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Is The Global Economy A Ponzi Scheme?


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#21 Vis

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Posted 14 March 2013 - 03:55 PM

Well. casper should have woken up by now. Some one check on him and see if he's still breathing. I'm worried :mellow:


He's probably serenading his wife again....give him till the weekend to recover from the injuries caused by his wife's handbag.....

#22 Casper

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Posted 14 March 2013 - 04:38 PM

Well. casper should have woken up by now. Some one check on him and see if he's still breathing. I'm worried :mellow:

Thanks for your concern.
No, I'm in a village called Boedapest. Really nice.
So, no update here till at least tuesday I think. Doing business over here.
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#23 Casper

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Posted 14 March 2013 - 04:39 PM

He's probably serenading his wife again....give him till the weekend to recover from the injuries caused by his wife's handbag.....

I love you Vis.... :angry:

#24 Vis

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Posted 14 March 2013 - 04:52 PM

I love you Vis.... :angry:


Thanks Casper,

Have a good time there. See you on Tuesday. :)

#25 Casper

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Posted 23 March 2013 - 03:48 PM

Let's start again.
The function of money is 1) medium of exchange.
2) unit of account.
3) store of value
Store of value is only reliable when the money currency is stable. You need a powerfull (most important military) nation for this. The only one to day is de USD, even China isn't powerfull enough to have this kind of might. These days you see that also the USD isn't the safe harbour anymore as in the old days.
World wide everything is compared to the USD, very handy and gives some stability.
The most important one is the medium of exchange. For a good and healty economy you need a trustworthy currency. Never in the history of mankind was there such a trustworty currency.
And also trustworty is subjective.
When you look to historic value of the USD you can see that since the WOII the USD already lost 93% of its value. The picture below shows the purchasing power of the USD.
Posted Image

You can say that the USD already crashed.

#26 Gangnam Guy

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Posted 23 March 2013 - 03:56 PM

Thanks for your concern.
No, I'm in a village called Boedapest. Really nice.
So, no update here till at least tuesday I think. Doing business over here.


Hey Casper are you talking about the Hungarian capital or I mistaken?

((Greetings from Budapest)) :)

#27 Casper

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Posted 23 March 2013 - 04:03 PM

But I do not see how exchanging one currency for another on paper stems inflation? As I see it All that is happening in the exchange is fixing the difference in the weight of the 2 currencies. could you explain that to me so i could understand better?

And like I said there has been lots of inflation and it will continue to get worse I think unless the course is changed. Snow balls rolling down hill always start out much smaller than they end up, that is before they hit something hard and get destroyed.

When you need USD for buying stuff, people has to exchange to the currency in which they can buy the goods.
Example: When you are the local store and you buy for 100 USD of goods (mild, jus, toiletpaper, meat etc) you can not say at the desk, I have Euro's and I want to pay the similair amount (according to the USD) in Euro's. Sometimes it's possible because in for example Hungary, it's sometimes possible to pay directly in Euro's. They love the hard cash of Euro according to the Hongarian currency (also now days....).
So you have to have first exchange your money. When you are the only one there is no effect to the economy/inflation etc. When many people/companies does that you get the situation that when 1Million people wants 100k USD they take their money to the bank/currency office and change it to USD. The USD is favorite so they can ask more Euro's for the same amount of USD because of the "popularity" of the USD. The euro's is according to the USD less worthy. In France you will not notice it until the goods you want to buy has some (or all) foreign (outside the Eurozone) parts in it, oil, car, jet, ipad, htc smartphoe. In that moment you notice that you can buy less than (for example) a week ago.
Because the world needs oil and most of the oil has to be bought with USD, the USD is popular and people needs it.
That for the Oil.
Another time about other ways to proper up the USD.

#28 Vis

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Posted 23 March 2013 - 04:10 PM

In that moment you notice that you can buy less than (for example) a week ago.


I can certainly agree with that.
There was a time when items only went up a penny at a time, now it's more like 5p a time, nearly every week as well......

#29 Casper

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Posted 23 March 2013 - 04:12 PM

Hey Casper are you talking about the Hungarian capital or I mistaken?

((Greetings from Budapest)) :)

Yes, my kind of humor get people confused. Village is ment as The city of Hungary.
Great city, I love it. You could see that people are supressed in their energy, they are anxious for what the future will bring.
I was in the Tulip Inn hotel. Pitty, next time I create the oppertunity to meet.
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#30 Gangnam Guy

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Posted 23 March 2013 - 04:18 PM

Yes, my kind of humor get people confused. Village is ment as The city of Hungary.
Great city, I love it. You could see that people are supressed in their energy, they are anxious for what the future will bring.
I was in the Tulip Inn hotel. Pitty, next time I create the oppertunity to meet.


:D I thought there is a village in The Netherlands called Budapest ! :P I love my city too!!

I am optimistic about the future, and about present as well :)
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#31 Casper

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Posted 01 April 2013 - 03:25 PM

Using bonds to pay the goverment bills.

When a country/goverment has not enought money they can lend money on the international bond market.

As a country you say: 1 million bond USD gives 0.2% interest (this is just an example) for 5 years. There are 1000 shares available so hurry ;)

You dictate what it will cost and international investers can buy them. What is important here is that the country who sells their bonds has to be trustworthy. Less trustworthy higher interest rate.

When no investor trust the goverment they will not buy the shares so you have to raise your interest. If not, you don't sell the bonds and you have no money to spend. Easy as that.

(you can also buy my own bonds but even my mother doesn't trust them ;) ..... boehoe)

Because a country can not go bankrupt........ this should be a save haven. BUT in the past it happend, 2003 Argentina declared itself bankrupt. International investors did loose a considerable amount of money.

So you create money as goverment but the money doesn't go in the open. There is a debt related to the created money.

This created money influence the inflation of course, but when it is not to much and well managed it can work. For the USA there are some doubts about it but they are still (militairy) the strongest country of the world so not problems there so far.....

 

The good part of all of this is that you have some trustworthy cash system installed in the world. There isn't enough gold in the world to replace the USD as international currency. So for me it's ok.

 

China has a lot of bonds of the USA (the biggest owners of bonds). You can imagine that China can threaten the USA with putting the bonds on the "free" market. But (and that is the hidden part of it and China didn't realize it in the beginning) the USA can state that the bonds China has in possession are lowered in value...... That will hurt China hard..... So who is stranglehold who? I think the USA.....



#32 skepticaldollars

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Posted 02 April 2013 - 09:26 AM

Using bonds to pay the goverment bills.

When a country/goverment has not enought money they can lend money on the international bond market.

As a country you say: 1 million bond USD gives 0.2% interest (this is just an example) for 5 years. There are 1000 shares available so hurry ;)

You dictate what it will cost and international investers can buy them. What is important here is that the country who sells their bonds has to be trustworthy. Less trustworthy higher interest rate.

When no investor trust the goverment they will not buy the shares so you have to raise your interest. If not, you don't sell the bonds and you have no money to spend. Easy as that.

(you can also buy my own bonds but even my mother doesn't trust them ;) ..... boehoe)

Because a country can not go bankrupt........ this should be a save haven. BUT in the past it happend, 2003 Argentina declared itself bankrupt. International investors did loose a considerable amount of money.

So you create money as goverment but the money doesn't go in the open. There is a debt related to the created money.

This created money influence the inflation of course, but when it is not to much and well managed it can work. For the USA there are some doubts about it but they are still (militairy) the strongest country of the world so not problems there so far.....

 

The good part of all of this is that you have some trustworthy cash system installed in the world. There isn't enough gold in the world to replace the USD as international currency. So for me it's ok.

 

China has a lot of bonds of the USA (the biggest owners of bonds). You can imagine that China can threaten the USA with putting the bonds on the "free" market. But (and that is the hidden part of it and China didn't realize it in the beginning) the USA can state that the bonds China has in possession are lowered in value...... That will hurt China hard..... So who is stranglehold who? I think the USA.....

 

 

When you need USD for buying stuff, people has to exchange to the currency in which they can buy the goods.
Example: When you are the local store and you buy for 100 USD of goods (mild, jus, toiletpaper, meat etc) you can not say at the desk, I have Euro's and I want to pay the similair amount (according to the USD) in Euro's. Sometimes it's possible because in for example Hungary, it's sometimes possible to pay directly in Euro's. They love the hard cash of Euro according to the Hongarian currency (also now days....).
So you have to have first exchange your money. When you are the only one there is no effect to the economy/inflation etc. When many people/companies does that you get the situation that when 1Million people wants 100k USD they take their money to the bank/currency office and change it to USD. The USD is favorite so they can ask more Euro's for the same amount of USD because of the "popularity" of the USD. The euro's is according to the USD less worthy. In France you will not notice it until the goods you want to buy has some (or all) foreign (outside the Eurozone) parts in it, oil, car, jet, ipad, htc smartphoe. In that moment you notice that you can buy less than (for example) a week ago.
Because the world needs oil and most of the oil has to be bought with USD, the USD is popular and people needs it.
That for the Oil.
Another time about other ways to proper up the USD.

 

 

You did an excellent job of laying that out.  I view the way the global money supply system works in the same way.  

 

Even though I agree with everything you said I still do not understand why exchanging euros or yans for USD helps keep united states inflation low.  It is very possible I am not seeing some specific aspect to the currency exchange and its relation to business that you understand.  It sounds like you see something I do not so I am going to believe you for the most part. 

 

 

Thank you very much for putting your thoughts down.  Excellent explanation. Your cool. B)



#33 Casper

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Posted 02 April 2013 - 02:45 PM

You did an excellent job of laying that out.  I view the way the global money supply system works in the same way.  

 

Even though I agree with everything you said I still do not understand why exchanging euros or yans for USD helps keep united states inflation low.  It is very possible I am not seeing some specific aspect to the currency exchange and its relation to business that you understand.  It sounds like you see something I do not so I am going to believe you for the most part. 

 

 

Thank you very much for putting your thoughts down.  Excellent explanation. Your cool. B)

Thanks Skepticaldollars :wub:

About exchanging. Example. When you have an ounce of gold and your are the only one in your country this is worth quite a lot. Important is here that people see the value (or think they see the value) of gold. When all the people in your country have an ounce of gold in their pocket. Than it is less worth (still it is worth something). And when all the people of your country can get kilograms of the gold out of their garden, it is becoming worthless.

 

When you have a ounce of gold (the only ounce of gold in the country) and no one is interested in the gold it's also worthless. When this situation arise in your country with the gold (first you, than the rest etc) first you can buy everything. At the end you can buy nothing, INFLATION.

When everyone has a ounce of gold in their pocket and the rest of the world want's your and the rest of the countri's gold it is more of value than when only the people in your country want's it.

 

When the whole world is exchanging their currency for USD it is very popular. I don't think you ever have exchanged your money to the Hungarian forint (HUF). Except for a holiday (or you live there). USA has one of the biggest economies in the world, Oil is stated in USD etc.

The money is popular and when you want buy some USA goods, oil etc you need USD. Many times, even on a daily base, you are exchanging your money to USD, you use energy, you drive a car, you buy an Ipad etc. You don't see it but eventually you are exchaning your money for USD.

 

Inflation is nothing more than what can I buy with my money. If there is too much money in a country circulating, too many people can buy stuff and the price of goods will raise.

 

But, yes there is a but:see my post on this topic 25. You will see that also the USD is going to massive inflation. Because there is to much USD in circulation, bad economy, balance of power is shifting. The benefit of this is that the economy of the USA is cheap. Goods out of the USA are cheaper than 20 years ago. This is good for exporting and fu... bad for importing. So the residents of the USA are forced to buy their own stuff.



#34 pako8007

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Posted 02 April 2013 - 03:26 PM

yes casper but they cant print usd forever.... at some point they will stop.... and whats then...?



#35 Casper

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Posted 02 April 2013 - 03:34 PM

yes casper but they cant print usd forever.... at some point they will stop.... and whats then...?

You don't want to fantasise about that. And yes it's probaly going to happen some day.

For an sound economy you want/need stabilty and trust. The USD gives that stability and trust (yes really) and they are not very responsible at the moment (specially Jr.Bush a few years ago).

There are also other factors but for now we stick to the USD as one of the stability factors.



#36 skepticaldollars

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Posted 02 April 2013 - 06:08 PM

Thanks Skepticaldollars :wub:

About exchanging. Example. When you have an ounce of gold and your are the only one in your country this is worth quite a lot. Important is here that people see the value (or think they see the value) of gold. When all the people in your country have an ounce of gold in their pocket. Than it is less worth (still it is worth something). And when all the people of your country can get kilograms of the gold out of their garden, it is becoming worthless.

 

When you have a ounce of gold (the only ounce of gold in the country) and no one is interested in the gold it's also worthless. When this situation arise in your country with the gold (first you, than the rest etc) first you can buy everything. At the end you can buy nothing, INFLATION.

When everyone has a ounce of gold in their pocket and the rest of the world want's your and the rest of the countri's gold it is more of value than when only the people in your country want's it.

 

When the whole world is exchanging their currency for USD it is very popular. I don't think you ever have exchanged your money to the Hungarian forint (HUF). Except for a holiday (or you live there). USA has one of the biggest economies in the world, Oil is stated in USD etc.

The money is popular and when you want buy some USA goods, oil etc you need USD. Many times, even on a daily base, you are exchanging your money to USD, you use energy, you drive a car, you buy an Ipad etc. You don't see it but eventually you are exchaning your money for USD.

 

Inflation is nothing more than what can I buy with my money. If there is too much money in a country circulating, too many people can buy stuff and the price of goods will raise.

 

But, yes there is a but:see my post on this topic 25. You will see that also the USD is going to massive inflation. Because there is to much USD in circulation, bad economy, balance of power is shifting. The benefit of this is that the economy of the USA is cheap. Goods out of the USA are cheaper than 20 years ago. This is good for exporting and fu... bad for importing. So the residents of the USA are forced to buy their own stuff.

 

 

I think I understand where you are coming from now.  the inflation is held slightly in check because USD is a hot commodity. as soon as people no longer want USD then inflation in America will sky rocket.  The idea that there are so many hands grasping for USD allows for a much wider circulation of the currency.

 

thank you.  Now I see where the anti inflationary pressure is coming from. it was right in front of me the whole time but didn't see it. 

 

Good Show ole' bean.   There needs to be a thumbs up smilie icon.  Big thumbs up to you



#37 skepticaldollars

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Posted 02 April 2013 - 06:16 PM

yes casper but they cant print usd forever.... at some point they will stop.... and whats then...?

 

 

If you lived in America, and listened to people talk about finance, like Larry Kudlow who is quite an authority on this subject along with his guests, you would really worry. 

 

I have heard many people say that the US fed CAN NOT stop printing money because the economy would collapse. and it isn't that great at the moment to begin with.   I agree with you Pako. they can not print forever.  But they also can not stop.  unfortunately that means America will print money until it causes America to dis appear.  I actually think that the FED will at least sow down the printing of USD when the economy picks up some steam (IF). the problem is. the next big recession....  there will be nothing for the government to do because our deficit will be so high our money will be worthless. then Doom

 

 Wether people want to believe it or not America is a very benevolent super power.  At least as benevolent as a global super power could be and still be a super power. I do not think the next one, and there is always at least one, will be so very nice. especially if its during a global economic melt down. 



#38 wren56

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Posted 02 April 2013 - 07:50 PM

Boy I never thought about the benevolence or lack of in the next economic super power.  I think the future is not so bright.



#39 skepticaldollars

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Posted 02 April 2013 - 11:13 PM

the un could be next, maybe.  but from history I would say governments have killed a lot of people. can't live with them live in chaos without them.  

 

I doubt many people in the east europe would have liked it much if it was just the USSR and the US wasn't there to balance.  Human rights violations may happen in china all the time. but what if there was no other power.

 

America is not perfect by any means but compared to the 30 mill mao killed of his own people or the misery under the french oligarchy of the 17,18 19 th century then America is a great place. 

 

there has been only one super power in history that has not sought to conqer all around by shear force.  but I don't think it will be around for ever.


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#40 Casper

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Posted 03 April 2013 - 03:19 AM

Speaking of inflation: Mao between 40 and 72 mill.......