Yes, 'wealth' can be created too. Profit is a good thing, it's unpayable debt that is problematic.

If a borrower can create wealth, then debt isn't necessarily unpayable.

Maybe I'm misunderstanding your point however.

Perhaps you are saying that it is not possible for all financial actors to simultaneously repay all they owe in cash at any given time? While true in your example, I'm not sure that is an interesting observation. It would be foolish for the lender (money printer) to call in these debts. It doesn't seem to be a realistic scenario.

As far repaying immediately and repeating the exploit is concerned, conditions/restrictions would need to set in place. One such example, that is actually being used today is "early repayment fees".

I'm not sure you understand my point. Delayed free money is still free money...

I'm not sure you understand my point. Delayed free money is still free money...

Rather than calling it "free money", call it "profit" (that's what the Banks do).

What is the Lender exactly in your scenario? Is he able to "print money" (or in more general terms, create value from thin air)? Because your calculations make me think he is.

Technically, in today's world, there exists a privilege/license to essentially create money-from-nothing. It has its origins, long ago, in the form of 'receipts' which could redeem gold at goldsmiths. The method has evolved into the form that it is today, however, money can no longer redeem gold.

If a borrower can create wealth, then debt isn't necessarily unpayable.

In an ideal world, we'd like the Lender to accept other forms of payment, unfortunately, that would mean asking the Lender to sacrifice their controlling interest in the economy. Even though a person can produce something of 'value', the Lender is only interested in being repaid in the form of currency of which it issues.

Perhaps you are saying that it is not possible for all financial actors to simultaneously repay all they owe in cash at any given time? While true in your example, I'm not sure that is an interesting observation. It would be foolish for the lender (money printer) to call in these debts. It doesn't seem to be a realistic scenario.

I mention a little bit about that in an earlier post.

There is a time delay. Without that delay, every market dependent on money would crash instantly. It would fail before it could start. But because of the delay, the name for these inevitable failures are referred to as a 'recession'/'depression'/'crisis'. In actuality, these are "delays" of deflation that are beginning to shorten too quickly. This is a problem rarely talked about openly (the reasons for which are controversial).

Sarcasm? Or talking about a real offer you received, but being Sarcastic about it?

Yes. No. Yes. Both.

It's a real offer I've been made yesterday. Of course it's not something I'd put one cent in, it has all the classic signs of a scam: Unexpected call from an old acquaintance, you know, just checking how you're doing... so, 5 minutes of how-do-you-do, and then dive into making big profit with a super new thing. No big money needed (but can do 100k if you want, too), almost no risk, huge gains (like, 10x), and soon there be a split doubling money (so act quick). No thank you :lol:

But like I said (and here be the sarcasm): That's the solution to the dollar problem. No more problems with dollars after you've put your dollars in that one!

Not like I deem any virtual currency anything less than a scam anyway, and real currencies aren't much better. They are, a little, but not much. On a real currency, you have the (worthless) promise of your government that the bill's value equals goods equivalent to what's written on the bill, and you have their word that they have gold reserves and such which cover 0.001% of all the bills that they have printed. But at least, that's (marginally) better than nothing.

With a virtual currency, you pay real money in return for what's basically just an ordinary binary number (well it's not really ordinary, but you get what I'm saying). All you get in return for your real money is an idea, and the chance of not being the last fool in this huge snowball system. Which is just what it is, really... a snowball system. It works fine as long as people keep feeding real money into it, and if you jump off the train early enough, you are lucky. Only just if you miss jumping off, it's not nearly as great.

Ah, okay. That is what I thought in the end (that is why I added the second option to my first sentence)....

Crypto currencies are even worse than money in at least one thing: its incredibly hard to understand how todays money economy works to begin with, and there are many viewpoints on how it REALLY works in reality (if you call the current economy "working")...

Crypto currencies are even worse... now not even a mathematician might be able to tell how it is really working, its inner workings are intentionally obscured from sight. And even how it is supposed to work on a higher, economical level is kinda obscure, enough so that again, the normal citizen will have no chance to understand it...

And again, never invest in what you do not understand (which is why 90% of the population shouldn't even try to use money).

On the other hand, the chance to take the economy out of the hands of the few players in the financial industry and the governments worldwide (which also seem to have no idea how the economy really works) is slightly exciting. It might be our best bet yet for a change in how our economy works....

There's a solution to the dollar/loan/interest problem. Incidentially, just yesterday, I've been offered a great opportunity to get early access to a new crypto currency. Something like bitcoin, only less shady, less nerdy, more respectable, and suitable for the mass market. You can invest as much as you like, but even as little as $100 and turn these into $1000 in short time. But the best thing is, you have a currency that is free of the troubles of dollars, isn't that great? To add to the good stuff, they will do splits regularly, and at every split your amount of money doubles. So, I suggest you put all your money into that. (You might be inclined to believe that I'm joking, but no... that's really what I've been offered.)

Sarcasm? Or talking about a real offer you received, but being Sarcastic about it?

If not, can you elaborate more on how this thing should work? Because:

1) All we can go by currently is that you mentioned "Bitcoin"... if it should work anything like bitcoin did to "turn 100$ into 1000$", you better don't waste your time and money on it. It worked with bitcoin because it was new. It worked for people who got in early, invested big (into mining rigs and/or actual bitcoins) and stayed in right up to before the whole bubble bursted. That might happen again to some lesser degree with other cryptocurrencies... but don't rely on it.

2) I would never, ever, EVER invest a single dollar into something I don't understand to some degree myself, and expect to make profit with it. I am no big fan of Warren Buffet, but this quote of his, "Never invest in what you don't understand" makes so much sense to me. A lot of people would have prevented huge losses if they would have taken the time to analyze their investments.

3) If somebody tells you he can turn your 100$ into 102$ I will totally believe that. If he wants to turn it into 120$, I will ask about the risk. Still totally possible. If he wants to turn it into 200$ I would start to ask more questions. That starts to sound fishy.

Now, as to the 1000% increase....

Actually there are other crypto currencies that have seen a huge spike (350%) since the start of this year. This is mainly due to the huge demand by banks, financial institutions and VC backers to get on the potential Blockchain 2.0 and Blockchain 3.0 gravy train.
Still I agree with you anything that seems to be too good to be true probably isn't and even though I'm currently developing Blockchain technology and see all kinds of crazy jumps in made up crypto currencies I haven't risked a penny on any of them myself.

Well, lets be honest:

Just because something spikes in perceived value does not mean it HAS that value. Betting on cashing in on a hype is a very risky endeveaur.

How do you know when to get in? When to get out? Its still a black art, and the amount of money lost if you miscalculate is high if you want to win big.

That is just how the stock markets have worked since the beginnings. Its one big lottery in the end. Few investors are really interested in making a longterm investment on the stock markets, only some of the traded companys actually needed additional money. All of these players get screwed over by the gamblers gaming the stock market for short term profits.

I see the crypto currencies as the same. Just like the stocks, they have NO real value behind them, only perceived value (you can now argue that gold, wheat or oil also only has perceived value, but at least you can DO something with it. What you can DO with a company is way more complicated, and you cannot DO anything with the bits and bytes in a unit of crypto currency). Thus, they can spike all day long.... they can fall 350% in value the day after, because there is NO value behind it that would somehow anchor its perceived value.

If people loose trust, the value is gone.

As to financial institutes trying to get unto the blockchain hypetrain... he! Believe me, they lack ANY competence to achieve any real result in the digital world. Even with years of a head start, if any of the tech companys want to get in, they will surpass the financial institutes in a single stride.

Banks have never really adopted the new digital realities. They run on outdated systems, cling to outdated eBanking technology, and now are trying to get ahold of the new economical realities without enough IT competence.

I am sure some people (not gonna call them clever, as they just gambled and won) will win big... they might have invested in the right crypto currency from the beginning and got out before the whole thing came crashing down.

Or they sat in the right position in the right financial institute, sold top management some cool new hypetechnology and got out of the company with a big bonus before anyone found out the whole thing didn't work at all.

For most, its same old same old. If you have enough money to spend you can gamble on crypto currencies like you do on the stock market. If loosing a million means nothing to you you can gain many. Some will become poor because they suck even at gambling... some might become richer.

Most common people will either be smart and keep away because its not sane to gamble with money you might still need... or they will spiral down into deep depth because they messed with forces they most probably didn't understood themselves.

Forgive me, my Browser/ this Forum is acting up again and I cannot edit Quotes.... I just have to multipost, or my posts become an unreadable mess of wromg quotes.

What is the Lender exactly in your scenario? Is he able to "print money" (or in more general terms, create value from thin air)? Because your calculations make me think he is.

Technically, in today's world, there exists a privilege/license to essentially create money-from-nothing. It has its origins, long ago, in the form of 'receipts' which could redeem gold at goldsmiths. The method has evolved into the form that it is today, however, money can no longer redeem gold.

Did you adjust for the inflation caused by injecting additional money into the system?...

"Inflation" and "Price-Inflation" must be treated/thought of separately.

Currently, DEflation is the primary driving force behind Price-Inflation. As debt (including interest) is paid off, more money needs to be 'injected' into the economy to replace the money, returning to the original Lender, which is used to repay debt.

This 'new' money, being injected, via loans, into the economy is known as 'inflation', however, it artificially creates 'de'flation simultaneously because of the >100% debt that is immediately attached to it.

There is a time delay. Without that delay, every market dependent on money would crash instantly. It would fail before it could start. But because of the delay, the name for these inevitable failures are referred to as a 'recession'/'depression'/'crisis'. In actuality, these are "delays" of deflation that are beginning to shorten too quickly. This is a problem rarely talked about openly (the reasons for which are controversial).

...Or do you have a theory on how to prevent that effect

"Supply and Demand" naturally determines the price of resources, goods and services. 'Money' is an excellent means of making trade as efficient as possible. Money (currently) is continuously 'devalued' over time because of deflation. Deflation can be just as disruptive as hyper-inflation.

When deflation is greater than inflation, it affects everything from its point of origin outwards in a negative way.

the rich becoming richer and the poor becoming poorer...

There will always be some who are richer and some who are poorer. I attribute that to multi-generational planning.

My interest 'here' is only to achieve economic stability. To ease economic woes. To promote automation without displacing people financially.

we're a debt-based economy.

our current financial system needs to go.

A "debt-based economy" would seem like a very tough sell (from my POV), but the majority of the public have been sold on this very bad idea. We are far beyond the opportunity for a fresh start since the system is now so entrenched. It's a difficult 'spell' to break. The only solution is renegotiation.

1. Deflation / Inflation: Interesting theory... never seen somebody lay it out like that. I am trying to make sense of it now, please bear with me.

So you are saying "debt leads to deflation". Why is that? How could the fact that a lot of players in the market owe each other money devalue same money?

2. There are always people that are richer: And nobody (besides the far left lunatics) says anything against that. They should rightfully enjoy their wealth (which they hopefully gained via legal and morally unambigious means).

Nobody can be interested though in a world where money flows upwards -> richer becoming richer. Because that means in our economy that the poorer have to become poorer (or, if we would create much more additional value per year, the poor staying poor). Because that is money that is no longer as active in the market as it would be if it was distributed among more people. Because that defies our democratic values (given your country actually has a democracy, and you really believe that the current democrazies worldwide are anything other than the feudal system of the rich).

The rich should STAY rich. Not become richer. And the poor should slowly become LESS poor. From the perspective of the economy, that would do a lot of good (more people that can actually afford to spend money without provoking the next credit crash). From the perspective of democracy, that would do just as much good (less social turmoils, more people that can afford to be invested in political affairs (thus less "feudal system of the rich"), more stability due to less credits being awarded to people that cannot afford it).

3. "renegotiation": While I would really love the concept to, for once, solve an economical dead-end without violence, I am not sure this is a realistic option.

Lets look at who has power and money currently. You usually don't rice to riches and power by being nice and social with people. Its a fact that the amount of psychopaths, in leaderships positions of SOME industries is as high as 51%, while actually in total psychopaths only make up 1% of the population. It is also speaking how many politicians, if not being outright dictators already, show signs of a dictatorial leadership style.

Of course not anyone with power or money is a dictator or psychopath. But the amount amongst them is way higher than normal. Its just natural that you need to be very egoistical and ready to use and abuse power to get into that lofty position in society. At least in human society.

Then lets look at historical facts. How was the feudal system of the middle ages and renaissance overthrown? Violence... the only other way was the emergence of the military, wealthy and politicians as the new feudal leaders, and the nobility becoming poorer because of economical shifts.

How was communism instantiated as a new alternative to capitalism in some countries? Violence...

How were the rights of workers improved in almost all countries? Protests, general strikes, social turmoil... which, in older days, was just Violence with a better ending than war.

There are cases (as with feudalism) were change was ushered in by the old elite becoming poor, or the economy turning to shit... but that usually means that the facade will get replaced, while leaving the same corrupted old system running underneath (see soviet union -> russia... it was kinda-capitalistic before, and people who where powerful and rich under the old system are still powerful and rich now).

Are there other ways to change the economy for the better? I would hope so. Will we be able to negotiate with the currently powerful in a sane way when they have all the leverage? Sadly, most probably not.

See, we had a very interesting talk about psychopaths at work lately. A famous profiler was talking about how they work and how to spot (and avoid) them. You cannot negotiate with a psychopath. They do not think about anyone other than themselves. They do not care about other peoples feelings because they have none (to speak of). Without you having leverage over them, or you giving them a big incentive for maximizing their own personal gain, they will never move.

Now, again, I know the "rich and powerful" are not a uniform mass. Calling them all psychopaths is just as unfair as doing so for the rest of the population.

But we have to face the fact that there are certain traits that let you advance beyond the average in life. These traits are dangerously close to the traits defining psychopathy.

Its a question of scale. If 50% of the "rich and powerful" are ready to negotiate while the others see no need to do so, its still not enough. Without the positive 50% spending some of their influence and wealth on creating leverage over the other 50%, nothing will happen. And leverage in human society often means "violence" sadly.

We can assume the amount of people in the "rich and powerful" layer of society that actually do want a change even if its not DIRECTLY benefical to them is way smaller than 50%. And I am not blaming the others really... how many of you would risk your economical future just so that some kids in africa have something to eat (yes, in case of a billionaire that might not mean the guy himself has nothing to eat in 5 years, still)?

The ONLY kind of leverage I see is violence... the THREAT of violence might be enough, but only if its IMMINENT and BELIEVABLE... so best case people already died because of this new threat.

Then, and only then, there is a strong enough PERSONAL incentive for the "rich and powerful" to give up some of their power and some of their potential future gain in wealth for social stability. At least for the ~25% of them that are truly psychopaths, and the other 50% that is just plain too ego-centric to care unless their own life or wealth is in danger.

And if they don't, come to their senses and cling to their power, well... the escalation of that threat will certainly remove them from their position of power, usually with a very letal outcome for themselves. Or the process will consume all their power or wealth... if the population is dying because of civil war, and their money is no longer worth anything because of the inflation caused by war, they will at some point fall over anyway (or fall prey to their rivals).

IF this leads to the desired outcome is anyones guess though. Usually social turmoil leads to war, then to another corrupt regime that will end in social turmoil and war.

Is that better than a system spiralling towards more social injustice? Is violence inevitable at some point? How close are we already to that point in the western world (in some parts of the world, we see it happening right now)? IDK....

I just feel like negotiation without preceeding violence might not be in the cards, at all....

How on Earth is anyone supposed to get their money back if they've converted it into crypto-currency without selling it to someone else for official currency?

That's just the problem, you always need another fool who is willing to give you the same amount (or preferrably more!) of real money. Which is why it's a scam.

You can also just spend them in shops. At least here in the UK you can (although it isn't very common). The local independent coffee shop near me accepts both Bitcoin and Dogecoin and there is an MOT and servicing garage in town that accepts Bitcoin. CEX which is a very large popular chain of pre used games accept Bitcoin at the till. Some branches of Yo Sushi accept them. Its also possible (but not easy) to top up Paypal using Bitcoin. And of course there are various online only merchants who accept Bitcoin purchases.

There are also online services that will readily convert between one virtual currency another so even though bitcoin is the one that everybody accepts you can invest in a more volatile currency and then convert back into Bitcoin later.

As to financial institutes trying to get unto the blockchain hypetrain... he! Believe me, they lack ANY competence to achieve any real result in the digital world. Even with years of a head start, if any of the tech companys want to get in, they will surpass the financial institutes in a single stride.

Banks have never really adopted the new digital realities. They run on outdated systems, cling to outdated eBanking technology, and now are trying to get ahold of the new economical realities without enough IT competence.

This is pretty much completely false. It is a common trope that people think that financial institutes run on aging crumbling computer systems that run on cobol. This couldn't be any further from the truth. As for financial institutes trying to get into blockchain technology believe me they already have. As for the tech companies getting there first what do you think any fintechs exit strategy is? They are trying to get purchased by the banks.

I am sure some people (not gonna call them clever, as they just gambled and won) will win big... they might have invested in the right crypto currency from the beginning and got out before the whole thing came crashing down.

What do you mean come crashing down. It still hasn't anybody who bought Bitcoins at the start is still sitting pretty. Sure it did get a massive spike a couple of years ago when all the media agencies heard about it so if anybody bought them at that time they'll have lost out but, then they would have had to be incredibly stupid to invest at that time. But for anybody seeing it as a long term investment they are still sitting pretty.

I see bitcoin as a little different than stock as I can actually spend bitcoins whereas I cannot spend stock:

Can I pay may electricity bill using Bitcoin? Yes
Can I insure my car using Bitcoin? Yes
Can I book a hotel room using Bitcoin? Yes
Can I get a cab and pay the driver with Bitcoin? Yes
Can I get groceries using Bitcoin? Yes

The fact that it is already accepted over the counter just like regular cash money gives it value.

Shares on the other hand are completely different. You have to pay fees just to buy and own shares. You also have to pay tax on shares that you buy. You also need to pay a fee to sell your shares. Bitcoin you pay a small commission and thats it. Once you have them you can treat them just like cash.

Basically Bitcoins are fungible whereas Shares are not.

As to financial institutes trying to get unto the blockchain hypetrain... he! Believe me, they lack ANY competence to achieve any real result in the digital world. Even with years of a head start, if any of the tech companys want to get in, they will surpass the financial institutes in a single stride.

Banks have never really adopted the new digital realities. They run on outdated systems, cling to outdated eBanking technology, and now are trying to get ahold of the new economical realities without enough IT competence.

This is pretty much completely false. It is a common trope that people think that financial institutes run on aging crumbling computer systems that run on cobol. This couldn't be any further from the truth. As for financial institutes trying to get into blockchain technology believe me they already have. As for the tech companies getting there first what do you think any fintechs exit strategy is? They are trying to get purchased by the banks.

Okay, I might need to add that I work in IT in a financial institute, and I have done so for years so know enough people who transitioned to other financial institutes, gone international, and have access to the common wisthleblower outlets on the net.

Its not a trope. If you would know what is going on in some of the biggest financial institues on the planet, you would be scared for your money. And its not really that surprising... all these companys are run by traders and bankers. They have no idea of IT. And they don't want to have any idea.

That worked out fine in the days when IT was just a small thing on the side. The moment companys start relying on IT for their core business (to store their customer data, to replace their retail business with ebanking or eshops, to improve the speed at which they can do trading), IT becomes their core competence... at least ONE of their core competences. That hasn't really been aknowledged yet by many financial institutes IMO.

It might surprise, yes, all the financial institutes I know of still run on mainframes running Cobol. I guess this is true for most of them worldwide. Spending billions to migrate to a Unix/Java based economy is a tough sell when it is kinda hard to explain the gains of that move to a management that has as little knowledge of IT as the ones in the financial institutes.

And also there are reasons why the Mainframes are still the go to solutions for the data back-ends of most bigger companys running for longer than 10 years. IMO most of these reasons COULD be emulated by Unix based systems. But that needs some engineering still, and of course again billions in investment to move a large Mainframe Backend System over.

Not going to happen when the IT budgets in this industry are still shrinking year after year, to beautify the shareholder value.

Of course fintechs want to be bought. They don't care though if they are bought by a bank or a another tech company. And given that the byuer has no idea what to do with the technology (which sadly often is the case in the financial industry), I don't see fintech startups being bought by financial institutes to add much to their future proofness... I would actually say most banks that buy such companys want to PREVENT the technology from being used by their competition more than they want to actually USE IT themselves.

Most companys in this industry are actually quite incompetent at spending money... they got big during a time when working in this industry automatically meant you were basically printing money. In the 90's, money was spent without thinking. Money got tighter in the early 2000's, but still millions were wasted. The crisis brought a stop to a lot of money wasting, but now a culture has established were money is saved everywhere to the point where it really hurts operations, while still some people waste money on projects that will fail. And incompetent management is trying to save money by spending on things that cost more in the end, like outsourcing.

Its not that other big companys wouldn't be just as incompetent (after all, given enough size, and thus a large enough management, there have to be some incompetent people in positions of power)... its just that their industry might not be as used to spending big, thus the damage done by the incompetent decisions is less.

Yeah, I am just the tech guy in the industry... of course my view is biased and limited. But I have been long enough in it to see the trends and know that its not just a short term fad.

I am sure some people (not gonna call them clever, as they just gambled and won) will win big... they might have invested in the right crypto currency from the beginning and got out before the whole thing came crashing down.

What do you mean come crashing down. It still hasn't anybody who bought Bitcoins at the start is still sitting pretty. Sure it did get a massive spike a couple of years ago when all the media agencies heard about it so if anybody bought them at that time they'll have lost out but, then they would have had to be incredibly stupid to invest at that time. But for anybody seeing it as a long term investment they are still sitting pretty.

I see bitcoin as a little different than stock as I can actually spend bitcoins whereas I cannot spend stock:

Can I pay may electricity bill using Bitcoin? Yes
Can I insure my car using Bitcoin? Yes
Can I book a hotel room using Bitcoin? Yes
Can I get a cab and pay the driver with Bitcoin? Yes
Can I get groceries using Bitcoin? Yes

The fact that it is already accepted over the counter just like regular cash money gives it value.

Shares on the other hand are completely different. You have to pay fees just to buy and own shares. You also have to pay tax on shares that you buy. You also need to pay a fee to sell your shares. Bitcoin you pay a small commission and thats it. Once you have them you can treat them just like cash.

Basically Bitcoins are fungible whereas Shares are not.

Mmmh, while my original wording might have been too strong ("crashing down" hasn't happened yet, and as with the stock markets, its rather a "normalization" that will make some gamblers poor)... I still would say it "crashed" for some people.

Namely the guys who got in when it became famous, believing the growth could be endless, and lost big when the value normalized and fell.

You are right on the fundamental differences between shares and bitcoins. But they share one thing: no "real" value backing the concept.

Same could be said about "money" in todays economy where there is never enough gold to back all the money in the system. Same could be said about the gold actually.

Still, people trust money. There are a lot of institutions backing money, making sure that fluctuations are within certain thresholds. That does not hold true for bitcoins for example.

If one day people loose trust in bitcoins (say there is an exploit that let hackers manipulate the system at will... yes I know the system is pretty safe against such exploits, lets assume there is a way for a minute), the value of bitcoins might actually fall to zero. All the money invested in bitcoins is gone. Poof!

A very unlikely scenario, yes. But it is just there to show that bitcoins and shares ...erh.. share one defining characteristic: their value can fluctuate freely. Thus you can gain big by getting in early on a share / crypto currency that is rising. But you can also loose it all in an instant should something dramatic happen.

This does not happen with money. Not without the whole country (or european union) coming crashing down with debt, social problems or war. And if money crashes, everyone is affected, hence there is less incentive to "gamble" with money for personal gain (some still do it... money trading should really be banned! How anyone could think this is benefical to anyone besides the people trading is a mystery to me).