> >Once people start using shares as a means to trade other stuff, we have a > >fiat economy alongside the e-gold system. > > Robert there is just one mistake you are making dude ... > > it is true that things like stocks, bank accounts, "1mdc-like" things > (derivatives of money), and any and all financial instruments EXPAND > THE MONEY SUPPLY. Very few people know this, but it's true.
Yes, this is true , especially in the electronic age. In fact , with more and more assets (like houses, stocks,..) coming online as liquidity, we will soon be in a situation where all the value in a country is available as MONEY SUPPLY. In old days it was very difficult to pay with your house or with your stocks without selling them first. With the modern financial instruments and the internet, it becomes very easy. Already in many countries a bank account is linked up with a brokerage account and you have access to a line of credit with your stocks (and perhaps home) as collateral. When such a person pays you he in fact borrows against his assets, which means dollars are created at that moment, and these dollars are destroyed again when the person pays back later on. > However, Roebert, this has utterly nothing to do with "fiat money". > You are just using the wrong term. 'Paper' money would be more accurate, but we are fast moving towards 'electronic' money > But YES for sure, things like 1mdcGrams, every company that exists > that works with e-gold (TGC would be included in this, same as all > the rest), each market maker's existence, people who write private > notes and so on in e-gold, PVCSE, DBourse, etc - Robert's right that > they do expand the money supply, they multiply it !!!! Everywhere something valuable is created, also money is created, because the valuable thing can be used to pay. If you build a home, that home becomes money and adds to the money supply. > This is not necessarily a bad thing, it is organic multiplication of > a money supply. It is very good because the new liquidity keeps the wheels of the economy well 'greased' A huge advantage over just decreeing one commodity as the 'only' money > The practical upshoot is when you say "how many say USD are there?" > there is, simply, no clear answer. I only recently found out that > is what "M1, M2, M3 .. " mean. They are just successively broader > measures of money. M1 is "just USD bills" interesting, but largely > meaningless, as almost all "money" in the US of course is as checking > accounts, visa cards, instant transfers etc. M2 i believe is like > bills +_ checking accounts (still an almost useless measure). M3 > includes literally the value of MSFT shares and all other shares, I > think, and other "solid" credit items. And so on. (There simply IS > NO clear factual answer to "how many USD are there" as there's > various ways to measure it.) M1 is the paper bills and coins. M2 is M1 + time deposits , bank accounts, etc... up to a certain amount M3 is M2 + very big (institutional) accounts over a certain amount The value of all shares , etc.. is NOT included in any of the money measures. Every week the variations in each of the money supply numbers is published. You can see their historical changes here: http://www.federalreserve.gov/releases/h6/hist/h6hist10.txt Many people do not understand how dollars are created (and sometimes destroyed again) Most people think that the governments just print money when they need it and use it to finance their usually stupid plans. That's not how it goes. If the government needs money it has to borrow just like everybody else. Otherwise there would be no government debt anywhere in the world, logically.. New money is created when somebody goes to the bank and takes out a loan. Just a simple example. Person 1 has $1000 in cash. Person 2 and 3 have no money. So, the money supply is $1000. Person1 deposits his $1000 in the bank. Now there is $1000 in his account. The total money supply is now $2000: person 1 has $1000 in his bank account, and the bank has $1000 in bills Both could use their $1000 to pay for something. Person 2 goes to the bank for a loan of $1000. The bank gives him the loan because this person owns a home and is creditworthy. Person 2 goes to person 3 and buys a car with the money. Person 3 also deposits this $1000 in the bank. Now we have two persons with $1000 in their bank account. The money supply has grown to $3000: 2 persons have $1000 in their account and the bank has $1000 in bills (which they could loan out again) $1000 of new money was created when person 2 took out the loan for his car. Now person 2 needs to make money to pay back his debt in the bank. He goes to clean toilets in the home of person 1 and 3 and earns $500 from each of them. They pay him from their bank account. Person 2 uses the money to pay back his loan. Now we have two persons with $500 left in their account, and the bank has still $1000 in bills. The money supply has just dropped to $2000 because person 2 has payed back his loan. Person 1 and 3 could go to the bank and ask their $500 in bills, in that case the money supply drops to $1000, just like it was at the start of our game. This is the basic principle how dollars are created and dissapear again. So it is not the central bank that creates more dollars (all they can do is set their interest rates), it are the small banks in your street that create new dollars when somebody comes for a loan. If you go have a look at the money supply historical data on the link I gave , you will see that for the last 2 months money supply (M3) is actually declining. That means more people are paying back their debts than new loans being taken out. The new money being created when somebody takes a loan is not a problem if the person is creditworthy. But, that's of course the responsibility of the bank. If they make too much bad loans they end up eating the losses for it. The new money that was created is also not necessarily detrimental to the value of the dollars that were already in circulation. In fact that depends on what the new money is used for. If the person invests it in something valuable or productive, it actually increases the amount of value in this mini economy. If the person consumes it on beer and cigarettes, then no new value is created but the extra money remains (then it is inflationary..) > > I will now return to expanding the world's supply of goods. If it are valuable goods you are also expanding the supply of 'money' Danny --- You are currently subscribed to e-gold-list as: [EMAIL PROTECTED] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
