Is Credit Card Debt an expansion of the Money Supply?

[Paul Or Nothing II]

ed:
Steven, you might argue gold would be a "better" money then FRBN, and likely -on some points at least- I may agree with you.

But it is not money now.

Well, it isn't common form of "money" right now but surely, some people DO use it as "money" to make their dealings, as Steven himself has stated that he does business with it on occasions

What is "money"? "Money" is simply anything that people accept, not necessarily because they want to consume that thing itself but only to exchange it for other desirable things in the future

Surely, there can be more than one form of "money", & not all people may perceive it as "money" but that doesn't cease it from being "money" for those who are using it as "money"; I'm sure, in the past, when gold was more common form of "money", there were other communities that didn't use it as "money" but does that have any effect on the perception of that community which IS using it as money? NO! Not at all!
I, Steven & others could sell each other goods in exchange for gold, it mayn't make it "money" to others but surely for us it IS & anyone else saying otherwise doesn't make an iota difference

I'll cite your own statement :

...as if your opinion of value held some universal merit - which we have seen does not.

.....and as if your or anyone else's opinion of what "money" is has some universal merit?

It doesn't! As I've said, some people may perceive something as "money", others not but that doesn't change anything for those who do

[Paul Or Nothing II]

Relativley speaking I have a new and probably flawed view on this but I'd like to try to answer what's highlighted in green.

From what I understand aren't other nations already in the process of slowing lending to the US? I believe I read somewhere that the Federal Reserve had to buy nearly 60% of our debt for the fiscal year 2011?

What happens when China and the other big players stop lending real production for our funny money?

Either US will have to stop issuing additional debt (which is unlikely) or the Fed will have to keep buying more & more of it; & remember, every time Fed buys something, it "creates money", so you get the picture, right!

[Black Flag]

It's not "my theory", it's the theory that whole economics community follows, be it mainstream economists or Austrians; while your "theory" is probably only restricted to your imagined little world of your own definitions

I do not care how much you appeal to authority, your argument remains a fallacy.

Please prove how an instrument created by a transaction using money, measured in terms of money – is…money!

As I’ve said to Steven – you believe a dog’s bark is another dog so that there are two dogs outside your door.

As long as you do not open the door, you believe there are two dogs guarding your house and the moment you do open the door, and see one, you bizarrely claim the other “disappeared” and then claim that because now there is only one dog when there was two, your property is less secure and the home invaders are more likely to attack you!

If you feel you are in command of your monetary theory to such a degree you can convert it into understanding reality – prove it!

Show me the money!

Seems you've a short memory!

Didn't I tell you a while back that even if all the notes & coins are taken out of circulation, then STILL you could have central-bank-money as well as commercial-bank-money, so they're both equally fictional & therefore, claiming that one is "money" while the other isn't is height of ridiculousness

You have a real problem with reality!

You see the money in your wallet and bizarrely claim its fictional!

Well, send it over bud! I take all that fictional money out of your hands at no charge to you!

But your argument is bizarre.

Because I say one is not money and the other is money, your response is “well if all the money is taken out of circulation, the IOU’s would still exist, therefore the money must be fictional”.
Do you actually read the utter incomprehensible gibberish you typed there?

Austrian Economists have been trying to scream to the world for decades that fractional-reserve-banking creates inflation & bubbles, & it would only be too obvious to any reasonable person who takes the time to understand it but you seem intent on living in your own imagined "bubble" & unwilling to learn & revisit your understanding of things

They are correct. It does.

But you cannot ascertain the reason it does without making up fairy tales.

Instead you ascribe a theory requiring leprechauns and “debt” money that appears magically when money creates, and is equal to the money that creates it and has an effect EXCEPT when you actually reach for it and put it into your hand, then it disappears into a debt that needs to be repaid with real money, but probably will not be.

!Gasp! Utter crackpottery!

Appearing and disappearing money! And to you, this is a great theory because it make real money fictional because what you say is money is money except its fictional too, explains why you like gold, because all of this doesn’t happen with gold except when it does!

What's really funny is that you DO understand that commercial-bank-money are claims on central-bank-money

Yes, I have a firm grasp on what is money and what is debt and an obligation to pay satisfied only with money....which makes the two not the same thing.

For your theory to work, you have to make two, dissimilar, things become the same thing ... not because they have the features of similarity as they are not the same thing (given you have to add a bunch of adjectives to them for you to keep them straight) but merely to satisfy your THEORY about the behavior of one over the other.

So they are not the same thing - the necessity of adjectives demonstrates this - but once you get your nod that they are the same thing, you drop the adjectives and apply the powers of money to both of them as if they were the same thing.

Then you stand back and proclaim wisdom and understanding about reality!

But your theory leads you to this:

You think the latter is money, except its fictional.

You think the former is money because it is an IOU based on the latter, which you think is money, but it is fictional.

You then make up cause and effect stories of reality based on the latter being money, but is fictional – thus arguing that fairy tales manifest in reality.

Then you yell at me that I am living in a fantasy world by demanding reality be held firm in assigning cause and effect!

despite it don't realize such an obvious thing that an increase in bogus claim-checks necessarily distorts the market's perception of total supply

Total supply of ….what?

causing market-participants to think there's more than there actually is, which naturally leads to bidding up of prices to unsustainable levels & bubbles

So your story is this:
You and I go to an auction.
You have no money called “thin air money”.
I have real money.

The auction starts.

Because you think you have money, but you really don’t, you bid on products against me, raising the price of the goods that I have to pay.

So, answer these questions:
Why do I continue bidding?

If you raise the price higher than my value, I stop bidding.

But that is what I do anyway in making choices to spend. I do not spend more than my value.

So if you “somehow” raise the price of your goods by participating, and I do not bid –what happens to you?
You can’t pay since no one takes your thin-air, non-existent money.

The bid starts again and I get it at my price.

I agree that you believing you have money when you do not have money creates bad things for you.

But it does not create bad things for me.

[Black Flag]

Paul,

Further to the auction story.

You can only buy what you can pay for.

So you look into your account and see a bunch of IOU's owed to you.

You convert as many of those IOU's as necessary to pay for your goods.

But at no time can you convert more IOU's into money then there is money.

Thus at no time can you bring into the auction more money then there is money.

No matter how much money you think you have, you can only spend the amount of money that exists.

Thus, you cannot buy any goods greater than the amount of money you can actually spend, no matter how many IOU's you hold.

[Black Flag]

Paul,

Rothbard held to the same monetary theory as I - so your claim that the Austrians agree with you and disagree with me is false. It means, really, you do not understand Rothbard's argument nor understand mine.

[Paul Or Nothing II]

Seriously, your delusions have no limits! Just like Roy L, you've your own little imaginary world in your mind where reality is very different from what other people experience in the real world

As I've said, you're probably the only person who believes in your "unique" understanding of nature of money & it's effects so good luck with your delusions

Paul,

Rothbard held to the same monetary theory as I - so your claim that the Austrians agree with you and disagree with me is false. It means, really, you do not understand Rothbard's argument nor understand mine.

Oh! So you're going to talk about Rothbard now? He was the really HARDCORE gold-standard guy while you're clearly not!

He must be turning in his grave that someone like you is citing him in his defense, when the facts are that he was a vehement opponent of fractional-reserve-banking, specifically BECAUSE he understood that it leads to inflation & bubbles - which you clearly don't

He would pity someone like you who can't even discern the difference between an empty claim-check & the actual claim-money; again, he was the gold-standard guy & usually exhibited little respect for those who supported toilet-paper-money

Many Austrian economists have clearly expounded on the role of commercial-bank-money in causing inflation & bubbles, this is a widely known fact among those who have ACTUALLY understood it & claiming anything otherwise, especially in the name of Rothbard, is pure nonsense

[Steven Douglas]

Please prove how an instrument created by a transaction using money, measured in terms of money – is…money!

That's easy. Isn't that pretty much the defining characteristic of all the paper you now define as the only money?

The original dogs were gold and/or silver coin, an undeniable historical fact that will never go away. Paper IOU instruments were created by a transaction using this money, which instruments were measured in terms of money, and are what you now indeed call...money!

The paper currency, once issued by banks and now widely referred to as "money", were the original barks, not dogs, created far in excess of the hard specie they [mis]represented. Somehow these instruments, these barks, which were created by a transaction using money, and were measured in terms of money, were magically elevated to the status of real dogs, not barks, once the gold and silver origins were removed. Woof!

Ironically, right now we have an echo of that original scenario, wherein substitute instruments of paper instruments that were once substitutes themselves are created. The paper instruments (original barks which you now refer to as dogs), are now being used to create yet other instruments (mere echoes of the same bark). These instruments, which are measured in terms of the paper instruments, are but nothing but echoes of barks (which echoes you don't want counted as a dogs)! Now that's rich.

Now that Sweden is going paperless, and Canada is looking to follow suit, you may have to evolve your thinking, and adapt your paradigm, as what you consider barks, not dogs, may be the only things circulating if the paper itself is removed, as gold and silver once were, after which even the concept of "reserves" becomes a virtual abstract - a controlling number and a fiction in itself. No actual money. Just a number, as whatever-it-is-that-circulates-electronically out in the real world is the only thing that is counted by anyone as money. And I've no doubt that a future Black Flag will defend these transactions as such, crying out, as you now do against gold and silver coin, "Paper and coins are not money! Can you use them to buy food? No. Can you pay your taxes with them? No." lol

[Paul Or Nothing II]

That's easy. Isn't that pretty much the defining characteristic of all the paper you now define as the only money?

The original dogs were gold and/or silver coin, an undeniable historical fact that will never go away. Paper IOU instruments were created by a transaction using this money, which instruments were measured in terms of money, and are what you now indeed call...money!

The paper currency, once issued by banks and now widely referred to as "money", were the original barks, not dogs, created far in excess of the hard specie they [mis]represented. Somehow these instruments, these barks, which were created by a transaction using money, and were measured in terms of money, were magically elevated to the status of real dogs, not barks, once the gold and silver origins were removed. Woof!

Ironically, right now we have an echo of that original scenario, wherein substitute instruments of paper instruments that were once substitutes themselves are created. The paper instruments (original barks which you now refer to as dogs), are now being used to create yet other instruments (mere echoes of the same bark). These instruments, which are measured in terms of the paper instruments, are but nothing but echoes of barks (which echoes you don't want counted as a dogs)! Now that's rich.

Now that Sweden is going paperless, and Canada is looking to follow suit, you may have to evolve your thinking, and adapt your paradigm, as what you consider barks, not dogs, may be the only things circulating if the paper itself is removed, as gold and silver once were, after which even the concept of "reserves" becomes a virtual abstract - a controlling number and a fiction in itself. No actual money. Just a number, as whatever-it-is-that-circulates-electronically out in the real world is the only thing that is counted by anyone as money. And I've no doubt that a future Black Flag will defend these transactions as such, crying out, as you now do against gold and silver coin, "Paper and coins are not money! Can you use them to buy food? No. Can you pay your taxes with them? No." lol

+1

Great analogy

And yes, if paper & coins are gotten rid of then that definitely puts a huge, irreconcilable hole in his "theory", which he's made up in his own mind in his own imaginary world, just like our other friend Roy L

[Black Flag]

+1

Great analogy

And yes, if paper & coins are gotten rid of then that definitely puts a huge, irreconcilable hole in his "theory", which he's made up in his own mind in his own imaginary world, just like our other friend Roy L

Nonsense, Paul.

You get confused between digital money which is real money, and debt which is what you believe is money.

Digital money is not debt - it is not an IOU. It is a bailment - it is your money, only your money and always your money.

But because you hold a crack pot theory of money, you can't even tell the difference between them.

[Black Flag]

That's easy. Isn't that pretty much the defining characteristic of all the paper you now define as the only money?

Nonsense, Steven.

It is your claim that debt is money.

I ask how can an IOU - something created that is referenced by money be money.

It would be it's own reference - but then its not an IOU!

Your bizarro world is irrational - and when confronted, you merely fall back into your irrational definition, and try to shove it on me.

Sorry, you still have not provided any coherent theory, Steven.