South Africa Flag logo

South African Skeptics

July 10, 2020, 15:21:24 PM
Welcome, Guest. Please login or register.
Did you miss your activation email?

Login with username, password and session length
Go to mobile page.
News: Please read the posting guidelines before posting.
   
   Skeptic Forum Board Index   Help Forum Rules Search GoogleTagged Login Register Chat Blogroll  
Pages: [1] 2  All   Go Down
  Print  
Author Topic:

Fiat Currencies (Dollar particularly)

 (Read 2039 times)
0 Members and 1 Guest are viewing this topic.
st0nes
Hero Member
*****

Skeptical ability: +10/-1
Offline Offline

Posts: 942



mark.widdicombe1
WWW
« on: January 16, 2014, 10:03:39 AM »

I'm puzzled.  Quantitative Easing in the US has been pumping $85 billion newly-created (out of thin air) dollars into the US economy every month.  This is about $280 per man, woman and child in the US.  Can someone who knows something about economics explain to me why this appears not to have caused inflation or diluted the value of existing dollars, i.e. caused the value of the dollar to fall?
Logged
Rigil Kent
Clotting Factor
Hero Member
*****

Skeptical ability: +20/-3
Offline Offline

Posts: 2521


Three men make a tiger.


« Reply #1 on: January 16, 2014, 10:20:12 AM »

Know nothing about economics (I think it's yet another unknowable thing that God invented outside of the universe just to taunt the skeptics), so I can only speculate that they flogged some of their Fort Knox stash to that guy in Pawn Stars.
« Last Edit: January 16, 2014, 10:36:00 AM by Rigil Kent » Logged
Tweefo
Hero Member
*****

Skeptical ability: +10/-0
Offline Offline

Posts: 1569



WWW
« Reply #2 on: January 16, 2014, 10:33:04 AM »

Also know nothing about it. Is inflation not happening, but on a wider scale? The Dollar has a world wide effect, and it is maybe the poorer countries that feel it first. But I am sure that if they carry on it will catch up to them sometime.
Logged
BoogieMonster
NP complete
Hero Member
*****

Skeptical ability: +19/-1
Offline Offline

Posts: 3230



« Reply #3 on: January 16, 2014, 11:08:51 AM »

So, to be blunt, it's a self fulfilling prophecy of sorts?
Logged
Mefiante
Defollyant Iconoclast
Hero Member
*****

Skeptical ability: +63/-9
Offline Offline

Posts: 3782


In solidarity with rwenzori: Κοπρος φανεται


WWW
« Reply #4 on: January 16, 2014, 11:08:52 AM »

Like many things economic, the tactic exploits both general optimism about the future and the fact that adverse effects are usually delayed:  Pumping more currency into an economy stimulates spending, which in turn is expected to stimulate economic growth, all the while with the hope in mind that such growth is sufficient to offset or even exceed the currency inflation that should ensue.  Also, prices do not rise instantly as new currency is issued, further delaying any effects.  That is, the additional new wealth generated through stimulated growth adequately covers the deficit from the new currency issue, aided by retarded price increases, so that a new dollar rapidly acquires roughly the same buying power as an old one.  At least, that’s the theory cast in lay terms.

In brief, it’s a calculated gamble that people will believe that the future will be good enough to cover up their past irresponsibility.

(BTW, I’m hardly an economist.  One of those would no doubt explain the whole thing by resort to vastly more arcane and befuddling jargon.)

'Luthon64
Logged
Mefiante
Defollyant Iconoclast
Hero Member
*****

Skeptical ability: +63/-9
Offline Offline

Posts: 3782


In solidarity with rwenzori: Κοπρος φανεται


WWW
« Reply #5 on: January 16, 2014, 11:15:10 AM »

So, to be blunt, it's a self fulfilling prophecy of sorts?
Not necessarily.  Several factors could prevent it from having the desired outcome, e.g. China buying or selling bulk US currency in response, or a sudden rush on US Treasury bonds.

'Luthon64
Logged
The Vulcan
Shipmate
Full Member
***

Skeptical ability: +3/-0
Offline Offline

Posts: 230



WWW
« Reply #6 on: January 19, 2014, 17:41:17 PM »

Like many things economic, the tactic exploits both general optimism about the future and the fact that adverse effects are usually delayed:  Pumping more currency into an economy stimulates spending, which in turn is expected to stimulate economic growth, all the while with the hope in mind that such growth is sufficient to offset or even exceed the currency inflation that should ensue.  Also, prices do not rise instantly as new currency is issued, further delaying any effects.  That is, the additional new wealth generated through stimulated growth adequately covers the deficit from the new currency issue, aided by retarded price increases, so that a new dollar rapidly acquires roughly the same buying power as an old one.  At least, that’s the theory cast in lay terms.

In brief, it’s a calculated gamble that people will believe that the future will be good enough to cover up their past irresponsibility.

(BTW, I’m hardly an economist.  One of those would no doubt explain the whole thing by resort to vastly more arcane and befuddling jargon.)

'Luthon64


I'm no economist either, but you're on the ball like I also understand it, the delaying effect is called the lag effect or something like that and has to do with the 2 ways that government use to stabilize the economy, monetary and fiscal policy and the way they are supposed to be able to pump more cash into the economy without like destroying its value is through something called the multiplier effect:
Credit multiplier


But yeah, I heard this whole thing is what lead to the fall in our gold prices, said to be below the operating margins, really can't find anything know, but it was in the news in December. And of course the value of our money hasn't been based on the gold standard, since like the early 1900's - it has to do with the trust the world has in our country and things like the budget deficit is also one of the big contributors for that trust, but like Mefiante said, it's a bit of gambling and it's mixed up with philosophy, anyway that's my 2 cents, buy, don't buy it, I'm not an expert, just giving through the bit I understand, though not very well.

Logged
Tweefo
Hero Member
*****

Skeptical ability: +10/-0
Offline Offline

Posts: 1569



WWW
« Reply #7 on: January 28, 2014, 12:12:43 PM »

In the old days currencies were on the gold standard. There was supposed to be some value to it that was out of the control of the government issuing it. That has changed and now, as far as I can see, it is the government say so, and the market that determine the value. This Bidcoin thing is global. No one government can meddle, and so change the value of it, in the blink of an aye. Is this, or something similar, not what we need on a universal scale? You don't get a coin or note for Joburg but something else for Cape Town. The whole country works on one universal standard, the Rand. Why not the world?
Logged
Mefiante
Defollyant Iconoclast
Hero Member
*****

Skeptical ability: +63/-9
Offline Offline

Posts: 3782


In solidarity with rwenzori: Κοπρος φανεται


WWW
« Reply #8 on: January 28, 2014, 12:39:54 PM »

The whole country works on one universal standard, the Rand. Why not the world?
Because there’s far too much money to be made from trading currencies against one another.

'Luthon64
Logged
cr1t
Hero Member
*****

Skeptical ability: +4/-0
Offline Offline

Posts: 544



cr1t
« Reply #9 on: January 28, 2014, 12:48:39 PM »

I see a lot of hype around bit-coin, I think people are forgetting it is an experiment.
so there is no guarantees as yet that it will be around in 30 years.

At the moment it doesn't look sound, priced around $800 dollars for something you can't
widely use to buy and also not yet supported by major financial institutions, and also a
system that is easily copied, so competing virtual
currency will be popping up all over the place. The hole thing seems to be running on speculation,
which seems like another bubble to me.

Logged
Marius
Newbie
*

Skeptical ability: +0/-0
Offline Offline

Posts: 21


« Reply #10 on: January 28, 2014, 12:49:18 PM »

Quote
The whole country works on one universal standard, the Rand. Why not the world?
My guess is for the same reason that there is not one universal language in the world. Some people think theirs is better, so they'll never change Smiley. Of course Mefiante is also right.
Logged
cr1t
Hero Member
*****

Skeptical ability: +4/-0
Offline Offline

Posts: 544



cr1t
« Reply #11 on: January 28, 2014, 12:50:28 PM »

The whole country works on one universal standard, the Rand. Why not the world?
Because there’s far too much money to be made from trading currencies against one another.

'Luthon64

Yes what would the girl with the pritey blue eyes in the online Forex trading adds do
Logged
Mefiante
Defollyant Iconoclast
Hero Member
*****

Skeptical ability: +63/-9
Offline Offline

Posts: 3782


In solidarity with rwenzori: Κοπρος φανεται


WWW
« Reply #12 on: January 28, 2014, 13:30:04 PM »

More seriously, the lessons from the EU and its euro are manifest.  The Germans and French aren’t overly enchanted about having their national productivity exploited to support, perhaps even to fund the inefficiencies and excesses of the Portuguese, Spanish, Greeks, Italians, etc.

'Luthon64
Logged
brianvds
Hero Member
*****

Skeptical ability: +14/-0
Offline Offline

Posts: 2008



WWW
« Reply #13 on: January 28, 2014, 14:35:37 PM »

I wonder why they decided to leave the gold standard in the first place...
Logged
Mefiante
Defollyant Iconoclast
Hero Member
*****

Skeptical ability: +63/-9
Offline Offline

Posts: 3782


In solidarity with rwenzori: Κοπρος φανεται


WWW
« Reply #14 on: January 28, 2014, 14:50:38 PM »

I wonder why they decided to leave the gold standard in the first place...
Because it’s not easily compatible with fractional reserve banking and charging of interest since the gold reserves constantly need to be kept commensurate with the currency that is in circulation.  The net effect of this is that economic booms could be retarded, reduced or even forestalled.  And who wants to impede economic growth?  (Oddly enough, the flipside, i.e. that the gold standard could mitigate, reduce or even prevent economic recessions, is never mentioned by those who advocate against it.)

'Luthon64
Logged
Pages: [1] 2  All   Go Up
  Print  
GoogleTagged: com google


 
Jump to:  

Powered by SMF 1.1.11 | SMF © 2006-2009, Simple Machines LLC
Page created in 0.467 seconds with 23 sceptic queries.
Google visited last this page July 02, 2018, 14:50:02 PM
Privacy Policy