Frayed Ends: Business, Economics, and Tax Policy 3.0

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Kepler, you might want this link.

Personal debt won't wash against checking account holdings as this isn't a balance sheet equation. Personal debt merely gets counted in one of the broader definitions of the money supply.

Oh no, I get that. My contention is that with people running higher debt, their checking accounts are probably lower or at least the same. Therefore, even if checking accounts were accounted for in the metric, that wouldn't account for a rise.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The numbers I quoted are for M0, which is made up of only cash and coin. Cash and coin have increased steadily in the last ten years, especially so in the past nine. I made a mistake in my original post of stating M1 - it's been 16 years since I've taken an economics class, 17 years since a macro course, so I was off by a level. Sue me.

See you on Judge Judy.

If there's that much in the M0, then where the heck is it? Because I see less and less people carrying cash than the previous years you mentioned.

 

[St. Clown]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

See you on Judge Judy.

If there's that much in the M0, then where the heck is it? Because I see less and less people carrying cash than the previous years you mentioned.

There are small foreign nations that use the USD as their official currency (various nations use various larger nations' currencies as their official currencies, in truth), black marketers love the USD in non-traceable bills, bartenders, strippers and hookers too. Then you have generational differences that'll keep paper and coin in circulation for at least a little while, and those who don't want Big Brother tracking their spending habits. Those foreign nations using our currency are something we want to continue to support as most people in power like to think that it aids us in keeping the USD as that vaunted international standard currency of trade.

There are domestic instances where people like to use cash around here, but it's just not commonly used for mundane purchases at the grocers, sundries, or clothing stores. People use cash at various festivals and fairs all the time. Cash currency isn't going away anytime soon.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

There are small foreign nations that use the USD as their official currency (various nations use various larger nations' currencies as their official currencies, in truth), black marketers love the USD in non-traceable bills, bartenders, strippers and hookers too. Then you have generational differences that'll keep paper and coin in circulation for at least a little while, and those who don't want Big Brother tracking their spending habits. Those foreign nations using our currency are something we want to continue to support as most people in power like to think that it aids us in keeping the USD as that vaunted international standard currency of trade.

There are domestic instances where people like to use cash around here, but it's just not commonly used for mundane purchases at the grocers, sundries, or clothing stores. People use cash at various festivals and fairs all the time. Cash currency isn't going away anytime soon.

Just remember, according to DHS's eight signs, if you use cash a lot, you're a terrorist.

 

[French Rage]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Someone didn't notice withdrawal limits in Cyprus a while back. It's also a means to push for a cashless society. After all, if you use cash, you're a terrorist. Government wants complete (indirect) control of your money, with you having no say.

So that had nothing to do with the state of the banks there and not wanting a run on the banks?

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

So that had nothing to do with the state of the banks there and not wanting a run on the banks?

And you think that sort of a state doesn't exist already here, what with the whole small limit on reserves needing to be kept? FDIC insurance is not going to be able to pay every single account.

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

And you think that sort of a state doesn't exist already here, what with the whole small limit on reserves needing to be kept? FDIC insurance is not going to be able to pay every single account.

I don't think you'll find many friends of fractional reserve banking here, among conservatives or liberals. Getting rid of it may actually be one of the few (only?) things we can all agree on.

 

[St. Clown]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I don't think you'll find many friends of fractional reserve banking here, among conservatives or liberals. Getting rid of it may actually be one of the few (only?) things we can all agree on.

As in you don't think banks should be required to hold a minimum percentage of deposits on hand or that banks should be required to hold all deposits on hand?

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

As in you don't think banks should be required to hold a minimum percentage of deposits on hand or that banks should be required to hold all deposits on hand?

Equal to or greater than all outstanding loans.

 

[St. Clown]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Equal to or greater than all outstanding loans.

What you just posted is still fractional banking, except going from the Fed's current 3% to your idea of >50%.

 

[French Rage]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

And you think that sort of a state doesn't exist already here, what with the whole small limit on reserves needing to be kept? FDIC insurance is not going to be able to pay every single account.

Right, but that has to do with the basic mechanics of a fractional reserve system, not some sort of conspiracy to eliminate cash or a fiendish plot to eliminate the meal of dinner.

 

[French Rage]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Equal to or greater than all outstanding loans.

Loans or deposits? If it's customers wanting to withdraw their deposits that can cause problems, it would seem the amount held should in some way relate to that, not to loans given out.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Right, but that has to do with the basic mechanics of a fractional reserve system, not some sort of conspiracy to eliminate cash or a fiendish plot to eliminate the meal of dinner.

Actually, it does. If banks are lowering and lowering the amount of reserves that they hold, eventually they're not going to be able to pay you out in any sort of physical asset, but rather state that you have "credits" towards whatever goods and services are desired, and may only be transferred by means of a magnetized piece of plastic, perhaps in the future with implanted RFID chips, which they're already talking about doing, and some groups in Sweden are implementing. One those credits are put into place, people will find that physical cash is no longer a vehicle of currency. Even the tin-foils that have been pushing Bitcoin are taking the bait.

Always remember that there are two parties to every single transaction: a buyer and a seller. The medium of transfer must be agreed by both in order for a transaction to take place.

 

[FlagDUDE08]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Loans or deposits? If it's customers wanting to withdraw their deposits that can cause problems, it would seem the amount held should in some way relate to that, not to loans given out.

For what it's worth, a deposit could be seen as a loan, only that the terms for calling it back are either partial or total, and it is on demand, not on some sort of schedule. There is the matter of interest, too, but that exists on either side. BTW, if Shariah law is implemented, you can kiss interest goodbye, because the Muslim faith does not allow interest to be charged on any sort of monetary loan.

 

[French Rage]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Actually, it does. If banks are lowering and lowering the amount of reserves that they hold, eventually they're not going to be able to pay you out in any sort of physical asset, but rather state that you have "credits" towards whatever goods and services are desired, and may only be transferred by means of a magnetized piece of plastic, perhaps in the future with implanted RFID chips, which they're already talking about doing, and some groups in Sweden are implementing. One those credits are put into place, people will find that physical cash is no longer a vehicle of currency. Even the tin-foils that have been pushing Bitcoin are taking the bait.

Always remember that there are two parties to every single transaction: a buyer and a seller. The medium of transfer must be agreed by both in order for a transaction to take place.

The bank is still limited, in theory, to what is on its ledgers though, whether that is in physical paper cash or not. The bank not wanting to give you paper cash has nothing to do with some widespread shortage of physical paper cash, but rather that your money is tied up in Bill's house or Fred's house. Otherwise you're talking about bank notes ala the 1800s being used as currency (be they paper or electronic) rather than US dollars, and I've yet to see anything like that pop up, and am not even sure if it was be allowed to last long without being squashed.

 

[dxmnkd316]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

Equal to or greater than all outstanding loans.

I think what you're proposing is a bit on the crazy side.

 

[Kepler]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I think what you're proposing is a bit on the crazy side.

It's possible. I want a system where the debtors can't take down the bank by defaulting, and the public doesn't have to bail out the lender. I suppose I would settle for the lender being privately insured for the full amount as long as the insurance company has to have cash on hand equal to all outstanding liabilities.

 

[unofan]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

I don't think you'll find many friends of fractional reserve banking here, among conservatives or liberals. Getting rid of it may actually be one of the few (only?) things we can all agree on.

Fractional reserve banking isn't the issue, it's fine unless there's a run on a bank, and that's what the FDIC is for. Eliminating the wall between consumer banking and I-banking is the main issue. Nothing like gambling with other people's federally insured money.

 

[dxmnkd316]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

It's possible. I want a system where the debtors can't take down the bank by defaulting, and the public doesn't have to bail out the lender. I suppose I would settle for the lender being privately insured for the full amount as long as the insurance company has to have cash on hand equal to all outstanding liabilities.

Fractional reserve banking isn't the issue, it's fine unless there's a run on a bank, and that's what the FDIC is for. Eliminating the wall between consumer banking and I-banking is the main issue. Nothing like gambling with other people's federally insured money.

Pretty much in line with what I think. We need to put that wall back up. Twice as high, twice as thick.

 

[FreshFish]

Re: Frayed Ends: Business, Economics, and Tax Policy 3.0

The numbers I quoted are for M0, which is made up of only cash and coin. Cash and coin have increased steadily in the last ten years, especially so in the past nine.

I wonder how much of that is in silver coins stashed in people's emergency kits?

Even if you are not a conspiracy theorist in the slightest, if you have lived through extended power outages (ten days after Irene! for example), and you are aware of the fragility of the electric grid, how reckless we have been about internet security, and how determined our enemies have been in trying to pierce it, you might want to have 2.5% - 5.0% or so of your overall portfolio invested as a hedge against a doomsday scenario. I know plenty of ordinary, regular, well-balanced people who have $1,000 or $1,500 worth of silver coins stashed away along with water purifier tablets, MREs, insect repellant, those tiny packets that contain thermal blankets, etc. etc. etc. all in a duffel bag in the basement closet or some such place. It's not that much different from having your own gas-powered electrical generator as a backup.

Probably not that much overall....10% of the US population at an average of $1,500 per person would "only" be $48 billion or so.