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  1. #1
    SoonerFans.com Elite Member Jerk's Avatar
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    Some thoughts on Obama and the Economy

    I was wrong about Obama being the American version of Che. He appears to be more like Clinton II, minus the Blowjobs. I doubt we will see a moral fu**-up like this from Obama because his wife looks like he could beat his a.ss. He's smart, and right-wing people such as myself shouldn't under-estimate him, as if we already didn't. I think he learned the lesson from the blood-bath of 1994 and won't go hard left, for now. He'll throw a bone now and then to the hippies to keep them happy. I believe that his desire to steer this nation to the hard left will be subtle; in the form of judicial nominees, and he will pick his legislative battles wisely and chose to fight when he knows he can win. To sum it up, I expect a new version of Clinton who won't have a weaknees for young women wearing mini-skirts who can suck a golf-ball through a garden hose.

    How could you blame me for thinking that he would be an american Che? The guy started his political career in William Aires' house and has associated himself with many far left nefarious dudes.

    I think Obama's biggest problem will come from the masses who voted him in on high expectations. Peggy from Florida will be very upset when she realizes that there's no such thing as a "Yes We Can" mortgage payment coupon.

    On the economy, this is more of a question: What is a debt-based monetary system? Is it like we're basing the value of our money on outstanding fixed-rate mortgages? If somehow inflation went sky-high (hyper-inflation) then wouldn't people with fixed-rate notes be able to pay off their debts rather easily? Well, I guess you wouldn't want stag-flation. I really don't understand this econ stuff... I think the .gov should just send all of these banks their own printing press.
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

  2. #2
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Jerk View Post
    How could you blame me for thinking that he would be an american Che? The guy started his political career in William Aires' house and has associated himself with many far left nefarious dudes.
    Dude came out of Chicago. It's like faulting a politician in the old Soviet Union for having been a member of the communist party -- did he really have other options?

    This is where I tell you I told you so

    Quote Originally Posted by Jerk View Post
    On the economy, this is more of a question: What is a debt-based monetary system? Is it like we're basing the value of our money on outstanding fixed-rate mortgages?
    Well, for one, the term is a perjorative, so I bet I can guess which sites you've been reading recently.

    The more typical term is 'fractional reserve.' What this refers to is the power of banks to create money through a combination of debt and deposits.

    Abstract all of the "banks" in the world that accept dollar denominated deposits into one "banking system." Assume that across the system, the typical reserve rate is 10%. What this means is that for every $100 in deposits, the bank must keep $10 on hand ("in reserve").

    The bank is free to lend out the remaining $90. The person who receives the loan spends the $90, and the person who receives it deposits it. The bank must keep $9 of this deposit, and may lend out the remaining $81. The money gets redeposited, and the bank must now keep $8.10, and may lend out the remaining.

    This continues happening until there are a total of $100 of deposits and $1000 in loans. Essentially, the banks have created $900 additional dollars through the system.

    Quote Originally Posted by Jerk View Post
    If somehow inflation went sky-high (hyper-inflation) then wouldn't people with fixed-rate notes be able to pay off their debts rather easily?
    Yes, and in fact, this is one of the reasons why governments under heavy debt burdens tend to create hyper-inflation. When your debt is denominated in your own currency, you can effectively reduce your debt by printing money and devaluing your currency.

    In short, inflation helps debtors and hurts creditors. Reasonable inflation also helps businesses, as it allows them to reduce the "price" of sticky prices -- like wages. It's harder to give someone a pay cut than to not give them a raise... even though in an inflationary environment, a pay cut is essentially what's happening.

    The inverse is why debtors and businesses tend to dislike deflation. It increases the value of debt, hurting people who owe money... and in the case of businesses, what they sell tends to decrease in price faster than their wages -- which obviously hurts.

  3. #3
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    Re: Some thoughts on Obama and the Economy

    Good explanation of the money multiplier effect there, Vaevictus. Kudos.

  4. #4
    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    Well, it's still early, but so far I'm relieved; not that I am a liberal and wanted a liberal President, but I expected something worse, like a revolutionary.

    Thanks for the reply, Vaev.
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

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    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Frozen Sooner View Post
    Good explanation of the money multiplier effect there, Vaevictus. Kudos.
    It is interesting to me that money can be created out of thin-air.
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

  6. #6
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    Re: Some thoughts on Obama and the Economy

    Fair enough, it is still early. I just think Obama is smart enough not to turn hard left out of the gate -- and that assumes he wants to, and I'm not sure he really does.

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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Jerk View Post
    It is interesting to me that money can be created out of thin-air.
    Unless you're doing an asset backed currency, I'm pretty sure that's what you're always doing.

    (And bluntly, the experience in the Great Depression tells you that you really, really don't want an asset backed currency.)

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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Jerk View Post
    It is interesting to me that money can be created out of thin-air.
    How else would it be created?

    Any currency is created out of thin air, even those backed by an asset.

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    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Vaevictis View Post
    Fair enough, it is still early. I just think Obama is smart enough not to turn hard left out of the gate -- and that assumes he wants to, and I'm not sure he really does.
    I'll give him a fair chance. I'm a right-wing libertarian who currently has no home because my party chickened out long ago when they got into a fight with Clinton on the issue of base-line budgeting, and lost. Because they had no balls. I have foolishly stuck with them as they spent our way into oblivion because they've always seemed better than the alternative. Now, I'm not sure who to support. If you vote for any of the basterds, all you do is encourage them.

    Why is the concept of 'small and limited government' so unappealing to the masses?
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

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    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Frozen Sooner View Post
    How else would it be created?

    Any currency is created out of thin air, even those backed by an asset.
    Error. I don't compute. If the money is backed by an asset, how can it be from thin-air?
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

  11. #11
    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    I have one more question:

    Is it considered "cheating" to use control + Z whilst playing spider solitaire?
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

  12. #12
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Jerk View Post
    Why is the concept of 'small and limited government' so unappealing to the masses?
    Because the masses aren't ideologically bound to small and limited government like some folks are. Likewise, they aren't ideologically bound to large interventionist government like some folks are.

    What they are ideologically bound to is a society that puts them in the best position to have the best life they possibly can.

    What ends up happening is that the masses perceive that the government is getting in their way -- so they clamor for deregulation. Well, deregulation leads to greedy corporate interests sucking up all the wealth... which gets in the way of the masses, and so they clamor for more regulation.

    It's an endless cycle. Government and private interests are always looking out for themselves, and when one gets too powerful, 'the masses' will turn to the other to balance things out.

    In my opinion, that's the way things work. And yes, it really is that simple.

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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Jerk View Post
    Error. I don't compute. If the money is backed by an asset, how can it be from thin-air?
    Because even when backed by an asset you're 1) assigning an arbitrary value to an asset and 2) creating a shared fiction in the market that a piece of paper is equivalent to some quantity of that asset.

    To further expound on point one:

    Say you back your currency with gold. Handy store of value, gold. People like it. It's pretty, and it has industrial uses. However, some people may not actually wish to take gold in trade. Some people may have no actual use for gold. However, since gold has been decreed to be of value, people will accept notes that puport to be backed by gold knowing that they can exchange those notes for other goods that they do actually value.

    How's that different from what we do now? In both cases, you have a central government saying "That there note's gonna be worth something."

  14. #14
    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Frozen Sooner View Post
    Because even when backed by an asset you're 1) assigning an arbitrary value to an asset and 2) creating a shared fiction in the market that a piece of paper is equivalent to some quantity of that asset.

    To further expound on point one:

    Say you back your currency with gold. Handy store of value, gold. People like it. It's pretty, and it has industrial uses. However, some people may not actually wish to take gold in trade. Some people may have no actual use for gold. However, since gold has been decreed to be of value, people will accept notes that puport to be backed by gold knowing that they can exchange those notes for other goods that they do actually value.

    How's that different from what we do now? In both cases, you have a central government saying "That there note's gonna be worth something."
    Ok, I get it now. Thanks.
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

  15. #15
    SoonerFans.com Elite Member Jerk's Avatar
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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Vaevictis View Post
    Because the masses aren't ideologically bound to small and limited government like some folks are. Likewise, they aren't ideologically bound to large interventionist government like some folks are.

    What they are ideologically bound to is a society that puts them in the best position to have the best life they possibly can.

    What ends up happening is that the masses perceive that the government is getting in their way -- so they clamor for deregulation. Well, deregulation leads to greedy corporate interests sucking up all the wealth... which gets in the way of the masses, and so they clamor for more regulation.

    It's an endless cycle. Government and private interests are always looking out for themselves, and when one gets too powerful, 'the masses' will turn to the other to balance things out.

    In my opinion, that's the way things work. And yes, it really is that simple.
    In a better world, we would have capitalism without corporations. Just a bunch of mom and pop stores who specialise. It would be like small town America, before Wal-Mart. The only way to go back to that, would be to use the power of government, which would then negate the purpose of the free market. Oh well.

    I am more right wing than Atilla the Hun, but I HATE corporations.
    "When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."
    - Fred Bastiat

  16. #16
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    Re: Some thoughts on Obama and the Economy

    Corporations aren't the only vehicle. Large proprietorships can just as easily fill that role... or guilds.

    It doesn't matter what the organizational structure. Rich people will always seek more wealth, and because they're rich, they'll get it.

    ... right up until the masses do something about it. I don't know about you, but in terms of a mechanism effecting that, I personally prefer voting and income/estate taxes to the Reign of Terror.

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    Re: Some thoughts on Obama and the Economy

    Vaevictis....

    I noticed that Citibank sent me an offer to start a Savings account this week. I thought it was kind of strange considering they and the others like them usually are either trying to sell Credit Card Protection or some sort of intro offer. When I saw that it wasn't either...I actually took time to read it and then realized what they were trying to get me to sign up for.

    I'm guessing your statement on them having cash deposits is why they are doing this...thus allowing them to loosen up the offers for loans?

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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by StoopTroup View Post
    Vaevictis....

    I noticed that Citibank sent me an offer to start a Savings account this week. I thought it was kind of strange considering they and the others like them usually are either trying to sell Credit Card Protection or some sort of intro offer. When I saw that it wasn't either...I actually took time to read it and then realized what they were trying to get me to sign up for.

    I'm guessing your statement on them having cash deposits is why they are doing this...thus allowing them to loosen up the offers for loans?
    In a nutshell, yes.

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    Re: Some thoughts on Obama and the Economy

    Quote Originally Posted by Frozen Sooner View Post
    In a nutshell, yes.
    I figured something was up.

    I also know about them forgiving some educational loans for some students who were trying to learn to fly helicopters from a private company that went bankrupt this year.

    I don't know what the amount was but I'm guessing the cost of recovery vs ligation would have just wasted time and money tying up resources leading to Citi not helping move forward in recovery.

    I'm guessing the students have the luck of some good timing on their side too but who knows...it might have just been the right thing to do and they would have never recovered the dough anyway. Bad loans are Bad loans. Putting people in bankruptcy because of the misdealing of poorly managed companies doesn't probably help anything right now.

  20. #20
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    Re: Some thoughts on Obama and the Economy

    Wow.

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