third world America in Appalachia

You got that right. I am.

You sound like you take your economic views from TV.

No actually I find that my own perceptions of what's happened and is happening in the world just happen to match up to what they say on that. I'm not always in agreement with them either. But this time I am in agreement partly because the opinion is so universal, but more importantly all the evidence I've seen bears it out. History also bears it out as it did during the depression and the ties are greater now than they were back then. My personal opinion (which does differ from many economists) is that if we don't hit the right road to recovery soon, the ensuing economic collapse will make the depression look like a cake walk. Your money is losing world value on a daily basis (as they print money like there was no tomorrow) and consequently our dollar debt to other countries is increasing correspondingly.

What is your explanation on how that is happening? I mean our printing increases dollar debt to other countries?

Pretty simple really. Other countries have made loans to our country (if you choose not to believe that either, well then not much I can say it's a fact). The more money we print the less it is worth on the world market (another thing that if you choose to challenge it there's not much I can say it's how monetary values are calculated and accounts for much of why our dollar has been losing value internationally for the last few years). Do you really think the holders of those loans are going to calculate our debt in US dollars? Hell no they are calculating our debt in their dollars. Even if the debt remains stable in their currency it will go up in our own because it is worth less.

No, I am aware of both facts.

However, you are making a mistake in thinking here. If I lent you one yen, and you inflated your currency two-fold, then you still owe me one yen. In your own currency, your debt to me didn't grow. It grew nominally only, as you write it now as number 2 (dollars, instead of 1), which is now equals 1 yen. But you are also having all these dollars sloshing around, exactly two times more of them.

So, if you only had 1000 dollars money supply when you borrowed my yen, and now you have 2000 money supply, it still takes only 1/1000 of your wealth to pay back what you borrowed.

Now, if you held that yen in a bank for interest, then your debt to me is the same even nominally.

I see your point except that we are talking about the US government they don't keep those dollars "sloshing around". They spend them and not all in this country consequently we may have printed double our currency but we don't have double the currency. And certainly we know the government didn't put that currency in a bank for interest

Davey... he is wrong!!!

His point was accepted through unneccessarily confusing the issue.

The borrower owns 1 dollar... borrows one yen... at the time of lending the values were 1 to 1...

The dollar loses value/the yen increases value.

The 1 yen borrowed becomes more than 1 dollar.

Just because printing doubles does not mean that everyone's wealth follows...

He is wrong!

True however I was trying to point out the absolute. There is no doubt our debt is growing due to the losses in the value of the dollar (as well as other reasons of course).

Increases every time we borrow and every time we increase currency numbers...

My downtown area is thriving. They've even been building expensive lofts there.

They have been building expensive lofts in my downtown too, but nobody is buying them. All the stores are closing and the rest have iron gates in front of them.

DaveyB,

If inflation did not follow (I define an inflation here as price inflation), then it would make sense to simply print fiat money. It would be like a mythical source of free energy. And, many will tell you that it is true, but then, they must blame everything including greed, to explain how did they fncked up the system again (our situation today).

But because we can't make anything out of nothing, we can't make more money while simultaneously NOT having less of it. Fiat printing immediately followed by price inflation. It may not be an uniform raise in prices, because, as Von Mises explained, the maximum of price inflation is at the point where new money are currently spent.

With that being said, let us see if there is a change in prices, even for the government, even if they spent the money elsewhere.

If a swiss frank falls on some foreign exchange, and you are having some franks, but living in say Boston, and there aren't any newly printed franks around you, do you think you can still get the same value for your franks? Why not? Because, it didn't become less valuable at particular place, it become less valuable as an object.

Money only worth a part of total money existing. This looks an easily understood concept, when we think of paper money. But, imagine money such as gold, that have intrinsic value. Whole gold is whole value, or whole wealth. One gold dollar is one/100000000 (whatever) part of that whole. When you accept one note, you have exchanged something for that fraction of the whole value. You did not exchange for the gold dollar itself, but for the fraction of whole, kind of bying stock of a company. One cert of a share is meaningless, but as a fraction of whole it has a meaning.

This is why, even if us government prints money and spends it entirely abroad, their action lowers the value of the dollar nevertheless. Because they have fudged with the whole, watering it down, and every share of that whole must now lose value proportionally.

You have probably heard of a term "export of inflation", where supposedly we print money and send if overseas, so it doesn't lower the value of a dollar here. That is a misdirection. The purpose of such action is to hide the effects of inflation, not to eliminate them. Instead of easily seen price inflation in food and household items, there is a rise in prices of foreign labor as purchased in dollars, which means that we will import lower quality product. We then buy a lower quality product for a same or almost same price, which is price inflation. The price per unit of value did grow, but it is not being seen, because a gadget now has less value, but sold for about the same price. In particular, this is why it is expensive these days to buy many things of the same quality that our parents bought daily. People always guess and bring up home-grown explanations, when the true cause is simply a price inflation manifested not as a price increase, but as a value decrease.


I've got to go now, I'll follow up later if you care.

Ok I'm gonna stop here, this really is a masterpiece of miss-direction I am impressed... not convinced of course but impressed. You've switched from our discussion on national debt to talking about product, a subject I suspect we would be much closer to agreement on. That's actually what I see as the bright-side of all this. Purchasing of American made products should see some increase based on value, whether it is by reduced quality of foreign made products as you suggest or because of increased cost on foreign products due to monetary exchange rates. Sadly there is far too much we no longer make and we will still be forced to purchase at the inflated rates.

Returning to the subject we were actually discussing, let me try this explanation using your own example. You hinted at this, but suggested the amount of money would be inconsequential. If as in your example we doubled the amount of printed cash we have thereby reducing it's value against a Yen which remained stable, to one half it's former value. Then even if you factor out everything else you still have the interest which you basically said was inconsequential. But by cutting the value of a dollar in half and remembering that our creditors are going to be calculating that interest in their own Yen, Euro or whatever then you have effectively doubled your interest rate. Remember we are talking trillions of dollars, a debt we already cannot afford to even pay the interest on and now we are doubling that interest rate. Additionally the over all debt will compound at that doubled interest rate since we can not pay it. That is an extremely nasty downward spiral you are looking at.

You post this, and you imply a mis-direction on my part? You doubting my intentions? Never mind.

I didn't imply anything I stated exactly what the miss direction was. Commented on it, and returned to the original discussion. I take it you don't want to return to the original discussion. No problem.

I just went to Walmart. Most of the people there were not speaking English. I don't know if this is the third world but it is not the world in which I was raised.

My advice, learn Spanish.
According to the BHO plan, it could become the Primary Language of the US.
He's going to be counting on their votes come next election and there are millions and millions more are on their way.

I'm sorry to hear that. We're not experiencing that in Downtown St. Louis. Most of the lofts have been sold.