no will do.

[Rick]

The Americans will do whatever they damn well please...good or bad...and there is nothing you can do about it. Sorry.

Osama Bin Laden says you're wrong about that.

[bush_cheney2004]

Osama Bin Laden says you're wrong about that.

Osama is dead...the Americans executed him...without any trial...because they wanted to...and there is nothing you can do about it.

[Rick]

? Are we just talking about upping taxes on the rich (however we define that)?

Without question...As they should be.

But are we talking about something else, a sort of neo-Marxism where the Bourgeoisie (again, however we define that) get to be marched to the proverbial guillotine to appease the angry masses who want "their fair share"?

Don't tease... it'd be all too sweet.

Is it something in between?

Sadly, probably yes.

Will we be stripping some property from the rich to give to the poor?

We'd better one way or another.

Will we be putting limits on how rich you can get?

No, just making sure the rich aren't stealing from the poor with their pro slave labour attitude.

Someone please bloody well explain it to me, because when I see angry people demanding the heads of the aristocracy, the first thing that comes to mind isn't a Haight-Ashbury Love-in.

Welcome to reality... this isn't some fairyland like Oz and you're not in Kansas any more.

[Rick]

Osama is dead...the Americans executed him...without any trial...because they wanted to...and there is nothing you can do about it.

And how many Americans died trying to find him?

You're not as superior as you think you are. There's a reason the world hates your arrogance.

China owns you...

[bush_cheney2004]

And how many Americans died trying to find him?

You're not as superior as you think you are. There's a reason the world hates your arrogance.

China owns you...

LOL!...then the USA owns Canada. No wonder the world hates your guts.

Edited October 30, 2011 by bush_cheney2004

[Rick]

No wonder the world hates your guts.

They can't hate us all that much, they're not bombing our embassies or flying planes into our buildings.

[bush_cheney2004]

They can't hate us all that much, they're not bombing our embassies or flying planes into our buildings.

Then why did country kill the locals in Libya, Afghanistan, Haiti, Serbia, Bosnia, and Iraq? I guess love hurts in Canadaspeak.

[charter.rights]

Then why did country kill the locals in Libya, Afghanistan, Haiti, Serbia, Bosnia, and Iraq? I guess love hurts in Canadaspeak.

They mistook them for Americans. They can't read the English on the uniforms.

[bush_cheney2004]

They mistook them for Americans. They can't read the English on the uniforms.

Yea..the whole world does that...I wonder why? Better sew flags on their backpacks...LOL!

[Guest American Woman]

They can't hate us all that much, they're not bombing our embassies or flying planes into our buildings.

You sound quite naive. Just because they have generally gone for bigger targets doesn't mean they love you any more than the U.S., Britain, Spain, etc., so you best knock wood.

[cybercoma]

You don't change liquidity, there is either more or less. You can change the amount of liquidy.

Talk about splitting hairs.

Do you think there is a cap on the amount of buyers in the grain market place? Nope, the more the better. Those people in developing countries now have incentive to produce their own food and there is incentive for foreign investors to put land around the globe I to food production. Those people in developing countries actually become richer as a result as more are employed in food production.

It's not about a cap. It's about a proportion of speculators. People in the developing world are not better off because of the amount of speculators. Since they're buying grain, not for the sake of it being grain, but for the sake of it being a good gamble, they're driving the price up artificially, causing people to starve to death.

But they do have an interest in that grain, they are interested in the demand of that grain and how they and their clients can make some money by cashing into that demand.

They're artificially changing the demand, which is not for the grain itself but for the investment. Others rely on that grain to survive.

Regardless, the point is that the price of grain now is not changing because there is more demand for the grain itself. There's demand for the investment. There's demand for money to change hands, but not in the actual products. The market fluctuations ought to be primarily based on the changing supply and demand for that particular commdity, not for the financial benefit of buying low and selling high.

And again, I'm not saying there should be no speculators on the market, but when there's an 80/20 split farmers to speculators and that relationship flips, it's a problem. The price is now being driven by financial predators, not by the actual nature of the commodity.

[cybercoma]

Is getting a x% return on a 10,000 investment creating value? Yes or no will do.

The point is that most people have next to nothing in stocks. When they're creating value it's not for the benefit of the poor retirees, like you want to paint it. The people that are cashing in on that value are the people that hold most of the financial wealth in the United States. It's some of the bottom 99%, but a disproportionate amount goes to the top 1%.

[bush_cheney2004]

.... It's some of the bottom 99%, but a disproportionate amount goes to the top 1%.

It's a lot of the 99%...the minimun opening account balance for an ETrade account is only $1000.

[blueblood]

Talk about splitting hairs.

It's not about a cap. It's about a proportion of speculators. People in the developing world are not better off because of the amount of speculators. Since they're buying grain, not for the sake of it being grain, but for the sake of it being a good gamble, they're driving the price up artificially, causing people to starve to death.

They're artificially changing the demand, which is not for the grain itself but for the investment. Others rely on that grain to survive.

Regardless, the point is that the price of grain now is not changing because there is more demand for the grain itself. There's demand for the investment. There's demand for money to change hands, but not in the actual products. The market fluctuations ought to be primarily based on the changing supply and demand for that particular commdity, not for the financial benefit of buying low and selling high.

And again, I'm not saying there should be no speculators on the market, but when there's an 80/20 split farmers to speculators and that relationship flips, it's a problem. The price is now being driven by financial predators, not by the actual nature of the commodity.

Really, me and all my neighbors are buying construction equipment to drain sloughs so we can maximize production, we cannot grow stuff fast enough. And that is going on around the world, the former USSR is now a grain exporting region than importing region, Saudi Arabia and the UAE are investing in African farmland. People have starved to death with cheap food being dumped by Europeans and Americans. Without higher grain prices there would be no incentive to invest in Africa or up production in the former USSR. A big part of that has been the speculators. Why should the people of the developing world be unemployed so that the USA and Europe can dump grain? Argentinas biggest export is soybeans and 10 yrs ago that country was literally broke.

That speculation reflects real supply and demand. If north America, Australia, and Europe have optimal growing conditions, the price of grain

drops. It's not smoke and mirrors, the speculators are just part of the market. Do you know why the speculators are so bullish on grain?it's because of the new demand from Asian countries. They have money and they don't want to live on a bowl of rice a day anymore.

If anything you should be upset with the cheap money caused by the fed printing money and bring put in commodities. In my business more quantitative easing is a good thing as it finds it's way into the commodity market. The developing world is growing at a much faster rate than the developed world and more and more people are becoming middle class, how is that a bad thing?

[dre]

Really, me and all my neighbors are buying construction equipment to drain sloughs so we can maximize production, we cannot grow stuff fast enough. And that is going on around the world, the former USSR is now a grain exporting region than importing region, Saudi Arabia and the UAE are investing in African farmland. People have starved to death with cheap food being dumped by Europeans and Americans. Without higher grain prices there would be no incentive to invest in Africa or up production in the former USSR. A big part of that has been the speculators. Why should the people of the developing world be unemployed so that the USA and Europe can dump grain? Argentinas biggest export is soybeans and 10 yrs ago that country was literally broke.

That speculation reflects real supply and demand. If north America, Australia, and Europe have optimal growing conditions, the price of grain

drops. It's not smoke and mirrors, the speculators are just part of the market. Do you know why the speculators are so bullish on grain?it's because of the new demand from Asian countries. They have money and they don't want to live on a bowl of rice a day anymore.

If anything you should be upset with the cheap money caused by the fed printing money and bring put in commodities. In my business more quantitative easing is a good thing as it finds it's way into the commodity market. The developing world is growing at a much faster rate than the developed world and more and more people are becoming middle class, how is that a bad thing?

If anything you should be upset with the cheap money caused by the fed printing money

The fed isnt the one thats creating all the money though. Less than 5% of the money supply was created in this manner. Almost ALL of the money in circulation was created by private commercial banks loaning out money that doesnt exist.

Its a commonly held misperception that the government is creating all this money. Almost all monetary expansion is the product of the banking system.

Edited October 30, 2011 by dre

[cybercoma]

The fed isnt the one thats creating all the money though. Less than 5% of the money supply was created in this manner. Almost ALL of the money in circulation was created by private commercial banks loaning out money that doesnt exist.

Its a commonly held misperception that the government is creating all this money. Almost all monetary expansion is the product of the banking system.

They create money, then expect it to be paid back.... with interest. Where does the interest come from if they're the ones creating the money?

Oh, but they're not funneling money to the top of the pyramid.

[blueblood]

The fed isnt the one thats creating all the money though. Less than 5% of the money supply was created in this manner. Almost ALL of the money in circulation was created by private commercial banks loaning out money that doesnt exist.

Its a commonly held misperception that the government is creating all this money. Almost all monetary expansion is the product of the banking system.

Oh really, so the "open market operations" the fed engages in don't happen. For example the fed decides to increase the money supply. It decides to buy 1 billion in bonds from say Goldman Sachs. It writes a check on itself and presto, Goldman Sachs has 1 billion dollars to play with. Since fractional banking requires only a percentage of money on hand as reserves, i think its 10%, it can loan out even more money than they got from the fed. So with 1 billion bucks from the fed, it can loan out 10 billion bucks.

Then there is the raising and lowering of interest rates at which banks can lend from each other and to the fed.

So your right in that private banks created a bunch of money out of nothing because of fractional reserve banking, but the fed gives them phony reserves a lot of the time to begin with.

Thats why you need a smart person running the fed so that there isn't this runaway freight train.

This explains it too.

My link

Edited October 30, 2011 by blueblood

[dre]

Oh really, so the "open market operations" the fed engages in don't happen. For example the fed decides to increase the money supply. It decides to buy 1 billion in bonds from say Goldman Sachs. It writes a check on itself and presto, Goldman Sachs has 1 billion dollars to play with. Since fractional banking requires only a percentage of money on hand as reserves, i think its 10%, it can loan out even more money than they got from the fed. So with 1 billion bucks from the fed, it can loan out 10 billion bucks.

Then there is the raising and lowering of interest rates at which banks can lend from each other and to the fed.

So your right in that private banks created a bunch of money out of nothing because of fractional reserve banking, but the fed gives them phony reserves a lot of the time to begin with.

Thats why you need a smart person running the fed so that there isn't this runaway freight train.

Exactly. The commercial banks could not what they do without the Fed. They enable these banks by wizzing around funds between banks to cover spikes in withdrawal, and buy insuring all of the deposits. They protect banks from the natural consequences of their fraudulent activity, which is loaning money that doesnt exist and charging usury for it. Without the fed this clearly wouldnt work in the real world because its morally wrong. Imagine if you will, me selling somebody else your car. The contract would not be enforcable in court because its considered an "impossible contract", and as such it is fraud, since I cannot deliver what I promise. Like the banks, I show up to the negotiations with empty pockets. If I tried to sell somebody your car the contract would be deemed illegal and Id probably spend some time in jail.

And youre right... the government can put money into the economy by purchasing securities. But the vast vast majority of the total money supply was created as bank credit.

Thats why you need a smart person running the fed so that there isn't this runaway freight train.

The freight train is mathematically unstoppable though no matter how the fed is managed because people have to go into debt to get enough money into the economy to facilitate trade. The only things that can prevent its collapse is are either constantly high levels of economic growth, or huge montary expansion (increasing debt).

This explains why as soon as the dollar was de-coupled from gold in the early seventries the national began because to skyrocket, and only slowed down briefly in the 90's due to massive economic growth.

http://www.issues2000.org/askme/natdebt.gif

If you ran this system in an economy with low growth, then before long not only would the banks have every bit of money, but they would own every bit of real property as well.

Consider the following scenario... Theres an economy that starts out with no money supply, and 3 participants. Bob, John, and Peter.

They each take a loan out from the centrally backed commercial bank for 100 dollars. There is now 300 dollars in the national economy. Thats how big the money supply is. The problem is that the money was "lent" at interest so Bob, John and Peter owe a combined total of 315 dollars. 105 each.

It is UTTERLY IMPOSSIBLE for John and Peter, and Bob to all repay their loans, because they owe 315 dollars but theres on 300 dollars in the money supply that they can possibly trade their goods and services for. One of them is mathematically guaranteed to default. Even if all three are dilligent producers. The money to pay the loan back with interest simply doesnt not exist in the economy.

Bob defaults on his loan, the bank siezes his assets, and now the bank owns 1/3rd of the real property in the economy, and is still owed all of the currency. The only way for the system to continue working is either in the face of massive economic growth or more and more borrowing.

Its the very nature of the system ITSELF that makes it a runaway freight train. Not just the people managing it. The system cannot be balanced. THink of a piece of software with a memory leak. The "leak" in the federal reserve system is the usury charged by commercial banks.

Edited October 30, 2011 by dre

[blueblood]

Exactly. The commercial banks could not what they do without the Fed. They enable these banks by wizzing around funds between banks to cover spikes in withdrawal, and buy insuring all of the deposits. They protect banks from the natural consequences of their fraudulent activity, which is loaning money that doesnt exist and charging usury for it. Without the fed this clearly wouldnt work in the real world because its morally wrong. Imagine if you will, me selling somebody else your car. The contract would not be enforcable in court because its considered an "impossible contract", and as such it is fraud, since I cannot deliver what I promise. Like the banks, I show up to the negotiations with empty pockets. If I tried to sell somebody your car the contract would be deemed illegal and Id probably spend some time in jail.

And youre right... the government can put money into the economy by purchasing securities. But the vast vast majority of the total money supply was created as bank credit.

The freight train is mathematically unstoppable though no matter how the fed is managed because people have to go into debt to get enough money into the economy to facilitate trade. The only things that can prevent its collapse is are either constantly high levels of economic growth, or huge montary expansion (increasing debt).

This explains why as soon as the dollar was de-coupled from gold in the early seventries the national began because to skyrocket, and only slowed down briefly in the 90's due to massive economic growth.

http://www.issues2000.org/askme/natdebt.gif

If you ran this system in an economy with low growth, then before long not only would the banks have every bit of money, but they would own every bit of real property as well.

Consider the following scenario... Theres an economy that starts out with no money supply, and 3 participants. Bob, John, and Peter.

They each take a loan out from the centrally backed commercial bank for 100 dollars. There is now 300 dollars in the national economy. Thats how big the money supply is. The problem is that the money was "lent" at interest so Bob, John and Peter owe a combined total of 315 dollars. 105 each.

It is UTTERLY IMPOSSIBLE for John and Peter, and Bob to all repay their loans, because they owe 315 dollars but theres on 300 dollars in the money supply that they can possibly trade their goods and services for. One of them is mathematically guaranteed to default. Even if all three are dilligent producers. The money to pay the loan back with interest simply doesnt not exist in the economy.

Bob defaults on his loan, the bank siezes his assets, and now the bank owns 1/3rd of the real property in the economy, and is still owed all of the currency. The only way for the system to continue working is either in the face of massive economic growth or more and more borrowing.

Its the very nature of the system ITSELF that makes it a runaway freight train. Not just the people managing it. The system cannot be balanced. THink of a piece of software with a memory leak. The "leak" in the federal reserve system is the usury charged by commercial banks.

Your talking about a scenario where the interest stays low, which provides the signal to consume. The problem we face is the fed very rarely allows the interest rate to rise to levels it should to encourage savings. If more people save what they produce, it puts more sound money in the banking system for loans and transactions, and then the fed can start selling the bonds it bought from the banks instead of buying them. Volcker jacked up the interest rate in the early 80's to get out of stagflation in the 70's, at first it seemed harsh, but in the long run it was better. RIght now that interest rate needs to go up so people can start saving their money in banks and the banks will have more sound money to lend out.

And why does the fed keep rate low, because any gov't who said to the fed to jack up the rates during a recession even though most people are saving their money would be voted out of office because prices are falling. What people have a hard time getting their heads around is that falling prices aren't necessarily a bad thing, it helps lead to price discovery in the free market.

[dre]

Your talking about a scenario where the interest stays low, which provides the signal to consume. The problem we face is the fed very rarely allows the interest rate to rise to levels it should to encourage savings. If more people save what they produce, it puts more sound money in the banking system for loans and transactions, and then the fed can start selling the bonds it bought from the banks instead of buying them. Volcker jacked up the interest rate in the early 80's to get out of stagflation in the 70's, at first it seemed harsh, but in the long run it was better. RIght now that interest rate needs to go up so people can start saving their money in banks and the banks will have more sound money to lend out.

And why does the fed keep rate low, because any gov't who said to the fed to jack up the rates during a recession even though most people are saving their money would be voted out of office because prices are falling. What people have a hard time getting their heads around is that falling prices aren't necessarily a bad thing, it helps lead to price discovery in the free market.

If more people save what they produce, it puts more sound money in the banking system for loans and transactions

No thats NOT how the current system works. High personal savings rates actually shrink the money supply and create scarcity. Deflation. If all the borrowers paid back all the loans then there would be NO MONEY LEFT to facilitate transactions, because as I said before theres less money in the money supply than the total ammount owed by borrowers.

Thats why banks are trying so desperately to get people to accept credit. Unless theres always a fresh supply of new borrowers then the system will collapse. Thats exactly what happened during the great depression. People stopped borrowing money because they were uncertain of whether they would be able to sell enough goods and services to pay it back. As existing loans were paid off and no new loan money was written into existance the money supply shrank, and you got rampant deflation.

What people have a hard time getting their heads around is that falling prices aren't necessarily a bad thing, it helps lead to price discovery in the free market.

Falling prices are every bit as bad as rising prices or worse because they discourage individuals from trading with each other.

The idea of "promise to pay" money came out of the ancient marketplace because the direct barter system was extremely clumbsy and hard to use. The butcher could not purchase textiles from the seemstress unless the seamstress needed meat. So they started trading using self issued promises to produce. The baker started printing tokens redeemable for a loaf of bread. The butcher started accepting these tokens as payment for meat even if he didnt need bread, because tokens had value backed by the demand for the bread at the market, and the reputation of the baker.

Using this simple example of what money and credit really are its immediately apparent why price stability has been important, and is the goal of pretty much every monetary system ever designed.

In the ancient marketplace price stability was guaranteed because money was backed by things with real value. Your bread certificate would buy you a loaf of bread today... or a year from now. If you dont have price stability none of this can work. Every deal in the economy will be skewed by the volatility in the purchasing power of money, and people will make less deals with each other, and be less likely to employ each other.

Edited October 30, 2011 by dre

[blueblood]

No thats NOT how the current system works. High personal savings rates actually shrink the money supply and create scarcity. Deflation. If all the borrowers paid back all the loans then there would be NO MONEY LEFT to facilitate transactions, because as I said before theres less money in the money supply than the total ammount owed by borrowers.

Thats why banks are trying so desperately to get people to accept credit. Unless theres always a fresh supply of new borrowers then the system will collapse. Thats exactly what happened during the great depression. People stopped borrowing money because they were uncertain of whether they would be able to sell enough goods and services to pay it back. As existing loans were paid off and no new loan money was written into existance the money supply shrank, and you got rampant deflation.

Falling prices are every bit as bad as rising prices or worse because they discourage individuals from trading with each other.

The idea of "promise to pay" money came out of the ancient marketplace because the direct barter system was extremely clumbsy and hard to use. The butcher could not purchase textiles from the seemstress unless the seamstress needed meat. So they started trading using self issued promises to produce. The baker started printing tokens redeemable for a loaf of bread. The butcher started accepting these tokens as payment for meat even if he didnt need bread, because tokens had value backed by the demand for the bread at the market, and the reputation of the baker.

Using this simple example of what money and credit really are its immediately apparent why price stability has been important, and is the goal of pretty much every monetary system ever designed.

In the ancient marketplace price stability was guaranteed because money was backed by things with real value. Your bread certificate would buy you a loaf of bread today... or a year from now. If you dont have price stability none of this can work. Every deal in the economy will be skewed by the volatility in the purchasing power of money, and people will make less deals with each other, and be less likely to employ each other.

What happens with the rising interest rates is that there ends up being a lot of savings, so much in fact that the bank doesn't want to dole out the high interest payments so it drops the rate to clear the excess money out of the bank. That's how its supposed to be, its supposed to be a cycle. THe problem is when gov't gets involved and screws around with the rates causing a misallocation of resources. This is what happened in 1920 when there was double digit unemployment and the fed. No collapse of anything.