Sidenote...

Opinion: crApto-currency is an interesting fad. My sympathies to all those who are unable to obtain refunds.

Back to topic...

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?

The reason for this is that to sum of all debt is greater than the sum of all money.

No matter how much debt (without interest) is paid to avoid defaulting, more money will need to be borrowed to pay the 'interest' (since more is owed than it is given), yet, even if a person or a business manages to manoeuvre themself within the economy to be debt-free, the debt has simply been shifted to somewhere else.

The debt may continue shifting until it causes bankruptcy/joblessness foreclosure/homelessness. It makes me sad to see this play out because "I" know it is completely unnecessary.

To treat the symptom (rather than the cause) more "credit" is issued but 'Debt' always tags along for the ride. Which would be okay except for, 'Debt' (currently) demands over 100% share of the pie/market.

The reason why deflation causes price-inflation is due to money 'disappearing' (to pay debt incl. interest), with 'replacement' money increasing the size of debt. Money becomes devalued because, more is constantly needed - the price before is no longer enough to cover expenses.

rich/poor

I'll discuss more about how multi-generational planning effects wealth in Step 3.

"renegotiation":

Renegotiation is possible and preferable. It would require awareness/understanding on the part of the public to influence their representatives.

'Revolutions' are temporary. 'Knowledge' is more effective.

Rather than thinking in terms of a "revolution", think of it as another "renaissance".

I'll discuss more about multi-generational planning in step 3.

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 They run on outdated systems, cling to outdated eBanking technology, and now are trying to get ahold of the new economical realities without enough IT competence.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 guess I should also add that I also work in finance companies in London and my experience is entirely different to yours.

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).

It happened last year when the Swiss decided to stop pegging their Franc against the Euro without giving any warning. A lot of people were basically wiped out in less than 5 minutes.

Sidenote...

Opinion: crApto-currency is an interesting fad. My sympathies to all those who are unable to obtain refunds.

Back to topic...

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?

The reason for this is that to sum of all debt is greater than the sum of all money.

No matter how much debt (without interest) is paid to avoid defaulting, more money will need to be borrowed to pay the 'interest' (since more is owed than it is given), yet, even if a person or a business manages to manoeuvre themself within the economy to be debt-free, the debt has simply been shifted to somewhere else.

The debt may continue shifting until it causes bankruptcy/joblessness foreclosure/homelessness. It makes me sad to see this play out because "I" know it is completely unnecessary.

To treat the symptom (rather than the cause) more "credit" is issued but 'Debt' always tags along for the ride. Which would be okay except for, 'Debt' (currently) demands over 100% share of the pie/market.

The reason why deflation causes price-inflation is due to money 'disappearing' (to pay debt incl. interest), with 'replacement' money increasing the size of debt. Money becomes devalued because, more is constantly needed - the price before is no longer enough to cover expenses.

rich/poor

I'll discuss more about how multi-generational planning effects wealth in Step 3.

"renegotiation":

Renegotiation is possible and preferable. It would require awareness/understanding on the part of the public to influence their representatives.

'Revolutions' are temporary. 'Knowledge' is more effective.

Rather than thinking in terms of a "revolution", think of it as another "renaissance".

I'll discuss more about multi-generational planning in step 3.

1) Inflation/Deflation:

Okay, so we now that injecting money into a market leads to the value of the money dropping, thus inflation. Deflation would be value actually increasing.

So you are saying that the value of the money is actually increasing because of debt? I guess because the rising debt creates demand for more money than currently is in the market? Could you slow down your explanations and start to us a more "layman language", I am not sure I understand your point correctly.

2) rich/poor: okay, I will be happy to hear you opinion on the topic.

3) negotiations:

Any realistic ideas on how to get into a position where you can negotiate anything as fundamental as our current economy without sever leverage on your side?

Sure, it would be nice if "people would be reasonable", but history tells us the amount of people being reasonable is TOO DAMN LOW! ... and has always been this way.

In an increasingly ego-centric world view, that is certainly not gonna change for the better.

So how could we break out of this stalemate as a society? Without violence and revolution?

Hyper-Inflation decreases the value of money.

The irony here is that DE-flation (above 100%) is the 'real' cause behind Hyper-Inflation (in recent history).

(above a hundred percent) >100% Debt is like quick-sand. Or to use a racing analogy, the more you/everyone try to repay your/everybody's debts, the more money you (all) need to borrow, because the finish-line is constantly moving forward away from you, relative to your speed.

It's a bit like positive (+) and negative (-). The Central Lender demands more than it issues. The Central Lender is happy to issue more as long it receives even-more. Not only does the Central Lender NOT want to let go of ownership of a single penny, it wants MORE pennies. It's a form of insatiable greed. It will 'lease' those pennies for a price, but will only accept payment in the form of pennies. Which means everyone has to ask the Central Lender for more pennies to pay what they owed in the first instance and the cycle continues indefinitely.

No-one would willing agree to that. The only reason it exists today is because the public has implicitly agreed and generations afterwards have accepted it without question.

The problem goes unnoticed for a while. But when problems start to surface on a large scale, misleading advice is given and the details of the actual cause are not discussed publicly. In the meantime, more "credit" is given to act as a quick fix.

-

In today's culture, the concept would have to go viral. The more people understand and talk about it, the more likely the conversation in politics will change. It's your Government that has the power to change laws/regulations. But it's the ordinary voter that chooses who they want representing them. Since in a democracy, the majority wins - the majority of people need to understand this concept (fully).

People tend to notice stories of poverty in the news and tend to be 'moved' by such stories. When they realize that they themselves are in fact the ones living in a rigged-poverty, then maybe they might start taking an interest in how the system actually works.

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.

I still don't see how if I lend someone $100, and then they later only have to pay back $90, I've somehow made $90. No, I've lost $10. Doesn't matter whether that's gold, gold-back currency of fiat.

I think this is confusing two things - the workings of an economy, and the mechanism by which something works. It's like saying you shouldn't have money if you don't know how the money is printed, or invest in gold if you don't know how gold is mined.

I'm curious, how much have you studied the history of currency? Back in the 80s I really enjoyed numismatics, the study of money and currencies, and among other things learned about the histories of currencies through the ages. All currency serves as a debt, and without it working as a debt the modern economy collapses.

The US has had its own run-ins with devalued money in the past. At the time of the US revolution from England, the continental currency collapsed over the span of about a decade.

Many states introduced their own currency, many banks of the era introduced their own notes which served as currency. Some have survived the centuries and are quite beautiful as art by themselves, the engraved artwork as much to prevent counterfeiting as anything.

Several of those earlier currencies collapsed as well, others had great value.

The current US currency system had a major overhaul around the time of the US civil war, and another set of overhauls when dropping the silver and gold standards. These days the US currency, as well as the currencies of most nations, is not backed by any physical good like gold. It only has value because people are willing to trade with it.

Currency is a form of debt. Without it we go back to the barter society. Currency solves the biggest problem of barter economies, the need to trade goods of similar value directly in an exchange.

* "I want to buy a stick of gum but only have a young rooster to trade, what else can I get for the value of a rooster?"

* "I want to buy $75 of groceries, can I give you 75 copies of my phone app for it?"

* "I want to buy a $25,000 automobile, can I give you 10,000 dozen of eggs for it?"

Many jobs would be difficult to pay without currency. How would you pay knowledge workers like teachers, or auditors, or book editors, or lawyers, or scientists? "You gave us knowledge, here are two cows."? It can work, but it is tedious and trade is difficult.

Somebody, usually a bank or a government, creates notes that are exchanged instead. They are considered a debt of the bank or of the government, but they grease the wheels of the economy so much that people typically work with them without a thought.

Cryptocurrencies work exactly the same way. They are a fiat currency, something with no backing value that only has value because people are willing to trade with it.

When the first real transactions with bitcoin took place, somebody convincing a pizza store owner to sell a pizza for around a quarter million bitcoin, it established a value. Before that it had no real value in trade. Today a bitcoin is trading for about $400 against the dollar, but only some people and places will accept them. The value as a fiat currency will continue to fluctuate based on whatever people value them at.

That does not make them bad or good, only a thing that exists for trade. Nobody has to use crytpocurrencies. People could decide suddenly to stop exchanging goods and services for them and their value would instantly drop to nothing. Similarly people could decide suddenly to stop exchanging goods and services for the US dollar, or to stop exchanging for Euros, or to stop exchanging for any other fiat currency.

They only have value as long as people say they have value, and their value is whatever society sets it to be. Minting more of them decreases their value and destroying them increases their value, but no matter what the issuers do the value is still largely determined by the users of the currency, not the issuers of the currency.

I don't want to inject myself into the detailed, long-running exchanges thus far but after frob's comment I thought I'd add something which seems to have been hinted around so far. Currency can function as a store of value (among other things), but especially in our economic system I think that a better description is as a claim on future production. A dollar isn't worth having in itself, whether it's backed by gold or expectations of future exchange or anything else, but commerce is worthwhile and a currency note (dollars, in the modern US case, but it's not much different with a gold dubloon) is how commerce is generally done.

The major positive of a debt-based economy is that it can expand. New products, new services, add to what can be bought and sold; without the ability to expand commerce then these new things can only operate in the economy to the extent that commerce in the things which existed before contracts. The government, as a monopoly "official" currency issuer, has a huge ability to both regulate the existing supply of money and to ensure that bridge the gap between current and future participants in the economy. Most debt, in terms of currency issuance and the national debt, is owed by US citizens today to US citizens tomorrow. It's not a risk-free system, and certainly wealth can be diverted and conglomerated along the way. But it's not some monstrous deception over a hard-money system, which has its own drawbacks (and is not free from risk of episodes of rapid inflation either. Look at the effort to move to the silver standard in the mid-20th century in the US).

Bitcoins are great

Just let your government realize that a) you don't pay tax, and b) that you follow the recommendation of using different addresses blah blah, in other words transactions are not traceable. Then you'll have your crashdown.

To say it in the words of my favorite fat socialist.: We need to abolish the 500€ bill. Few people know what it looks like and only drug dealers and terrorists use them anyway.

Wait what he will say about a crypto currency which only criminals use that have something to hide and who don't pay tax on their revenues.

It happened last year when the Swiss decided to stop pegging their Franc against the Euro without giving any warning. A lot of people were basically wiped out in less than 5 minutes

How so? It merely caused a temporary change in exchange rate. Noticeable, yes, but far from "wiped out in minutes". The rate has regained half of that since then, with nothing being done and nothing happening (or rather, you could say despite much happening). The reason is clear, too, if you consider that the franc is backed in euros.

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

Ah, that is not true. The value of shares consists of two parts. The usually greater part is part defined by the bigger fool principle. It is, indeed a "no value" value.

But with shares you also own part of a company. Shares are not debt, they are ownership (without obligations, which is a funny thing). As owner, you have, at least in principle, a bit of a say in business decisions, and the leadsrship board has to answer to you. They do that once every year, too (I know people who own 1 share of three dozen companies and have nothing better to do than go to shareholder conventions all year for the free beer and food).

In practice, of course, you would need to own millions of shares for deciding anything, and almost all companies are effectively owned by 1-2 people (rarely more than 5-6) holding >50% of shares, so it's really just them deciding, but for example you only have to own 20% in order to have a veto right on business decisions. Yes, 20% is still quite a bit, but it's nowhere near the majority.

But the thing is, even with one share, you own a part of the company. With one bitcoin, you own shit.

If bitcoin gets bad press tomorrow because someone found an exploit and makes a website with a nice logo for it, then your bitcoins are worth zero over night. Your baker will start laughing frenzily if you try to buy a real bread with your worthless numbers. Your car insurance will tell you "no sorry", too.

If the car manufacturer that you are holding shares of is found cheating exhaust tests, well... then that is not precisely good news for your portfolio. But your shares are still worth a part of that company. You can still try to get some of your money back by drinking their free beer... :D

The word "currency" in the name "cyptocurrency" is misleading.

If you can't pay taxes with them, can you at least deposit them at your bank?

(Please, no guesses, I want to know what the answer from your Bank was. :) )

meanwhile, back in the real world...

"To the Batmobile!"

--Oops, wrong Universe.

Ah, here we are...

Many jobs would be difficult to pay without currency.

Currency can function as a store of value (among other things), but especially in our economic system I think that a better description is as a claim on future production.

You are on the "money".

Money is great because you don't have to walk around with a ledger and bunch of receipts trying to prove what you're owed.

The other reason why money is great is that the values can change over time and you don't have to be forced to reserve different prices for different people.

Currency is a form of debt. Without it we go back to the barter society.

Money is an extension of barter. The word "Barter" is for namesake only.

-

...defined by the bigger fool principle.

lol. I like that. I might use that phrase some day.

-

Your Government decides what is legal tender. Your Central Lender issues legal tender.

... I forgot the point I was trying to make.

It'll come back to me later.

--I remember now.

The Central Lender mimics the role of a monarch's treasury.

As a private civilian acting under the auspices of capitalism within a republic, there is a severe conflict of interest.

The Central Lender is attempting to act as though you are still under a monarchy (owning everything; including you), while the civilian, in that example, is trying to assert its individual soveriengty (claiming independent ownership & freedom).

Under republic-capitalism, >100% debt is a deal, a bad one, but still a deal. Like in the example in earlier posts, one party (Central Lender) is overvaluing while the other is undervaluing its contribution to the society of which it shares.

That is why renegotiation is important. It doesn't have to be BIG amendments, it can be small, such as 99.999% debt.

In case you are still wondering why that would still be profit for the Lender, it is because it is the 'borrower' that is promising to actually 'do' something of value. The Lender is only facilitating the need to provide a trustworthy means of flexible trade. The Lender doesn't have to do any work equivalent to 99.999% of the loan. It also does not have to provide tangible assets equivalent to 99.999% of the loan. In other words, it's pretending. The only difference between the Central Lender and anyone else is: it's enforceable.