On Mon, 28 Jan 2008, phil scott wrote:

On Jan 28, 9:09=A0pm, phil scott <p...@philscott.net> wrote:

On Jan 28, 3:25 pm,

edited

On Jan 28, 3:25 pm,

snip

=A0and when rates hit zero, what then?

govt is way ahead of us here...notice the 150 billion dollar give
back...and now tax credits of double the investment for any
industrial upgrade etc...give backs in effect.

and we are still supposedly *paying the fed interest... =A0 =A0but are w=

really *paying the
fed interest.

Lets say the real inflation rate is 10pct...and the fed rate to our
banks is 4 pct.... that amounts ot 6% payment to the banks and
borrowers for =A0taking fed money and putting it into the economy....

think about it.

Could that be the mechanism... prosperity by means of fiat
money...paid to foreign nations for *real goods, cars, oil,
minerals..etc. in the final analysis. =A0 Something sure as hell
accounts for the wage rate anomallies I mention below.

that may account for my observation that in 1979........ I
was paying high school drop outs 7 to 15 dollars an hour for trades
work... rent was 75 dollars then.

today rent is =A020 times as
high...yet.... that level of junior trades person is still getting
about the same money... 10 to 15 dollars an hour, maybe 20 dollars
max. =A0 those should by all rights be starved to death on that...but
no...

they buy new cars and homes on that.? =A0How?

for a while ive wondered by what magic that happened... we struggled
with 75 dollar rent in 1979 ...my charge out rate was 40 dollars a
hour...two hours work and the rent was paid..

.yet we struggled a little.

Today it takes 20 hours of work billed out... 15 to 20 hours work to
pay the rent...( the
charge out rate is only up to 80 dollars)... if it rose with rents it
would be 800 dollars an hour! =A0 =A0whats up with these gross anomalies=

. =A0 =A0no way that should work.

but it does.

some sort of alchemy is creating this 'prosperity'..a prospertiy
bubble apparently..

I'm not entirely sure, but it may be that my
notion of a fed rate below the actual =A0 =A0(but hidden.... actual
inflation
rate) is that alchemy...1 to =A06% or more ......pure "prosperity"
pumped into the
economy annually for decades now.

so what is the downside? =A0 =A0 I think the estimated 500 trillion
dollars in 'derivitive' investments accounts for that...hot air...
ready to collapse at the slightest touch.

My "take" on this, after reading a couple of books, is that the answer is
basically _yes_ but with caveats. I could not write a little essay like
you did and do it justice.

Basically, I cannot think of any kind of economic system that would do
what our goofy, kludge, money-out-of-thin-air banking system does. If you
go to a command economy (eg. Marxism) then what you would have is what
Russia had last century. The whole idea of fractional-reserve banking is,
basically, brilliant. Caveats are serious, however. You get business
cycles, you get periodic unemployment, you get inflation, and you get the
dangers of a run on the banks, and, yes, the whole fucking thing can go up=
in smoke. The kludge guarantees that a few will get rich, a lot will not,
there will be debt, etc.

Yes, pull off "stock" in addition to "printed" money, and add derivatives
and all manner of tricks, rabbits out of hats, bait and switch..
...and.. ..viola...you get chances for economic crises and those economic
crises _could_ mushroom into another Great Depression, and, man, I can
tell you that we do NOT want that. I think in today's over hyped, over
spent, over indebted, over costly world, more people would get seriously
hurt (and or starve) if we had a global economic meltdown. And, the only
solution would be to print more money, and throw gas on the fire.

There are no solutions unless you want to go back to the caveman days when=
human beings did not have money (and all ofthe problems due to money) but
did have another set of problems that most people would prefer not to have=
(the cave, not enough food, no car, cold in the winter time, etc).

we have been living in an
alchemists universe it seems.

If you have any bright ideas, I'll be glad to hear about them, otherwise,
what you need to do is one of two things: i) CYA, or ii) BRB.

Phil Scott- Hide quoted text -

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