Consumer spending picks up, but savings a worry

[GT182]

Duh! Consumer spending rose because prices rose. How can you spend less or the same with higher prices all across the board?

Prices rose because the economy was bad. So now if the economy is so much better, why don't prices fall?

[mookiemookie]

Originally Posted by Skybird

Microcycles like this only help propagandists to acchieve extremely short-termed political election goals, or not. Economically, they are meaningless, if you consider this: the volume of financial transactions across borders that base on FIAT money exceeds the volume of real goods trades by a factor of at least 25 (said former Deutsche Bank CEO Herrhausen).

But FIAT money is no real value. It is a bond. It is debt being traded in good - though unfounded - faith. It represents no real values and assets and services - not even a claim for these. FIAT money does not create real values. As the saying goes: from nothing comes nothing.

News like this one now only keeps peoples' minds distracted and so prevents them from revolting. Meanwhile, the pressure-bubble keeps growing. Never has there been more FIAT money pumped into the economic cycle, as currently. Never has there been such a multi-factorial discrepancy between real values, and debts surpassing them. And we all are guilty in having helped this bubble to grow. We all are compliances in crime. But when the bubble bursts, everybody will claim to just be a victim, and that one could not have known.

BS. Economics is not difficult, and they are not a science (I do not understand what place economics have at universities). Difficult it becomes only in attempting to hide unwanted truths and deceive the wide public over the disaster unfolding. The cheating and lying - that is what adds complexity to it that now is so voluminous that it cannot be controlled and overwatched anymore.

No attack on you, Vendor, my criticism aims at the issue, not at you for posting.

All money is fiat money, Skybird. All money has a value because society has agreed upon the fact that it does. If your money is backed by gold, or seashells or horses or whatever, it doesn't make it any more sound than any other type of money. Gold, seashells and horses have little to no intrinsic value other than the fact that we agree that they do. Scarcity is not enough to make something valuable.

I have a cup that I drank tea out of this morning. As far as I know, it's the only cup that still has my spit on it. That makes it one of a kind. Does that fact make it valuable?

Originally Posted by GT182

Duh! Consumer spending rose because prices rose. How can you spend less or the same with higher prices all across the board?

Prices rose because the economy was bad. So now if the economy is so much better, why don't prices fall?

Prices won't rise unless people spend enough money to drive up prices. Inflation is a sign of a healthier economy. If no one has any money to spend, or if they are fearful that they may not have money in the near future, they won't spend it and there won't be as much inflationary pressure.

[Skybird]

A "covered currency" - different to FIAT money - means that the cnetral bank is allowed to make only as many notesd and coins as there is a coverage in material value: gold being the most obvious, because history teaches us that precious rare items like gold and jewelry in almost every crisis can be traded for other items: food, shelter, medicine, whatever. It makes no sense to take an absolute philosophic view on it, Mookie.

A coin in this system is made of the precious metal covering the money - it has been done like that over centuries. A note still is only a "note of debt", a state bond. A central bank should also only make as many coins and notes as is represented by the real wealth that it administers: goods, possessions, services of that nation.

Where in the medieval kings started to raise the ammount of money beyond the level of silver and gold they owned, by making coins with smaller amounts of silver in them, replacing the difference with cheaper metals, it always was a recipe for galloping financial troubles sooner or later: the system lost its balance.

When Bretton Woods and the gold-coverage was given up to pay for the Vietnam war, this had a similiar effect since then. Since then, money is no longer representative and is no longer covered by real assets and wealth of a nation, but is just printed: no real value anymore, but FIAT money only.

Even worse: money turned from a tool by which the economy could do easy trading, to a trading item itself. Which in other words meant: debts became a trading good, like bread, ore, wood. This helped to accelerate the growing dysbalancing between debts circulating, and real value.

When Herrhausen in I think 2009 said that the international trading of money as a trading good (which means the trading of debts as a trading doo, since it is FIAT money only) surpasses the international trade with real material goods and items by a factor of 25, this was an illustration of how messed up things really are: because debts should not be traded, and currencies should be covered by real wealth.

the money we hzave today, is meaningless more or less, it is a snowball chip handed around. Once anybody asks where the real gold chip is that he plastic chip represents, the system will collapse, inevitably. Because then everybody will suddnely see that there is 25 plastic chips in the snowballing system, but only one gold coin to be exchanged for one plastic chip. The other players will lose everything that is related to the other 24 plastic chips.

That is why nobody wants to ask that question. Nobody dares to see how many gold coins there really are. Because if the snowball stops rolling, there is only just one winner. All others lose.