The household debt put in proportions

stimialiti (60)in #economy • 6 years ago

2018-7-12

A few hours ago I heard Gregory Mannarino scare his crowd once again about the household debt.

Instead of commenting on his video or his Steem thread, I decided to post it as my own thread.
In the current financial system, and even under a gold standard (since gold is mined, brought from space (it reached earth from space on its own so far) and can be recycled and hence its quantity grows and there is the issue of gold backed notes that are fractional reserve banking)
The quantity of money grows over time.
The average value of the currency (monetary unit/money) is the amount of people divided by the amount of money.
Simplistic, but if there is a better definition I believe that it will be similar.
In the current system, I believe that in average, the amount of money growth faster than the amount of people.
The debt, both public and private, is devalued too.
This is why the debt per capita grows and should be expected to grow in the long term, and the aggregate debt grows and should be expected to grow even faster, since the population grows which multiplies the already growing debt per capita.

Even a steeper growth in debt than the growth in the amount of money does not guarantee a correction/crash/crisis, because it can be offset by an increase in the rate of money creation.

Prices and markets are controlled and rigged from above, and hence I believe that when there is a correction/crash/crisis, it happens because it was intentionally caused from above, and not by happen so, or by the forces of the market, because the biggest forces of the markets are central banks and their proxies.

#debt #busy #household #finance

6 years ago in #economy by stimialiti (60)

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grammarnazi (5) 6 years ago

You have a minor misspelling in the following sentence:

This is why the debt per capita grows and should be expected to grow in the long term, and the aggregate debt grows and should be expected to grow even faster, since the population grows which multiplies the already growing debt per capita.

It should be in the long run, instead of in the long term,.

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3 votes

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beatminister (61) 6 years ago

I would like to point out, that not all money (or currency rather) is equal to another. So you cannot compare a natural element (like gold, but in principle all elements) with a randomly created currency like our paper money. Or worse, the digital form of fiat currencies that does not even exist as paper notes at all.
The amount of physical material - which is basically the mass of the planet - is finite, and in that case the theory of Amount/Number of People=Value could be used, even though it does raise some doubts.
With fiat money it is different, because the number of units is infinite. Even if the creator promises that he will not increase the amount - as history has shown that doesn't mean a thing.
So the entire exixtence of fiat currencies is based on the faith (lat.= fiat) of the users that it has a value - although it in fact has none.
And this faith in the value can disappear rather quickly under certain circumstances.
While the value of physical material is determined by much different factors. Availability first of all. but everything has a value, even iron and aluminum and such elements, even if half the planet consists of them.
And their amount does not really increase. Yes, there is some dust and meteorites and stuff raining down on earth all the time, but the amount is not really significant to make a diffirence.

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3 votes

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stimialiti (60) 6 years ago

I would like to point out, that not all money (or currency rather) is equal to another. So you cannot compare a natural element (like gold, but in principle all elements) with a randomly created currency like our paper money. Or worse, the digital form of fiat currencies that does not even exist as paper notes at all.

I compared and I showed the similarity, and I also showed why my claims hold regardless of the similarity.

The amount of physical material - which is basically the mass of the planet - is finite,

I explicitly stated that materials can be brought from space, and in fact reached on their own from space.

So the entire exixtence of fiat currencies is based on the faith (lat.= fiat) of the users that it has a value - although it in fact has none.

Since you mentioned value, why should gold be valued more than drinking water or consumer goods?
Most of its value is based on faith too.
What use will gold have when SHTF?
As you wrote here:

And this faith in the value can disappear rather quickly under certain circumstances.

While the value of physical material is determined by much different factors. Availability first of all.

Availability over usability?
In this case a certain picasso picture should cost more than 10^9 USD.
After all, there are more 10^9 USDs than a certain unique picasso picture, not to mention that most of these USDs are not even printed on paper, just entries on computers' HDs.

but everything has a value, even iron and aluminum and such elements, even if half the planet consists of them.
And their amount does not really increase. Yes, there is some dust and meteorites and stuff raining down on earth all the time, but the amount is not really significant to make a diffirence.

It was significant enough to bring their entire deposits to earth.

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