Something economists thought was impossible is happening in Europe

[Mad Indian]

It was an example. Normally when you invest in high denominations running into millions of $ you look for other investment vehicles like public or private bonds.

I do not think central banks allow you to hoard big amounts of cash if you are not registered exchange dealer. But I am not sure about Swiss case. So all I can do is guess.

If it is true, then it makes complete sense. Thank bro :thumb:

 

[pmaitra]

Let me ask some counter questions.

1) Do you think if you tie the hands of central banks from printing money the world would be much better place?
2) Is pegging money printing to random value of gold dug from earth any better?

You can ignore the above two if you want.
3) How does fiat money explain negative interest rate phenomenon- the topic of debate on this thread?



Hyper-inflation is well documented phenomenon. But is it due to fiat currency or not using the monetary policy well? Just because fiat currency allows you to print money, does not mean you will get high and print money. It is a tool and outcome depends on how you use it.

So, is that the answer to my question?

Is it that you don't know the answer to the question, or is it that you are not comfortable answering the question? I have replicated the question below for everyone's convenience.

Addendum:

I want to add one question @Sakal Gharelu Ustad, because I want to see your interpretation of it. Please refer to the video by @Mad Indian.

When Greece took out those massive loans, what was the collateral?

 

[pmaitra]

No one from his school of economics claimed that printing paper increases wealth. Printing money increases money supply and it in turn facilitates easier transanctions, which under good conditions create more wealth. You are attacking a strawman if you are claiming that people who believe in Fiat currency believe that printing money increases wealth

Here is a surprise for you:

Spoiler

QE can boost Italy GDP by end-2016 1.8%, says CSC
Bernanke On The Offensive: QE Added More Than 2 Million Jobs, Pushed Up GDP By 3%

No one claimed that printing more money (pieces of paper) can generate wealth? Hmmm.
​

The strawman is right there in the emboldened part.

You are indicating that printing more pieces of paper has a cascading effect that eventually, with some good conditions generates wealth. So, you are claiming more or less the same thing that you claim no one is claiming.

Or, is it the good conditions alone generate wealth and have nothing to do with printing more money?

Just trying to remove the ambiguity that surrounds the defence of fiat currency.

 

[Mad Indian]

The strawman is right there in the emboldened part.

You are indicating that printing more pieces of paper has a cascading effect that eventually, with some good conditions generates wealth. So, you are claiming more or less the same thing that you claim no one is claiming.

Or, is it the good conditions alone generate wealth and have nothing to do with printing more money?

Just trying to remove the ambiguity that surrounds the defence of fiat currency.

You are now using word play to deflect the strawman you created. The claim here is that Fiat currency, by increasing the availability of money available, increases the ease of transanctions which lead to increase in wealth and it is NOT fiat currency creates wealth. Of course, wealth will be created with or without fiat currency but the school of thought is that fiat currency accelerates the process of wealth creation.

For ex., exhaust fan increases the amount of convection in the air and helps increase air circulation and hence improve the atmostphere by removing the hot air and so improve in the breathing air in a crowded room. Here Fiat currency is the fan. You are equating the fan improves the breathing conditions in the rooms with - fans cause the respiration to happen in the first place

Now, your original claim was that the economists believing in Fiat currency by believe that Fiat currency itself creates wealth. No economist who believes in fiat currency believes that. They believe fiat currency is a catalyst in generation of wealth and not really the substance involved in producing it. Your claim would make their stand look as though they think fiat currency as a reactant in and of itself and that fiat currency itself causes the reaction. It does not nor do they believe that as you claimed. So you are arguing against a position they dont even have- strawman argument

 

[pmaitra]

@Mad Indian, sorry, I had to add more evidence to my original post.

Anyway, you said that no one claimed that printing more pieces of paper (you used the word money) generates wealth. You have been proven wrong.


Here is a surprise for you:

Spoiler

QE can boost Italy GDP by end-2016 1.8%, says CSC
Bernanke On The Offensive: QE Added More Than 2 Million Jobs, Pushed Up GDP By 3%

No one claimed that printing more money (pieces of paper) can generate wealth? Hmmm.
​

You are now using word play to deflect the strawman you created. The claim here is that Fiat currency, by increasing the availability of money available, increases the ease of transanctions which lead to increase in wealth and it is NOT fiat currency creates wealth. Of course, wealth will be created with or without fiat currency but the school of thought is that fiat currency accelerates the process of wealth creation.

For ex., exhaust fan increases the amount of convection in the air and helps increase air circulation and hence improve the atmostphere by removing the hot air and so improve in the breathing air in a crowded room. Here Fiat currency is the fan. You are equating the fan improves the breathing conditions in the rooms with - fans cause the respiration to happen in the first place

Now, your original claim was that the economists believing in Fiat currency by believe that Fiat currency itself creates wealth. No economist who believes in fiat currency believes that. They believe fiat currency is a catalyst in generation of wealth and not really the substance involved in producing it. Your claim would make their stand look as though they think fiat currency as a reactant in and of itself and that fiat currency itself causes the reaction. It does not nor do they believe that as you claimed. So you are arguing against a position they dont even have- strawman argument

So, you agree that printing more pieces of paper has no effect on creating wealth?

Do you have a succinct answer, instead of anecdotal examples and counter question like @Sakal Gharelu Ustad used to deflect from a pressing question?

 

[Mad Indian]

^^ To make it complete, the school of thought which believes in fiat currency believes that wealth creation in a good economic condition using fiat currency will be faster than wealth creation in similiarly good economic condition without a fiat currency or the currency which has currency with fixed exchange rates to gold?!?

 

[Mad Indian]

@Mad Indian, sorry, I had to add more evidence to my original post.

Anyway, you said that no one claimed that printing more pieces of paper (you used the word money) generates wealth. You have been proven wrong.


Here is a surprise for you:

Spoiler

QE can boost Italy GDP by end-2016 1.8%, says CSC
Bernanke On The Offensive: QE Added More Than 2 Million Jobs, Pushed Up GDP By 3%

No one claimed that printing more money (pieces of paper) can generate wealth? Hmmm.
​

I think they are refering to the process I just mentioned- they are claiming that QE has increased the money available and hence it stimulated the economy into growing instead of falling into recession again. How does that translate to printing more money equals wealth creation again?

 

[Sakal Gharelu Ustad]

So, is that the answer to my question?

Is it that you don't know the answer to the question, or is it that you are not comfortable answering the question? I have replicated the question below for everyone's convenience.

No collateral. But it was bound by the rules of joining EU.

 

[pmaitra]

No collateral. But it was bound by the rules of joining EU.

Thank you. So, the money was backed by nothing. As I said, the money was printed out of thin air.

So, this is Fractional Reserve banking, and no, it did not come out at the drop of the hat. I will answer the questions you have asked, after a couple of hours.

 

[pmaitra]

I think they are refering to the process I just mentioned- they are claiming that QE has increased the money available and hence it stimulated the economy into growing instead of falling into recession again. How does that translate to printing more money equals wealth creation again?

GDP is an indicator of wealth, and when Ben Bernake says the QE (printing money) has boosted GDP, then of course, there are people who have claimed that printing more money generates wealth.

So, your claim that no one claimed printing money generates wealth has been proven wrong.

You are now trying to hide behind semantics and it is you who is propping up a strawman.

 

[Mad Indian]

So, you agree that printing more pieces of paper has no effect on creating wealth?

Nope, I am saying that printing of paper does not cause increase in wealth by itself. For ex. printing more money than what is deemed appropriate without any responsibility can lead to money becoming worthless and result in uncontrolled inflation and can actually harm the country. "Fiat money Does not create wealth" is not the same as "Fiat money has no influence in wealth creation".

Again, it becomes just a tool. It can be used to accelerate the wealth generation or it can be misused into producing hyperinflation. It cant be held at fault for its misuses , just as a gun is not responsible for the deaths it caused

 

[Sakal Gharelu Ustad]

I think they are refering to the process I just mentioned- they are claiming that QE has increased the money available and hence it stimulated the economy into growing instead of falling into recession again. How does that translate to printing more money equals wealth creation again?

I have tried to argue this before. So good luck!

Wealth generation has lot of factors and being able to force people to use credit for productive purposes is one. In case of recession, the credit market dries up and QE or low interest rate policy is one way to stimulate it. Without fiat currency, you cannot do it.

 

[Mad Indian]

GDP is an indicator of wealth, and when Ben Bernake says the QE (printing money) has boosted GDP, then of course, there are people who have claimed that printing more money generates wealth.

So, your claim that no one claimed printing money generates wealth has been proven wrong.

You are now trying to hide behind semantics and it is you who is propping up a strawman.

You are misunderstanding the article.

To give an anology with the same fans - Fans(QE) improved the breathing conditions(GDP) in the room(Italy). You are the one who is claiming(wrongly) that they are implying that Fans(QE) actually is needed for the air(GDP) to be breathable in that room.

 

[Mad Indian]

I have tried to argue this before. So good luck!

Wealth generation has lot of factors and being able to force people to use credit for productive purposes is one. In case of recession, the credit market dries up and QE or low interest rate policy is one way to stimulate it. Without fiat currency, you cannot do it.

I will be taking a big break for preparing for PG exams. So I wont be doing any arguing.

Besides, I am no expert on economic to argue on this stuff. I only know the basics and that too is learnt from you guys.

 

[Mad Indian]

I have tried to argue this before. So good luck!

Wealth generation has lot of factors and being able to force people to use credit for productive purposes is one. In case of recession, the credit market dries up and QE or low interest rate policy is one way to stimulate it. Without fiat currency, you cannot do it.

But without fiat currency, can the govt still run a budget deficit which will cause the debt crisis?

 

[pmaitra]

Nope, I am saying that printing of paper does not cause increase in wealth by itself. For ex. printing more money than what is deemed appropriate without any responsibility can lead to money becoming worthless and result in uncontrolled inflation and can actually harm the country. "Fiat money Does not create wealth" is not the same as "Fiat money has no influence in wealth creation".

Again, it becomes just a tool. It can be used to accelerate the wealth generation or it can be misused into producing hyperinflation. It cant be held at fault for its misuses , just as a gun is not responsible for the deaths it caused

So, printing pieces of paper is one of the reasons that increase wealth?

I have tried to argue this before. So good luck!

Wealth generation has lot of factors and being able to force people to use credit for productive purposes is one. In case of recession, the credit market dries up and QE or low interest rate policy is one way to stimulate it. Without fiat currency, you cannot do it.

Wealth generation has a lot of factors. Is printing money out of thin air one of the factors? I am just trying to remove the vagueness that is perhaps because of the way I am interpreting your comments.

 

[Mad Indian]

Make up your mind. Don't contradict yourself in the same post.


Wealth generation has a lot of factors. Is printing money out of thin air one of the factors? I am just trying to remove the vagueness that is perhaps because of the way I am interpreting your comments.

???I am very clear, Fiat currency does have influence on wealth creation- positively or negatively depends on how it is used. This is not the same as Fiat currency will create wealth

 

[pmaitra]

You are misunderstanding the article.

To give an anology with the same fans - Fans(QE) improved the breathing conditions(GDP) in the room(Italy). You are the one who is claiming(wrongly) that they are implying that Fans(QE) actually is needed for the air(GDP) to be breathable in that room.

You are simply going around in a circle.

Ok, does the fan have any effect on the breathing conditions or no? Are you claiming a causation between the fan and breathing condition?

 

[pmaitra]

You are simply going around in a circle.

Ok, does the fan have any effect on the breathing conditions or not? Are you claiming a causation between the fan and breathing condition?

Ignore the post above. I got your answer.

???I am very clear, Fiat currency does have influence on wealth creation- positively or negatively depends on how it is used. This is not the same as Fiat currency will create wealth

So, you are claiming printing money has a causative effect on wealth creation (positively or negatively).

 

[Sakal Gharelu Ustad]

Wealth generation has a lot of factors. Is printing money out of thin air one of the factors? I am just trying to remove the vagueness that is perhaps because of the way I am interpreting your comments.

Yes. In current EU conditions it is useful.