Re: Why is local currency good or bad or neither?
> >People also often suffer from a confusion between income and money. > >They tend to think of the two as synonymous, that anything not received > >in money isn't income and therefore isn't taxable. > > Precisely. If we drop the distinction, we can for instance easily see > that > all sex is actually prostitution of one kind or another. > Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111 No, prostitution is sex in exchange for money or goods, when there is no emotional or relational benefit from it. If one obtains psychic income from sex, one has not really prostituted oneself. Fred Foldvary = [EMAIL PROTECTED]
Re: Why is local currency good or bad or neither?
--- Sampo Syreeni <[EMAIL PROTECTED]> wrote: > >So why not just use federal paper dollars for that? > > Because if you get caught, you'll pay for it. In case of local currency, > the tax authorities do not bother as easily because of the cost and the > trouble with drawing the line between mutual help and legally taxable > transactions. I don't see why this would be different between local currencies and national currencies. > >> From this perspective local currencies can also be a means to > >> circumvent labor market rigidities. > > > >Again, why not just use federal cash? > > Because it isn't always available if the relevant markets are rigid. Markets for what? It is the market for credit that is rigid, as I said earlier. > Local cash on the other hand can be created on demand, and even neglecting > that, is somewhat decoupled from the ordinary cash economy. What is really being created is credit. X is a carpenter. Y wants to fix a table. Y has no national cash. Y creates local dollars and uses them to pay the carpenter. The carpenter has pieces of paper representing credit. If Y had instead gone to banks to ask for a loan, they would declined. Fred Foldvary = [EMAIL PROTECTED]
Re: Why is local currency good or bad or neither?
--- "Burns, Erik" <[EMAIL PROTECTED]> wrote: > and also of "e-gold" (which is still around: > www.e-gold.com), all of which use tokens rather than dollars (which are > tokens too). Gold is not a token. Gold is a real commodity. Tokens are substances of little intrinsic value which can be exchanged for something of real value, like a ticket to a movie, or like fiat paper money. What we call "coins" today are really tokens rather than true coining of precious metal. > these always seemed to me to be ADDING a step to transactions > rather than making them easier. What step does it add to exchange in terms of gold ounces rather than dollars? It is a step to translate from dollars to gold, but if you reckon in terms of gold ounces, then the extra step is to translate to dollars. > and the argument that e-gold solves the fiat > money problem is, to me, false because you're stuck with gold's value > being determined by a market that's priced in ... dollars. The fiat problem is the arbitrary inflating of the amount of currency, which does not take place with gold. Gold's value is relative to everything else, not just dollars. Those who had their money as gold during the past couple of years are not crying. Fred Foldvary = [EMAIL PROTECTED]
Re: Why is local currency good or bad or neither?
On 2003-10-31, [EMAIL PROTECTED] uttered: >People also often suffer from a confusion between income and money. >They tend to think of the two as synonymous, that anything not received >in money isn't income and therefore isn't taxable. Precisely. If we drop the distinction, we can for instance easily see that all sex is actually prostitution of one kind or another. Not that I'd easily argue that in public... ;) -- Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
Re: Why is local currency good or bad or neither?
> On 2003-10-31, Fred Foldvary uttered: > > >> At least in some cases we can analyse local currencies as instances of > >> tax evasion. > > > >So why not just use federal paper dollars for that? > > Because if you get caught, you'll pay for it. In case of local currency, > the tax authorities do not bother as easily because of the cost and the > trouble with drawing the line between mutual help and legally taxable > transactions. (From the econ standpoint, there's no such line. If we were > to be perfectly logical about it, tending to your children is a service to > your spouse with a taxable value.) If I recall correctly, in the late 1970s or early 1980s, the IRS tried to tax home repairs as "income." The theory was, if you paid a plumber to fix your toilet, he would have to pay income tax -- so if you fixed your toilet yourself, why should the IRS lose? Therefore, if you fixed your toilet yourself, you should have to pay income tax based on the fair market value of the repair. Again if I recall correctly, President Reagan issued an executive order to stop this policy. (It was not legislated; it was just going to be a change to IRS regulations.) (I guess based on that standard, if you were to think about something, you would have to pay income tax based on the fair market value of consulting services!) > >What is more neighbourly is the local organization and the relationships > >it fosters. > > So why not just use federal paper dollars for that? > -- Folks, I think they people who set up these currencies are not aiming for economic efficiency in the way we tend to think about it. I think they are trying to make a political point; using something other than U.S. dollars gives them psychic utility and possibly social status within a certain group, independent of any transactional benefits. It's sort of like buying a Lexus instead of a Toyota -- it doesn't get you to your destination any faster, but you might feel better about it. --Robert
Re: Why is local currency good or bad or neither?
In a message dated 10/31/03 12:21:31 PM, [EMAIL PROTECTED] writes: >>So why not just use federal paper dollars for that? > >Because if you get caught, you'll pay for it. In case of local currency, >the tax authorities do not bother as easily because of the cost and the >trouble with drawing the line between mutual help and legally taxable >transactions. (From the econ standpoint, there's no such line. If we were >to be perfectly logical about it, tending to your children is a service >to >your spouse with a taxable value.) People also often suffer from a confusion between income and money. They tend to think of the two as synonymous, that anything not received in money isn't income and therefore isn't taxable.
Re: Why is local currency good or bad or neither?
this also reminds me of the internet currencies created during the dotcom boom (i.e. flooz & beenz) and also of "e-gold" (which is still around: www.e-gold.com), all of which use tokens rather than dollars (which are tokens too). these always seemed to me to be ADDING a step to transactions rather than making them easier. and the argument that e-gold solves the fiat money problem is, to me, false because you're stuck with gold's value being determined by a market that's priced in ... dollars. for some reason the gift certificate still seems to work as a money substitute, and has been ported to the online world with relative ease (i.e. amazon.com gift certificates) - perhaps because it's clear there is no secondary market in gift certificates (is there?) and so they really are a gift and not "just" money. etb
Re: Why is local currency good or bad or neither?
On 2003-10-31, Fred Foldvary uttered: >> At least in some cases we can analyse local currencies as instances of >> tax evasion. > >So why not just use federal paper dollars for that? Because if you get caught, you'll pay for it. In case of local currency, the tax authorities do not bother as easily because of the cost and the trouble with drawing the line between mutual help and legally taxable transactions. (From the econ standpoint, there's no such line. If we were to be perfectly logical about it, tending to your children is a service to your spouse with a taxable value.) >> From this perspective local currencies can also be a means to >> circumvent labor market rigidities. > >Again, why not just use federal cash? Because it isn't always available if the relevant markets are rigid. Local cash on the other hand can be created on demand, and even neglecting that, is somewhat decoupled from the ordinary cash economy. >What is more neighbourly is the local organization and the relationships >it fosters. So why not just use federal paper dollars for that? -- Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
Re: financial leverage
--- Tyl <[EMAIL PROTECTED]> wrote: > I don't see how bond > would be a loser if interest rates goes higher since I > will locking in a bond that yields a higher coupon rate > than the borrowed rate. If you can borrow money at a lower interest rate than what the bonds pay, and you hold the bonds until maturity, then yes, you will have a profit if the inflation rate has not risen to offset the after-tax gain. If the interest you pay on your borrowed funds is tax-deductible but the interest you receive is not taxable, so much the better. Fred Foldvary = [EMAIL PROTECTED]
Re: Why is local currency good or bad or neither?
--- Sampo Syreeni <[EMAIL PROTECTED]> wrote: > On 2003-10-30, Fred Foldvary uttered: > >So basically this is a response to credit constraints. > > Another reason people may be inclined to use local currencies is that the > narrow circulation and informal accounting usually associated with them > make it difficult to collect taxes on the associated transactions. At > least in some cases we can analyse local currencies as instances of tax > evasion. So why not just use federal paper dollars for that? > Another common reason why local currencies are used is unemployment. When > people are unable to earn a living on the open market, they'll have to > rely on friends and neighbours for help, which easily leads to reciprocal > trade in services. That can easily spread and give rise to a new, local > currency when bilateral trade no longer suffices. From this perspective > local currencies can also be a means to circumvent labor market > rigidities. Again, why not just use federal cash? > What I can't fathom is > why these people engage in indirect trade, use what is essentially money > and even compete, but still think that it's somehow more "neighbourly" or > "human" to do all this in an alternative currency. What is more neighbourly is the local organization and the relationships it fosters. The use of LETS or local currencies is incidental to this. Fred Foldvary = [EMAIL PROTECTED]
Re: Why is local currency good or bad or neither?
On 2003-10-30, Fred Foldvary uttered: >So basically this is a response to credit constraints. Another reason people may be inclined to use local currencies is that the narrow circulation and informal accounting usually associated with them make it difficult to collect taxes on the associated transactions. At least in some cases we can analyse local currencies as instances of tax evasion. Another common reason why local currencies are used is unemployment. When people are unable to earn a living on the open market, they'll have to rely on friends and neighbours for help, which easily leads to reciprocal trade in services. That can easily spread and give rise to a new, local currency when bilateral trade no longer suffices. From this perspective local currencies can also be a means to circumvent labor market rigidities. I've heard of a couple of examples here in Finland where the system has basically started out as a mutual help collective, then undergone expansion and the usual problem with a commons, and finally adopted some unit of accounting. A list of currently operating LETS's (Local Community Exchange Group) in Finland lives at http://hammer.prohosting.com/~msurakka/suomi.htm . It seems that a dislike for hard currency is a big part of why they exist. What I can't fathom is why these people engage in indirect trade, use what is essentially money and even compete, but still think that it's somehow more "neighbourly" or "human" to do all this in an alternative currency. The funniest part is that in many cases local currencies are started by different kinds of socialist collectives who wish to fix the hourly wage or simply do not like hard currency. It's really quite funny to see a bunch of sworn communists denounce money, only to reinvent it in another form a couple of months later. -- Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
Re: financial leverage
> Short-term I would lose about 1-2% percent on the > borrowed fund but in the long-term I would gain 1-2% > when I lock in a long-term bond that has a coupon rate > that is above the borrowed rate. I don't see how bond > would be a loser if interest rates goes higher since I > will locking in a bond that yield a higher coupon rate > then the borrowed rate. If you plan to resell your bonds before maturity, the rising rates will cause the resell value to go down accordingly. If you plan to hold the bonds to maturity, the interest you receive will probably be a net loss in constant (inflation-adjusted) dollars, because interest rates do not rise for no reason. If rates on long term bonds rise, it will probably be in large part because of rising inflation. With our government increasing the money supply to stimulate the economy and the value of the dollar vis a vis other currencies in a sustained downward trend, both higher inflation and higher interest rates are likely in the future. ~Alypius
