How Does Population Affect the Value of Land and Currency?

[BilPrestonEsq]

I also could have titled this thread "Argument for Fixed Money Supply". First of all the term 'value' will be defined as: "relative worth, merit, or importance". Also fixed: "not subject to change" This argument is based on two truths:

1. Population dictates the value of land. The value of land will increase according to an increase in population. There is a fixed suppy of land available on Earth. Increase in demand through an increase in population relative to fixed supply of land will increase land values.

2. A fixed money supply in relation to a growing population will lead to a growing demand for each unit of currency. This growing demand for each unit of currency in relation to a fixed supply will increase the value of each unit of currency. Population dictates the value of currency if money supply is fixed.

In a fixed money supply economy, population dictates the value of both land and currency. A rise in population= a rise in value of both land and currency based on supply and demand.

Hmmm...

 

[brainstorm]

Land use and value gets stratified in so many ways. Generally, you're right that land gets relatively scarcer as population increases but there are so many other factors. Increasing population density can, for example, stimulate cultural adjustments that multiply utility of space per unit ground area. Multistory building is just one example. Another example might be infrastructural changes that allow more people to live and work comfortably within a smaller area.

Also, as uninhabited land becomes scarcer it becomes more valuable. This could cause large amounts of money to be invested in acquiring large blocks of uninhabited land, which could help depreciate land in densely populated areas to make dwellings more affordable. The people in the denser areas could then visit the large ecological land preserves as recreation, which could contribute to their ability to live in denser urban situations.

 

[BilPrestonEsq]

All those things may be true. Consider the alternative. In fractional reserve banking the money supply is consistently growing. That means that with population growth, land is also rising except that the currency is becoming less valuable making land twice as expensive in relation. To a consumer in a fixed money supply economy land prices remain fairly stable. Meaning that throughout generations and generations it remains equal affordable.The value of land grows with the unit of currency. This is really about the relation between population, land and CURRENCY. If we had adopted this monetary policy instead of fractional reserve banking we would not be in the same predicament we are in right now. It is only going to get worse. If there was a fixed money supply there would be no boom, no bust, no housing bubble, no rising unemployement, no rising healthcare costs. Much less inefficiencies. The entire world would be better off in everyway. Not only would the whole world be better off, but we would not be facing an impending economic collapse. I am suprised there are not more replies.

 

[brainstorm]

That means that with population growth, land is also rising except that the currency is becoming less valuable making land twice as expensive in relation. To a consumer in a fixed money supply economy land prices remain fairly stable. Meaning that throughout generations and generations it remains equal affordable.

Land prices do not necessarily remain stable just because the money-supply is stable. E.g. if a lucrative factory is built in a particular area, the money the factory brings in will make it valuable along with the value of surrounding land if the employees invest their profits and pay in buying land and adding to its value. Close the factory due to unprofitability and it along with surrounding land prices will decrease as the area becomes less attractive to own and develop. There is plenty of affordable land available currently, but people don't want to buy it because it is unlikely to increase in value so they can sell it for a profit.

The value of land grows with the unit of currency. This is really about the relation between population, land and CURRENCY. If we had adopted this monetary policy instead of fractional reserve banking we would not be in the same predicament we are in right now. It is only going to get worse. If there was a fixed money supply there would be no boom, no bust, no housing bubble, no rising unemployement, no rising healthcare costs. Much less inefficiencies. The entire world would be better off in everyway. Not only would the whole world be better off, but we would not be facing an impending economic collapse. I am suprised there are not more replies.

Currency value is just one small part of economics. What about the ratio between land prices and the cost of building supplies? What about between finished buildings and building supplies? What about between food and healthcare? What about between air-travel and surface transit? What about between corporate salaries and service-sector salaries? All relations between other prices/costs are influential, not just between currency and a certain basket of goods or between currency and real-estate or currency and health-care or currency and other currencies.

 

[BilPrestonEsq]

You are missing the point of this completely. I realize there are other factors. I am comparing a fixed money supply to fractional reserve. Fractional reserve banking creates money, deluting the money supply ON TOP of all those factors you pointed out. The same rules apply. Except with a fixed money supply the VALUE of land AND currency grows TOGETHER. With fractional reserve you have increased land values with population growth AND an increased money supply. Inevitibly the price of land will be IMPOSSIBLE to afford. Not to mention EVERYTHING else. That is why fractional reserve is IMPOSSIBLE to sustain just as a perpetual motion machine is IMPOSSIBLE to sustain.

 

[brainstorm]

You are missing the point of this completely. I realize there are other factors. I am comparing a fixed money supply to fractional reserve. Fractional reserve banking creates money, deluting the money supply ON TOP of all those factors you pointed out. The same rules apply. Except with a fixed money supply the VALUE of land AND currency grows TOGETHER. With fractional reserve you have increased land values with population growth AND an increased money supply. Inevitibly the price of land will be IMPOSSIBLE to afford. Not to mention EVERYTHING else. That is why fractional reserve is IMPOSSIBLE to sustain just as a perpetual motion machine is IMPOSSIBLE to sustain.

You can't consider the effect of reserve banking or other factors that influence the availability of money (supply) without considering how other goods and services mitigate relative spending and saving. You could be lending out money like crazy and running big spending deficits in government as well as businesses and private budgets but if people buy and sell certain goods/services for very high profit margins, those goods and services will act as a money-sink that disciplines the money supply within lower-profit exchanges. E.g. let's say antiques get very expensive and a great deal of money is changing hands in the antique trade. This could cause people to devote large proportions of their budgets to antique trading (or some other commodities), and this would put deflationary pressure on other markets/commodities.

Likewise, banks could be keeping 100% of deposits as reserves and people could privately invest their savings in high-growth sectors that could generate a whole class of big-spenders whose consumption could cause inflation even though the money supply was relatively limited. You need to do some micro-level analysis of what causes a given price to rise, what the effects of that price rising are, and how this effect "trickles" down and around to other enterprises, revenues, incomes, and prices. Ultimately a free market is not centrally controlled by one or more banks but by the interplay of various markets and production-systems/ecologies.

 

[BilPrestonEsq]

You can't consider the effect of reserve banking or other factors that influence the availability of money (supply) without considering how other goods and services mitigate relative spending and saving. You could be lending out money like crazy and running big spending deficits in government as well as businesses and private budgets but if people buy and sell certain goods/services for very high profit margins, those goods and services will act as a money-sink that disciplines the money supply within lower-profit exchanges. E.g. let's say antiques get very expensive and a great deal of money is changing hands in the antique trade. This could cause people to devote large proportions of their budgets to antique trading (or some other commodities), and this would put deflationary pressure on other markets/commodities.

Likewise, banks could be keeping 100% of deposits as reserves and people could privately invest their savings in high-growth sectors that could generate a whole class of big-spenders whose consumption could cause inflation even though the money supply was relatively limited. You need to do some micro-level analysis of what causes a given price to rise, what the effects of that price rising are, and how this effect "trickles" down and around to other enterprises, revenues, incomes, and prices. Ultimately a free market is not centrally controlled by one or more banks but by the interplay of various markets and production-systems/ecologies.

So are you for a fractional reserve system or a fixed money supply? That is the question.

You can't consider the effect of reserve banking or other factors that influence the availability of money (supply) without considering how other goods and services mitigate relative spending and saving

I have considered the effects of the banking system alone and so have economist over decades. That is the point of the thread. I am comparing our current system to a fixed money supply. Fractional reserve is impossible to sustain. IMPOSSIBLE. So regardless of anything that could happen in business as a result of a fixed money supply, the question is which one is better? ...That question is ridiculous... but so are the Keynesian economist ideals that have put us on the brink of collapse and also the ideals that most of the world actually shares! Anyways, after that question is decided then I'll be more than happy to work out the details. And talk about possible negative outcomes, that could then be compensated for through taxation or laws or whatever. I am all about the details, but before you start picking out the curtains, maybe we should design the foundation.

 

[talk2glenn]

So are you for a fractional reserve system or a fixed money supply? That is the question.

This is a false choice - fractional reserve banking and a fixed money supply are not mutually exclusive. You continue to have a serious misunderstanding of elementary economic principle in these threads, and to disregard attempts to correct that misunderstanding.

Given that, there's little point in continuing any discussions with you on this subject.

Fractional reserve is impossible to sustain. IMPOSSIBLE.

Why? By what standard? Every good and service provided on a market is provided on a fractional reserve basis. Is currency special, or are all markets "impossible to sustain", and by what accepted, conventional theory of economics is this true?

Look at the market for gasoline. The demand for gasoline is a function of the number of cars, the size of their tanks, and their mileage. This would be pretty simple to regress and estimate, and if we assume everybody starts from Full, you could state absolutely how much the demand for gasoline in the United States is per mile driven.

Now if you plotted this against the supply of gasoline per mile driven, you'd discover a (maybe shocking?) fact - the supply of gasoline in every tank at every service station in the nation at any given moment is a fraction of the volume necessary to meet hypothetical peak demand. That is, if every car simultaneously decided to fill up its tanks, we would run out of gas.

Does this mean that the gasoline market is "unsustainable"? How about the sock, milk, corn, water, or TV markets - in each case, the situation is the same. The reason this is OK is because the demand for any product has an impulse. The impulse for gasoline consumption is, approximately, when you have an empty tank. Not everybody in the country has an empty tank at the same time - some people have half a tank, some 3/4, etcetera. Their demand for gasoline at the moment is zero, but their pent up demand is half a tank, or 1/4 of a tank, etcetera.

Currency is no different. In an average month, my expenses are approximately $4,000 after income taxes. That is, my monthly demand for currency is $4,000. Does that mean on Monday, January 31st I need $4,000 cash? Of course not - today I only bought lunch and a cup of coffee, and spent maybe $20. So my demand for currency on Monday the 31st was $20 cash, with ~$3,980 of pent up or already met demand. So my bank only needs to keep $20 on hand to meet my demand at that moment, and so on throughout the system, such that the volume of currency in all the vaults in the country at any given day can be less than average daily demand, as long as the U factor (the error term) averages out to zero in the long run.

Now, obviously it is impossible to accurately graph the demand function for currency for an economy of any realistic scale. However, this curve can be estimated using regression models, to reasonable degrees of accuracy. These models are used by banks to successfully project their currency needs in the same way that the gas station operator successfully projects how much gasoline he'll need in his tanks. Too much gas, and you've paid storage and capital costs that could have been deferred or eliminated; too little and you weren't able to meet demand, losing sales or forcing you to take emergency loans from somebody else (both costly propositions).

I understand the myth of fractional reserve banking introducing some kind of systemic risk is pervasive, but this does not make it true. The myth that heavier objects accelerate faster due to gravity than lighter ones is also pervasive, and also untrue. There is no systemic risk. In the event that the demand for currency exceeded projections and/or stocks, and banks were unable to meet it, currency values would rise relative to, say, bonds, until eventually people would be either unable or unwilling to consume additional units of currency. This is the same mechanism that makes sure there's enough milk on store shelves to go around without spoilage, and it works remarkably well such that aggregate surpluses and shortages are virtually unheard of in market economies over any meaningful term - this is a problem unique to planned economies.

Currency is no different; there has never been a market-induced currency crisis in countries with free floating exchange rates (defined as a radical change in currency values over short terms). These crises only happen when countries are trying to maintain a fixed or target exchange rate, and become unable to do so against market forces. When the state capitulates, the pent up change in value rapidly materializes as the currency moves quickly towards market equilibrium. See Mexico, Argentina, Thailand, and Russia in the '90s. Central banks in the States and elsewhere allow their currency values to float with market tides, acting instead to smooth out or stabilize the swings in either currency values or the broader macroeconomy, instead of trying to maintain a fixed target rate environment for precisely this reason.

Finally, it does not follow that a fixed supply of currency would be preferable to a liquid supply. If the supply were fixed, as you rightly point out, a rising population would increase its value. So would a growing economy. This would necessitate a higher velocity of money, which would increase the demand for financial infrastructure to facilitate the rapid movement of money from where it wasn't needed to places it was needed. If you believe that this kind of financial environment is more risky than one with less demand for the movement of currency between parties, then a fixed currency regime is precisely the opposite direction you'd want to move in. The alternative is insufficient currency to complete all demanded transactions in the economy, which stalls growth (if the transactions simply don't happen) and/or incetivizes a movement away from the currency as the basis of trade (if the parties find another means of making the trade) - a profit maximizing option for the individuals involved at the moment but something much less efficient in aggregate than a healthy and reliable currency exchange system.

 

[WhoWee]

The flaw in your system is there is no leverage. Only the current land owner will be able to purchase land, given the ever-increasing cost. If land doubles in value every 10 years - you would need to own twice as much land as you're trying to purchase to meet equity requirements.

 

[brainstorm]

Now if you plotted this against the supply of gasoline per mile driven, you'd discover a (maybe shocking?) fact - the supply of gasoline in every tank at every service station in the nation at any given moment is a fraction of the volume necessary to meet hypothetical peak demand. That is, if every car simultaneously decided to fill up its tanks, we would run out of gas.

Does this mean that the gasoline market is "unsustainable"? How about the sock, milk, corn, water, or TV markets - in each case, the situation is the same. The reason this is OK is because the demand for any product has an impulse. The impulse for gasoline consumption is, approximately, when you have an empty tank. Not everybody in the country has an empty tank at the same time - some people have half a tank, some 3/4, etcetera. Their demand for gasoline at the moment is zero, but their pent up demand is half a tank, or 1/4 of a tank, etcetera.

This is an interesting analogy, but the amount of energy-per-gallon of gasoline doesn't change according to the rate of fuel getting injected into the engine. Well, fuel efficiency does go down when you go heavier on the gas pedal, so maybe that analogy also works for inflation after all. Regardless, he is trying to make the point that fractional reserve banking allows more money to be lent out and as this money circulates through various supply-chains, it inflates prices and thus loses value.

I agree with his general assessment that increased circulation of money is related to inflation insofar as sellers will tend to hold out for a higher price if they believe a buyer is likely to pay that price, whereas if they expect no sale they are more likely to reduce the price to induce interest. Where I disagree is I don't think that requiring high reserves would stop investment-driven spending that causes money to circulate and ultimately inflate. The only difference would be that spending driven by direct-investment could produce inflation that would not be reflected in interest rates on savings deposits. So inflation could theoretically go quite high but if bank reserves wouldn't be generating interest in the inflationary economy, savings deposits wouldn't grow with inflation. So in order to guarantee that savings deposits don't lose value with inflation, they have to be lent out at interest rates that reflect the current rate of inflation, however assessed.

 

[BilPrestonEsq]

This is a false choice - fractional reserve banking and a fixed money supply are not mutually exclusive. You continue to have a serious misunderstanding of elementary economic principle in these threads, and to disregard attempts to correct that misunderstanding.

Given that, there's little point in continuing any discussions with you on this subjec

So there is demand for currency, and that is why we must create more money? Is that what your saying?

Finally, it does not follow that a fixed supply of currency would be preferable to a liquid supply. If the supply were fixed, as you rightly point out, a rising population would increase its value. So would a growing economy. This would necessitate a higher velocity of money, which would increase the demand for financial infrastructure to facilitate the rapid movement of money from where it wasn't needed to places it was needed. If you believe that this kind of financial environment is more risky than one with less demand for the movement of currency between parties, then a fixed currency regime is precisely the opposite direction you'd want to move in. The alternative is insufficient currency to complete all demanded transactions in the economy, which stalls growth (if the transactions simply don't happen) and/or incetivizes a movement away from the currency as the basis of trade (if the parties find another means of making the trade) - a profit maximizing option for the individuals involved at the moment but something much less efficient in aggregate than a healthy and reliable currency exchange system.

My bold

It sounds like it. So why not print more small denominations of cash? And take the larger deomination out of circulation? That way there is more cash, but not an increase in the total supply of money. I don't follow you. The idea of printing money to fill a demand for it, is a joke. Why would you print more money? Each unit of currency would become more valuable if there was a higher demand. Printing more money makes money less valuable. How is that sustainable? Explain it, I am listening. You made no comment on how land would rise to a level that was inaffordable if fractional reserve is used instead of a fixed supply. You never commented on how a fixed money supply in relation to a fixed land supply creates a situation where the demand for currency rises with the demand for land. That is a really important point you left out. Actually all you descibed was the demand for currency. And then you make the point that you don't need all your money all the time so it is good if it is in the bank so that other people can get it out if they need it. That is your second point. And then there is a myth about fractional reserve banking. I haven't been reading any myths. You believe in a mainstream view of economics. These views have already failed. The Keynesian view is illogical and mathematically impossible to sustain. Do you believe that deficit spending is a good thing too? There is no systematic risk? So the 'business cycle' that fractional reserve creates is a good thing? How about bailouts? Housing bubbles? Rising debt? Rising costs do to inflation? Am I making all of those things up? Are they also a myth? You are being condescending towards me and your whole post is explaining the demand for currency and why we need to create more to supply the demand? The mainstream view you hold still fails to recognize the problems created by it. How about healthcare costs. The total healthcare cost of a population will rise with the rise in population. If the supply of money is rising with it then the value of money is dropping while the healthcare costs are rising. Again not sustainable. If you look at two graphs: one of total money supply 1900-20?? and purchasing power of a dollar 1900-20?? you will see that they coinside. Can you explain that? How about what happens if there was a bank run? You have added nothing of value to this thread.

 

[BilPrestonEsq]

The flaw in your system is there is no leverage. Only the current land owner will be able to purchase land, given the ever-increasing cost. If land doubles in value every 10 years - you would need to own twice as much land as you're trying to purchase to meet equity requirements.

If land values double than so does the value of currency. So no matter what the value of land is, currency will be valued the same. Let's say that there is a large expanse of land for sale. Say someone saves the money to pay for this land. Say they want to 'invest' in land.
So the money saved has had an effect on the value of currency in the market, the value has risen. It has caused prices to go down to encourage the spending of this saved money.
This someone buys the land from the seller. The price payed by the buyer for this land is based on the current demand for land but it is also based on the demand for money. If when the buyer purchased the land the demand was high that would mean the population had gone up enough to have such demand therefore the value of currency had gone up too . If this 'investor' holds onto his newly purchased land and the seller spends his newly acquired money than the value of money will go down and the price of the land will go down too. If the seller keeps his money then the demand for money will stay high. The price of land will stay the same. Until there is higher demand for land. A higher demand for land will mean there are more people that need land. If there are more people than the demand for money has also risen. The real estate investor makes no profit either way. There are no land speculators because there is no money in it. If you were to loan someone money for land over the time of the loan the value of money would rise. But so does the land. Or if there was no population change the value of money won't rise but neither will the land.
I think you get the picture.

 

[russ_watters]

I also could have titled this thread "Argument for Fixed Money Supply". First of all the term 'value' will be defined as: "relative worth, merit, or importance". Also fixed: "not subject to change" This argument is based on two truths:

1. Population dictates the value of land. The value of land will increase according to an increase in population. There is a fixed suppy of land available on Earth. Increase in demand through an increase in population relative to fixed supply of land will increase land values.

2. A fixed money supply in relation to a growing population will lead to a growing demand for each unit of currency. This growing demand for each unit of currency in relation to a fixed supply will increase the value of each unit of currency. Population dictates the value of currency if money supply is fixed.

In a fixed money supply economy, population dictates the value of both land and currency. A rise in population= a rise in value of both land and currency based on supply and demand.

View attachment 31775


Hmmm...

That's a statement of a premise, not an argument. You didn't say what implications it has for the economy or why you think that's a good thing.

 

[WhoWee]

If land values double than so does the value of currency. So no matter what the value of land is, currency will be valued the same. Let's say that there is a large expanse of land for sale. Say someone saves the money to pay for this land. Say they want to 'invest' in land.
So the money saved has had an effect on the value of currency in the market, the value has risen. It has caused prices to go down to encourage the spending of this saved money.
This someone buys the land from the seller. The price payed by the buyer for this land is based on the current demand for land but it is also based on the demand for money. If when the buyer purchased the land the demand was high that would mean the population had gone up enough to have such demand therefore the value of currency had gone up too . If this 'investor' holds onto his newly purchased land and the seller spends his newly acquired money than the value of money will go down and the price of the land will go down too. If the seller keeps his money then the demand for money will stay high. The price of land will stay the same. Until there is higher demand for land. A higher demand for land will mean there are more people that need land. If there are more people than the demand for money has also risen. The real estate investor makes no profit either way. There are no land speculators because there is no money in it. If you were to loan someone money for land over the time of the loan the value of money would rise. But so does the land. Or if there was no population change the value of money won't rise but neither will the land.
I think you get the picture.

I know you are desperate at this point (3rd or 4th thread?) to create a scenario where your model will work - but I still don't agree. Your rule change that there will be no land speculation is invalid when the OP states "Population dictates the value of land. The value of land will increase according to an increase in population. There is a fixed suppy of land available on Earth. Increase in demand through an increase in population relative to fixed supply of land will increase land values. "

If the home buyer purchases only what they can afford a cash purchase system may work (1 to 5 years of saved wages?). On the other hand, how will wages ever be sufficient to facilitate an ever-increasing purchase price - won't rents be increasing as well?

 

[brainstorm]

If land values double than so does the value of currency.

Please think about this statement. If the value of a 1 acre parcel of land doubles from $10,000 to $20,000, that means that the value of $10,000 went from 1 acre to 1/2 an acre. If the value of the same parcel of land went from $10,000 to $5,000, $10,000 would buy 2 acres instead of 1. Thus the value of the money increases because it becomes worth more land. That is deflation.

 

[BilPrestonEsq]

I know you are desperate at this point (3rd or 4th thread?) to create a scenario where your model will work - but I still don't agree. Your rule change that there will be no land speculation is invalid when the OP states "Population dictates the value of land. The value of land will increase according to an increase in population. There is a fixed suppy of land available on Earth. Increase in demand through an increase in population relative to fixed supply of land will increase land values. "

If the home buyer purchases only what they can afford a cash purchase system may work (1 to 5 years of saved wages?). On the other hand, how will wages ever be sufficient to facilitate an ever-increasing purchase price - won't rents be increasing as well?

Yes, land and rent values will go up. Just as they do now. Except the supply of money won't being going up. Demand for land will come with an increase in population, right? Demand for money will increase with population as well. Am I desperate for other people to understand this? Yea, it makes me crazy that the majority does not realize how our system now cannot sustain. How obvious it's faults are. So my question for you is can you create a scenario where the fractional reserve system would work? If you are so opposed to this theory. Then you should be able to understand how the current theory intends to deal with rising land values. Where will land prices be 100 years from now? What about inflation a hundred years from now? How about healthcare costs? Do the math. That is all I am asking.

 

[mheslep]

We have an entire thread here without a single reference. BP Esq, when you start a thread with a claim of "two truths", I recommend you back up the claim with referenced sources. The consequence of not doing that is a thread like this one, with hundreds of assertions and counter assertions.
https://www.physicsforums.com/showthread.php?t=414380

 

[BilPrestonEsq]

Please think about this statement. If the value of a 1 acre parcel of land doubles from $10,000 to $20,000, that means that the value of $10,000 went from 1 acre to 1/2 an acre. If the value of the same parcel of land went from $10,000 to $5,000, $10,000 would buy 2 acres instead of 1. Thus the value of the money increases because it becomes worth more land. That is deflation.

Exactly. Where you are getting confused is the term deflation. Deflation is the opposite of inflation. Deflation with a fixed money supply is a good thing. The money increases in value as the population demands more of it.
Now the mainstream like talk2glenn says this demand for cash can only be quenched by printing more or creating more through deficit spending, or creating more with a fractional reserve requirement. This is unnecessary because the value goes up with demand. So if more cash was needed for various transactions. More smaller denominations of cash would be printed and an equal amount of money in larger denominations would be taken out of circulation. Also once you meet this demand with 'new money' you create a sort of addiction to it. I will explain.
The reason that deflation is considered a bad thing in a fractional reserve system is because it will cause a recession. Just like in the eighties when the interest rates rose in an attempt to curb rising inflation. The higher the interest rate the lower the amount of credit is available to keep spending up. If no one is spending with credit then jobs will be lost. When jobs are lost there are even less people spending and so on...This leads to more defaults on mortgages. If mortgages default then banks have to be bailed out. And 'too big to fail' companies get bailed out so they won't lay off massive amounts of employees which obviously would add to the problem. So, just as the last bailout avoided a downward spiral much like the ones that came before it, it has also put more money into the money supply.
It is like having to pay off a credit card with another credit card. Also, unsustainable as the interest and debt will eventually make it impossible for you to pay it back and you will go bankrupt. That is how the fractional reserve system works. To show you many examples of this, you can read this page on recesesion in U.S. history on wikipedia below. http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States"

 

[BilPrestonEsq]

We have an entire thread here without a single reference. BP Esq, when you start a thread with a claim of "two truths", I recommend you back up the claim with referenced sources. The consequence of not doing that is a thread like this one, with hundreds of assertions and counter assertions.
https://www.physicsforums.com/showthread.php?t=414380

It is true. Land value will go up if population goes up. There is a fixed supply and a rising demand. That is a fact. Currency if it is fixed will go up in value if population goes up. There would be a fixed supply of currency and a rising demand. That is also fact.
Prove those two statements wrong.

A referenced source? The statements I made which I labelled truths are undeniable. If I claim "1+1=2", do I have to give a referenced source? The math is just as simple.

 

[brainstorm]

Exactly. Where you are getting confused is the term deflation. Deflation is the opposite of inflation. Deflation with a fixed money supply is a good thing. The money increases in value as the population demands more of it.

You seem to be fixated on making macro level claims that transcend the micro. Deflation is good for consumers/buyers. It is not as favorable for the supply-side, i.e. revenues and incomes. Technically, neither inflation nor deflation should matter as long as prices (i.e. everything that is purchased, including labor) are adjusting together. What happens, though, is that when inflation is occurring, revenues/incomes are going up with has a stimulating effect on people because they see their means as growing. When deflation is occurring, people resist adjusting their prices and wages downward because they have a sense of fixed currency value.

Now the mainstream like talk2glenn says this demand for cash can only be quenched by printing more or creating more through deficit spending, or creating more with a fractional reserve requirement.

When people feel like they can't live with less than a certain amount of income, they favor any means possible to get that income. No one quietly accepts total elimination of their budget, as far as I know. Some people can make due with less spending than others, though.

This is unnecessary because the value goes up with demand. So if more cash was needed for various transactions. More smaller denominations of cash would be printed and an equal amount of money in larger denominations would be taken out of circulation. Also once you meet this demand with 'new money' you create a sort of addiction to it. I will explain.
The reason that deflation is considered a bad thing in a fractional reserve system is because it will cause a recession. Just like in the eighties when the interest rates rose in an attempt to curb rising inflation. The higher the interest rate the lower the amount of credit is available to keep spending up. If no one is spending with credit then jobs will be lost. When jobs are lost there are even less people spending and so on...This leads to more defaults on mortgages. If mortgages default then banks have to be bailed out.

This is the assumption, but it is based on the premise that there's nothing anyone can do to compensate for lost income except seek new income. In other words, it assumes total dependency on money-spending for economic well-being. In reality, there are many forms of economic activity that can be undertaken without any money changing hands. To use an unrealistic extreme of this for illustration purposes, if no one needed any money for anything, there would be no reason to charge taxes or rent or any other fees for anything that didn't require labor. I.e. people would not have to manipulate each other into performing labor in exchange for land-rights. So, if you begin with such an unrealistic ideal situation and then start adding dependencies to it, you eventually arrive at the current economy. But theoretically it is possible to decrease those (inter)dependencies and make people less vulnerable to recession.

And 'too big to fail' companies get bailed out so they won't lay off massive amounts of employees which obviously would add to the problem. So, just as the last bailout avoided a downward spiral much like the ones that came before it, it has also put more money into the money supply.

It just so happens that corporate people seem to like dealing with budget cuts by laying off some employees and keeping others on at full salary or giving them raises. But they could just as easily cut wages across the board and avoid laying people off. By failing to cut the wages of employees that are not laid-off, they maintain higher costs which get passed on to consumers in their product pricing. Thus, when the laid-off people cut their spending to deal with their reduced budgets, their ex-company's revenues drop as a result. This effect could be reduced by reducing wages and costs and keeping people on part-time instead of laying them off completely.

 

[mheslep]

It is true. Land value will go up if population goes up. There is a fixed supply and a rising demand. That is a fact. Currency if it is fixed will go up in value if population goes up. There would be a fixed supply of currency and a rising demand. That is also fact.
Prove those two statements wrong.

That's not how it works at PF - you post unsourced claims of fact and demand others prove you wrong. Given that the price of residential housing is _still_ falling in the US even though population increased with the last census, you need to show proof, or relable your post as a your personal proposition. No more handwaiving, provide a source. Also while the supply of land may be fixed, the supply of dwellings on that same supply of land is not. Last chance.

 

[BilPrestonEsq]

.1.You seem to be fixated on making macro level claims that transcend the micro. Deflation is good for consumers/buyers. It is not as favorable for the supply-side, i.e. revenues and incomes. 2.Technically, neither inflation nor deflation should matter as long as prices (i.e. everything that is purchased, including labor) are adjusting together. What happens, though, is that when inflation is occurring, revenues/incomes are going up with has a stimulating effect on people because they see their means as growing. When deflation is occurring, people resist adjusting their prices and wages downward because they have a sense of fixed currency value.

1.If revenues are income. Then revenues-overhead=profit. In order to maintain the same profits both revenues and overhead must stay the same in relation to each other. If more money is introduced into the economy there will be a spike in incomes or revenues of businesses do to increased spending. This will also translate into higher overhead for the company. The profits end up as an average over the course of the 'business cycle'(which has been created by inflation and deflation).

2.It is true that prices of goods may go down due to market competition, this does compensate for the rise in inflation. This does not mean that inflation is ok because the rising prices have been compensated for. What you cannot compensate for is land prices.
You also cannot compensate for healthcare. You cannot outsource healthcare jobs to China to lower your overhead. You cannot put people on a conveyor belts and send them through the hospital like you could in the manufacturing of goods. Automated factories have decreased overhead costs of manufacturing enormously. So has outsourcing jobs to countries like China. It is not possible to compensate for inflation this way in the healthcare sector. It is also not possible to make land any less valuable as long as the population continues to grow. You have to think about the things that market competition can not make cheaper. Regardless of what the prices are, the growth in money supply will always lead to the devaluation of the currency. Always.

This is the assumption, but it is based on the premise that there's nothing anyone can do to compensate for lost income except seek new income. In other words, it assumes total dependency on money-spending for economic well-being. In reality, there are many forms of economic activity that can be undertaken without any money changing hands. To use an unrealistic extreme of this for illustration purposes, if no one needed any money for anything, there would be no reason to charge taxes or rent or any other fees for anything that didn't require labor. I.e. people would not have to manipulate each other into performing labor in exchange for land-rights. So, if you begin with such an unrealistic ideal situation and then start adding dependencies to it, you eventually arrive at the current economy. But theoretically it is possible to decrease those (inter)dependencies and make people less vulnerable to recession.

This is not an assumption at all. People in our system must seek new income. If you cut down on your own spending then you lower someone else's income. If you lower someone else's income they must cut spending and so on until banks start falling due to defaults. If they are allowed to fall it is game over for the dollar. The thing is it is only delaying that inevitable crash. In response to your scenario: Our economy is the result of design. It is not some kind of natural progression that led us here. Recession in our economy is man made.
It is from contraction of credit. Just as an economic boom is the expansion of credit.

It just so happens that corporate people seem to like dealing with budget cuts by laying off some employees and keeping others on at full salary or giving them raises. But they could just as easily cut wages across the board and avoid laying people off. By failing to cut the wages of employees that are not laid-off, they maintain higher costs which get passed on to consumers in their product pricing. Thus, when the laid-off people cut their spending to deal with their reduced budgets, their ex-company's revenues drop as a result. This effect could be reduced by reducing wages and costs and keeping people on part-time instead of laying them off completely.

Underemployement causes the same problems as unemployement. If I get a pay cut I have to cut down on my spending. This leads to the same downward spiral that unemployment creates. All that does is spread it out amongst everyone in the company. It will still lead to the same drop in business revenues for businesses that rely on consumer spending. This drop in revenues will cause that business to lay off workers or cut everyone's pay and so on...When you have an economy that is based on credit it must continue to be supported by this credit or a downward spiral will result.
What your not understanding is that from the very beginning of a fractional reserve system, when the first new money was created through loaning it started a growth of businesses. It also gave people money to spend on those businesses. From that point on the whole economy built a need for this credit.
So the survival of the first newly created businesses is dependant on the money that was created and loaned to the consumers. So when mainstream ecomomist say that a little inflation(created by the influx of new money) is good because it creates growth, the problem they are not recognizing is it relies on this new money to keep flowing. So why would anyone want this boom bust cycle? Well, in a recession prices are lower due to the increase in demand for cash. So if you are rich you can buy up say, real estate because you know that credit will again expand or else the system will crash. So when that credit is back spending will increase and the demand for cash is lower. This makes the price of real estate go back up. Then you sell your real estate and make the profit. So the rich get richer in this business cycle because they have the cash to take advantage of the lower prices. Now do you see?

 

[BilPrestonEsq]

That's not how it works at PF - you post unsourced claims of fact and demand others prove you wrong. Given that the price of residential housing is _still_ falling in the US even though population increased with the last census, you need to show proof, or relable your post as a your personal proposition. No more handwaiving, provide a source. Also while the supply of land may be fixed, the supply of dwellings on that same supply of land is not. Last chance.

http://www.investopedia.com/university/economics/economics3.asp"

How's that? Once again I have labelled my statements truths because they are true.
I can get more sources to expain the LAW of supply and demand if you'd like. And once again my thruths state: "a fixed supply in relation to a rising demand creates a rise in value proportionate to the rise in demand."

Value does not necessarily mean price as you pointed out
here:

Given that the price of residential housing is _still_ falling in the US even though population increased with the last census

 

[brainstorm]

1.If revenues are income. Then revenues-overhead=profit. In order to maintain the same profits both revenues and overhead must stay the same in relation to each other.

Capitalism isn't a economic system that starts by setting a profit level, then takes fixed overhead into account, and finally sets revenue targets to meet goals. That may be the strategy of individuals/firms, but a free-market works by each buyer attempting to get the lowest prices to reduce their overhead as much as possible. This is why there is competition on the supply side.

If more money is introduced into the economy there will be a spike in incomes or revenues of businesses do to increased spending. This will also translate into higher overhead for the company. The profits end up as an average over the course of the 'business cycle'(which has been created by inflation and deflation).

It really depends how the money is injected and how it is used. If it would be invested into firms with a competitive edge against price-leaders, the increased competition could put pressure on the price-leader to further innovate its supply-chains and produce more competitive prices. However, if the money-injections are used to insulate high wages against cuts, prevent, layoffs, etc. - i.e. prevent cost-cutting, then price-competition is averted and market evolution is postponed.

2.It is true that prices of goods may go down due to market competition, this does compensate for the rise in inflation.

Inflation = rising prices. Falling prices = deflation.

What you cannot compensate for is land prices.
You also cannot compensate for healthcare. You cannot outsource healthcare jobs to China to lower your overhead. You cannot put people on a conveyor belts and send them through the hospital like you could in the manufacturing of goods.

What do you mean by compensate? Land prices rise and fall like any other commodity, based on supply and demand. Values are relative to other values, not absolutely determined by the total supply of the commodity. BTW, you CAN outsource various health-care work in many ways. I wouldn't be surprised if online diagnoses via webcam become popular. Surely doctors can talk to you about your issues and examine your body via webcam - and consumers and insurance companies will probably be interested if there is money to be saved. People like to get ahead, especially when they're on a tight-budget financially.

Automated factories have decreased overhead costs of manufacturing enormously. So has outsourcing jobs to countries like China. It is not possible to compensate for inflation this way in the healthcare sector. It is also not possible to make land any less valuable as long as the population continues to grow.

Urban densification makes it possible to house more people on less land. This increases land prices in densified urban areas while rural land decreases in value because it becomes culturally less popular to live in rural or suburban sprawl. Gas prices and vehicle-costs help stimulate the choice to forego allotting relatively large chunks of one's income to vehicle-costs.

You have to think about the things that market competition can not make cheaper. Regardless of what the prices are, the growth in money supply will always lead to the devaluation of the currency. Always.

If people would save the income they gain from money supply growth and not spend it, how would it cause inflation? Prices go up when there is a bidding war over existing commodities. No bidding war = no inflation. Price competition = deflation. Therefore, conservation = price competition = deflation and waste/inefficiency/increasing-consumption = bidding war = inflation. Money supply changes may influence behavior and expectations of consumers, investors, business controllers, etc. but it is not determinant.

This is not an assumption at all. People in our system must seek new income. If you cut down on your own spending then you lower someone else's income. If you lower someone else's income they must cut spending and so on until banks start falling due to defaults. If they are allowed to fall it is game over for the dollar. The thing is it is only delaying that inevitable crash. In response to your scenario: Our economy is the result of design. It is not some kind of natural progression that led us here. Recession in our economy is man made.

Fixed cost fixation is the main psychological factor in inflation and resistance to deflation. It is as strong a factor, imo, as the belief that property prices never drop were in causing the housing boom. People can choose whether they want the economy to be driven by psychological beliefs or material scarcity and abundance. As long as they opt for psychological determinism, there is no point in discussing economics except as a marketing ploy to influence the psychology behind market behavior.

It is from contraction of credit. Just as an economic boom is the expansion of credit.

Credit is not the traditional cause of economic boom. Economic boom is supposed to occur when businesses and consumers are innovative and find ways of doing more with less (i.e. more efficient productivity). When they do this, abundance is the result, which depreciates prices and makes it possible for population growth because more people can live from the available resources.

Underemployement causes the same problems as unemployement. If I get a pay cut I have to cut down on my spending. This leads to the same downward spiral that unemployment creates.

Compare an economy where half the people are laid off and one where everyone takes a 50% pay cut. In the second situation, the overall deflation of wages results in uniform price-cuts which makes it possible to maintain consumption-levels, production-levels, and per-capita employment as long as productivity isn't lost due to decreased labor input. In the first situation, half the people end up doing all the work while the other half tax them or otherwise take money from them in order to afford prices that are inflated by the high wage levels of employed workers.

All that does is spread it out amongst everyone in the company. It will still lead to the same drop in business revenues for businesses that rely on consumer spending.

Unless prices are reduced, in which case everyone would go on consuming the same amount they did before their hours were cut, provided that productivity-levels are not impaired by reducing the total labor-hour input.

This drop in revenues will cause that business to lay off workers or cut everyone's pay and so on...When you have an economy that is based on credit it must continue to be supported by this credit or a downward spiral will result.

What makes you assume that revenues will catch up with costs once the economy adjusts?

What your not understanding is that from the very beginning of a fractional reserve system, when the first new money was created through loaning it started a growth of businesses. It also gave people money to spend on those businesses. From that point on the whole economy built a need for this credit.

Because inflation caused people's bills to exceed their income.

So if you are rich you can buy up say, real estate because you know that credit will again expand or else the system will crash. So when that credit is back spending will increase and the demand for cash is lower. This makes the price of real estate go back up. Then you sell your real estate and make the profit. So the rich get richer in this business cycle because they have the cash to take advantage of the lower prices. Now do you see?

You need to realize that investments are marketed, which involves generating reasons that investment purchases will appreciate for resale at a profit. In a depreciating market, people are wanting to buy in and then have their commodity appreciate - but it is just as possible that people will buy in and by doing so end up taking a share of depreciation as the commodity continues to depreciate. The person who ultimately wins out in a deflationary market is the person who buys the commodity to use it, because it doesn't matter to that person what the resale price is. They buy a house when they can afford it and live in it as long as they can. This is of course the same for cars, farm land, or any other commodity. When people want to USE what they buy, they buy it and use it for that purpose. The only thing that can interfere with them is when things like taxes and debt threaten to take their property away if they don't use it to generate profit. That can be a problem in a deflationary economy because revenues can be much harder to come by when people are trying to save for a future when prices are lower.

 

[BilPrestonEsq]

Inflation = rising prices. Falling prices = deflation.

Since it would take too long to correct all the mistakes you made in that last post, let's get this one straight...

When you add money to the money supply, which is measurable, you lower the demand and inflation is the result.http://en.wikipedia.org/wiki/Money_supply"

The price of various goods cannot accurately measure inflation!

Prices can be affected my market competition. If two companies that sell the same product are competing for the top spot in the market. Prices are lowered through competition.
If the price of that same product is measured 1 year apart it would be lower than the previous year. CPI, which measures inflation would not get an accurate reading of the increase in the money supply because the price has been affected my market competition not the increase in money supply. CPI measures price. Not money supply. Yet it is considered by the mainstream to be accurate? That is only making it easier to decieve people into believing that the 'economists' of the world are looking out for their best interest.

I am not sure why you and the majority continue to ignore this problem? I have clearly stated major obvious problems associated with fractional reserve banking and yet they are being ignored! This information seems to only fall on deaf ears. No one seems to want to face the reality of the situation. It is as if there is an asteroid visibly on a collision course with Earth and no one wants to believe it, even if it is clearly right in front of them.
I am not the only one that understands this. But man it is really really frustrating. It is not like it is difficult to understand, I am not claiming to be more intelligent than you, it is just that it seems almost unbelievable that something so simple has evaded you after all this time. Please read my previous post again and do some research on the statements I have made. If you are only on a mission to prove my statements wrong, you will learn nothing.

 

[WhoWee]

I am not sure why you and the majority continue to ignore this problem? I have clearly stated major obvious problems associated with fractional reserve banking and yet they are being ignored! This information seems to only fall on deaf ears. No one seems to want to face the reality of the situation. It is as if there is an asteroid visibly on a collision course with Earth and no one wants to believe it, even if it is clearly right in front of them.
I am not the only one that understands this. But man it is really really frustrating. It is not like it is difficult to understand, it is just that it seems almost unbelievable that something so simple has evaded you after all this time. Please read my previous post again and do some research on the statements I have made with an open mind. If you are only on a mission to prove my statements wrong, you will learn nothing.

You might want to read this?
http://books.google.com/books?id=0u...ge&q=fractional banking and liquidity&f=false

start with section 7.1

 

[BilPrestonEsq]

You might want to read this?
http://books.google.com/books?id=0u...ge&q=fractional banking and liquidity&f=false

start with section 7.1

I would but I can't even begin to understand it.

 

[brainstorm]

Since it would take too long to correct all the mistakes you made in that last post, let's get this one straight...

When you add money to the money supply, which is measurable, you lower the demand and inflation is the result.http://en.wikipedia.org/wiki/Money_supply"

The price of various goods cannot accurately measure inflation!

Prices can be affected my market competition. If two companies that sell the same product are competing for the top spot in the market. Prices are lowered through competition.
If the price of that same product is measured 1 year apart it would be lower than the previous year. CPI, which measures inflation would not get an accurate reading of the increase in the money supply because the price has been affected my market competition not the increase in money supply. CPI measures price. Not money supply. Yet it is considered by the mainstream to be accurate? That is only making it easier to decieve people into believing that the 'economists' of the world are looking out for their best interest.

I am not sure why you and the majority continue to ignore this problem? I have clearly stated major obvious problems associated with fractional reserve banking and yet they are being ignored! This information seems to only fall on deaf ears. No one seems to want to face the reality of the situation. It is as if there is an asteroid visibly on a collision course with Earth and no one wants to believe it, even if it is clearly right in front of them.
I am not the only one that understands this. But man it is really really frustrating. It is not like it is difficult to understand, I am not claiming to be more intelligent than you, it is just that it seems almost unbelievable that something so simple has evaded you after all this time. Please read my previous post again and do some research on the statements I have made. If you are only on a mission to prove my statements wrong, you will learn nothing.

I am not "on a mission to prove your statements wrong." I find it absurd that you circumvent the issue of empirical pricing to fixate on "the money supply" as a macro facet of economic analysis. Your analytical universe seems to run parallel to empirical economic activities without being able to connect with empirical specificities. Instead of obfuscating and shifting the focus back to "the money supply" and "fractional reserve banking," why don't you just address the micro-level specificities you are concerned about and look at the empirical specifics of how various factors can relate to each other. Once you have some sense of how specific commodities affect each other, you can look at how increased (or decreased) funds-availability would influence the actors in those markets. Until you do that, though, I'm afraid you're just dealing with theoretical abstractions at a level totally divorced from empiricism.

 

[WhoWee]

I would but I can't even begin to understand it.

Try section 7.3 at least

 

[BilPrestonEsq]

I am not "on a mission to prove your statements wrong." I find it absurd that you circumvent the issue of empirical pricing to fixate on "the money supply" as a macro facet of economic analysis. Your analytical universe seems to run parallel to empirical economic activities without being able to connect with empirical specificities. Instead of obfuscating and shifting the focus back to "the money supply" and "fractional reserve banking," why don't you just address the micro-level specificities you are concerned about and look at the empirical specifics of how various factors can relate to each other. Once you have some sense of how specific commodities affect each other, you can look at how increased (or decreased) funds-availability would influence the actors in those markets. Until you do that, though, I'm afraid you're just dealing with theoretical abstractions at a level totally divorced from empiricism.

I am focusing on the money supply because it dictates everything that happens on the micro level.

 

[brainstorm]

I am focusing on the money supply because it dictates everything that happens on the micro level.

Then you need to start talking about the specifics of the micro-level in a way that is open to critical empirical evaluation. You need to put forth falsifiable claims, not insistent yet ungrounded statements.

 

[BilPrestonEsq]

Then you need to start talking about the specifics of the micro-level in a way that is open to critical empirical evaluation. You need to put forth falsifiable claims, not insistent yet ungrounded statements.

Ungrounded? I have made statements you can easily look up I have posted links as well
Why is it that you are ignoring that? I clearly explained how increasing money supply through a fractional reserve affects the economy. I explained how the business cycle works. I explained how the first new money created businesses and the consumers to support these businesses through credit. You ignored that. I posted a link to a list of recessions to support my statements. Still nothing. To understand what happens on a micro level how about looking at macro trends. That shows the behavior of everyone! Why look at the behaviors of one when you can look at the behaviors of many? That gives more insight into what is happening on a micro level. It is like trying to read a book with your face mashed into the pages.

Credit is not the traditional cause of economic boom. Economic boom is supposed to occur when businesses and consumers are innovative and find ways of doing more with less (i.e. more efficient productivity). When they do this, abundance is the result, which depreciates prices and makes it possible for population growth because more people can live from the available resources

Wrong. I wish it happened like this but it simply doesn't. If you read up on recessions and economic booms you will realize this.

Compare an economy where half the people are laid off and one where everyone takes a 50% pay cut. In the second situation, the overall deflation of wages results in uniform price-cuts which makes it possible to maintain consumption-levels, production-levels, and per-capita employment as long as productivity isn't lost due to decreased labor input. In the first situation, half the people end up doing all the work while the other half tax them or otherwise take money from them in order to afford prices that are inflated by the high wage levels of employed workers.

Wrong This has the same effect on businesses that rely on consumer spending.
How will people be able to maintain their consumption levels if they have less money?
Instead of half the people spending nothing, you have all the people spending half as much.
The company that's laying off employees is still paying out half as much either way.

I posted this: "What your not understanding is that from the very beginning of a fractional reserve system, when the first new money was created through loaning it started a growth of businesses. It also gave people money to spend on those businesses. From that point on the whole economy built a need for this credit." This is your response:

Because inflation caused people's bills to exceed their income.

This is not what I was saying at all. Though it is still true. When the federal reserve took control over the money supply in the U.S. around 1913 they started to loan out money. This money became investment capital and consumer spending money. From that point on the two rely on each other and the credit that made it possible. What caused the great depression? Contracting this credit. What brought us out? WW2 spending. If you look at all the booms and busts in this country and what caused them you will see what I am talking about.

Fixed cost fixation is the main psychological factor in inflation and resistance to deflation. It is as strong a factor, imo, as the belief that property prices never drop were in causing the housing boom. People can choose whether they want the economy to be driven by psychological beliefs or material scarcity and abundance. As long as they opt for psychological determinism, there is no point in discussing economics except as a marketing ploy to influence the psychology behind market behavior.

I agree, that is why I agree with a fixed money supply. If you know that the demand for land will increase with population then you can assume that the price will go up too. But it cannot go up forever. At some point a home will be unaffordable. Construction will stop.
Real estate agents will be out of work. Not to mention one big driving force behind consumer spending, equity loans. This is enough for a significant amount of people to cut there spending. That is a significant amount of money that businesses that depend on consumer spending will lose. That will cause layoffs. Mortgages will default. Banks that have foreclosed homes sell them for cheaper than a homeowner. This drives prices down further.
More jobs are lost. What do we do to fix it? Lower interest rates as an incentive for home buyers. And then inject the economy with 700 billion dollars. Amongst other things, cash for clunkers and others. This creates even more inflation even more debt. Look at the business cycle. Look up recession, here http://en.wikipedia.org/wiki/Recession" If the money supply was fixed this would be impossible.

 

[WhoWee]

Ungrounded? I have made statements you can easily look up.

We need to provide support for our arguments - not expect others to google our posted statements.

 

[WhoWee]

We need to provide support for our arguments - not expect others to google our posted statements.

BTW - try to find something besides wiki.

 

[brainstorm]

To understand what happens on a micro level how about looking at macro trends. That shows the behavior of everyone! Why look at the behaviors of one when you can look at the behaviors of many? That gives more insight into what is happening on a micro level. It is like trying to read a book with your face mashed into the pages.

It's not a question of looking at some or many. It's a question of being accountable to the details of empirical specificities. Without willingness to dissect macro-level claims to their constituent phenomena, the only basis you have for grounding them is citation of other macro-claims. That lends itself to misinterpretation of both data and secondary source material.

Wrong. I wish it happened like this but it simply doesn't. If you read up on recessions and economic booms you will realize this.

In other words, you are saying that in the texts you read about recessions and economic booms, things happen a certain way and so you're not open to critically evaluating empirical logics of economic trade.

Wrong This has the same effect on businesses that rely on consumer spending. How will people be able to maintain their consumption levels if they have less money? Instead of half the people spending nothing, you have all the people spending half as much. The company that's laying off employees is still paying out half as much either way.

There are two sides to every balance sheet: debit and credit. Prices factor in on the credit side, as do sales. When prices are held constant and sales decrease, revenue decreases. Employee payments factor in on the debit side. When wages and other compensation are cut, costs decrease. The savings can be allocated in a number of ways. Lowering prices is one of those ways. When prices are lowered, it challenges others into compete, i.e. cut costs to avoid getting priced out of business. As prices generally decrease, the cost of living for consumers decreases (deflation) and people can afford to live with less income without going into debt.

I posted this: "What your not understanding is that from the very beginning of a fractional reserve system, when the first new money was created through loaning it started a growth of businesses. It also gave people money to spend on those businesses. From that point on the whole economy built a need for this credit." This is your response:

If you would just think things through on the micro-level, it would be a clear basis for understanding how multiple instances interact to generate emergent (macro) phenomena. Consider you make 10,000/year and someone offers you a good deal on a house you would typically not consider affording. Now consider someone offers you a loan but the payments push your budget and require you to seek more income. Now, let's say you can't pass up the temptation to invest in the bigger house so you take the loan. Now you are dependent on seeking more income to pay your mortgage because your current income has become insufficient. Now consider that the seller of the big expensive house you bought sees business potential in selling such houses to people like you because the banks see them as a reasonable credit risk. They will keep building big houses and keeping the price high knowing that people like you will take out a loan thinking that the product is a bargain at the asking price. When many people do this, it becomes normal to have a house that costs you a 30+ year mortgage and it becomes normal for the people selling the houses to be getting revenue from the banks at levels that require a 30+ year mortgage to pay off. This is not the fault of the reserve-requirement. It is the fault of the buyers' and sellers' behavior. Yes, if the banks wouldn't lend the money, the buyers and sellers wouldn't be able to do their thing, but they have just as much power to resist doing business that way without the banks cutting them off.

This is not what I was saying at all. Though it is still true. When the federal reserve took control over the money supply in the U.S. around 1913 they started to loan out money. This money became investment capital and consumer spending money. From that point on the two rely on each other and the credit that made it possible. What caused the great depression? Contracting this credit. What brought us out? WW2 spending. If you look at all the booms and busts in this country and what caused them you will see what I am talking about.

And maybe this time we will succeed in reducing spending and credit-dependency before nazis start taking hostages again. (note: I don't think such a thing would happen again - I believe it's a shadow-play used to induce fear-driven support for fiscal stimulus). Of course, if it would happen again there would be another WWII and the question would be whether once again fiscal stimulus would grow in the aftermath or whether people would begin immediately again with promoting sustainable economics.

I agree, that is why I agree with a fixed money supply. If you know that the demand for land will increase with population then you can assume that the price will go up too. But it cannot go up forever. At some point a home will be unaffordable. Construction will stop.
Real estate agents will be out of work. Not to mention one big driving force behind consumer spending, equity loans. This is enough for a significant amount of people to cut there spending. That is a significant amount of money that businesses that depend on consumer spending will lose. That will cause layoffs. Mortgages will default. Banks that have foreclosed homes sell them for cheaper than a homeowner. This drives prices down further.
More jobs are lost. What do we do to fix it? Lower interest rates as an incentive for home buyers. And then inject the economy with 700 billion dollars. Amongst other things, cash for clunkers and others. This creates even more inflation even more debt. Look at the business cycle. Look up recession, here http://en.wikipedia.org/wiki/Recession" If the money supply was fixed this would be impossible.

Do you see what you do? You name a bunch of problems and then insist that there's one magic cure-all and you don't address the cause and effect in each situation. It's like watching a TV ad for a wonder elixir where numerous ailments scroll down the screen while the name of the product is repeated over and over. Are you trying to hypnotize people into believing you?

 

[WhoWee]

Do you see what you do? You name a bunch of problems and then insist that there's one magic cure-all and you don't address the cause and effect in each situation. It's like watching a TV ad for a wonder elixir where numerous ailments scroll down the screen while the name of the product is repeated over and over. Are you trying to hypnotize people into believing you?

It sounds as if someone might have serious potential for a high level political office?

 

[mheslep]

http://www.investopedia.com/university/economics/economics3.asp"

How's that? Once again I have labelled my statements truths because they are true.
I can get more sources to expain the LAW of supply and demand if you'd like...

Just read the one you actually provided, starting with the next section. There are caveats to supply and demand, namely elasticity, and you have not attempted to establish increased demand for land in the US.
http://www.investopedia.com/university/economics/economics4.asp
Economics Basics: Elasticity

A. Factors Affecting Demand Elasticity
There are three main factors that influence a demand's price elasticity: ...
1. The availability of substitutes - ...
2. Amount of income available to spend on the good -...
3. Time - The third influential factor is time...

 

[WhoWee]

I also could have titled this thread "Argument for Fixed Money Supply". First of all the term 'value' will be defined as: "relative worth, merit, or importance". Also fixed: "not subject to change" This argument is based on two truths:

1. Population dictates the value of land. The value of land will increase according to an increase in population. There is a fixed suppy of land available on Earth. Increase in demand through an increase in population relative to fixed supply of land will increase land values.

2. A fixed money supply in relation to a growing population will lead to a growing demand for each unit of currency. This growing demand for each unit of currency in relation to a fixed supply will increase the value of each unit of currency. Population dictates the value of currency if money supply is fixed.

In a fixed money supply economy, population dictates the value of both land and currency. A rise in population= a rise in value of both land and currency based on supply and demand.

View attachment 31775


Hmmm...

As far as I can tell, the OP "truths" have not been supported. Any arguments built on this premise are unsupported as well.

 

[BilPrestonEsq]

Just read the one you actually provided, starting with the next section. There are caveats to supply and demand, namely elasticity, and you have not attempted to establish increased demand for land in the US.
http://www.investopedia.com/university/economics/economics4.asp
Economics Basics: Elasticity

The degree to which a demand or supply curve reacts to a change in price is the curve's elasticity. Elasticity varies among products because some products may be more essential to the consumer. Products that are necessities are more insensitive to price changes because consumers would continue buying these products despite price increases. Conversely, a price increase of a good or service that is considered less of a necessity will deter more consumers because the opportunity cost of buying the product will become too high.

This is from the article you posted. I wanted to point that out. Since land is a necessity is it not so elastic. The demand for land will remain closely proportionate to the population. If I haven't attempted to establish increase demand for land in the U.S. that is because it is not necessary. The demand for land always goes up with population, so does rent and home values along with it. Why would you try to deny such an elementary principle? Where would I get a "land demand chart"? I am pretty sure that doesn't exist. You could record home prices but obviously that would not have any relevance to an increased demand. Since home prices are affected by the fractional reserve system. And affected by those that create policy for the system. This is the problem I have been pointing out. Why don't you think about the implications of such a system, instead of picking out the slightest of discrepancies, all while ignoring the major problems set forth by the fractional reserve system?

 

[WhoWee]

This is from the article you posted. I wanted to point that out. Since land is a necessity is it not so elastic. The demand for land will remain closely proportionate to the population. If I haven't attempted to establish increase demand for land in the U.S. that is because it is not necessary. The demand for land always goes up with population, so does rent and home values along with it. Why would you try to deny such an elementary principle? Where would I get a "land demand chart"? I am pretty sure that doesn't exist. You could record home prices but obviously that would not have any relevance to an increased demand. Since home prices are affected by the fractional reserve system. And affected by those that create policy for the system. This is the problem I have been pointing out. Why don't you think about the implications of such a system, instead of picking out the slightest of discrepancies, all while ignoring the major problems set forth by the fractional reserve system?

Have you considered how assets other than land are financed? Large ticket equipment for manufacturing, ships, airplanes, computers, store fixtures, medical equipment, trucks, and farm equipment are all typically lease financed. Next is the auto industry. How much does an average new car cost? How many new car transactions are financed and how many are cash deals?

Now consider how the manufacturing costs of all of these items were financed?

Businesses of every type run on credit.

Please explain how banks can satisfy this need under your restructuring (of the entire banking system) proposal.

 

[BilPrestonEsq]

As far as I can tell, the OP "truths" have not been supported. Any arguments built on this premise are unsupported as well.

Supported by what? I posted a site explaining the law of supply and demand. The 'truths'
are true because they are undeniable by the current laws of supply and demand.
So the arguments on this premise are in fact supported.

We need to provide support for our arguments - not expect others to google our posted statements.

BTW - try to find something besides wiki.

If I am in the Electical Engineering section of this forum for example, and I don't understand something that has been stated, am I going to argue that the statements are untrue? If I don't understand why a perpetual motion machine doesn't work, and someone gives me a few searches to look at after he/she has explained why it doesn't work, should I demand that they claim their ignorance on the subject because of my own ignorance? Or, should I just learn the facts behind their explanation and add something valuable to the conversation?

 

[BilPrestonEsq]

Have you considered how assets other than land are financed? Large ticket equipment for manufacturing, ships, airplanes, computers, store fixtures, medical equipment, trucks, and farm equipment are all typically lease financed. Next is the auto industry. How much does an average new car cost? How many new car transactions are financed and how many are cash deals?

Now consider how the manufacturing costs of all of these items were financed?

Businesses of every type run on credit.

Please explain how banks can satisfy this need under your restructuring (of the entire banking system) proposal.

That is true all businesses in this country and most of the world run on credit. That is what makes them and the whole fractional reserve design impossible to sustain.

Unfortunately, banks can not satify this need for restructuring. They also cannot continue to satisfy this need for credit as it is. That is the problem. So it is not an easy question to answer "how could we adapt this plan to our current system?". It really can't, not without massive problems. But the thing is, the economy we have will crumble regardless. That is why it is difficult to listen to me. I wouldn't want to either if I haven't already done the research myself. It is really bad news. My only intention is to open eyes to the problems we will be facing and to be able to learn from them to avoid making the same mistakes.

If you look at how the Fed came about you will see that our addiction to credit started long ago. This also shows that the majority has no concept of banking history in general. We talk now about recessions and bailouts and such like people haven't been going through this unnecessary and damaging 'business cycle' for generations. http://www.u-s-history.com/pages/h952.html"
This is on the panic of 1907.

 

[BilPrestonEsq]

It's not a question of looking at some or many. It's a question of being accountable to the details of empirical specificities. Without willingness to dissect macro-level claims to their constituent phenomena, the only basis you have for grounding them is citation of other macro-claims. That lends itself to misinterpretation of both data and secondary source material.

In other words, you are saying that in the texts you read about recessions and economic booms, things happen a certain way and so you're not open to critically evaluating empirical logics of economic trade.

I understand your point. You would like me to look at it from a different angle. To more deeply look into the causes of what you claimed to be 'general phenomona'.
The perspective I have is the result of a lot of research into the causes of 'general phenomena' and I have found they are not general phenomena at all.They are effects of very acute issues brought on by monetary and fiscal policy. This effects every little exchange down to every dime, nickel, and penny. All of these exchanges have been recorded somewhere in historical charts and graphs. That is why macro level claims are not claims at all but based on historical facts. They even can even exhibit the psychology of people based on how consumers or businesses react to certain economic circumstances.
There is nothing you can't learn about even the smallest details of monetary exchange through the study of empirical historical charts. This data can then be used to form fairly accurate hypothetical scenarios.

There are two sides to every balance sheet: debit and credit. Prices factor in on the credit side, as do sales. When prices are held constant and sales decrease, revenue decreases. Employee payments factor in on the debit side. When wages and other compensation are cut, costs decrease. The savings can be allocated in a number of ways. Lowering prices is one of those ways. When prices are lowered, it challenges others into compete, i.e. cut costs to avoid getting priced out of business. As prices generally decrease, the cost of living for consumers decreases (deflation) and people can afford to live with less income without going into debt.

I know, and I must say, I like that better than the way I said it, earlier in this thread.
What your not factoring in is, that in order for a company to remain competitive with the company that just layed off workers, they must lay off workers themselves. Deflation leads to more deflation in a credit/debt based consumer economy. That is why historically in order to counteract this deflation, credit is again expanded by lower interest rates, or demand for money is eased by deficit spending or bailouts or tax relief in some cases. This is clearly stated in historical data.

If you would just think things through on the micro-level, it would be a clear basis for understanding how multiple instances interact to generate emergent (macro) phenomena. Consider you make 10,000/year and someone offers you a good deal on a house you would typically not consider affording. Now consider someone offers you a loan but the payments push your budget and require you to seek more income. Now, let's say you can't pass up the temptation to invest in the bigger house so you take the loan. Now you are dependent on seeking more income to pay your mortgage because your current income has become insufficient. Now consider that the seller of the big expensive house you bought sees business potential in selling such houses to people like you because the banks see them as a reasonable credit risk. They will keep building big houses and keeping the price high knowing that people like you will take out a loan thinking that the product is a bargain at the asking price. When many people do this, it becomes normal to have a house that costs you a 30+ year mortgage and it becomes normal for the people selling the houses to be getting revenue from the banks at levels that require a 30+ year mortgage to pay off. This is not the fault of the reserve-requirement. It is the fault of the buyers' and sellers' behavior. Yes, if the banks wouldn't lend the money, the buyers and sellers wouldn't be able to do their thing, but they have just as much power to resist doing business that way without the banks cutting them off.

I understand exactly what you are saying here. I have made the same observations. I have considered them in everything I have posted on this thread. This is only possible with a fractional reserve system. Consider that if given the opportunity to gain wealth through a such a system, history has shown that the majority will take the opportunity, to improve their chances of survival. If one business takes on a loan to invest in their company, so must their competitors or they will be left behind in the market. It is true that a company with a larger investment capital is more likely to succeed than their underfunded competitor. This opportunity for one business to obtain credit, creates a need for others to adopt the same credit policies in their businesses'. So unless no one took advantage of credit would it be possible for others not to have to follow suit. That is the problem with
blaming businesses for contributing to the problem. They must in order to survive.
As far as each private individual's contributing irresponsible spending habits, IMO that is also similar. In order to maintain a certain level of respect in a certain culture you must follow what the mainstream dictates that level of respect and how it is expected to appear. For example if I want to get into a certain click I must do what the mainstream views as being indentifiable to that certain click in order to be accepted. This is used in advertising to target a specific audience. Now one thing that the majority of people in the U.S. have is a TV. Television creates a culture through the material being broadcasted. This contributes to the individual money policies of the majority. Again in the face of competition it becomes necessary for each person's 'social survival'.

Do you see what you do? You name a bunch of problems and then insist that there's one magic cure-all and you don't address the cause and effect in each situation. It's like watching a TV ad for a wonder elixir where numerous ailments scroll down the screen while the name of the product is repeated over and over. Are you trying to hypnotize people into believing you?

No, I am not trying to hynotize you. You have already been hypnotized. Have you noticed that no one has even entertained the idea that the fractional reserve system has major flaws, even in the face of economic turmoil? Or even begun to entertain the possible benefits of a fixed money supply? The statements I have made about the causes for this economic turmoil we are in now are the same causes that have come about in the past. These same causes have been considered by the mainstream and are available for you to learn if you just read into them. If you would like me to prove specific statements I have made with historical data, I will. The same arguments I have made have been made in the past, and once again they fall on deaf ears. Why people defend the same system that intends to harm them, I have no idea. I would not have to repeat myself if the statements I made were recognized the first time. The 'bunch of problems' that I listed, that you claim are independant of each other, our actually not independant at all. All those problems are created by the fractional system, they would not be possible without it's creation. Those problems are what make the fractional reserve system fundamentally flawed.
When you put your money into a checking account, you are not making a deposit, you are loaning the bank money, 90% of your deposit by law, anyways. They are inturn loaning than 90% out. 90% or your checking account is actually just a promise from the loanee. That is why banks need to be bailed out when large amounts of loans get defaulted. Because they don't have your money. They have a promise from someone else to pay that money. And they create profits from that interest. So the bank borrows money from you and lends it to someone else at their discretion, then profit off of it and give you your cut. So while they make 7% annual interest for example you make maybe 1% off of your money.
They are also lowering the demand for your cash you have loaned the bank through the creation of money, only possible in a fractional reserve system. This leads to land or home speculation that leads to a housing bubble that leads to defaults. Just naming one of the problems. That is all possible by your loaning money to the bank. That is the cause of the 'bunch of problems' that I have listed. I am claiming that fractional reserve banking creates these problems because it does create these problems. It is a fault of the foundation of it's design.

 

[WhoWee]

Supported by what? I posted a site explaining the law of supply and demand. The 'truths'
are true because they are undeniable by the current laws of supply and demand.
So the arguments on this premise are in fact supported.

If I am in the Electical Engineering section of this forum for example, and I don't understand something that has been stated, am I going to argue that the statements are untrue? If I don't understand why a perpetual motion machine doesn't work, and someone gives me a few searches to look at after he/she has explained why it doesn't work, should I demand that they claim their ignorance on the subject because of my own ignorance? Or, should I just learn the facts behind their explanation and add something valuable to the conversation?

If you want to defend your "truths" - fine by me. I thought you wanted to discuss an isolated theoretical model? Let's begin with this:

"1. Population dictates the value of land. The value of land will increase according to an increase in population. There is a fixed suppy of land available on Earth. Increase in demand through an increase in population relative to fixed supply of land will increase land values."

Are you suggesting dense populations of poor people will increase land values in an area?

 

[brainstorm]

Have you considered how assets other than land are financed? Large ticket equipment for manufacturing, ships, airplanes, computers, store fixtures, medical equipment, trucks, and farm equipment are all typically lease financed. Next is the auto industry. How much does an average new car cost? How many new car transactions are financed and how many are cash deals?

What's strange about all these lease-financed transactions is that they all inflate the cost of industrial goods and services by making relatively large amounts of money available for them. The idea is that because equipment is going to be used to produce large amounts of product for sale, they should not be sold for as little as possible. In other words, it is not the labor and materials of production that determine the price but rather the amount that the final product contributes to someone else's revenues. Another way to look at it is that people want to get as large a piece of other people's revenues as they can, so they price their inputs as high as the buyer will bear. If lease-financing was not available, the buyer could bear a lot less, so industrial equipment would have to be sold for less or not at all. Then the question would be how much businesses would be willing to "save up" for new equipment and whether equipment providers would hold out for higher prices or whether they would go ahead and sell at a discount to keep those businesses in business.

I understand your point. You would like me to look at it from a different angle. To more deeply look into the causes of what you claimed to be 'general phenomona'.
The perspective I have is the result of a lot of research into the causes of 'general phenomena' and I have found they are not general phenomena at all.They are effects of very acute issues brought on by monetary and fiscal policy. This effects every little exchange down to every dime, nickel, and penny. All of these exchanges have been recorded somewhere in historical charts and graphs. That is why macro level claims are not claims at all but based on historical facts. They even can even exhibit the psychology of people based on how consumers or businesses react to certain economic circumstances.
There is nothing you can't learn about even the smallest details of monetary exchange through the study of empirical historical charts. This data can then be used to form fairly accurate hypothetical scenarios.

If you understand the micro-mechanics of economics, why do you keep going back to referencing the money supply and fractional reserve banking instead of identifying other factors? It's like you can't stand that economics is constituted through multiple factors influencing each other because you want one think, i.e. banking, to be determinant so that you can push to change this one thing and have everything else behave the way you want it to. You refuse to look at other factors and other responses to the changes you promote than the ones you hope for.

I know, and I must say, I like that better than the way I said it, earlier in this thread.
What your not factoring in is, that in order for a company to remain competitive with the company that just layed off workers, they must lay off workers themselves. Deflation leads to more deflation in a credit/debt based consumer economy. That is why historically in order to counteract this deflation, credit is again expanded by lower interest rates, or demand for money is eased by deficit spending or bailouts or tax relief in some cases. This is clearly stated in historical data.

Laying off employees is not the only way to cut costs. You can also reduce the amount paid to employees without laying them off. They may threaten to leave, but will they really? If they do, will the company that pays them what they want stay competitive if others are working for less?

I understand exactly what you are saying here. I have made the same observations. I have considered them in everything I have posted on this thread. This is only possible with a fractional reserve system.

You don't get it. It's not about you considering things and then making a decision and stating it. It's about having a discussion that negotiates conflicting logics through explicit grounded reasoning. The discussion should be explicit and logical enough that anyone (logical) reading it should be able to understand why each or both come to the conclusions that they do.

Consider that if given the opportunity to gain wealth through a such a system, history has shown that the majority will take the opportunity, to improve their chances of survival. If one business takes on a loan to invest in their company, so must their competitors or they will be left behind in the market.

This is the logic of compulsory conformity. Once you start obeying this logic, you become a robotic servant of conformity. Ever see movies of people marching in lockstep?

It is true that a company with a larger investment capital is more likely to succeed than their underfunded competitor. This opportunity for one business to obtain credit, creates a need for others to adopt the same credit policies in their businesses'. So unless no one took advantage of credit would it be possible for others not to have to follow suit.

Obviously there is an interest in convincing businesses that they will fail if they don't have the backing of the best funding. That is in the interest of investors with money to fund relative market control. What do you think would happen if un(der)funded businesses could compete with well-funded ones, undercut their prices, drive their competitors out of business, and provide everyone with extremely affordable alternatives to high-priced goods and services? The poor would flourish and the rich would make less money. Is this what the rich want? No, that's why they support corporate financing and the belief that only well-financed businesses can succeed.

That is the problem with
blaming businesses for contributing to the problem. They must in order to survive.

Nonsense. These words are an ideology of people who are too lazy to try out alternatives but prefer to think of themselves as dutiful and driven rather than lazy and/or uncreative.

As far as each private individual's contributing irresponsible spending habits, IMO that is also similar. In order to maintain a certain level of respect in a certain culture you must follow what the mainstream dictates that level of respect and how it is expected to appear.

When does the lockstepping start?

For example if I want to get into a certain click I must do what the mainstream views as being indentifiable to that certain click in order to be accepted. This is used in advertising to target a specific audience. Now one thing that the majority of people in the U.S. have is a TV. Television creates a culture through the material being broadcasted. This contributes to the individual money policies of the majority. Again in the face of competition it becomes necessary for each person's 'social survival'.

And otherwise people get targeted for "social elimination," I suppose? Ok, I see where your head is now.

 

[WhoWee]

What's strange about all these lease-financed transactions is that they all inflate the cost of industrial goods and services by making relatively large amounts of money available for them. The idea is that because equipment is going to be used to produce large amounts of product for sale, they should not be sold for as little as possible. In other words, it is not the labor and materials of production that determine the price but rather the amount that the final product contributes to someone else's revenues. Another way to look at it is that people want to get as large a piece of other people's revenues as they can, so they price their inputs as high as the buyer will bear. If lease-financing was not available, the buyer could bear a lot less, so industrial equipment would have to be sold for less or not at all. Then the question would be how much businesses would be willing to "save up" for new equipment and whether equipment providers would hold out for higher prices or whether they would go ahead and sell at a discount to keep those businesses in business.

The large ticket leasing business is structured around the tax codes.

 

[brainstorm]

The large ticket leasing business is structured around the tax codes.

What's the point of saying this if you're not going to discuss how or otherwise relate it to the discussion? Are you just trying to imply that tax codes are determinant? Does anyone realize that ALL these factors are humanly constructed and thus negotiable in various ways?

 

[WhoWee]

What's the point of saying this if you're not going to discuss how or otherwise relate it to the discussion? Are you just trying to imply that tax codes are determinant? Does anyone realize that ALL these factors are humanly constructed and thus negotiable in various ways?

I made the connection of leasing to tax codes to make the point that finance is complicated - changing capital reserve ratios doesn't help the economy.

A quick description of a typical large ticket lease structure.
http://www.leaseforce.com/ASP/Dictionary/bottom.asp?Action=FirstLetterSearch&Letter=W

"Wrap Lease

A lease transaction typically involving a lease from an investor to an operating lease company with a sublease by the operating lease company to the end-user lessee. Typically, the operating lease company acquires the equipment and leases it to an end-user lessee. The operating lease company then sells the equipment, in accordance with the terms and conditions of the lease, to a packager who re-sells it to an investor who then enters into a lease with the operating lease company for a term longer than the term of the lease between the operating lease company and its lessee. A wrap lease is essentially a sale-leaseback of its own equipment by an operating lease company."

Again, this is a basic structure.

 

[mheslep]

This is from the article you posted. I wanted to point that out. Since land is a necessity is it not so elastic.

You're missing the point. Everyone does not have a necessity for a given amount of land.

The demand for land will remain closely proportionate to the population.

No, visibly it does not. The population density varies wildly all over the world and the US.

If I haven't attempted to establish increase demand for land in the U.S. that is because it is not necessary. The demand for land always goes up with population, so does rent and home values along with it. Why would you try to deny such an elementary principle?

Because, as you've stated it here, you're wrong.

Where would I get a "land demand chart"? I am pretty sure that doesn't exist. You could record home prices but obviously that would not have any relevance to an increased demand. [...] Why don't you think about the implications of such a system, instead of picking out the slightest of discrepancies, all while ignoring the major problems set forth by the fractional reserve system?

I'm not interested in your other, off topic as you defined it, issue, and your discrepancies are not slight.

 

[BilPrestonEsq]

You're missing the point. Everyone does not have a necessity for a given amount of land.
No, visibly it does not. The population density varies wildly all over the world and the US.
Because, as you've stated it here, you're wrong.
I'm not interested in your other, off topic as you defined it, issue, and your discrepancies are not slight.

If you do not understand the subject and are not willing to learn stop posting on this thread. I am not missing the point, I am well aware of varying population densities. Do you think I am saying that everyone is going to pay the same amount for land in a fixed money supply economy?
NO, I am not. Obviously land and homes and rent will be of more value in certain areas!
The population has an effect on the demand of any land, anywhere. It also has an effect on the demand for certain more desirable locations.You seem to have some kind of strange personal vendetta against me if you are trying to point out things that I haven't even said.Do you actually think you have proved anything or that you are in any way providing any constructive criticism?
You asked me to prove that demand for land is rising in the US? Is that a joke? How do you measure demand if not price? Price in this system cannot accurately measure the demand of land because of speculation. Which I already explained.

Because, as you've stated it here, you're wrong

HAha ha! Where am I wrong here? "If I haven't attempted to establish increase demand for land in the U.S. that is because it is not necessary. The demand for land always goes up with population, so does rent and home values along with it. Why would you try to deny such an elementary principle?"

Do you realize that it is not important whether the population rises at all? The whole point is that the demand for currency follows the demand for land by population change. If one is fixed(land) the money supply must be, or you will end up in the situation we are in now! Housing bubblemassive foreclosures, massive defaults. All those defaulted loans are actually the money people expect to be able to withdraw from there bank accounts on demand. 90% of the money in your bank is actually just a promise from someone else. As I pointed out earlier in this post the value or price of rent is dependant on the availability of undeveloped land. Prices can only rise to a point that people are willing to pay. If I can make more money in a certain area I must also pay higher rent. If the rent is too high that I cannot afford the rent even with higher pay I will choose not to rent there. If I can find a better income to rent ratio I will find it wherever I can. Even if it happens to be in a more rural area than my original plan. So population always dictates the value of land which dictates the value of a home or an apartment even if there are more or less desirable areas.
That is why cities are formed and is why suburbs exist on the outskirts. That is also why suburbs will eventually become more developed and undeveloped land will become suburbs.
Elementary principles. Your link on elasticity does not prove my statements wrong at all. Did you read your own link? Especially the part I pointed out? There are no massive spikes in population that will give such elasticity to the supply and demand curve of land. Land is also a necessity, not just undeveloped land but homes and apartments. So there is not going to be much elasticity in the supply demand curve at all. So far you have proved nothing I have said wrong, even though you still for some reason seem so desperate to do so. But if you want to nuts let's get nuts. Bring specific discrepencies to me if you'd like so I can drown you in credible references. I am not claiming to be all knowing, and I am very careful what I claim to be truth or fact. I would prefer that you didn't and that this thread could be more than just people ignoring factual information in some kind of lame attempt to take credibility away from my arguments. This can be the end all of fractional reserve banking threads.