Hi Glen ,
It looks in some ways that inflation is a polite way to avoid fight or flight and that used to be the jurisdiction of governments. It is not clear how governments can fiddle much anymore as lowering the bank lending rate rarely results in lowering consumer debt rates. That has been one argument for governments taking over the banking sector, no doubt the other is that it would be like giving the fox the keys to the henhouse. I have argued often with people that believe gold is some kind of fixed commodity, it is not. The higher the price goes the more holes people dig looking for the stuff when the value declines people just stop digging. Gold suffers as much as any commodity; people just believe the stuff is rare sort of like the fallacious energy shortage. There is no such thing , the truth is that there is only a shortage of dirt cheap energy. I try and avoid these debates since most of the participants seem to have a belief system that entitles them to make outrageous claims that are beyond testing, much like religion. So far we have tried any number of economic models with typical failures every 1 or two generations. I suppose any system based on belief without question is bound to collapse when the priests and disciples fade away. Sometimes I suspect money is a loosely correlated concept to the degree of trust people have for each other. That global trust is falling apart as we speak and the economics will follow. There does not seem to be any way a single government can reestablish basic trust on a global scale. In the 13th century people were freaking out about counterfeiters. Dante reserved a special place in the Inferno for such miscreants because he felt strongly that they were undermining God's Order. Some of these counterfeiters were basically making less than pure gold coins by small margins. The question that was never answered was whether the States themselves were issuing less than full measure and simply looking for scapegoats. Back then anyone with a smattering of chemistry could be burned at the stake. Inflation is just a less obvious way of devaluing currency. I doubt it is a zero sum game since there are many examples of people just walking away from the table and starting new systems, the trick is to convince everyone that it is the only game in town. Vladimyr Ivan Burachynsky Ph.D.(Civil Eng.), M.Sc.(Mech.Eng.), M.Sc.(Biology) 120-1053 Beaverhill Blvd. Winnipeg, Manitoba CANADA R2J 3R2 (204) 2548321 Phone/Fax <mailto:vbur...@shaw.ca> vbur...@shaw.ca -----Original Message----- From: friam-boun...@redfish.com [mailto:friam-boun...@redfish.com] On Behalf Of ERIC P. CHARLES Sent: September 10, 2010 12:43 PM To: friam Subject: Re: [FRIAM] national debt and zero-sum games Vladimyr, Glen, Agreed! Even in the cases where there is not forfeit or fight, however, the situation is not as bad as it seems. First, the notion that this particular nation will even be "out of debt" seems unlikely, at least unlikely in the next 50 to 100 years. Second, one of the major reasons for the government to manage inflation is because inflation devalues debt. So, on top of the other concerns brought up, it is misleading to say that we are passing the debt onto our children because, 1) the nation will continuously float debt, which in some sense means that the current debt will never really be paid off, 2) by the time my children are paying off parts of the current debt, the effective value of the debt will be much less. The president of Penn State was shocked when a recent survey of entering freshmen showed that the vast majority expected to become millionaires. To me, the statistics seemed very realistic... with the added caveat that being a millionaire might not be very impressive at that point. Eric On Fri, Sep 10, 2010 01:05 PM, "Vladimyr Ivan Burachynsky" <vbur...@shaw.ca> wrote: Glen, I share your misgivings about the current discussions regarding money, Before the second world war there was an Austrian or Austro-Hungarian school of economics that had substantially different ideas than is currently in fashion. My understanding is that Brettton Woods ? agreement ,after the war, ended the old school and started the one we now think is "Normal" The name that sticks out is Von Mises. I have a copy somewhere but it was thicker than my own PhD thesis and never had the courage to crack it open. It is a little late in my life for such a dramatic shift of intellectual pursuit.. Reading Herodotus I am convinced children rarely pay off the debts of their forefathers and would rather emigrate or fight. Trying to extract ancient debts from the unwilling is a nasty affair that costs more than it returns. Solon's approach to declare bankruptcy for Athens is said to have saved the city and heralded in a new era of Prosperity. If money does not last forever then it seems debt is just as short lived. Maybe others have more details or ideas to add to the discussions. Debt crisis have been downplayed by historians I suspect because they did not fully understand the economics or principles. Vladimyr Ivan Burachynsky Ph.D.(Civil Eng.), M.Sc.(Mech.Eng.), M.Sc.(Biology) 120-1053 Beaverhill Blvd. Winnipeg, Manitoba CANADA R2J 3R2 (204) 2548321 Phone/Fax vbur...@shaw.ca -----Original Message----- From: friam-boun...@redfish.com [mailto:friam-boun...@redfish.com] On Behalf Of glen e. p. ropella Sent: September 10, 2010 11:42 AM To: The Friday Morning Applied Complexity Coffee Group Subject: [FRIAM] national debt and zero-sum games I keep hearing people claim that any debt the US builds/acquires will have to be paid (or defaulted on) by "our children and their children". This oversimplification has always _seemed_ fundamentally wrong to me ... more wrong than just being an oversimplification. It doesn't seem to me like the economy is a zero-sum game. Money isn't subject to any conservation laws that I"m aware of. Granted, there are economic drivers that are conserved; but money isn't one of them. So, what literature do I need to start reading that will help me a) understand what is and isn't conserved about debt and b) clarify this point to those who insist on making the oversimplified argument? I'm not convinced one way or the other; I just want to find a bit of clarity around this soundbite. In particular, it strikes me that on a personal scale (time and distance), money is mostly conserved. E.g. I pile up credit card debt or buy a house and that debt sticks with me. I either have to pay it off or default (or die). But is that true at all scales? I've spent some time looking at generic books and popular magazine articles on economics. But they lack the clarity I need (or perhaps I'm too thick to understand them). And the sources for Game Theory I've seen are too idealistic to get any real traction for an argument. Thanks. -- glen e. p. ropella, 971-222-9095, http://agent-based-modeling.com
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