CNBC: Gold to hit $11,000 per Oz on dollar collapse - Video

[LoveIsTruth]

...ahh but interest was never created....

I already said that. But it does not mean that some banks will not collect interest. They will, and they will count it as profit. Whatever they collect in interest is NOT put out of existence. That is the whole point. It is kept and is a part of monetary base and will still circulate. The all important question for deflation theory is at what rate does the money goes out of existence. The answer is: The only way it goes out of existence is when a principle is repaid. Now you and I know, that principle, mathematically, CANNOT be repaid by all, only by some, because of the interest payments (the money for which was never created). Thus, because principle, mathematically cannot be repaid by all, on balance, more money is created than un-created. If principle is repaid, the bank is free to loan this none-existing "money" again, thus the money supply does NOT shrink. And if principle was not repaid, than inflation has occurred, because more money was created (and put in circulation) than un-created. So you see, money supply in such system never shrinks, only expands.

[Jason]

The all important question for deflation theory is at what rate does the money goes out of existence. The answer is: The only way it goes out of existence is when a principle is repaid. Now you and I know, that principle CANNOT be repaid by some, because of the interest payments. Thus on balance, more money is created than un-created. If principle is repaid, the bank is free to loan this none- existing "money" again, thus the money supply does NOT shrink. And if principle was not repaid, than inflation has occurred, because more money was created (and put in circulation) than un-created. So you see, money supply in such system never shrinks, only expands.

As you point out with defaults....on principle more money would stay in circulation than initially created. All interest expense does is create the obligation to the bank that cannot be met - all else being equal (no new borrowers and equal reward for production).

Yes the money supply would expand....thus causing inflation of asset prices in conjunction with the expansion. Probably the barometer of money in circulation would be total debt.

In terms of the bank being free to loan non-existing "money" again....that's only correct if it was all cash....ultimately its dependent upon reserve requirements and federal/private banking regulations.....as well as the willing number of people to sign IOUs.

Of course when you hit the debt saturation point (can't take on any more new debt - at the macro level) then the money supply growth will stagnate and defaults that have long been procrastinated by new borrowers money....now will occur. Prices will deflate from prior inflated values as people scramble for cash to meet their debt and interest obligations - the game of musical chairs, as the mad scramble to ensure one keeps their assets, plays out. The obligation or pyramid scheme which depends on a constant flow of new debtors to keep money growth above interest rate growth....will stagnate and reverse course. Production cannot meet the obligation....and demand drops.

Also ignoring the velocity of money which is another key ingredient.

[LoveIsTruth]

As I said. Default increases money supply, and does not shrink it:

The all important question for deflation theory is at what rate does the money goes out of existence. The answer is: The only way it goes out of existence is when a principle is repaid. Now you and I know, that principle, mathematically, CANNOT be repaid by all, only by some, because of the interest payments (the money for which was never created). Thus, because principle, mathematically cannot be repaid by all, on balance, more money is created than un-created.

If principle is repaid, the bank is free to loan this none-existing "money" again, thus the money supply does NOT shrink.

And if principle was not repaid, than inflation has occurred, because more money was created (and put in circulation) than un-created. So you see, money supply in such system never shrinks, only expands.

You agreed with me that principle, mathematically, CANNOT be repaid by all. And since that is the case, the money CANNOT be un-created; because the only way money is un-created is when principle is repaid.

And, thus it is mathematical certainty, in such system, that more money is being created than un-created.

[Jason]

As I said. Default increases money supply, and does not shrink it:

The all important question for deflation theory is at what rate does the money goes out of existence. The answer is: The only way it goes out of existence is when a principle is repaid. Now you and I know, that principle, mathematically, CANNOT be repaid by all, only by some, because of the interest payments (the money for which was never created). Thus, because principle, mathematically cannot be repaid by all, on balance, more money is created than un-created.

If principle is repaid, the bank is free to loan this none-existing "money" again, thus the money supply does NOT shrink.

And if principle was not repaid, than inflation has occurred, because more money was created (and put in circulation) than un-created. So you see, money supply in such system never shrinks, only expands.

You agreed with me that principle, mathematically, CANNOT be repaid by all. And since that is the case, the money CANNOT be un-created; because the only way money is un-created is when principle is repaid.

And, thus it is mathematical certainty, in such system, that more money is being created than un-created.

NO....default allows the money already created to remain in circulation versus being destroyed....does not increase the money supply.

Debt on the other hand increases the money supply and decreases it when paid off - destroyed.

[LoveIsTruth]

NO....default allows the money already created to remain in circulation versus being destroyed....does not increase the money supply.

Debt on the other hand increases the money supply and decreases it when paid off - destroyed.

If exactly the same amount of money is created as destroyed, inflation does not occur. In case of default, as you yourself admit, more money is created than destroyed (uncreated). This causes inflation, i.e. more and more money in circulation.

[Jason]

NO....default allows the money already created to remain in circulation versus being destroyed....does not increase the money supply.

Debt on the other hand increases the money supply and decreases it when paid off - destroyed.

If exactly the same amount of money is created as destroyed, inflation does not occur. In case of default, as you yourself admit, more money is created than destroyed (uncreated). This causes inflation, i.e. more and more money in circulation.

No....the new debt creates inflation upon creation (more money entering the pool chasing after the same "relative" amount of goods).....and deflation upon payoff or destruction. If default occurs then the level of debt (money in circulation) remains the same. It doesn't add to nor take away from the amount circulating - just change of ownership of assets.

[LoveIsTruth]

No....the new debt creates inflation upon creation (more money entering the pool chasing after the same "relative" amount of goods).....and deflation upon payoff or destruction. If default occurs then the level of debt (money in circulation) remains the same. It doesn't add to nor take away from the amount circulating - just change of ownership of assets.

How can it not add to the amount circulating when you yourself said: "default allows the money already created to remain in circulation versus being destroyed?" Thus more money is being created than destroyed!

[Jason]

No....the new debt creates inflation upon creation (more money entering the pool chasing after the same "relative" amount of goods).....and deflation upon payoff or destruction. If default occurs then the level of debt (money in circulation) remains the same. It doesn't add to nor take away from the amount circulating - just change of ownership of assets.

How can it not add to the amount circulating when you yourself said: "default allows the money already created to remain in circulation versus being destroyed?"

Its already in circulation....how can it add to the amount in circulation?

Its not paid back - destroyed. Neither is it additional debt or new money that is added to the pool. Instead loss of assets occurs but the money is still circulating.

[LoveIsTruth]

Its already in circulation....how can it add to the amount in circulation?

Because more money is being CREATED than being destroyed.

[Jason]

Its already in circulation....how can it add to the amount in circulation?

Because more money is being CREATED than being destroyed.

It was already created.....its not getting re-created. The initial debt causes inflation....not default....and certainly not payment of debt.

[LoveIsTruth]

More money is being created than destroyed. We both agreed on it.
What do you think happens when more money is being created than destroyed?

[Original_Intent]

Surely we can agree that the Fed can inflate OR deflate at a whim.
Surely we can agree that they at various times use both tools to serve THEIR interests.

TPTB profit from foreknowledge whichever they choose.

The Fed can almost completely influence elections as the party tends to stay in power during good economic times and tends to be "thrown out" during bad ones.

Whicever happens, it will not be to the detriment of the Fed.

[LoveIsTruth]

Surely we can agree that the Fed can inflate OR deflate at a whim.
Surely we can agree that they at various times use both tools to serve THEIR interests.

TPTB profit from foreknowledge whichever they choose.

The Fed can almost completely influence elections as the party tends to stay in power during good economic times and tends to be "thrown out" during bad ones.

Whicever happens, it will not be to the detriment of the Fed.

All I was trying to say is that the system is inherently inflationary. Though fluctuations in money supply are possible via control of interest rates, the overall trend in a fiat, debt based system is ALWAYS inflation. Last 100 years are a great illustration of that. The dollar has declined over 96% via inflation. It is the inevitable doom and destiny of all fiat currencies (i.e. fiat = fraud).

[LoveIsTruth]

Ron Paul Interview with Newsmax

Ron Paul: "It's not that gold is perfect; it is that paper is insane!"

[LoveIsTruth]

US Debt now is $61.6 TRILLION in unfunded liabilities to seniors, veterans and retirees That is over $500 thousand per household. [Obviously, that can never be repaid except by making dollars worth pennies through inflation.] USAToday 2011 Jun 7

http://www.usatoday.com/news/washington ... titialskip" onclick="window.open(this.href);return false;

from http://www.realityzone.com/currentperiod.html" onclick="window.open(this.href);return false;

[LoveIsTruth]

VIDEO: Jim Turk explains that gold is money, not an investment. Investments are used to create wealth by producing products or services. Money doesn't create anything. Its role merely is to maintain purchasing power while waiting to spend it. When people hold national currencies as money and those currencies lose purchasing power, they lose their wealth. When they hold gold as money, they maintain their wealth. GoldMoney 2011 Jun 7



from http://www.realityzone.com/currentperiod.html" onclick="window.open(this.href);return false;

[Jason]

More money is being created than destroyed. We both agreed on it.
What do you think happens when more money is being created than destroyed?

You still don't get it....

The money is created when the debt is created. Inflation is created when the debt is created.....and Deflation is created when the debt is paid back (destroyed). Zero inflation occurs after the creation of the new debt.....at best (100% default) the money in circulation would remain the same and none would be destroyed (payment of debt) but defaults don't result in inflation.....just the status quo. The only way for inflation to continue is for continued increases in new debt (creation of new money) that surpasses the payments on old debt (destruction of money). This game comes to an end at the debt saturation point. Then one must blatantly print money (not created by debt) in sufficient quantities to overwhelm the destruction of old debt.

So we are back to the point where the destruction of the dollar via inflation that has occurred over the past 100 years is the result of ever expanding debt levels (constant increases in new debt) up until the debt saturation point in 2008. Total debt has declined since that point despite the increases in the government portions of new debt.

Deflation!

[LoveIsTruth]

More money is being created than destroyed. We both agreed on it.
What do you think happens when more money is being created than destroyed?

You still don't get it....

The money is created when the debt is created. Inflation is created when the debt is created.....and Deflation is created when the debt is paid back (destroyed). Zero inflation occurs after the creation of the new debt.....at best (100% default) the money in circulation would remain the same and none would be destroyed (payment of debt) but defaults don't result in inflation.....just the status quo. The only way for inflation to continue is for continued increases in new debt (creation of new money) that surpasses the payments on old debt (destruction of money). This game comes to an end at the debt saturation point. Then one must blatantly print money (not created by debt) in sufficient quantities to overwhelm the destruction of old debt.

So we are back to the point where the destruction of the dollar via inflation that has occurred over the past 100 years is the result of ever expanding debt levels (constant increases in new debt) up until the debt saturation point in 2008. Total debt has declined since that point despite the increases in the government portions of new debt.

Deflation!

Your logic is definitely missing a screw! Consider what you just said:


"Inflation is created when the debt is created."

................ And then in the next sentence:

"Zero inflation occurs after the creation of the new debt."


You are definitely missing a screw somewhere in your logic!

This is unreal! It's like talking to a crazy person!

Wow!

[Jason]

More money is being created than destroyed. We both agreed on it.
What do you think happens when more money is being created than destroyed?

You still don't get it....

The money is created when the debt is created. Inflation is created when the debt is created.....and Deflation is created when the debt is paid back (destroyed). Zero inflation occurs after the creation of the new debt.....at best (100% default) the money in circulation would remain the same and none would be destroyed (payment of debt) but defaults don't result in inflation.....just the status quo. The only way for inflation to continue is for continued increases in new debt (creation of new money) that surpasses the payments on old debt (destruction of money). This game comes to an end at the debt saturation point. Then one must blatantly print money (not created by debt) in sufficient quantities to overwhelm the destruction of old debt.

So we are back to the point where the destruction of the dollar via inflation that has occurred over the past 100 years is the result of ever expanding debt levels (constant increases in new debt) up until the debt saturation point in 2008. Total debt has declined since that point despite the increases in the government portions of new debt.

Deflation!

Your logic is definitely missing a screw! Consider what you just said:


"Inflation is created when the debt is created."

................ And then in the next sentence:

"Zero inflation occurs after the creation of the new debt."


You are definitely missing a screw somewhere in your logic!

This is unreal! It's like talking to a crazy person!

Wow!

LOL.....like I said....you still don't get the big picture! But that's just crazy talk.....LOL! :-B

KISS - Inflation occurs with creation of additional money chasing relatively same amount of goods. Additional money is created by debt. After that new money is created.....what is going to cause additional inflation? The money supply either stays flat (100% default on debt)....or it declines with the payment of debt (destruction of money).

The only way for more inflation....or for inflation to continue....is the creation of more money via more debt (the debt cycle or money printing).....but when the growth in new debt declines below the rate of destruction (payment on debt) - i.e. total debt is flat or declining......then deflation results. Deflation is the inherent feature of the money system.....just comes down to saturation points (driven by interest costs - i.e. debt servicing costs) and the timing of said points.

Still too hard to grasp???

[LoveIsTruth]

LOL.....like I said....you still don't get the big picture! But that's just crazy talk.....LOL! :-B

KISS - Inflation occurs with creation of additional money chasing relatively same amount of goods. Additional money is created by debt. After that new money is created.....what is going to cause more inflation? The money supply either stays flat (100% default on debt)....or it declines with the payment of debt (destruction of money).

Still too hard to grasp???

With 100% default on debt the money supply will stay flat until the next loan is made. And when the next loan is made, the money supply increases. If defaults keep happening (as they mathematically must, because no money for interest is created etc.) the money supply keeps growing because, on balance, more money is being created than destroyed; because, again, failure to repay is failure to destroy money. Last 100 years is a great illustration of that: money supply has expanded to the point that the dollar lost 97% of its purchasing power. The nature of the system is inflationary because defaults are a mathematical certainty, and failure to repay is failure to destroy money.

[Jason]

LOL.....like I said....you still don't get the big picture! But that's just crazy talk.....LOL! :-B

KISS - Inflation occurs with creation of additional money chasing relatively same amount of goods. Additional money is created by debt. After that new money is created.....what is going to cause more inflation? The money supply either stays flat (100% default on debt)....or it declines with the payment of debt (destruction of money).

Still too hard to grasp???

With 100% default on debt the money supply will stay flat until the next loan is made.

Absolutely correct!!!

And when the next loan is made, the money supply increases.

Correct!!!

If defaults keep happening (as they mathematically must, because no money for interest is created etc.) the money supply keeps growing because, on balance: more money is being created than destroyed. Last 100 years is a great illustration of that.

True.....but the inflation happens with the creation of additional money.....not later when default or payment on debt occurs. Thus on the macro scale inflation is based on the growth in money (new debt) versus defaults and payment of debt (destruction of money).

When the debt saturation point hits people stop borrowing and AT BEST (100% default) you flat line......but the reality is some payments will occur and deflation will result. So your constant inflationary conclusion is based on continued growth in debt and 100% defaults occurring at the saturation point in order to keep the game going.

[LoveIsTruth]

When the debt saturation point hits people stop borrowing and AT BEST (100% default) you flat line.

"Saturation point" DOES NOT EXIST with the government, because they will always be able to print more and more money.

So your constant inflationary conclusion is based on continued growth in debt and 100% defaults occurring at the saturation point in order to keep the game going.

Exactly right: http://www.usdebtclock.org/

As you can see the debt numbers are going UP, not down.

[Jason]

When the debt saturation point hits people stop borrowing and AT BEST (100% default) you flat line.

"Saturation point" DOES NOT EXIST with the government, because they will always be able to print more and more money.

The government has a very small portion of the total debt!

So your constant inflationary conclusion is based on continued growth in debt and 100% defaults occurring at the saturation point in order to keep the game going.

Exactly right: http://www.usdebtclock.org/

As you can see the debt numbers are going UP, not down.

LOL....that's as of this moment.....check out some historical charts of total debt! Its been flat or declining since 2008!

[LoveIsTruth]

....check out some historical charts of total debt! Its been flat or declining since 2008!

http://cedarcomm.com/~stevelm1/USDebt.png" onclick="window.open(this.href);return false;

[Jason]

....check out some historical charts of total debt! Its been flat or declining since 2008!

Total....not national! The center number in your debt clock that is $54.9 trillion and declining....