Economic recovery my a**

[UnrepentantSinner]

Who the hell is supposed to "invest" in corporations when people don't have jobs generating income to provide investment income?

How the hell does a consumer based economy "recover" when people don't have jobs generating income so they can spend?

I'm sorry, I worked Saturday in a building my company is getting rid of - after eliminating about 1,200 positions ranging from houskeepers to vice presidents and the product lines weren't discontinued, they were outsourced overseas. :mad:

[a_unique_person]

it is quite simple really, they should all be getting paid the same as the guys overseas, and accept their working conditions. The libertarian paradise.

[UnrepentantSinner]

Shouldn't that be communist paradise?

I was going to offer up the Libertarian argument that regulation makes employing people in the U.S. too expensive but:

a. My company has exported jobs to Canada.

and

b. OSHA doesn't have a whole lot of regulations regarding call centers.

The reason this concerns me is that I'd hate to see a resurgance of old fashioned Marxism because of the actions of a handfull of greedy American capitalists. Capitalism works because the insidious greedy side of human nature has less effect on the marketplace than the insidious laziness side which plagues communism. That fact however, grows less salient as capital is concentrated in fewer and fewer hands.

[Mr Manifesto]

The Communist paradise would be that the people overseas get paid the same as us.

[a_unique_person]

I cannot show you the article, (unless you want to pay), but I was just reading in the AFR about how the one thing missing in this current economic recovery is jobs. Over the past 4 years, the net gain in jobs has been 704.

[Gregor]

Sure, OSHA regulates call centers - remember the flap about ergonomic chairs, carpel tunnel, working from home, etc. OSHA is everywhere.

Will other countries adopt our bloated, over-regulated, over-litigated practices?

Do you think India will adopt: OSHA, EPA, EEOC, IRS, Dept. Treasury, Dept. of HHS, Dept. of Labor, Dept. of Transportation, Social Security, and about 150,000 plaintiff's lawyers? I'd gladly ship 'em over.

My colleagues who are in-house corporate lawyers spent a grossly disproportionate amount of their time on labor and employment laws. The regulations involved in hiring, paying, monitoring, insuring, and firing employees are huge and expensive. When you run a manufacturing business and have an in-house lawyer who spents 60-70% of his or her time on employment law matters, that means that the majority of your regulatory costs and litigation costs are tied to employees, rather than the gadgets you make, it makes sense to chose an out of country labor market.

We are convinced that no employer in the US complies with all of the laws and regulations on the books. We hit regulatory overload years ago.

[shanek]

How many times do I have to explain this to you people? Companies moving overseas does not, not, NOT take jobs away from anyone here! It's not a zero-sum game!

Do you pay for these good in yuan? No! They're paid for in dollars. The companies must exchange their dollars for yuan to pay their workers, which means that others are exchanging yuan for dollars—and that money will be spent in the American economy.

If you want a reason why people aren't spending money, how about the fact that the government is taking 48% of the National Income in taxes? How about the fact that the Minimum Wage makes it difficult for employers to create low-wage jobs? How about the fact that most jobless people today will lose benefits if they become employed and so there's less of an incentive for them to do so? How about the fact that the government keeps inflation going and this is the point in the business cycle when inflation should be levelling off, encouraging people to start investing again, which is the very thing needed to create jobs? How about the fact that the government did everything to get people to invest three years ago and now there are fewer people left to do so? How about the war in Iraq making people nervous about oil supplies, which isn't made any better by Bush's talk of war elsewhere?

But go ahead, blame jobs going to China. Nevermind the fact that jobs going to Japan 50 years ago resulted in not only an economic boom over here but also a technological one as well...

[shanek]

Originally posted by Gregor
We are convinced that no employer in the US complies with all of the laws and regulations on the books.

How can they even know all of them? The politicians don't, and lawyers who specialize in it are still trying to sort them all out...and they change every year!

[Mr Manifesto]

Originally posted by shanek
How many times do I have to explain this to you people? Companies moving overseas does not, not, NOT take jobs away from anyone here! It's not a zero-sum game!

Do you pay for these good in yuan? No! They're paid for in dollars. The companies must exchange their dollars for yuan to pay their workers, which means that others are exchanging yuan for dollars—and that money will be spent in the American economy.

If you want a reason why people aren't spending money, how about the fact that the government is taking 48% of the National Income in taxes? How about the fact that the Minimum Wage makes it difficult for employers to create low-wage jobs? How about the fact that most jobless people today will lose benefits if they become employed and so there's less of an incentive for them to do so? How about the fact that the government keeps inflation going and this is the point in the business cycle when inflation should be levelling off, encouraging people to start investing again, which is the very thing needed to create jobs? How about the fact that the government did everything to get people to invest three years ago and now there are fewer people left to do so? How about the war in Iraq making people nervous about oil supplies, which isn't made any better by Bush's talk of war elsewhere?

But go ahead, blame jobs going to China. Nevermind the fact that jobs going to Japan 50 years ago resulted in not only an economic boom over here but also a technological one as well...

Ah, the ol' "Trickle down" argument. No discussion on deregulation should be without it.

[shanek]

Originally posted by Mr Manifesto
Ah, the ol' "Trickle down" argument.

No, that is not "trickle down." "Trickle down" is an excuse to give tax breaks or corporate welfare to only the richest people and corporations. That's not what I'm talking about at all.

US said in the first post in this thread:

"Who the hell is supposed to "invest" in corporations when people don't have jobs generating income to provide investment income?"

So my argument is exactly as "trickle-down" as his is. Investment does stir the economy and create jobs. And investors aren't limited to the rich. If you put money in the bank, you're participating in the investment process. If you get a money market or retirement account, you're investing money. And the government has done so much to stifle investment it's a wonder anyone is still denying it!

What would you do with that (on average) $10,000 a year the government is taking from you in Income Tax if you had it yourself? You'd either spend it on goods, which would increase demand and create jobs, or try to save or invest it, which would give corporations the capital needed to expand and create jobs. Same if you had that 15% of your pay that is currently being stolen to be squandered away in a fraudulent Social Security scam. I spend a whole, long thread presenting evidence as to why the Minimum Wage takes away jobs. War, despite Republican claims to the contrary, is bad for the economy, not good, as it destroys wealth instead of creating it. And how is mentioning how government handouts give people less of an incentive to work in any way part of "trickle down"?

Do you have ANY logical rebuttal, or is name-calling all you can do?

[Mr Manifesto]

It is unreasonable to expect the government not to collect tax. The government services will not simply provide themselves. You cannot rely on the private sector to fill the gap, because the private sector will be against anything that isn't sufficently profitable.

I agree that war is not good for the economy. It isn't just the republicans who think it is good for the economy, either, it has been an enduring myth since the end of WWII. Robert McNamara didn't help things, either. The amount spent on defense could easily stimulate the economy.

While minimum wage does take away jobs, you don't solve the problem by getting rid of it in your own country. Workers are entitled to basic human rights the world over, including a fair, living wage.

You seem to be arguing that the more profit companies make, the more investment that is made, and therefore more jobs. This is merely trickle-down economics in another form. For instance, how does investment create jobs, especially since investors like to go for the 'quick buck' that can be found in junk bonds or big investment tip du jour like dot-coms?

[peptoabysmal]

Be sure to write former president Clinton a nice letter thanking him for how well his globalization policies are working out nowadays.

[American]

I am rich, and not from my parents! Even when the economy was bad, I did just fine for myself!

You got to try being more like me and less like you all the time.

[Tony]

Originally posted by Mr Manifesto

While minimum wage does take away jobs, you don't solve the problem by getting rid of it in your own country. Workers are entitled to basic human rights the world over, including a fair, living wage.


Minimum wage is a fair living wage? :roll: :roll:

[Mr Manifesto]

Originally posted by American
I am rich, and not from my parents! Even when the economy was bad, I did just fine for myself!

You got to try being more like me and less like you all the time.

You don't have a girlfriend and you talk like a retard all the time. I'm quite happy the way I am, if you're the alternative.

[Mr Manifesto]

Originally posted by Tony


Minimum wage is a fair living wage? :roll: :roll:

Fairer than 3rd world standards. And, hey, give me control of the world and watch how high minimum wage goes!













(and how quickly inflation skyrockets- or have we proven there's no link between wages and inflation? Whatever.)

[Tricky]

Originally posted by peptoabysmal
Be sure to write former president Clinton a nice letter thanking him for how well his globalization policies are working out nowadays.
LOL. Blame Clinton again? Well, okay, it is true this time. But it should be noted that almost all of the opposition to his "globalization policies" came from Democrats, especially those representing places with strong labor unions. Republicans just loved his policies.

In fact, the Republicans should be grateful every time they mention Clinton. Not only did he support and help pass a lot of the items on their agenda, he also has provided them with a whipping boy for everything that goes wrong with the country.

[shanek]

Originally posted by Mr Manifesto
It is unreasonable to expect the government not to collect tax.

That's not the point. The point is, what kind of tax and how much?

The government services will not simply provide themselves.

But so few of them are actually necessary and do what they're supposed to do.

While minimum wage does take away jobs, you don't solve the problem by getting rid of it in your own country. Workers are entitled to basic human rights the world over, including a fair, living wage.

Go read the thread I started on that.

You seem to be arguing that the more profit companies make, the more investment that is made, and therefore more jobs.

I never said that. I said that the more people invest in a company, the more jobs they create, which is true. I also said that the more people buy from a company, the more demand is created for more goods, which will cause the company to expand and therefore need new workers, which, again, is true.

Dismissing it as "trickle down" is improper because 1) it isn't "trickle down" and 2) you aren't actually rebutting the argument.

[Mr Manifesto]

Originally posted by shanek

I never said that. I said that the more people invest in a company, the more jobs they create, which is true.


Really? The investment money doesn't get used for acqusitions or feathering CEOs' nests?

[NoZed Avenger]

Employment is a lagging indicator.

Leading indicators (ahead of the curve) have been positive for a few months. Standard indicators are coming along. Lagging indicators are the last to show improvement.

The numbers for growth look good. The jobs will follow.

NA

As an aside, Tricky, I agree that too many people are quick to jump up and point at Clinton and/or his policies (for what largely is a monetary and cyclical problem) -- but you say it like republicans invented the tactic. Or is it completely valid when the democrats "inherited the worst economy in fifty years"?

[EvilYeti]

Originally posted by shanek
How many times do I have to explain this to you people? Companies moving overseas does not, not, NOT take jobs away from anyone here! It's not a zero-sum game!

Do you pay for these good in yuan? No! They're paid for in dollars. The companies must exchange their dollars for yuan to pay their workers, which means that others are exchanging yuan for dollars—and that money will be spent in the American economy.


This is so wrong it's laughable.

Exchanging money is a zero-sum game! Money is meaningless until it is used for the exchange of goods and services, which will benefit the local economy where the exchange takes place. Unless those workes in Bangalore are do their shopping at a Walmart in Oakland its going to benefit the Indian economy, not ours.

If this was true we should be able to ship 100% of our jobs overseas and our economy would boom while our entire population enjoyed an early retirement.

[Q-Source]

Investors are rational. Capital flow goes from low profit to high profit economies in order to maximise its return. The fact that there is a recession in the economy is the result of many factors that determine whether or not the GDP growth rate increases.

It is naive to isolate just one of them. In a capitalist economy such as the US, we must analyse all the variables that influence the capital return, these go from wages, productivity, interest rate to political reasons. The government can only control some variables, but it cannot manipulate others such as consumers demand and international affairs.

What is the best thing to do to stimulate the economy?, maybe just concentrate on those variables that favour a high capital return. However, this requires an active role of government in the economy, something that many demonise but at the same time complain for the slow economic growth.

[shanek]

Originally posted by EvilYeti
This is so wrong it's laughable.

Exchanging money is a zero-sum game! Money is meaningless until it is used for the exchange of goods and services, which will benefit the local economy where the exchange takes place.

THIS is the laughably wrong claim.

It DOESN'T MATTER where the exchange takes place. If dollars are exchanged for yuang, the dollars will still be spent in the American economy and the yuang in the Chinese. The only difference is who's spending the money. The exchange of money has NOTHING WHATSOEVER to do with which economy benefits.

Unless those workes in Bangalore are do their shopping at a Walmart in Oakland its going to benefit the Indian economy, not ours.

The workers in Bangalore are going to be paid in rupees. If you paid for the goods in dollars, then we have the exchange again. Yes, the workers are going to spend the rupees in their economy, but SOMEONE ELSE—the person who exchanged his rupees for dollars—is going to spend them in the American economy.

If this was true we should be able to ship 100% of our jobs overseas

That's a laughable construct and only shows how little you know about economics. As I said, it's not a zero-sum game. We're not "shipping jobs overseas." Jobs are still being created here based on those transactions!

[fishbob]

That's a laughable construct and only shows how little you know about economics. As I said, it's not a zero-sum game. We're not "shipping jobs overseas." Jobs are still being created here based on those transactions! What kind of jobs? Seriously.

[shanek]

Originally posted by fishbob
What kind of jobs? Seriously.

Any kind! Dollars spent or invested in the economy have the same effect regardless of who's doing the spending. It doesn't matter if it's being spent by an American citizen in America or someone in Japan, China, or India. It DOESN'T MATTER. The money still gets spent!

[CapelDodger]

From shanek:
Do you pay for these good in yuan? No! They're paid for in dollars. The companies must exchange their dollars for yuan to pay their workers, which means that others are exchanging yuan for dollars—and that money will be spent in the American economy.
Not if the products are sold to a third country. In that case what were US exports, and the jobs they supported, are now another country's exports and their jobs.The US economy plays no part in the process except as a receiver of profits - if they're re-patriated.

[shanek]

Originally posted by CapelDodger
Not if the products are sold to a third country.

Yes, even if they're sold to a third country. There would still be the exchange for dollars and so there would still be the use of those dollars in the American economy. No one's going to exchange a currency for dollars unless there's something in America they want to buy or invest in.

(Well, unless they're speculating in currency futures, but in that case they're just another middleman and it's still balanced out.)

[kittynh]

Pool Boys cmpany is moving 200 high paying jobs to India. These are highly skilled technical jobs, the average worker being laid off making $65,000+. They can pay the people in India less than $10,000 a year no benefits. The company had record profits - stock is at an all time high. And they are rewarding the people who helped make this possible by laying them off!

I will say they just opened a call center in a remote area of Canada and are employing many First Nations people. The Canadian government is pretty much paying for everything, and it has been working out well. But, hey, it's nice they can now give up seal hunting and fishing for the tradtional native craft of answering phones.

[corplinx]

I work with several H1B programmers. They are the hardest working programmers I have ever met. Compared to your typical american programmer (white caucasian male), they are a godsend.

Here is the deal:
they work
programming to them is a job, not an artform
they sit down and program, they dont wait for inspiration


The downside to the h1b is that they tend to only know what they know. They basically have 4 year community college degrees. Instead of learning theory of programming they tend to be trained in specific language usage. I am often surprised about how little else they know outside their own niche.

I see no sense in an american business putting up with a smarmy pampered white whiny boy java programmer who only works 2 hours of his work day and only seems to be able to catch the muse late at night (therefore justifying why he shows up an hour after everyone else) when they can just outsource that position to India and actually get their work done timely at less expense.


If anything, american IT professionals fear their Indian counterparts because they realize they work better and with more realistic compensation.

Competition being what it is, american IT workers will probably learn the hard way that they need to work harder and stop making such unrealistic dot bubble heyday salary demands.

[EvilYeti]

Originally posted by shanek

It DOESN'T MATTER where the exchange takes place. If dollars are exchanged for yuang, the dollars will still be spent in the American economy and the yuang in the Chinese. The only difference is who's spending the money. The exchange of money has NOTHING WHATSOEVER to do with which economy benefits.


Shanek, I really have a hard time understanding how you can believe this. Did you think this up yourself or is it the standard Libertarian party line? It's totally nonsensical.


The workers in Bangalore are going to be paid in rupees. If you paid for the goods in dollars, then we have the exchange again. Yes, the workers are going to spend the rupees in their economy, but SOMEONE ELSE—the person who exchanged his rupees for dollars—is going to spend them in the American economy.


This is wrong on several levels.

Firstly, the whole point of shipping jobs overseas is you can pay the employees much less. So you have less money being paid for the same amount of work. Thats bad for our economy.

Second, you are making the assumption that 100% of the money flowing into foreign countries is going to make it back to America. That is simply ludicrous. If that was true every country in the world would be bankrupt except us.

The majority of it is going to be absorbed into the local and neighboring nations economies. Believe it or not India doesn't buy all its goods and services from the U.S., or vacation exclusively here.


That's a laughable construct and only shows how little you know about economics. As I said, it's not a zero-sum game. We're not "shipping jobs overseas." Jobs are still being created here based on those transactions!

Shanek, here you go again embarrassing yourself again. You are displaying an almost super-human level of ignorance regarding economics and simple common sense. If you can find anyone here with an economics background to agree with you I'll concede, until then go read an econ book or something,

[a_unique_person]

Originally posted by EvilYeti


Shanek, here you go again embarrassing yourself again. You are displaying an almost super-human level of ignorance regarding economics and simple common sense. If you can find anyone here with an economics background to agree with you I'll concede, until then go read an econ book or something,

Shane has already related how he was the prize student in his class. I would say he was taught by a libertarian economic fundie.

A similar process is happening with Australian shipping. The unions are fighting tooth and nail to ensure that ships that dock in Australian ports provide basic levels of amenity to the crews and that ships that carry Australian cargo pay living level wages and provide proper employment standards.

If they don't they will lose all their jobs, and the poor b**ards who get their jobs will live on sustenance wages only.

[peptoabysmal]

Originally posted by Tricky

LOL. Blame Clinton again? Well, okay, it is true this time. But it should be noted that almost all of the opposition to his "globalization policies" came from Democrats, especially those representing places with strong labor unions. Republicans just loved his policies.

In fact, the Republicans should be grateful every time they mention Clinton. Not only did he support and help pass a lot of the items on their agenda, he also has provided them with a whipping boy for everything that goes wrong with the country.

Yeah, OK I didn't mention that this crap started with Nixon, when he was trying to pay for carpet bombing Vietnam. I think if Clinton were in for one more term, he would have sold the Lincoln monument to foreign investors.

I thought (Hill)Billy was Hillary's whipping boy :D

[shanek]

Originally posted by EvilYeti
Firstly, the whole point of shipping jobs overseas is you can pay the employees much less. So you have less money being paid for the same amount of work. Thats bad for our economy.

I have already refuted this twice.

Second, you are making the assumption that 100% of the money flowing into foreign countries is going to make it back to America. That is simply ludicrous. If that was true every country in the world would be bankrupt except us.

Do you have any clue what you're talking about? Where do you think those dollars exchanged for other currencies are going to go? And why would other countries go bankrupt? Where would their currency go?

When you exchange dollars for yuang, there are still exactly as many dollars and exactly as many yuang as there were before. The dollars are still going to be spent in the American economy and the yuang still in the Chinese economy. Why do you stubbirnly refuse to understand this blindingly simple relationship? What do YOU think happens do dollars when you exchange them for yuang?

The majority of it is going to be absorbed into the local and neighboring nations economies.

No, because it's still dollars. Someone has exchanged dollars for the local currency to spend in that economy, sure, but that means that others have exchanged that local currency for dollars to spend in the American economy.

Believe it or not India doesn't buy all its goods and services from the U.S., or vacation exclusively here.

Stupid and dishonest strawman.

Shanek, here you go again embarrassing yourself again. You are displaying an almost super-human level of ignorance regarding economics:id:

[shanek]

Originally posted by a_unique_person
Shane has already related how he was the prize student in his class.

When did I claim anything of the sort? Stop lying.

[jj]

Originally posted by shanek
How many times do I have to explain this to you people? Companies moving overseas does not, not, NOT take jobs away from anyone here! It's not a zero-sum game!


Ah yes, because you say so makes it true.

I agree that it's not a zero-sum game, BUT your mantra also includes sensible investment of the profits, not holding and wasting them.

And you fail to realize that the place where libertarianism becomes a religion is where it assumes that the people owning the businesses will respond rationally to long-term pressures while having short-term gains available.

The history shows that most won't.

So your entire idea fails on the simplest examination of human history, and is shown to be another religion (a non-deist one, though) predicated on an idea that has to be taken on faith (like the YEC idea) that is contradicted by the real evidence (like YEC).

[jj]

Originally posted by Mr Manifesto


Really? The investment money doesn't get used for acqusitions or feathering CEOs' nests?

Of course not, Shanek lives in 'the best of all possible worlds'.

[jj]

Originally posted by EvilYeti


Shanek, here you go again embarrassing yourself again. You are displaying an almost super-human level of ignorance regarding economics and simple common sense. If you can find anyone here with an economics background to agree with you I'll concede, until then go read an econ book or something,

Yeti, Yeti, Yeti, you don't understand! Shanek here speaks ex-cathedra, he can't be wrong! He knows so much more than us old farts who have watched systems come and go. We should all bow down to his youth and praise him...

(Do I need the sarcasm marker, really?)

If you want to check out a debate, go read his claptrap and his fly-by-night propaganda in the electrical regulation argument (I won't call it a discussion). Straw men, extraction from context, excluded middles all over the landscape, but not a TESTED, FALSIFIABLE idea in sight.

[CapelDodger]

from shanek:
There would still be the exchange for dollars and so there would still be the use of those dollars in the American economy. No one's going to exchange a currency for dollars unless there's something in America they want to buy or invest in.
That makes no sense. Why would there be an inevitable exchange for dollars if people are only going to exchange into dollars if they want dollars? Your two statements are contradictory. The actual details of the financing of the trade will be complex and designed to serve the interests of the company involved. That's part of what is known as Treasury Operations, which can make a significant difference to a company's bottom line. (Either that or I've wasted even more of my nearly-50 years than I'd thought.)

The dollar only comes into it if there's a reason. The main reason at the moment seems to be to lend the dollars at a good rate to finance the US current account deficit.

[EvilYeti]

Originally posted by shanek

When you exchange dollars for yuang, there are still exactly as many dollars and exactly as many yuang as there were before. The dollars are still going to be spent in the American economy and the yuang still in the Chinese economy. Why do you stubbirnly refuse to understand this blindingly simple relationship? What do YOU think happens do dollars when you exchange them for yuang?


And there is the crux of your fallacy. The only way your scheme would work is if we printed counterfeit yuang to enchange for real dollars! How do we get the yuang to begin with? We give the Chinese American dollars!

Let me give you a simple example that hopefully you can understand.

Suppose I ran a company, YetiSoft Inc., that employeed three local full time programmers. They work from home and are I pay no benefits. I pay them each $90k a year, so my total salary expenditures are $270k yearly.

Now, I'm a bit old-fashioned and don't trust banks, so I pay my employees in international gold bullion. They can cash this in for their currency of choice anywhere around the world. Being local to San Diego, they exchange the gold for U.S. currency which they spend locally.

One day I decide I would like to increase production without increasing expenditures, so I fire my three employees and outsource my programming to nine Indian programmers for the same total expense. There is no issue of currency conversion, I still pay salaries with gold bullion, in this case it is shipped overseas to my new employees.

Being in India, my new employees exchange their gold bullion for rupees at their local bank. They spend this in their local economy.

The San Diego economy has lost $270k a year and the Indian economy has increased by $270k a year. You can't benefit both economies equally, in order for one to gain another must lose. In order for you scheme to work the foreign employees would have to spend each dollar twice, once in their own economy and once in ours. Needless to say, thats impossible.

[Grammatron]

Originally posted by EvilYeti


And there is the crux of your fallacy. The only way your scheme would work is if we printed counterfeit yuang to enchange for real dollars! How do we get the yuang to begin with? We give the Chinese American dollars!

Let me give you a simple example that hopefully you can understand.

Suppose I ran a company, YetiSoft Inc., that employeed three local full time programmers. They work from home and are I pay no benefits. I pay them each $90k a year, so my total salary expenditures are $270k yearly.

Now, I'm a bit old-fashioned and don't trust banks, so I pay my employees in international gold bullion. They can cash this in for their currency of choice anywhere around the world. Being local to San Diego, they exchange the gold for U.S. currency which they spend locally.

One day I decide I would like to increase production without increasing expenditures, so I fire my three employees and outsource my programming to nine Indian programmers for the same total expense. There is no issue of currency conversion, I still pay salaries with gold bullion, in this case it is shipped overseas to my new employees.

Being in India, my new employees exchange their gold bullion for rupees at their local bank. They spend this in their local economy.

The San Diego economy has lost $270k a year and the Indian economy has increased by $270k a year. You can't benefit both economies equally, in order for one to gain another must lose. In order for you scheme to work the foreign employees would have to spend each dollar twice, once in their own economy and once in ours. Needless to say, thats impossible.

Unless you own your very own gold mine and gold processing facility, I suspect you would need to buy that gold bullion somewhere using some currency, thus your whole point is for nothing.

[shanek]

Originally posted by CapelDodger
That makes no sense. Why would there be an inevitable exchange for dollars if people are only going to exchange into dollars if they want dollars?

If no one is willing to exchange their currency for dollars, then the company wouldn't be able to change their dollars to that currency in the first place. I would think this should be obvious...

[DavidJames]

EvilYeti: I think I understand your example, although I don't know why you complicated it by using gold, which means maybe I didn't understand it :)

Continuing with your example, in addition to the 270k being spent in India and not San Diego, there are now 3 less people employed in San Diego.

[EvilYeti]

Originally posted by jj

Yeti, Yeti, Yeti, you don't understand! Shanek here speaks ex-cathedra, he can't be wrong! He knows so much more than us old farts who have watched systems come and go. We should all bow down to his youth and praise him...


Shanek talks out of a catheter? Man, he's in worse shape then I thought.

I'm a young fart and his arguments are still laughably transparent. Most of what he spouts is so self-contradictory it almost defies analysis. I feel like I'm debating Zippy the pinhead.

[shanek]

Originally posted by EvilYeti
And there is the crux of your fallacy. The only way your scheme would work is if we printed counterfeit yuang to enchange for real dollars!

No, that's completely wrong, as per your usual. Printing up new yuang is not necessary. You just find people who already have yuang and are willing to exchange them for dollars. No money is created in the exchange!

Suppose I ran a company, YetiSoft Inc., that employeed three local full time programmers. They work from home and are I pay no benefits. I pay them each $90k a year, so my total salary expenditures are $270k yearly.

Now, I'm a bit old-fashioned and don't trust banks, so I pay my employees in international gold bullion. They can cash this in for their currency of choice anywhere around the world.

One part your missing: Your customers in America are going to be paying for the goods with dollars. You'd need to exchange those for the gold. The gold just becomes another medium of exchange, like another currency. Then they turn around and convert it right back into dollars. Assuming the price of gold hasn't changed between these two transactions, you have made absolutely no difference here whatsoever.

One day I decide I would like to increase production without increasing expenditures, so I fire my three employees and outsource my programming to nine Indian programmers for the same total expense. There is no issue of currency conversion, I still pay salaries with gold bullion, in this case it is shipped overseas to my new employees.

And where did you get your gold? You bought it with dollars! DUH!!!!

The San Diego economy has lost $270k a year

No, it hasn't. When you exchanged your dollars for gold you found someone willing to exchange their gold for dollars. What do you think they're going to do with them?

You STILL have the dollars. NOTHING is lost...except your mind.

You can't benefit both economies equally, in order for one to gain another must lose.

Absolutely untrue. You exchanged dollars for gold, and then your employees exchanged gold for rupees. You've added in a transitory medium of exchange (the gold), but the actual amounts involved are still the same.

In order for you scheme to work the foreign employees would have to spend each dollar twice,

No, they wouldn't! Christ on a stick, this is so simple! Why do you refuse to get this? What is your malfunction?

[EvilYeti]

Originally posted by Grammatron


Unless you own your very own gold mine and gold processing facility, I suspect you would need to buy that gold bullion somewhere using some currency, thus your whole point is for nothing.

Incorrect. My whole point is that currency exchange is a zero-sum game, as no one is making or losing money in the immediate transaction. I exchange my currency for gold, which I can either give to local employees or ship overseas.

If I give it to U.S. employees, they exchange it for currency and then domestic good and services. That is good for the economy. If I ship it overseas it "disappears" from our economy. It's never echanged for U.S. currency or domestic goods and services. That is bad for our economy, but good for wherever I'm shipping the gold to.

Why is that so hard to understand?

[EvilYeti]

Originally posted by DavidJames
EvilYeti: I think I understand your example, although I don't know why you complicated it by using gold, which means maybe I didn't understand it :)

Continuing with your example, in addition to the 270k being spent in India and not San Diego, there are now 3 less people employed in San Diego.

The only reason I used gold in the example is due to Shanek's shell-game with currency exchange.

Yes, you are correct their are also three less people unemployed in San Diego. I guess high-unenmployment also helps the economy in Shanek-land.

[Grammatron]

Originally posted by EvilYeti


Incorrect. My whole point is that currency exchange is a zero-sum game, as no one is making or losing money in the immediate transaction. I exchange my currency for gold, which I can either give to local employees or ship overseas.

If I give it to U.S. employees, they exchange it for currency and then domestic good and services. That is good for the economy. If I ship it overseas it "disappears" from our economy. It's never echanged for U.S. currency or domestic goods and services. That is bad for our economy, but good for wherever I'm shipping the gold to.

Why is that so hard to understand?

Because it doesn't make sense? If I use instead of gold, cars, then it shows better how your example does not work. If you buy a car here and ship it overseas to pay Indian programmer, the car does not really disappear from the economy since you already contributed to the economy by buying that car in San Diego using dollars.

[jj]

Originally posted by EvilYeti

I'm a young fart and his arguments are still laughably transparent. Most of what he spouts is so self-contradictory it almost defies analysis. I feel like I'm debating Zippy the pinhead.

It's your own fault, you know. You dare to think.
:D

[EvilYeti]

Originally posted by shanek

Assuming the price of gold hasn't changed between these two transactions, you have made absolutely no difference here whatsoever.


What happens to the gold I send overseas? Is that converted into dollars and pumped into the U.S. economy? No!


You STILL have the dollars.


NO I DO NOT! I've exchanged my dollars for gold and exchanged the gold with some guys in India for their time and expertise. The money expended on salary is no longer in circulation in the US economy, it has been exported to India.


Absolutely untrue. You exchanged dollars for gold, and then your employees exchanged gold for rupees. You've added in a transitory medium of exchange (the gold), but the actual amounts involved are still the same.


Yeah, and its all over in India now. Please explain how the Indian economy is the U.S. economy.


No, they wouldn't! Christ on a stick, this is so simple! Why do you refuse to get this? What is your malfunction?

Hey Zippy, why don't you provide evidence your theory is true, or even a means to test it? If you can't this is just another example of your neverending stream of paranormal Libertarian beliefs.

[Rayn]

Umm ... admittedly I am not the most well-read person in international and domestic economies, but I'm not sure what argument you're making shanek. I know you've said that you have refuted the idea that moving jobs overseas is not deleterious to our economy, but could you explain that to me? Personally it seems to me that by moving jobs somewhere else, people lose their jobs here, granted different jobs may open up here but that is not necessarily the case. So if people lose jobs here, is that not a bad thing? How does it even out? But it seems I am wrong according to you, so please help me understand your position. Thanks.

[EvilYeti]

Originally posted by Grammatron


Because it doesn't make sense? If I use instead of gold, cars, then it shows better how your example does not work. If you buy a car here and ship it overseas to pay Indian programmer, the car does not really disappear from the economy since you already contributed to the economy by buying that car in San Diego using dollars.

Firstly, car's aren't currency, they depricate in value. If I have $20,000 in the bank, I will still have $20,000 ten years later (more in fact, plus interest). A $20,000 car won't be worth nearly as much 10 years later, even if its hardly driven.

Your analogy collapses under further scrutiny. Yes, the car is gone from the San Diego economy. If I gave it to a local programmer he would pay local businesses for gasoline and services. Plus he could resell it later for cash, which he would then spend locally. This is all good for the economy.

I ship the car to India and I might as well roll it into the ocean for all the further good its going to do our economy.

[jj]

Originally posted by Grammatron


Because it doesn't make sense? If I use instead of gold, cars, then it shows better how your example does not work. If you buy a car here and ship it overseas to pay Indian programmer, the car does not really disappear from the economy since you already contributed to the economy by buying that car in San Diego using dollars.

Except that you're making a whole host of fallacious assumptions, here.

The car could have been made in Korea, for instance, and most of the money go to Korea.

He could buy his gold from South Africa.

Cars are not a medium of exchange. Gold is. You can't spend a car very effectively, you can spend gold.

Supernovas make gold. Factories make cars

and on and on and on and on ...

In any case, in the "3 programmers in San Diego" case the money stays local and circulates.

In the "send it to India" case, the money goes to India and circulates there, and disappears from here.

Big difference.

[Grammatron]

Originally posted by EvilYeti


Firstly, car's aren't currency, they depricate in value. If I have $20,000 in the bank, I will still have $20,000 ten years later (more in fact, plus interest). A $20,000 car won't be worth nearly as much 10 years later, even if its hardly driven.

Your analogy collapses under further scrutiny. Yes, the car is gone from the San Diego economy. If I gave it to a local programmer he would pay local businesses for gasoline and services. Plus he could resell it later for cash, which he would then spend locally. This is all good for the economy.

I ship the car to India and I might as well roll it into the ocean for all the further good its going to do our economy.

I hate to break it to you, but we have not been on Gold standard for some time now; the Gold you buy today might worth half the price tomorrow.

I can apply the same logic with gold: A programmer might melt all the gold into jewelry thus taking out of the economy.

[jj]

Originally posted by Grammatron


I hate to break it to you, but we have not been on Gold standard for some time now; the Gold you buy today might worth half the price tomorrow.

I can apply the same logic with gold: A programmer might melt all the gold into jewelry thus taking out of the economy.

Illicit reasoning, and I think you knew it from the start.

Yes, gold is a market item now, but that's no more or less than the same thing as currency fluctuation, and making the gold into jewelry doesn't take it out of the economy unless it's so bad he throws it all away.

The point, sir, is WHERE the money goes as well as what happens to it.

You have, I presume, heard of Gresham's principle/law/whatever?

[jj]

Originally posted by shanek

It doesn't matter if it's being spent by an American citizen in America or someone in Japan, China, or India. It DOESN'T MATTER. The money still gets spent!

Then you reject Gresham's law and its corrolaries?

Really, now?

Explain.

[EvilYeti]

Originally posted by Grammatron

I hate to break it to you, but we have not been on Gold standard for some time now; the Gold you buy today might worth half the price tomorrow.


I'm well aware we are no longer on the gold standard. I hate to break it to you but the same thing is true with currency, its how George Soros made his billions.


I can apply the same logic with gold: A programmer might melt all the gold into jewelry thus taking out of the economy.

And a programmer might cash his paycheck for small bills and burn them to heat his house. Or send it to family overseas, either way it does nothing for the US economy.

[shanek]

Originally posted by EvilYeti
Incorrect.

No, he's quite correct.

My whole point is that currency exchange is a zero-sum game, as no one is making or losing money in the immediate transaction.

That was my point. Your point is that Americans are somehow losing in the deal when we aren't.

Why is that so hard to understand?

Uh, because it's completely and totally bogus?

[shanek]

Originally posted by EvilYeti
The only reason I used gold in the example is due to Shanek's shell-game with currency exchange.

No, it's that you thought you could obfuscate it, when in reality it makes no difference at all.

I guess high-unenmployment also helps the economy in Shanek-land.

I guess lying is a proper debate strategy in EvilYeti-world.

[Mr Manifesto]

While you're here, shanek, can you explain how investment creates jobs necessarily, particluarly given company's habits of using capital to acquire companies, strip them of assets, and then sell them off again for quick bucks? Or even given investors habits of speculating with money (such as in futures markets)? Where is the link between investment and jobs?

[shanek]

Originally posted by EvilYeti
What happens to the gold I send overseas? Is that converted into dollars and pumped into the U.S. economy? No!

BECAUSE THE CONVERSION HAS ALREADY TAKEN PLACE!!! YOU GAVE DOLLARS TO THE PERSON IN EXCHANGE FOR THE GOLD AND HE PUTS IT BACK INTO THE US ECONOMY!!!!

I've exchanged my dollars for gold

Whereupon whomever exchanged you the gold for the dollars is going to use it in the American economy!

The money expended on salary is no longer in circulation in the US economy,

YES IT IS!!! You gave the dollars to someone in exchange for the gold, and they're going to spend or invest it in the economy! The money is STILL IN CIRCULATION!!!

it has been exported to India.

No, it hasn't! The dollars are in the hands of whomever you exchanged the gold with!

Yeah, and its all over in India now. Please explain how the Indian economy is the U.S. economy.

Please explain how the person you gave the dollars to is going to spend them in the Indian economy.

[jj]

Originally posted by shanek


No, it's that you thought you could obfuscate it, when in reality it makes no difference at all.


You still haven't said a thing that denies that the money has moved from San Diego, where it is no longer circulating, to India, where it is now circulating.

Please explain, if you will, how that is in any way good for the residents of San Diego.

You haven't done that yet, and you've evaded and obfuscated the issue in some of the most obvious fashions possible, while hypocritically accusing same of Yeti.


I guess lying is a proper debate strategy in EvilYeti-world.

I see no lie.

You have proven nothing, provided no evidence, and resorted to pure, overweening evasion, and now ethical accusations.

Have you ANYTHING at all to say for yourself?

Now, as we all know, Yeti and I don't get along that well, but in this exchange he's looking like motherhood and apple pie, and you're looking like something a horse has recycled.

[shanek]

Originally posted by Rayn
Personally it seems to me that by moving jobs somewhere else, people lose their jobs here,

Because you're trapped into thinking it's a zero-sum game when it isn't. Even if you buy goods from overseas, those dollars you use are still going to be in circulation in the American economy, which means they're going to be tied to a level of production.

There's a simple way to test this: Does shipping jobs overseas increase inflation? No, clearly, it doesn't. Therefore, the dollars still in the economy must be being put to productive value. Therefore there is just as much production as there was before. Therefore there has been no rise in unemployment, since a rise in unemployment means a drop in overall production.

[shanek]

Originally posted by EvilYeti
Firstly, car's aren't currency,

Neither is gold anymore. You're using a commodity instead of currency.

they depricate in value. If I have $20,000 in the bank, I will still have $20,000 ten years later (more in fact, plus interest). A $20,000 car won't be worth nearly as much 10 years later, even if its hardly driven.

But cars also have a use. Gold just sits there.

[shanek]

Originally posted by jj
The car could have been made in Korea,

It doesn't matter, unless he paid for it in won. And even then, if he exchanged dollars for won, it still doesn't matter.

He could buy his gold from South Africa.

Same thing. Even if he pays for it in rands, he would still have to exchange dollars for rand, unless he earned rands in South Africa to begin with, in which case nothing is leaving our economy because it wasn't there in the first place.

Cars are not a medium of exchange. Gold is.

No, it isn't. Not any more than stocks or bonds are. It's a commodity, and therefore may be exchanged on the commodities market, but that's different from it being currency.

you can spend gold.

No, you can't. You have to go back to the exchange market and exchange it for whatever currency you're looking for.

In the "send it to India" case, the money goes to India and circulates there, and disappears from here.

No, it doesn't. There are exactly as many dollars as there were before.

[shanek]

Originally posted by jj
The point, sir, is WHERE the money goes as well as what happens to it.

Okay, so where do the dollars go once they're exchanged for gold?

[shanek]

Originally posted by jj
Then you reject Gresham's law and its corrolaries?

Gresham's law has nothing to do with this! Gresham's law hasn't applied since our government converted to a fiat currency! A $100 bill is not made out of $100 worth of paper and ink, nor is it a promissory note for $100 worth of commodities!

Why, oh why won't you people go learn some basic economics?

[shanek]

Originally posted by EvilYeti
And a programmer might cash his paycheck for small bills and burn them to heat his house. Or send it to family overseas, either way it does nothing for the US economy.

This is just absolutely pathetic....

If he's paid in dollars, then what are his relatives going to do with it? They, like he, either have to spend it in the US or exchange it, in which case someone else will be spending it in the US.

The burning example is just plain stupid. Who in his right mind would burn money to heat his house when for about $3 you can go and get an all-night burning log that'll last longer than burning 3 $1 bills?

You're pathetic...

[shanek]

Originally posted by jj
You still haven't said a thing that denies that the money has moved from San Diego, where it is no longer circulating, to India, where it is now circulating.

Yes, I have! In order to be moved to India, the dollars must be exchanged for rupees! That means that, in a 1:1 correlation, there must be others out there willing to exchange the same number of rupees for the same value of dollars. And as I said, they're going to spend them in the US economy. There's no other reason for them to exchange their rupees for dollars.

You haven't done that yet, and you've evaded and obfuscated the issue in some of the most obvious fashions possible, while hypocritically accusing same of Yeti.

No, I have answered every question. But you've made it obviously clear that your biased little mind doesn't even want to consider anything that will shatter your precious little delusions.

I see no lie.

Then quote me saying that high unemployment helps the economy.

[RandFan]

Originally posted by Mr Manifesto
While you're here, shanek, can you explain how investment creates jobs necessarily, particluarly given company's habits of using capital to acquire companies, strip them of assets, and then sell them off again for quick bucks? Or even given investors habits of speculating with money (such as in futures markets)? Where is the link between investment and jobs? I'm sure that shane is far more capable than myself to answer the question. I would just like to note that the "habit" you refer to is not all that pervasive. Takeovers popularized by movies such as Wallstreet, Other People's Money and Pretty Women were more frequent in the 80's and early 90's. Companies now are more effective at thwarting such takeovers with any number of tactics. Also many states have inacted strong anti-takeover legislation.

Hostile Takeovers (http://occawlonline.pearsoned.com/bookbind/pubbooks/carlton_awl/chapter2/custom2/deluxe-content.html)

Management Defensive Tactics. The current, inefficient managers do not want you to succeed in taking over the firm and firing them. They may resort to a variety of defensive tactics designed to prevent an outsider from succeeding in a hostile takeover attempt. Even if you assure the managers you will not fire them and they want you to take over the firm, they may thwart you temporarily to force you to raise your bid.

Make the Firm Undesirable. To keep you from wanting to acquire the corporation, the managers may make taking over the firm unattractive. The managers can legally obligate the firm to engage in costly actions if you succeed in taking it over. For example, in the event of a hostile takeover, some unattractive obligations include:

Scorched earth policy: The corporation must sell valuable assets.
Golden parachutes: Key employees (the current managers) receive very high severance pay.
Poison pill: The corporation must make stock available at bargain prices to original shareholders (but not someone who takes over the firm) if the firm is taken over, thereby diluting the value of the new owner's stock.

...

The greater the roadblocks that you must face in acquiring control, the less is your initial incentive to engage in the costly activity of uncovering underperforming firms. If you could swoop in quickly and buy up all the shares of the firm, you would avoid the problem of having other investors benefit from your discovery that the firm is underperforming.

Hostile takeover battles were rare prior to 1968 and are, in part, a result of more recent government legislation. Unfortunately for you, the U.S. government has legislation (such as the Williams Act of 1968) that requires you to reveal your intentions about a firm in which you are trying to acquire a controlling interest. The legislation also imposes certain delays on you that give managers time to try to thwart your attempt to gain control. The result is that you must often share a large part of your expected gains with the stockholders of the firms you acquire, which reduces your incentive to engage in such activities.

SOURCE:
Grossman, Sanford J., and Oliver D. Hart. 1980. "Takeover Bids, the Free Rider Problem, and the Theory of the Corporation." Bell Journal of Economics 11:42-64.

[EvilYeti]

Originally posted by shanek


No, it's that you thought you could obfuscate it, when in reality it makes no difference at all.



You are the one who is trying to obfuscate it by bringing currency exchange into the discussion in the first place, when it has nothing to do with the debate.


I guess lying is a proper debate strategy in EvilYeti-world.

When did I lie Zippy? Why don't you provide evidence of your little theory, or even a means to test it?

[shanek]

Originally posted by RandFan
I'm sure that shane is far more capable than myself to answer the question.

I would if I had seen it. Sorry, Mr. M.

Originally posted by Mr Manifesto
While you're here, shanek, can you explain how investment creates jobs necessarily, particluarly given company's habits of using capital to acquire companies, strip them of assets, and then sell them off again for quick bucks? Or even given investors habits of speculating with money (such as in futures markets)? Where is the link between investment and jobs?

As RandFan pointed out, the "habit" you mentioned is exaggerated at best. They're the exception, and certainly aren't what companies are looking for in a CEO.

Anyway...investing creates jobs because those who invest the money are looking for a return on their investment (ROI). In order for that to happen, enough wealth must be created to exceed the initial amount invested, and that has to happen through production. Meaning, people are going to have to work to make it happen.

Of course, some investments go bad. An investor has every incentive to invest only in those areas he thinks is most likely to give him a return, and invest in enough different areas so that even if a few of them go under he still comes out ahead because the others are there to pick up the slack.

Note that this doesn't work once the economy reaches the level of total production, because it's just impossible for people to make any more stuff than they are now. That's what starts the downswing of the business model and a recession. Things have to slow down until they get below the level of total production, in which case it ramps up again. The economy is trying to reach the level of total production, but it's impossible to know where that is; hence the cycle.

The point of this thread is that, on the upswing of the cycle, jobs are supposed to open up and be available again as the economy is going to try and produce more. But even though we're certainly below the level of total production, it just can't seem to get cranking. This is what government intervention in the economy gets us. Recessions were never this long before.

[shanek]

Originally posted by EvilYeti
You are the one who is trying to obfuscate it by bringing currency exchange into the discussion in the first place, when it has nothing to do with the debate.

It has everything to do with the debate! You're trying to claim that the money's gone, and it's not! The currency exchange PROVES YOU WRONG!

When did I lie Zippy?

When you accused me of saying high unemployment was good for the economy, Pippy.

[EvilYeti]

Originally posted by shanek


BECAUSE THE CONVERSION HAS ALREADY TAKEN PLACE!!! YOU GAVE DOLLARS TO THE PERSON IN EXCHANGE FOR THE GOLD AND HE PUTS IT BACK INTO THE US ECONOMY!!!!



BUT THERE HAS BEEN NO INCREASE IN NET WEALTH!!! IF I EXCHANGED $1000 IN CASH FOR $1000 IN GOLD THERE IS NO INCREASE IN NET WEALTH IN OUR ECONOMY!!! IF I SHIP THE GOLD OVERSEAS THE NET WEALH GOES DOWN!!! BAD FOR THE ECONOMY!!!


Whereupon whomever exchanged you the gold for the dollars is going to use it in the American economy!


What if he uses it to buy more gold from South Africa?


YES IT IS!!! You gave the dollars to someone in exchange for the gold, and they're going to spend or invest it in the economy! The money is STILL IN CIRCULATION!!!


You are making the assumption that exchanging currency for currency is the same as exchanging currency for goods and services. The first does nothing, the latter everything when the economy is concerned.


No, it hasn't! The dollars are in the hands of whomever you exchanged the gold with!


And he has the same amount of wealth as prior to our transaction, so there is no net effect on the economy. What helps the economy is to spend money on goods and services, not endlessly exchange it for other forms of currency.


Please explain how the person you gave the dollars to is going to spend them in the Indian economy.

Ok, pay close attention now as Uncle Yeti is going to explain to little Zippy how a "Bank" works. Thats where grown-ups keep their money.

To keep this simple, lets assume I pay my Indian programmers in cash, U.S. currency, mailed directly to their homes in India. EvilYeti doesn't trust banks remember!

My programmers recieve their weekly pay and take it to their local Indian bank to exchange it for rupees. Now, here is the important part, so pay close attention children...

When they exchange the money, the bank gives their rupees to my programmers and takes the programmers U.S. currency. The U.S. currency does not count as the programmers salary anymore. Its the property of the bank, to do with as they see fit. There is no guarantee it's going to end up back in America.

The rupees the programmers leave the bank with is their salary now, not the cash sitting in the bank. The programmers now spend their salaries in India, benefiting the Indian economy, not ours.

Simple, no?

[DavidJames]

Ok, let's go back to EvilYeti's example and strip it down to the basics. Three programmers in San Diego, which cost the company 270k get laid off. The company hires programmers in India for 270k.

Correct me where I go astray.

The three programmers lose their jobs in San Diego.
The 3 San Diego programmers don't get to spend their piece (after taxes) of the 270k, eliminating that money from the local economy.

What have I missed?

[Grammatron]

I'm sure shanek has a more apt retort to your post, I will just comment on few things I saw that make no sense.

Originally posted by EvilYeti


BUT THERE HAS BEEN NO INCREASE IN NET WEALTH!!! IF I EXCHANGED $1000 IN CASH FOR $1000 IN GOLD THERE IS NO INCREASE IN NET WEALTH IN OUR ECONOMY!!! IF I SHIP THE GOLD OVERSEAS THE NET WEALH GOES DOWN!!! BAD FOR THE ECONOMY!!!


Instead of saying something I will just include your own quote as my reply.

Originally posted by EvilYeti

You are making the assumption that exchanging currency for currency is the same as exchanging currency for goods and services. The first does nothing, the latter everything when the economy is concerned.


Moving on....
Originally posted by EvilYeti

And he has the same amount of wealth as prior to our transaction, so there is no net effect on the economy. What helps the economy is to spend money on goods and services, not endlessly exchange it for other forms of currency.

Are you honestly going to sit there and tell me that someone is going to sell you gold with out making a profit? Please tell me where you shop.

[UnrepentantSinner]

Originally posted by jj
In any case, in the "3 programmers in San Diego" case the money stays local and circulates.

In the "send it to India" case, the money goes to India and circulates there, and disappears from here.

Big difference.

My point exactly.

Where the hell are we supposed to have income for investment and spending if we have no jobs here to provide said income.

How the hell is a programmer in India making $10,000 a year feeding my children, funding my 401k or paying my mortgage?

[Grammatron]

Originally posted by DavidJames
Ok, let's go back to EvilYeti's example and strip it down to the basics. Three programmers in San Diego, which cost the company 270k get laid off. The company hires programmers in India for 270k.

Correct me where I go astray.

The three programmers lose their jobs in San Diego.
The 3 San Diego programmers don't get to spend their piece (after taxes) of the 270k, eliminating that money from the local economy.

What have I missed?

Some things need to be clarified regarding this whole conversation. First of all there is no incentive to hire Indian programmers in India and pay them same amount, they will be paid less, probably 10K each. Second, the jobs going to India are not really programming jobs as I have seen, most are maintenance jobs; the program has already been written and a company just needs some people to make debug it once in a while. This makes sense IMO, you would not pay an engineer who made the car to change oil or do tune-ups. Third, there is an inflation of programmer in USA thanks in part to the dot-com era where everyone with a CS degree had an instant ticket on the "gravy train."

I'm in the IT field and I don't see any programmers starving. I realize this is nothing but anecdotal evidence, but the only downside to this is that most programmers will switch jobs more often. However, for the money they are getting paid I won't be feeling sorry for them any time soon.

[UnrepentantSinner]

Originally posted by Grammatron
I'm in the IT field and I don't see any programmers starving. I realize this is nothing but anecdotal evidence, but the only downside to this is that most programmers will switch jobs more often. However, for the money they are getting paid I won't be feeling sorry for them any time soon.

I work at a telecom company and both manufacturing and engineering jobs have been eliminated or outsourced permanently. As buildings have closed, it's also meant security guards, housekeepers, receptionists, maintenance personnel and cafeteria workers have been laid off as well.

It's not just high paid programmers who are losing jobs.

[EvilYeti]

Originally posted by shanek

It has everything to do with the debate! You're trying to claim that the money's gone, and it's not! The currency exchange PROVES YOU WRONG!



Actually Zippy, I must confess to some pinhead baiting. I've known why you were wrong since your first post. I just felt like having some fun and dragging the debate out a bit. It turns out you can add "International Banking" to the laundry list of topics you are ignorant of.

You see, I used to work in a programming shop that used some overseas programmers. I was curious how the business angle of that worked, so I talked to the CFO (thats Chief Financial Officer). Here's how it works:

The bank that ran the payroll would cut checks for the domestic employees or do a direct deposit. That was in U.S. currency.

For overseas employees the bank would wire transfer the funds to a foreign bank, which would automatically exchange the US funds for foreign currency at the current exchange rate. The US currency really does disappear, it leaves America as dollars and is doled out at the other end as whatever (in this case, rupees).

So there is no exchange of paper currency. Its all virtual. The U.S. funds are debited from the domestic account and credited to the international account as foreign currency at the current exchange rate. Unless you are doing a drug deal, this is how international business is done.

Before you go claiming I made this up, this is anecdotal, etc... I'll tell you an easy way to test this. Take a trip up to Canada and use your ATM card to withdraw U.S. funds from a domestic account. Guess what? American cash ain't gonna come out. You will get Canadian dollars at the current exchange rate. In fact the transaction isnt even in American dollars, its Canadian! You withdraw $200 Canadian and $144.12 U.S. is debited from your domestic account (as of noon today).

Now why don't you explain to all of us how paying international workers in the currency of their country of origin does the same for our economy as paying domestic workers in U.S. funds.

Until you answer the above question I have no further interest in discussing the matter with you.

[Grammatron]

Originally posted by UnrepentantSinner


I work at a telecom company and both manufacturing and engineering jobs have been eliminated or outsourced permanently. As buildings have closed, it's also meant security guards, housekeepers, receptionists, maintenance personnel and cafeteria workers have been laid off as well.

It's not just high paid programmers who are losing jobs.

I need some clarification here, are all offices of your company closed? I doubt it, but you kind of made it sound that way.

[UnrepentantSinner]

Originally posted by Grammatron


I need some clarification here, are all offices of your company closed? I doubt it, but you kind of made it sound that way.

The company has a coporate campus. We still have buildings open, but they've closed about 2/3rds of them and have eliminated all local manufacuring and testing of equipment and R&D. Service and support is either being spun off, outsourced overseas or the product line is being eliminated.

Those jobs are gone from the area for good and in most cases from the U.S. for good.

[Grammatron]

Originally posted by UnrepentantSinner


The company has a coporate campus. We still have buildings open, but they've closed about 2/3rds of them and have eliminated all local manufacuring and testing of equipment and R&D. Service and support is either being spun off, outsourced overseas or the product line is being eliminated.

Those jobs are gone from the area for good and in most cases from the U.S. for good.

Are you sure the company is not slowly going out of business?

[EvilYeti]

Originally posted by Grammatron

Second, the jobs going to India are not really programming jobs as I have seen, most are maintenance jobs; the program has already been written and a company just needs some people to make debug it once in a while.


Thats not always the case. I worked on a distributed computing application, of which the entire client was outsourced to an Indian consulting company. The project lead worked in America on a visa (I think he got the job cause he spoke english the best) and co-ordinated a team in India. They were responsible for part of the design and all of the implementation and maitenence of our distributed client.

Needless to say my former company has about 3 employees left, all of which are buisness folks trying like mad to find someone to buy whats left of the company. This is partially due to the really crappy client, which had dozens of memory leaks, used about 10X as much memory as it should have and crashed constantly. In my experience you get what you pay for; programming is no exception.


I'm in the IT field and I don't see any programmers starving. I realize this is nothing but anecdotal evidence, but the only downside to this is that most programmers will switch jobs more often. However, for the money they are getting paid I won't be feeling sorry for them any time soon.

Yeah, I'm in IT too and agree as well. I'm not hurting because I have a very strong background/skillset and, most importantly, have realistic salary demands. The people I know who are hurting are the HTML coders with huge mortgages and three SUV's, whom for some reason can't find anyone willing to pay them six figures for making web pages.

I really do feel sorry for the communities that lose whole factories and buildings, that not only effects the people that are laid off but the folks that depend on their business as well.

[UnrepentantSinner]

Originally posted by Grammatron


Are you sure the company is not slowly going out of business?

Yes, my company just renewed our contract with them for 3 years. We're a U.S. entity of a large multi-national. The multi-national ain't going broke any time soon.

[EvilYeti]

Originally posted by EvilYeti

Now why don't you explain to all of us how paying international workers in the currency of their country of origin does the same for our economy as paying domestic workers in U.S. funds.

Until you answer the above question I have no further interest in discussing the matter with you.

Well, that sure silenced the rabble.

Shanek and Grammatron sure got lippy with me before, I wonder why the sudden silent treatment?

Such a shame, I didn't even get a chance to point out that 80% of the U.S. currency currently in use doesn't even circulate in our economy!

[CapelDodger]

From shanek:
If no one is willing to exchange their currency for dollars, then the company wouldn't be able to change their dollars to that currency in the first place. I would think this should be obvious...
They pay wages in yuan, they sell for euros, they exchange euros for yen - why is it obvious that the company is changing dollars at any point? Even the initial investment could be financed by credit from a local bank, or from euro balances or whatever. Once the business is outside the US the US could stay completely outside the loop. Permanently.

[Grammatron]

Originally posted by EvilYeti


Well, that sure silenced the rabble.

Shanek and Grammatron sure got lippy with me before, I wonder why the sudden silent treatment?

Such a shame, I didn't even get a chance to point out that 80% of the U.S. currency currently in use doesn't even circulate in our economy!

Why? Well I was replying to a very specific claim that you were making. Then you switched your claim because you were "trying to trick shanek" or whatever. I am not familiar with international banking and currency exchange that occurs specifically during the transaction so I can't comment on that and so I did not. Any more questions?

[CapelDodger]

From Evilyeti:
Yes, you are correct their are also three less people unemployed in San Diego. I guess high-unenmployment also helps the economy in Shanek-land.
I gather shanek still adheres to the discredited monetarist theories of the Chicago school. In this system high unemployment leads to downward pressure on wages and therefore on inflation, which is the be-all and end-all of monetarism. The system requires a pool of unemployed to scare workers with so that their wages can be kept as close to subsistence level as possible (or less if the government takes up the slack). By such means does a nation become prosperous, apparently.

When Henry Ford started paying his workers five dollars a day other employers berated him, claiming such wages would lead to the end of civilisation - nay, was the end of civilisation. Henry Ford replied: "I want my workers to be able to buy my cars." That way does lie prosperity.

[EvilYeti]

Originally posted by CapelDodger
From Evilyeti:

I gather shanek still adheres to the discredited monetarist theories of the Chicago school. In this system high unemployment leads to downward pressure on wages and therefore on inflation, which is the be-all and end-all of monetarism.


To Shanek's credit, he never actually came out and stated that high unemployment would be good for the economy. I inferred that from the claims he was making, but he cried foul.

The claim he did make, which I proved wrong, is that moving jobs overseas does not cause unemployment domestically. If he supports moving jobs overseas and thinks having a strong economy is a good thing, I don't see how its wrong to infer his belief that unemployment helps, or at least has no effect, on the economy.

His reasoning was that the foreign workers would be paid in U.S. currency, which would then be exchanged and eventually fed back into the American economy. This is so wrong, on so many levels, I had a hard time understanding how anyone could believe it. I assume he was taught this at some point, though I have not heard anyone make the claim before.

Do you know any school of economic theory that would preach such nonsense? I'm curious.

[EvilYeti]

Originally posted by Grammatron

Any more questions?


Yeah, why did you pick on me when I was making the same fundamentally nonsensical point as Shanek?

I trolled him with his own bait, after all.

[CapelDodger]

From EvilYeti:
Do you know any school of economic theory that would preach such nonsense? I'm curious.
I've never come across it in any kind of economic theory. What classical theory would predict would be a reduction in the value of the dollar (due to the deterioration in the current account by loss of exports and/or import of what was previously home-produced). Eventually that would make US workers competitive again. So the export of jobs leads inexorably to third-world standards of pay and conditions (in classical theory) and thus prosperity ....

shanke has waved the Chicago school at me in the past, and what I describe above is in fact their position. All aspects of monetarism coincidentally lead to the same policy - more for the rich, less for the poor. A cynic ;) might think the theory was argued backwards from that policy.

[Grammatron]

Originally posted by EvilYeti


Yeah, why did you pick on me when I was making the same fundamentally nonsensical point as Shanek?

I trolled him with his own bait, after all.

I did nor do pick on anyone. You made some statements that made no sense so I challenged them based on my knowledge and experiences, that is all.

[Tormac]

Just as a side note, the telecom industry has been moving to India for some time now. It has definatly not just started to happen.

I used to work for a company that did phone support for one of the major cable modem providers. I jumped ship for personal reasons, but saw the trend in the industry.

From my understanding technical degrees are common in India (as well as general computer "literacy"), and the educated in India have as high, and unfortunately maybe higher "language skills" in English than we do here in the states. I was a new hire trainer for the call center here, and would often teleconference with my Indian counterparts. Granted they were all trainers like myself, but they were very well spoken and professional.

The move to India seemed inevitable. The geographic barriers to the telecom industry are slight. I hate to admit it, but the Indian counter parts that I worked with were very professional, and if I was on the wrong end of a customer support call, I would have rather have worked with one of the Indian CSR’s or TSR’s than most of the Americans in the night crew at the call center I worked at.

[shanek]

Originally posted by EvilYeti
BUT THERE HAS BEEN NO INCREASE IN NET WEALTH!!!

The exchange process isn't about that!!!

You're just trying to avoid facing the fact that your claim that the dollars are gone has been completely and utterly trashed.

What if he uses it to buy more gold from South Africa?

Then the person he bought the gold from is wanting to use them in the US economy. Otherwise, he wouldn't have given up his gold for dollars.

No matter what you do, you can't make the dollars go away!

You are making the assumption that exchanging currency for currency is the same as exchanging currency for goods and services.

It is, in this case, since you're using the gold as a medium of exchange!

And he has the same amount of wealth as prior to our transaction,

Not in his view. He must have valued the dollars more than the gold, or else he wouldn't have bothered trading. Likewise, you must have valued the gold more than the dollars, or you wouldn't have made the trade, either. Hence, you each got something you considered to be more valuable than what you traded it for, and wealth is created!

My programmers recieve their weekly pay and take it to their local Indian bank to exchange it for rupees. Now, here is the important part, so pay close attention children...

When they exchange the money, the bank gives their rupees to my programmers and takes the programmers U.S. currency. The U.S. currency does not count as the programmers salary anymore. Its the property of the bank, to do with as they see fit. There is no guarantee it's going to end up back in America.

What else are they going to do with US dollars? They're either going to put it in the US economy, or end up loaning them out to someone who's going to put them in the US economy! That's what US dollars are for—spending in the US economy!

Simple, no?

Simple, yes, but WRONG. As Einstein said, everything should be made as simple as possible, but no simpler.

[shanek]

Originally posted by DavidJames
What have I missed?

The fact that US dollars are going to be spent in the US economy, after all the exchanges are done.

[shanek]

Originally posted by EvilYeti
For overseas employees the bank would wire transfer the funds to a foreign bank, which would automatically exchange the US funds for foreign currency at the current exchange rate. The US currency really does disappear, it leaves America as dollars and is doled out at the other end as whatever (in this case, rupees).

No, it doesn't! When the bank exchanges the US funds for foreign currency, someone else is exchanging that currency for US dollars! Why do you think they call it an exchange?

How long are you going to continue to deny reality?

So there is no exchange of paper currency. Its all virtual.

It doesn't matter. Only a small minority of the dollars in the US is in the form of paper to begin with. The exchange is still being made, and it still is real.

I'll tell you an easy way to test this. Take a trip up to Canada and use your ATM card to withdraw U.S. funds from a domestic account. Guess what? American cash ain't gonna come out. You will get Canadian dollars at the current exchange rate.

And that will be exchanged somewhere else for Canadian dollars back into American dollars! Learn how these things work before you go mouthing off...you assume that just because YOU don't see it, it isn't there; but it is there. It must be!

[DavidJames]

"The fact that US dollars are going to be spent in the US economy, after all the exchanges are done."

By WHO - Please fill in where I'm mistaken!

The three programmers lose their jobs in San Diego. Yes/No/Other - Please Explain

The 3 San Diego programmers don't get to spend their piece (after taxes) of the 270k, eliminating that money from the local economy. Yes/No/Other - Please Explain

[shanek]

Originally posted by EvilYeti
Well, that sure silenced the rabble.

You farking wish!

Shanek and Grammatron sure got lippy with me before, I wonder why the sudden silent treatment?

Maybe because it hasn't even been 24 hours since you posted it and you're trying to score some cheap points because you know you're losing the argument?

Such a shame, I didn't even get a chance to point out that 80% of the U.S. currency currently in use doesn't even circulate in our economy!

Which means what? This point about paper currency is a red herring you threw out. It doesn't matter if it's paper or not! The exchange still takes place!

[shanek]

Originally posted by CapelDodger
They pay wages in yuan, they sell for euros, they exchange euros for yen - why is it obvious that the company is changing dollars at any point?

Because there's no point at all in invoking the example unless the company is either making profits in dollars or selling products to America in dollars. Otherwise, it's a foreign company selling exclusively to foreigners and no one in America is affected one way or the other.

[shanek]

Originally posted by DavidJames
By WHO

Whomever ends up with the dollars, duh! They wanted the dollars to buy goods or services or invest in the American economy!

The three programmers lose their jobs in San Diego. Yes/No/Other - Please Explain

Individually, yes, but that doesn't mean the economy nets three jobs fewer.

[jj]

Originally posted by shanek
No matter what you do, you can't make the dollars go away!


So, the dollars fly to India, getting very old and tired in the process. There, they are exchanged for Rupees. Somebody in India now has dollars and somebody else in India has rupees.

The dollars aren't here any more.

End of discussion.

[DavidJames]

"Whomever ends up with the dollars, duh! They wanted the dollars to buy goods or services or invest in the American economy!"

The $'s being discussed are the salary's of the programmers. Those salarys have gone overseas, as has been stated over and over again, they will be spent overseas. Again, please explain how the money comes back to the United States. And who are the "They" you are referring to?

"Individually, yes, but that doesn't mean the economy nets three jobs fewer."

Tell that to the 3 programmers. I think you will need to elaborate more (and yes, provide specifics and evidence) for your claim.

[jj]

Originally posted by shanek


Whomever ends up with the dollars, duh! They wanted the dollars to buy goods or services or invest in the American economy!


OH, excuuuuuse me, they didn't want hard currency that they could exchange with somebody in Bangladesh for rice. The person in Bangladesh buys farm equipment and seed from somebody in Thailand, who pays for a vacation in Pattaya. The people who run the Royal Thai then give some of those dollars to their staff, who run out and buy bagged rice from the guy in India.

Yeah, helps us a whole lot here in the USA. Sure 'nuff.



Individually, yes, but that doesn't mean the economy nets three jobs fewer.

The US economy? Or somebody else's economy?

And, by the way, Gresham's law is in no way hopelessly tied to a standard-based currency, it is in clear and obvious evidence in a purely market-based currency as well.

[EvilYeti]

Originally posted by shanek


No, it doesn't! When the bank exchanges the US funds for foreign currency, someone else is exchanging that currency for US dollars! Why do you think they call it an exchange?

How long are you going to continue to deny reality?


That is not how bank's work pinhead!!! There is no exchange taking place as there is no hard currency involved! That refers to cash transactions only. The wire version is called currency conversion. The U.S. funds are debited from the domestic account as dollars and credited to the foreign account in whatever the local currency is at the present exchange rate. Its a one way transaction, dollars -> rupees in my example. No dollars are coming back into the country as the result of this transaction.

If you're version of reality is correct, then why don't you provide some EVIDENCE of it, rather than your shrill assertions?


It doesn't matter. Only a small minority of the dollars in the US is in the form of paper to begin with. The exchange is still being made, and it still is real.


No there is no exchange being made. The dollars are being converted into rupees for all intents in purposes.

Why is that so hard for you to understand?


And that will be exchanged somewhere else for Canadian dollars back into American dollars! Learn how these things work before you go mouthing off...you assume that just because YOU don't see it, it isn't there; but it is there. It must be!

You don't know that!!! It could circulate endlessly in the Canadian economy for all you know.

How is an American spending Canadian dollars in Canda, converted from US funds withdrawn from a domestic account ANY different then a Canadian spending Canadian dollars withrawn from a Canadian account? They both benefit the Canadian economy, not the US. Does the American's money magically return to the US and the Canadians money stay up north? Care to explain the mechanism of how that works, or provide evidence of the same?

[shanek]

Originally posted by jj
So, the dollars fly to India, getting very old and tired in the process. There, they are exchanged for Rupees. Somebody in India now has dollars and somebody else in India has rupees.

The dollars aren't here any more.

End of discussion.

No, it's not! Whomever has the dollars (and you don't know it's someone in India who exchanged for the dollars; it's just someone with rupees) is going to use them to either buy American goods or invest in American companies! Why do you refuse to acknowledge this part?

[shanek]

Originally posted by DavidJames
The $'s being discussed are the salary's of the programmers. Those salarys have gone overseas,

But they aren't dollars once they go overseas! They've been exchanged for rupees! The dollars come right back into the American economy. There's just nothing else that can happen to those dollars!

[shanek]

Originally posted by jj
The US economy?

Yes, the US economy!

And, by the way, Gresham's law is in no way hopelessly tied to a standard-based currency, it is in clear and obvious evidence in a purely market-based currency as well.

We don't have a market-based currency, either.

[shanek]

Originally posted by EvilYeti
You don't know that!!! It could circulate endlessly in the Canadian economy for all you know.

Canadians use Canadian dollars, not US dollars—unless they're buying American goods! You're behaving like Nimrod again...

How is an American spending Canadian dollars in Canda, converted from US funds withdrawn from a domestic account ANY different then a Canadian spending Canadian dollars withrawn from a Canadian account?

Because the American starts with American dollars, which must be exchanged for Canadian dollars. That's the difference, and that's the exact difference I've been trying to get through your thick, bigoted skull for three pages already!

Does the American's money magically return to the US

It doesn't "magically" return to the US...It never left the US! It was exchanged for Canadian dollars, but the same amount of Canadian dollars was also exchanged for US dollars! That's how the exchange works!

[shanek]

All right, people, before you make any more of your completely ignorant comments, please read this:

http://wfhummel.cnchost.com/foreignexchange.html

It confirms everything I've said, and is written in a way that anyone should be able to understand it.

A currency swap consists of two simultaneous transactions. In this example, one would be the purchase of francs for dollars for immediate delivery in the spot market. The other would be a contract in the forward market allowing the bank to sell francs for dollars at an agreed upon price three months hence. At that time the francs would be delivered as required. The currency swap locks in the exchange rate and thus protects the bank. The bank make its profit as a markup in the forward contract bought by the importer.

[jj]

Originally posted by shanek


Yes, the US economy!



We don't have a market-based currency, either.

I don't care what you call it, Shanek, you and I both know that you can't get around Gresham's law.

Now take your sorry excuse over to that other thread and fully, completely and abjectely retract your claim I'm a liar.

[jj]

Originally posted by shanek


No, it's not! Whomever has the dollars (and you don't know it's someone in India who exchanged for the dollars; it's just someone with rupees) is going to use them to either buy American goods or invest in American companies! Why do you refuse to acknowledge this part?

Doesn't matter. My scenario can be valid, that's all that's required.

You're double-booking the money.

They have no need to buy anything american with american dollars. That's a fact, and one often used around the world.

[jj]

Originally posted by shanek
All right, people, before you make any more of your completely ignorant comments, please read this:

http://wfhummel.cnchost.com/foreignexchange.html

It confirms everything I've said, and is written in a way that anyone should be able to understand it.



The quote has nothing whatsoever to do with your assertion.

[EvilYeti]

Originally posted by shanek

Maybe because it hasn't even been 24 hours since you posted it and you're trying to score some cheap points because you know you're losing the argument?


No, Zippy, the debate is over and you lost. You made the claim, early in the thread, that foreign workers are paid in dollars. Every claim you have made is descended from that initial statement, which I have proven false. Foreign workers are paid in the currency of their homeland converted (not exchanged) from U.S. funds.


Which means what? This point about paper currency is a red herring you threw out. It doesn't matter if it's paper or not! The exchange still takes place!

You made the claim that foreign workers were paid in dollars, not I. If that was true then they would recieve U.S. bills when they cashed their paychecks, which they would have to exchange for their local currency. Thats the only possible way your theory could even be partially correct, as some of those bills might be spent in America. You would still be mostly wrong, however, as only 20% of U.S. hard currency is circulated in the American economy.

Regardless, your initial claim is false, no exchange of currency takes place, the funds are converted as part of the wire transfer into foreign currency and the salaries are now supporting the Indian economy, not ours. There is no difference between the rupees the programmers spend and the rupees spent by any other native Indian.

[jj]

Originally posted by EvilYeti


You made the claim that foreign workers were paid in dollars, not ....
(making more holes in Shanek)
There is no difference between the rupees the programmers spend and the rupees spent by any other native Indian.

Yeti, I've got to give you credit. You hold your patience much more with this person than you do when you're peeved at me.

Maybe it's the sympathy for what it must be like to be Shanek?

:D

[Grammatron]

Originally posted by EvilYeti
No, Zippy, the debate is over and you lost. You made the claim, early in the thread, that foreign workers are paid in dollars. Every claim you have made is descended from that initial statement, which I have proven false. Foreign workers are paid in the currency of their homeland converted (not exchanged) from U.S. funds.

You made the claim that foreign workers were paid in dollars, not I. If that was true then they would recieve U.S. bills when they cashed their paychecks, which they would have to exchange for their local currency. Thats the only possible way your theory could even be partially correct, as some of those bills might be spent in America. You would still be mostly wrong, however, as only 20% of U.S. hard currency is circulated in the American economy.

Regardless, your initial claim is false, no exchange of currency takes place, the funds are converted as part of the wire transfer into foreign currency and the salaries are now supporting the Indian economy, not ours. There is no difference between the rupees the programmers spend and the rupees spent by any other native Indian.

Now I am not going to claim to know what shanek meant, but what I understood him to mean was that the Indian programmer are paid in dollars. Those dollars go to the bank which exchanges them in to rupees and only then actually gives it to the programmer in India. The dollars, however, are then used by the bank or whoever sold them the rupees, in the US economy.

[EvilYeti]

Originally posted by shanek
All right, people, before you make any more of your completely ignorant comments, please read this:

http://wfhummel.cnchost.com/foreignexchange.html

It confirms everything I've said, and is written in a way that anyone should be able to understand it.



This is about currency markets and nothing to do with the current discussion, other than driving the current conversion rate. Foreign exchange trading is an economy in and of itself and is a seperate issue entirely. Why am I not surprised you cannot understand this...

The wire transfers happen immediately and at whatever the current rate is. Its NOT an exchange, from the US companies point of view, as THEY ARE NOT GETTING ANY MONEY BACK!

The only exchanging going on is in the foreign exchange market, where the money circles around and around with the more clever investors skimming off the top. Its not dumped back into the US economy. Why am I not surprised you can't understand that either...

JJ, is right about the double billing, you are making the claim that the same dollar can be spent in San Diego and Bangalore. Needless to say, cash transactions do not work that way!

[EvilYeti]

Originally posted by Grammatron

Now I am not going to claim to know what shanek meant, but what I understood him to mean was that the Indian programmer are paid in dollars. Those dollars go to the bank which exchanges them in to rupees and only then actually gives it to the programmer in India. The dollars, however, are then used by the bank or whoever sold them the rupees, in the US economy.


The dollars are more than likely to be used on the foreign exchange market to buy other countries currency, not to buy American goods and services. Its one of the many ways Banks make new money with your old money. How is it helping the US economy if an Indian bank uses my former funds to buy Swiss Francs? In fact, pumping the money into the foreign exchange market is a practical guarantee it will never end up in the US economy, as U.S. dollars are a standard against with other currencies are traded. So the money just circulates from bank to bank, country to country.

Don't believe me, check the link Shanek posted!

He is also claiming that you can spend the same dollar twice. The salary I pay my employees can only be spent once and the american dollars no longer belong to me or the programmers after they are converted. They belong to the Indian bank. The rupees are the salary now and whatever economy they are spent in (guess which one?) is going to benefit.

[EvilYeti]

Originally posted by jj

Yeti, I've got to give you credit. You hold your patience much more with this person than you do when you're peeved at me.


I don't ever get peeved at you jj, I just used to enjoy antagonizing you to the point of over-reaction. I am a self-admitted part-time troll after all. I seem to be mostly reformed these days (present thread excepted).


Maybe it's the sympathy for what it must be like to be Shanek?

:D

Nah, he just makes the skewering so easy I don't even have to work at it.

[DavidJames]

Shanek
Please bare with me, but I am not following this at all. You are welcome to react with rudeness or sarcasm, but consider the possibility you are either wrong or not able to explain things. So let's try again.

I said: "The $'s being discussed are the salary's of the programmers. Those salaries have gone overseas,"

You replied.
"But they aren't dollars once they go overseas! They've been exchanged for rupees!"

So What, of course the money is exchanged. Dollars for whatever the local currency is. But when the money is exchanged you give them x dollars and they give you the equivalent in local currency.

"The dollars come right back into the American economy. There's just nothing else that can happen to those dollars!"

Huh? Those dollars went to the "person" that gave you the local currency? The company then pays the overseas programmers. How do they "come right back into the American economy"?

Please explain why these statements are incorrect
1. The 3 programmers in San Diego aren't getting paychecks equivalent to $270k for a year.
2. That's $270k that is not being spent in San Diego.
3. The company is paying programmers overseas $270k
4. The programmers overseas are cashing their checks and spending them in their local economy.
5. San Diego loses $270k/year and overseas gains $270k/year

Edit to add this question:
Are you saying that after the exchange, that physical U.S. currency is returned to the U.S. somehow? If so how?

[EvilYeti]

Originally posted by DavidJames

Edit to add this question:
Are you saying that after the exchange, that physical U.S. currency is returned to the U.S. somehow? If so how?


My apologizes for responding to this, but I can't resist. This is so hard to understand as Shanek is erroneous in several ways, simultaneously. He's a veritable hypercube of errors.

Yes, Shanek is claiming that there is now U.S. $270k sitting in some bank in India, just waiting to be invested in domestic goods and services, after all what good are U.S. dollars to Indians?

One could imagine, for example, a wealthy Indian businessman exchanging rupees for the $270k and using it to buy a little summer cottage in San Diego.

So as you can see, Shanek is right, as the $270k is pumped right back into the U.S. economy and all is well and good, correct?

If those programmers jobs were still in San Diego, the original $270k would be circulating in our local economy. So its all the same, correct?

WRONG

Here's the kicker, the Indian businessman STILL buys the cottage, regardless of where I hire programmers. So the net increase for the San Diego economy is U.S. $540k for that year if I hire domestic programmers, $270k if I outsource. Understand the fallacy now?

Shanek's first error is assuming the $270k sitting in the bank in India is the salary I paid to my Indian programmers. It's not, its been spent to purchase rupees, it doesnt belong to me anymore. Its the banks money now.

Now here is a very important point, you can't spend the same dollar twice. Each dollar I dole out as salary can be spent exactly once. It can either be spent in the Indian economy or the U.S. economy. Once its spent, its no longer the programmers salary anymore. Where it goes now is irrelevant for the purpose of this discussion.

Shanek's second error is assuming that 100% of the U.S. dollars are going to end up back in the U.S. This is completely untrue. Dept. of Treasury stats. indicate of all the U.S. hard currency in circulation, 80% of it occurs outside of our country and economy. American dollars are very popular in the black market.

Even ignoring hard currency, the picture is still bleak for U.S. funds overseas. The Indian bank holding it likely partakes in the foreign currency market, which uses dollars as the standard. So if the bank spends the money, they are going to use it buy other foreign currency. The bank has no interest in american goods and services, they are interested in Francs, Krona, Guilder, etc. Not surprisingly, Indian banks buying Swiss, Swedish and Dutch currency with U.S. dollars does little for our economy.

Are you clear now? Don't expect a logical response from Shanek, btw.

[The Don]

Answer is simple

- Quit whining
- Move to India

Money flow is global. The $270k will find its way back to the U.S. if there's any products or services the U.S. can provide to those Indians. If there isn't, then maybe you should start to think of ways to part these newly affluent foreigners from their wealth. Disney, Coke and Microsoft are a start.

[UnrepentantSinner]

I'm sorry, but I'd rather have the income from the 50,000 Americans being spent here than a percentage of the income of 50,000 Indians going to a few hundred Americans to spend here.

[The Don]

I understand that you do.

It's just not the way that economics works. Each corporation is obliged to generate the maximum profits by both increasing revenue and lowering costs.

If that company believes that moving jobs offshore is the best way to reduce costs then it is obliged to do so.


Anyway, your putative 50,000 will be spending their money on goods which have more than likely been manufactured overseas or which have been manufactured by companies based overseas. The money is destined for Asia, I guess what we're arguing about is how many hands it'll pass through on the way

[Mr Manifesto]

Originally posted by The Don
I understand that you do.

It's just not the way that economics works. Each corporation is obliged to generate the maximum profits by both increasing revenue and lowering costs.

If that company believes that moving jobs offshore is the best way to reduce costs then it is obliged to do so.


Anyway, your putative 50,000 will be spending their money on goods which have more than likely been manufactured overseas or which have been manufactured by companies based overseas. The money is destined for Asia, I guess what we're arguing about is how many hands it'll pass through on the way

Yeah, US. It's market forces. You can't fight it. Just close your eyes and open your mouth.


Edit to add: "In case you didn't know, I was being sarcastic."

[Some Friggin Guy]

Two things I'd like to touch on (which may or may not have already been said, since my ISP is getting funky and I can only pull up about 3 pages of this thread.)

First two quotes from shanek:

You began with this quote from another poster (apologies, I lost part of my initial cut of this, so whoever made the post, I want ot give you credit.)

My whole point is that currency exchange is a zero-sum game, as no one is making or losing money in the immediate transaction.

You're reply:

That was my point. Your point is that Americans are somehow losing in the deal when we aren't.

Elswhere, you repeatedly state that it is NOT a zero-sum game. Which is it?

Second, I am speaking from personal experience working payroll for a company with a devision in Bangalore. Our employees in Bangalore were paid in US Dollars, not Ruppees. If they decided to exhcange the money, that was there call, however (I am not trying to debate, I am stating heresay and am not claiming anything else) the black market, as I understand it, is fairly prosperous in that area. One thing I can state is that the international currency used in many black markets is US dollars.

So how would money, never exchanged in the US, shipped out of the US to workers who were being paid less than comperable workers in the US, POSSIBLY help the US economy?

[The Don]

[/B]So how would money, never exchanged in the US, shipped out of the US to workers who were being paid less than comperable workers in the US, POSSIBLY help the US economy? [/B]

By increasing the profitability of those American corporations who are exporting their jobs enabling the real added value activities (and best paying jobs) to be retained in the U.S.

[shanek]

Originally posted by jj
I don't care what you call it, Shanek, you and I both know that you can't get around Gresham's law.

It's a fiat currency, jj. Gresham's law considers it to be "bad money," so there's no "good money" to chase after it! The value of the bill DOES NOT represent an equal or greater value of something in the real world! It only has value because of government fiat—that's why it's called a fiat currency!

Now take your sorry excuse over to that other thread and fully, completely and abjectely retract your claim I'm a liar.

You ARE a liar, and you STILL have refused to provide the information I requested.

[shanek]

Originally posted by jj
Doesn't matter.

It most certainly does! It shows that what's really happening is the opposite of what you say it is!

You're double-booking the money.

No, I'm not! The money is not beign used twice; it's being exchanged! Someone is changing dollars for rupees, someone else is exchanging rupees for dollars.

They have no need to buy anything american with american dollars.

SOMEONE does, or else they wouldn't have been able to make the exchange!

[shanek]

Originally posted by jj
The quote has nothing whatsoever to do with your assertion.

Of course it does! IT'S THE EXACT SAME THING I'VE BEEN SAYING!!!

[shanek]

Originally posted by EvilYeti
No, Zippy, the debate is over and you lost. You made the claim, early in the thread, that foreign workers are paid in dollars.

Quote me making this claim. If you can't, then stop lying.

I claimed that in order for the workers to be paid dollars must be exchanged for their native currency. Big difference.

[shanek]

Originally posted by Grammatron
Now I am not going to claim to know what shanek meant, but what I understood him to mean was that the Indian programmer are paid in dollars. Those dollars go to the bank which exchanges them in to rupees and only then actually gives it to the programmer in India. The dollars, however, are then used by the bank or whoever sold them the rupees, in the US economy.

It could work that way, or (more likely) the company would make the exchange, exchanging dollars for rupees and then paying their employees directly in rupees. Either way, it amounts to the same thing.

[shanek]

Originally posted by EvilYeti
This is about currency markets and nothing to do with the current discussion,

It has the basic information on what a currency exchange is, and it completely supports what I've been saying.

The wire transfers happen immediately and at whatever the current rate is. Its NOT an exchange, from the US companies point of view, as THEY ARE NOT GETTING ANY MONEY BACK!

As I tried to point out to you, it doesn't matter if the effect is hidden from them—the exchange is still happening! When a company gets rupees for dollars, someone else is getting dollars for rupees!

JJ, is right about the double billing, you are making the claim that the same dollar can be spent in San Diego and Bangalore.

No, I'm not, and anyone here without a completely closed mind can see that.

[shanek]

Originally posted by EvilYeti
He is also claiming that you can spend the same dollar twice.

How? How am I claiming this?

The salary I pay my employees can only be spent once and the american dollars no longer belong to me or the programmers after they are converted.

No, they don't; they beolong to whomever exchanged them.

They belong to the Indian bank. The rupees are the salary now and whatever economy they are spent in (guess which one?) is going to benefit.

And what is the Indian bank going to do with the dollars?

[shanek]

Originally posted by DavidJames
So What, of course the money is exchanged. Dollars for whatever the local currency is. But when the money is exchanged you give them x dollars and they give you the equivalent in local currency.

And someone else somewhere has exchanged the same number of rupees for x number of dollars.

Huh? Those dollars went to the "person" that gave you the local currency?

The dollars went to whomever the person brokering the exchange found who wanted dollars for rupees.

The company then pays the overseas programmers. How do they "come right back into the American economy"?

Please explain why these statements are incorrect

It's not that they're incorrect; it's that they're the wrong questions. It's kind of like asking how can there be a drought when it rained on June 3rd.

Are you saying that after the exchange, that physical U.S. currency is returned to the U.S. somehow? If so how?

Because whomever was on the other side of the exchange wanted those dollars for a reason, and the only thing you can do with dollars is purchase goods and services or investments in the American economy.

[shanek]

Originally posted by EvilYeti
Shanek's first error is assuming the $270k sitting in the bank in India is the salary I paid to my Indian programmers. It's not, its been spent to purchase rupees, it doesnt belong to me anymore. Its the banks money now.

This is the part where your thinking falls apart. You both still have the same real value in money. You've just changed nominal values and the medium of currency.

According to Yahoo, right now $270K is worth abotu 12 million rupees. You no longer have the $270K, but you have something of equal value: the 12 million rupee. Someone else somewhere has made the opposite exchange.

You have exactly the same amount of money that you did before, and there is exactly the same number of dollars and rupees floating around. None of that has changed.

Each dollar I dole out as salary can be spent exactly once. It can either be spent in the Indian economy or the U.S. economy. Once its spent, its no longer the programmers salary anymore. Where it goes now is irrelevant for the purpose of this discussion.

You WANT it to be irrelevant, because it shows how wrong you are.

You're trying to follow the RUPEES that go to the programmers as though they were the dollars...but the dollars are now in someone else's hands. If you want to follow the dollar, then you need to go to whomever it was who wanted to exchange their rupees for dollars...and they wanted the dollars to purchase goods and services or investments in the American economy.

Shanek's second error is assuming that 100% of the U.S. dollars are going to end up back in the U.S. This is completely untrue. Dept. of Treasury stats. indicate of all the U.S. hard currency in circulation, 80% of it occurs outside of our country and economy. American dollars are very popular in the black market.

Show how that number increases due to currency exchanges and you MIGHT have some sort of point here...otherwise, it's just another one of your red herrings.

The Indian bank holding it

Why are you assuming it's an Indian bank?

So if the bank spends the money, they are going to use it buy other foreign currency.

All you're doing there is pushing back the equation by one step, though. Someone else still got the dollars.

[shanek]

Originally posted by Some Friggin Guy
Elswhere, you repeatedly state that it is NOT a zero-sum game. Which is it?

I was talking about two entirely different things. The currency exchange is a zero-sum game because nothing is gained or lost by either side. But the total number of jobs available isn't; just because three programming jobs moved from the US to India doesn't mean that there are ultimately three fewer net jobs in the US.

Second, I am speaking from personal experience working payroll for a company with a devision in Bangalore. Our employees in Bangalore were paid in US Dollars, not Ruppees. If they decided to exhcange the money, that was there call, however (I am not trying to debate, I am stating heresay and am not claiming anything else) the black market, as I understand it, is fairly prosperous in that area. One thing I can state is that the international currency used in many black markets is US dollars.

But even there, you're still only pushing back the equation by one term. Ultimately, those people are conducting business in the black market for a reason; and that reason is they want to make money to spend in the real world. So again, they'll either spend the dollars on American stuff or exchange them again.

[DavidJames]

ShaneK - Thanks, I now understand what you are trying to say.
EvilYeti - "He's a veritable hypercube of errors"

I'm not errors is the correct word.

I must give him credit for being consistent. Somehow in Libertarian land, there is a set of rules for politics and economics which, when left alone, will work perfectly to meet the needs of both the corporate and non-corporate worlds. A perfect "eco-system" where mutations and aberrations don't exist. Where human nature, greed, envy, lust for power and money are the fault of governments. Yes, in the example discussed here, people in San Diego have lost their jobs and money is not being pumped into the local economy. But have faith, we're told, you shall reap your rewards, the creator will not forsake you. The jobs will return, the money will come back, just kneel at the alter and worship the Libertarian view of capitalism and you shall reap the true rewards, a heaven on earth. Trust me.

There are clear parallels between the Libertarian religion and God based religions.

Both Religions require faith that the system, when followed exactly, is perfect.
Both have identified the evil which threatens the faith.
Listen to God's evangelists proclaim all evil is based on the influence of Satan
Listen to Libertarian evangelists proclaim all evil is based on the influence of Government.
In the Christian Religion, man is flawed, a sinner and requires God to reach eternal peace. Worship the Lord and claim your reward.
In the Libertarian Religion, man is perfect and only needs to follow the Libertarian Capitalistic Creed to reach eternal peace. Worship the dollar and claim your reward.

Of course the problem is reality. The Libertarian "eco-system" does not exist. You want proof? You want evidence that the Libertarian Capitalistic Creed is perfect, like God's heaven? As with religions, they will give you isolated anecdotes and abstract theories. But as there is not a heaven on earth, there no examples of Libertarian Capitalistic Creed on earth either. Both are poisoned by the reality of human nature. Get rid of sin and yee shall see heaven on earth. Get rid of government influence and yee shall see heaven on earth. Neither will ever happen, so both religions can continue to make their claims.

I think Dogbert said it best...."Bah"

ps: Please note, I'm am not against capitalism. I support it, I've taken advantage of it, my family and I have benefited from it. It works. It just needs help. The combination of capitalism and democracy have helped our wonderful country achieve so much. We are a long way from perfect, but I'd rather be here then anywhere else.

[EvilYeti]

Originally posted by shanek

How? How am I claiming this?


Because you are claiming the SAME $270k salary is being spent in both India and the U.S. The actual funds are irrelvant from an economic perspective, what matters is transactions, i.e. the exchange of cash for goods and services.

For example, imagine you had two dollars bills in your wallet, one freshly minted and one that changed hands in the American economy a thousand times.

The dollars are worth the same, but one has contributed vastly more to the economy then the other.

Now consider your best case scenario, there are three transactions:

Dollar for ruppee (rupee spent in India)
Ruppee for dollar (rupee spent in India)
Dollar for American goods and services (dollar spent in america)

Thats $3 worth of business, $2 of which has gone to the Indian economy, $1 to the American economy.

My best case scenario, with three transactions

Dollar for American goods and services
Dollar for American goods and services
Dollar for American goods and services (all spent in america)

Thats a net total of $3 for the U.S. economy.

The actual funds are irrelevant, its the number of transactions and where they take place that is important. Thats were your argument falls apart.


No, they don't; they beolong to whomever exchanged them.


Exactly, and they are no longer my salary anymore, so it doesnt matter what happens to it. What matters is where my salary dollars are spent, in this case, India.


And what is the Indian bank going to do with the dollars?

It really doesn't matter, what matters is where my paid salary is spent, which is going to be in India. Even if I paid in cash and 100% of the actuall money returned to America (which I've demonstrated to not be the case) you would still be wrong for the reasons I've listed earlier.

[Tricky]

Originally posted by DavidJames
Somehow in Libertarian land...
It's called Shanektady. (http://www.randi.org/vbulletin/showthread.php?s=&postid=1869919022&highlight=republicrat#post1869919022)

[The Don]

Originally posted by DavidJames

Yes, in the example discussed here, people in San Diego have lost their jobs and money is not being pumped into the local economy. But have faith, we're told, you shall reap your rewards, the creator will not forsake you. The jobs will return, the money will come back, just kneel at the alter and worship the Libertarian view of capitalism and you shall reap the true rewards, a heaven on earth. Trust me.



The alternative to a liberal approach is to start introducing barriers. You are then sending out the message "we don't care how bad your goods and services are, because you're local we're obliged to use you"

How does that kind of thing benefit anyone. Those people who feel strongly enough about it should only buy those goods and services which are 100% local and damn the expense and poor value for money.

Put up or shut up, don't get the gov't to fight your battles becuase what will happen is exactly what happens here in the UK, greedy people making artificially high profits from exploiting this kind of position.

[EvilYeti]

Originally posted by shanek

This is the part where your thinking falls apart. You both still have the same real value in money. You've just changed nominal values and the medium of currency.

You have exactly the same amount of money that you did before, and there is exactly the same number of dollars and rupees floating around. None of that has changed.


See, this is whats so funny about your debating style. Every time you make a rhetorical accusation, in reality it applies to yourself.

The total funds are identical, but they belong to Indian interests now (the ruppees and the dollars), not U.S. ones. Its not going to be able to return to the U.S. until someone puts an equivalent amount of rupees back into the Indian economy, so India wins again. Or are you suggesting the Bank is just going to give the dollars to America?


You WANT it to be irrelevant, because it shows how wrong you are.


As I've said, several times now, it is irrelevant and you are still wrong even if it wasn't. You can spend american dollars outside of the american economy, its a world standard, moreso than gold these days.


You're trying to follow the RUPEES that go to the programmers as though they were the dollars...but the dollars are now in someone else's hands. If you want to follow the dollar, then you need to go to whomever it was who wanted to exchange their rupees for dollars...and they wanted the dollars to purchase goods and services or investments in the American economy.


The dollars and the ruppees all belong the to economy of India now. The dollars are not going to be able to leave the Indian Bank until they are exchanged with an equal value of ruppees. Those ruppees are going to stay in India. Why is this so hard for you to understand?


Show how that number increases due to currency exchanges and you MIGHT have some sort of point here...otherwise, it's just another one of your red herrings.


Proof that U.S. hard currency circulates outside of the American economy is a pretty damning indictment of your theory. You're entire argument, with is wrong anyway, hinges on the assumption that 100% of the U.S. dollar transactions in the world are used to buy American goods and services. This is laughably false, for many, many reasons.


Why are you assuming it's an Indian bank?


Because it would be too difficult for the Indian programmers to withdraw the funds from an American bank and they would likely have to pay fees and wait a length of time to do so. Its much easier for both parties if the American dollars are wired overseas. "Some Friggin Guy" 's company is an example of this. My company did the same thing.

[EvilYeti]

Originally posted by The Don

Money flow is global.


True.


The $270k will find its way back to the U.S.


Not guaranteed in the least. American hard currency is more popular overseas than domestically and the dollar is used as the standard to trade against in foreign exchange markets. Many overseas businessmen will accept dollars in addition to (even in preference to) their native currency. It's very easy to spend U.S. dollars outside of our economy.

Sure, there is a chance you could trace the funds back to the U.S. eventually, but if it changes hands a dozen times in the process that means 3.2 million in business was executed in the world market, not domestic.

[Grammatron]

Originally posted by EvilYeti


Not guaranteed in the least. American hard currency is more popular overseas than domestically and the dollar is used as the standard to trade against in foreign exchange markets. Many overseas businessmen will accept dollars in addition to (even in preference to) their native currency. It's very easy to spend U.S. dollars outside of our economy.

Sure, there is a chance you could trace the funds back to the U.S. eventually, but if it changes hands a dozen times in the process that means 3.2 million in business was executed in the world market, not domestically.

I think, although I am not sure, that you are missing an important basic point here. Whenever an American company is making a profit it's beneficial to American economy, it's that simple.

[EvilYeti]

Originally posted by Grammatron

I think, although I am not sure, that you are missing an important basic point here. Whenever an American company is making a profit it's beneficial to American economy, it's that simple.

No I'm not missing it, that is a different discussion entirely. The whole theme of this thread was with regards to unemployment, i.e. does moving jobs overseas increase it.

The answer is yes, its obvious that laying people off increases unemployment. High unemployment goes hand-in-hand with a poor economy. The debate got fuzzy when Shanek claimed that 100% of the salary money that went overseas was returned to the American economy to create new jobs, at a 1 to 1 ratio no less, for each job lost.

I think I've aptly displayed that this is a faith-based position.

The discussion of corporate profit vs. the economy is a more complex topic. I would say corporate profit is not as strong an indicator of the health of the economy as employment.

Firstly, their is the problem of regional vs. national economics. If a big employer outsources 5,000 jobs, all from a small region, then records record profits, the results will be mixed. The national economy may benefit slightly, but the region that lost the jobs will be devestated. Its killing Peter to pay Paul.

There is also the myth of trickle-down economics, which the Republicans and Libertarians are very fond of. The claim is that the economy benefits more from filling the coffers of the very rich then a more equal distribution of wealth. It should come as no surprise that this philosophy was invented by (and is very popular with) the very rich.

The problem with the trickle-down mentality is that the rich are less likely to both spend their new found wealth quickly and/or spend it in the American economy then the middle-class and poor folk. And DOMESTIC SPENDING is what drives the economy, nothing else.

The grand irony about this whole discussion is that if you have low unemployment, the economy is robust, everyone is making money, rich, middle-class and poor alike. Move jobs overseas, yeah maybe the profits will increase and line the pockets of the already rich executives a little more, but everyon else loses. If things get bad enough, eventually the rich are going to lose as well.

Seems like a pretty damn shortsighted and selfish mindset to me.

[shanek]

Originally posted by EvilYeti
Because you are claiming the SAME $270k salary is being spent in both India and the U.S.

No, I don't. The $270k exists and is only spent once. It has just been traded for an equal value in rupees.

Here's the so-simple-even-EvilYeti-can-understand-it-version:

Person X has $270k.
Person Y has INR12M,
INR12M = $270k.

Person X and Person Y each go to their exchange broker. Person X gets Person Y's INR12M and person Y gets Person X's $270k. Now:

Person X has INR12M.
Person Y has $270k.

How am I claiming the money is spent twice?

Dollar for ruppee (rupee spent in India)
Ruppee for dollar (rupee spent in India)
Dollar for American goods and services (dollar spent in america)

That's just blatantly dishonest! Why are you counting the dollar twice?

Here's what happens:

46 rupees and 1 dollar (current exchange rate).
Man gives other man 1 dollar in exchnage for other man's 46 rupees.

Same value, both sides. The only difference is who has the dollar and who has the 46 rupees. The money would do the same economically even if the exchange had never been made. No matter what, it's $1, spent in the US economy.

Exactly, and they are no longer my salary anymore,

So?

so it doesnt matter what happens to it.

It most certainly does! You just say that because you know you lose if you actually consider what happened to the dollars.

[shanek]

Originally posted by EvilYeti
The total funds are identical, but they belong to Indian interests now (the ruppees and the dollars), not U.S. ones.

Bull$#!7. It's exactly as before: the dollars go to US interests, and the rupees go to Indian interests. That's why we have different currencies to begin with!

Its not going to be able to return to the U.S. until someone puts an equivalent amount of rupees back into the Indian economy, so India wins again.

How does this even pass the most rudimentary logic check? It IS able to return IMMEDIATELY because someone else now has the dollars!

As I've said, several times now, it is irrelevant

I've shown why it's relevant. All you have is your assertions.

The dollars and the ruppees all belong the to economy of India now.

NO THEY DON'T!!!! The Indian economy doesn't USE dollars!!!!

And why do you insist they're using an Indian bank when they could just as easily be using an American bank? Or even Swiss?

Because it would be too difficult for the Indian programmers to withdraw the funds from an American bank

They wouldn't have to! They'd be given their paycheck ALREADY IN RUPEES and just take it to their local bank!

[shanek]

Originally posted by EvilYeti
American hard currency is more popular overseas than domestically and the dollar is used as the standard to trade against in foreign exchange markets.

This is just a red herring. The only role the dollar plays here is that of normalization. If you want the exchange rate of, say, rupees to crowns, you look at the exchange rate of rupees to dollars and dollars to crowns. It's a lot easier than keeping a complex matrix of related currencies together. But dollars are not literally used to exchange rupees to crowns.

It's a total red herring and one more example of how desperate you've become to avoid admitting you're wrong.

Sure, there is a chance you could trace the funds back to the U.S. eventually, but if it changes hands a dozen times in the process that means 3.2 million in business was executed in the world market, not domestic.

Currency exchange is not a business transaction.

[EvilYeti]

Originally posted by shanek

Bull$#!7. It's exactly as before: the dollars go to US interests, and the rupees go to Indian interests. That's why we have different currencies to begin with!

Wrong, dollars can easily be spent in the world market. Are you suggesting that it is IMPOSSIBLE to spend American currency outside of the United States without exchanging it first? I've done this numerous times.

How does this even pass the most rudimentary logic check? It IS able to return IMMEDIATELY because someone else now has the dollars!

Wrong, my dollars now belong to the Indian bank, nobody else. Nobody else is going to get them until they give the bank somthing. The bank isn't going to spend them in America!

I've shown why it's relevant. All you have is your assertions.

Wrong, you have done nothing of the sort. All YOU have is your assertions, you have ZERO evidence to back up your position. You will never be able to provide any as your are arguing an illogical an untenable position.

NO THEY DON'T!!!! The Indian economy doesn't USE dollars!!!!

Wrong. American currency is valued pretty much everywhere in the world and is the currency of choice for black market transactions. Indian Banks can use dollars to purchase foreign currency on the Foreign Exchange market. Its perfectly normal to contract business overseas among two foreign entities in dollars without involving the american economy.

And why do you insist they're using an Indian bank when they could just as easily be using an American bank? Or even Swiss?


Because thats the way outsourcing contracts to other countries works. If you were doing a website for a company based in Germany, would you rather they wire the funds to your bank or some bank overseas? Even if I deposited the salaries locally, the bank used by the programmers would withdraw the funds and transfer them to an Indian account. And again the dollars are now part of the Indian economy.

They wouldn't have to! They'd be given their paycheck ALREADY IN RUPEES and just take it to their local bank!

Wrong. If their paychecks were issued from an American bank then they would be cashed as dollars. Why on earth would an American bank issue a check in ruppees?

[EvilYeti]

Originally posted by shanek

But dollars are not literally used to exchange rupees to crowns.

Blowing smoke again. If the Indian Bank is sitting on lots of American dollars but is running low on crowns, they are going to buy crowns with the dollars. Are you suggesting that is impossible and never happens? If not, then you are admiting its possible to spend U.S. dollars in the world market and not the U.S. economy!

Or if the dollar is strong against another currency they may buy the currency as an investment. Are you saying that never happens either!

It's a total red herring and one more example of how desperate you've become to avoid admitting you're wrong.

Your entire argument is based on nothing but obfuscation and red herrings. You have no evidence and no proof, and will never be able to produce any, as your theory is illogical.

You are the desperate one, you have ignored all the facts I've produced and offered nothing but shrill assertions in return.

Currency exchange is not a business transaction.
Wrong. Why should buying money not count as a business transaction? Not a business transaction that is very useful from an economic standpoint, but a business transaction none-the-less.

George Soros made his fortune through speculative currency investment.

[jj]

Originally posted by shanek

You ARE a liar, and you STILL have refused to provide the information I requested.

The information is trivially obvious to anyone who reads the entire thread in question.

You have no room here, the facts are in evidence, and your accusation is false.

Retract, fully, and capitulate.

[jj]

Originally posted by shanek
Currency exchange is not a business transaction.

Oh. Really?

Son, you need a dose of reality really bad.

[fishbob]

Person X has $270k.
Person Y has INR12M,
INR12M = $270k.

Person X and Person Y each go to their exchange broker. Person X gets Person Y's INR12M and person Y gets Person X's $270k. Now:

Person X has INR12M.
Person Y has $270k.

You forgot this part:

Person X is in the US
Person Y is in India
Person X pays his INR12M to workers in India.
People in India now have both $270K and INR12M.
Person X still has his product.
Workers in US have nothing.

[EvilYeti]

Originally posted by jj

Son, you need a dose of reality really bad.

Make sure you give it to him in small doses, jj. He'll need to slowly build up a tolerance, too much at once might kill him!

[shanek]

Originally posted by EvilYeti
Wrong, dollars can easily be spent in the world market.

By exchanging them into other forms of currency.

Are you suggesting that it is IMPOSSIBLE to spend American currency outside of the United States without exchanging it first?

No, nor does my argument depend on that, although I'm sure you're going to start pretending that it does.

Wrong, you have done nothing of the sort. All YOU have is your assertions, you have ZERO evidence to back up your position.

Zero, except for all the evidence I've presented. But you've either ignored that or pretended it didn't say what it really said.

I'm through discussing this with you until you show even a modicum of interest in learning some basic economics. You're just a closed-minded, pathetic little person who has to have his delusions justified no matter what.

[shanek]

Originally posted by EvilYeti
Wrong. Why should buying money not count as a business transaction?

Because neither side actually produced the money! It's money they made some other way and they're just exchanging it.

Please, learn some rudimentary economics!

[shanek]

Originally posted by fishbob
You forgot this part:

Person X is in the US
Person Y is in India

Because that's not necessarily the case, and in any way it's irrelevant.

People in India now have both $270K and INR12M.
Person X still has his product.
Workers in US have nothing.

UNTIL the $270K gets spent. Amazing how you continually ignore that...

[jj]

Originally posted by shanek

UNTIL the $270K gets spent. Amazing how you continually ignore that...

Except the $270K gets spent in India, the pacific rim, etc, and never comes back home to momma.

You keep fantasizing that all dollars come home. They don't, and given our trade deficit, it's a *&(*& good thing, too.

[EvilYeti]

Originally posted by shanek

I'm through discussing this with you until you show even a modicum of interest in learning some basic economics. You're just a closed-minded, pathetic little person who has to have his delusions justified no matter what.

Go ahead and run away ignoramus, I won dozens of posts ago anyway. I just enjoy watching you humiliate yourself.

I'll have to add "chickensh!t coward" to my laundry list of Libertarian qualities.

Of course you could offer some independant third-party proof of your claim, perhaps from a peer-reviewed economics paper or a text book. I will even donate $1,000 to the JREF in your name if you do.

But you won't. You never do. You can't, because you're wrong, about everything, again.

Do you ever give any thought to how bad you make the Libertarian Party look?

[fishbob]

UNTIL the $270K gets spent. Amazing how you continually ignore that... And who spends it? Amazing how you continually ignore that.

[shanek]

Originally posted by EvilYeti
Go ahead and run away ignoramus, I won dozens of posts ago anyway.

Only in your own pathetic little mind...

[shanek]

Originally posted by fishbob
And who spends it? Amazing how you continually ignore that.

It doesn't MATTER who spends it. Amazing how you continually ignore that...

[EvilYeti]

Originally posted by shanek


Only in your own pathetic little mind...

"Of course you could offer some independant third-party proof of your claim, perhaps from a peer-reviewed economics paper or a text book. I will even donate $1,000 to the JREF in your name if you do."

Whassa matter Zippy, you don't want to support the JREF? Can't say I'm surprised, you being so enamored of faith-based paranormal political beliefs.

[UnrepentantSinner]

With all this talk of exchange rates I must still be missing how a company paying Indian workers instead of American workers allows Americans to purchase goods and services in America.

Will someone address that please?

[EvilYeti]

Originally posted by UnrepentantSinner
With all this talk of exchange rates I must still be missing how a company paying Indian workers instead of American workers allows Americans to purchase goods and services in America.

Will someone address that please?

Not surprising you miss it, as nothing is there. Shanek is wrong, as per usual.

His claim is that there is no net change in the U.S. economy as every dollar exchanged for rupees is going to be immediately spent in the U.S. economy. These dollars supposedly create new jobs that replace the ones lost by outsourcing.

He is wrong for many reasons

1. You can't spend the same dollar twice. Salaries sent overseas are spent overseas. That much should be obvious. The dollars no longer count as the salary after the exchange, they belong to the money exchanger (probably a bank). However they are spent, in America or elsewhere, it has nothing to do with the previous transaction. Don't believe me? Try buying two things at the dollar store with the same dollar.

2. Not all U.S. dollars are used in domestic transactions. If an Indian buys some Dutch cigarretes from a Bengali importer with U.S. currency it will have no effect on the U.S. economy. The transaction is invisible to our economy for all intents and purposes.

3. Foreign investors are not tied to exported U.S. salaries. This one is pretty bizzare and threw me for a bit. Shanek is claiming that foreign investors are waiting in the wings to echange rupees for dollars to spend in the U.S. economy. This is blatantly false. Banks change money, they have plenty of it and can exchange money anytime. The purchased rupees are going to put in the hands of the foreign workers, the exchanged dollars are going to sit in a bank in India and are still considered part of the Indian economy.

4. Currency exchange is a business transaction. Shanek claims this is false. Currency exchange can be considered buying money, its no different than any other business transaction. The Indian bank is not going to give up its American dollars unless they receive compensation in return, probably some other form of currency.

5. Shanek doesn't understand the importance of monetary transactions to an economy. Wealth does no good if its not circulated, a hundred dollar bill circulated once is less useful to the economy than a five dollar bill circulated a hundred times. Its better economically for a dollar to change hands three times domesticaly then to change hands twice in India and once over here. In reality (where Shanek doesn't dwell) it would take at least two transactions in India to get the dollar into and out of the banking system before it could even be spent here. Thats two transactions lost to our economy relative to paying a U.S. worker. In reality (again, not a friend of Mr. Shanek) its usually going to take lots more transactions to get that money back into the American economy, assuming it comes back at all.

So in summary, in order for Shanek to be correct, Indian banks would have to spend 100% of the U.S. funds they take in creating new jobs and paying salaries in America, with no intermediate transactions. Now, the Indians I've met are very nice, but they are not THAT nice!

Any questions?

[EvilYeti]

Originally posted by shanek

That's just blatantly dishonest! Why are you counting the dollar twice?


Oops, sorry folks missed this one. Don't want any of ya'll to think the pinhead caught me.

The reason the dollar is counted twice is because, in the real world, money is not exchanged with foreign investors eager to dump money into the U.S. economy. Its exchanged with banks, in this case in India. One transaction occurs when the dollars are exchanged for rupees, to pay the programmer. In order for the bank to give the dollars to an Indian investor requires another transaction, this time for rupees. Indian banks are not interested in investing in American goods and services. The indian investor can now spend the dollars anywhere he wants, possibly even in America!

[jj]

Originally posted by shanek


It doesn't MATTER who spends it. Amazing how you continually ignore that...

Amazing, according to you, Mischa spending it in Gorky has exactly the same effect on the San Diego economy as it does when John spends it in old town San Diego?

That's ludicrous on the face of it, sir, and we all know it, yourself included.

[crackmonkey]

This thread is very interesting, as well as educational to those of us with little grasp of economics. I am eagerly awaiting Shanek's reply...

[shanek]

Originally posted by UnrepentantSinner
With all this talk of exchange rates I must still be missing how a company paying Indian workers instead of American workers allows Americans to purchase goods and services in America.

Will someone address that please?

It doesn't, necessarily...it allows whomever was on the other side of the exchange to purchase goods and services or make investments in America, and that person may or may not be an American. It's just a person with rupees, who is probably more likely to be an Indian. But the point is, the trade deficit is balanced out by foreign investments because ultimately there's just nothing else that can be done with the money. Oh, you can obfuscate with transitory exchanges etc. all you want, but ultimately the dollars go back into the American economy.

[shanek]

Originally posted by EvilYeti

The reason the dollar is counted twice is because, in the real world, money is not exchanged with foreign investors eager to dump money into the U.S. economy. Its exchanged with banks, in this case in India.

This is another one of your blatant red herrings. The bank is NOT going to make the exchange for dollars unless it has customers willing to take those dollars to spend in America. Banks are in the business of making money, not sitting on it.

[shanek]

Originally posted by jj
That's ludicrous on the face of it, sir, and we all know it, yourself included.

Yes, and we all also know that it's another one of your pathetic strawmen and has absolutely nothing to do with my actual arguments.

[jj]

Originally posted by shanek

But the point is, the trade deficit is balanced out by foreign investments because ultimately there's just nothing else that can be done with the money. Oh, you can obfuscate with transitory exchanges etc. all you want, but ultimately the dollars go back into the American economy.

I think that you have very little, if any idea of the various functions that dollars conventionally have in international settings.

There is a lot to be done with dollars that never brings them back, and it's a good thing, too.

Your presumptions on international finance are starting to look downright childish at this point.

[Larspeart]

Isn't it true that is someone were to melt down the gold, and fashion it into jewelery it would in fact INCREASE in value? Also, that increase in value would be used to pay for the services and work done to convert the gold to jewelery, thus paying another person. Right?

[EvilYeti]

Originally posted by shanek

It doesn't, necessarily...it allows whomever was on the other side of the exchange to purchase goods and services or make investments in America, and that person may or may not be an American. It's just a person with rupees, who is probably more likely to be an Indian. But the point is, the trade deficit is balanced out by foreign investments because ultimately there's just nothing else that can be done with the money. Oh, you can obfuscate with transitory exchanges etc. all you want, but ultimately the dollars go back into the American economy.

Here's the Shanek error-count for this post.

1. Large currency exchanges are not made with individuals, they are made with financial institutions, i.e. banks. Banks are not in the business of trading in American goods and services. They deal in money. They only thing they are going to buy with the U.S. currency is other currency. There is no guarantee that the inviduals that buy U.S. dollars from foreign banks will invest in American interests (see 2).

2. As I, and others, have attempted to inform Shanek of several times now, its very easy to spend U.S. dollars abroad, independant of the domestic economy. The claim that "nothing else can be done with the money" is blatantly false.

3. Where dollars end up is not important economically, its where they circulate. If the dollars take six months to make it back stateside, thats six months of transactions that benefitted some other economy, not ours. If the funds were paid to U.S. citizens they would be circulated immediately.

[EvilYeti]

Originally posted by shanek


This is another one of your blatant red herrings. The bank is NOT going to make the exchange for dollars unless it has customers willing to take those dollars to spend in America. Banks are in the business of making money, not sitting on it.

Only two errors here... Shanek must be circling the drain.

1. Banks have lots of money. Especially U.S. dollars, they are very popular abroad. Indian banks are more than happy to exchange rupees for dollars anytime, day or night, with anyone for any purpose. There is no condition that the money be spent in America. Considering how far away America is from India, that should surprise no one.

2. Banks do sit on money, lots of it. Thats how they make it. Where did you learn economics, the back of a cereal box?

[EvilYeti]

Originally posted by Larspeart
Isn't it true that is someone were to melt down the gold, and fashion it into jewelery it would in fact INCREASE in value? Also, that increase in value would be used to pay for the services and work done to convert the gold to jewelery, thus paying another person. Right?

The whole gold discussion was me trolling, so don't take it too seriouslly.

From an economic perspective, nothing has value unless someone else is willing to exchange something else of value for it. This could be money, goods, or services.

If you make a nice piece of jewelery that someone else is willing to may more than the raw materials are worth, then it has increased in value.

Note that you can't pay someone to fashion the gold into jewelery with the estimated value of the finished piece without a contract.

Finally, if you keep the finished product for yourself and don't sell it, it is invisible from an economic standpoint. It is not helping or hurting your local economy.

[Segnosaur]

Originally posted by EvilYeti

2. Banks do sit on money, lots of it. Thats how they make it. Where did you learn economics, the back of a cereal box?

I've been avoiding this discussion like a smelly dead woodchuck under a porch, but I did want to correct something here...

Banks don't like to 'sit' on money, because that is not how they make more money. They make it by lending it out to people requestiong loans. In fact, banks almost have to be forced to 'sit' on money (i.e. make sure its available when needed) because every dollar sitting in a bank vault is one less dollar that can be leant out to earn interest.

[EvilYeti]

Originally posted by Segnosaur

Banks don't like to 'sit' on money, because that is not how they make more money. They make it by lending it out to people requestiong loans. In fact, banks almost have to be forced to 'sit' on money (i.e. make sure its available when needed) because every dollar sitting in a bank vault is one less dollar that can be leant out to earn interest.

I'm not disagreeing with you, by 'sit' I mean they have to have SOME amount of it at any given time to lend out. Shanek is claiming that banks have no money on hand and just act as middle-men between people looking to exchange money. According to him the bank won't take my dollars unless there is someone waiting to exchange rupees at the same time.

[CapelDodger]

From EvilYeti:
I'm not disagreeing with you, by 'sit' I mean they have to have SOME amount of it at any given time to lend out
The international bank reserve requirement is, I believe, 8% of liabilities (some national systems require larger reserves). That means that any cash held supports the creation of about 12 times as much (interest-earning) credit. Banks therefore like to have as large a reserve as possible. The make-up of the reserve - cash, government paper, gold, letters of deposit and a variety of other liquid assets - is dependent on the judgement of the bank. Some will inevitably be in cash, and a proportion of that will likely be in dollars (which is much in demand as a reserve currency). So dollars going abroad don't necessarily come back in the medium-term. When people start losing confidence in dollars they'll come back in a tidal wave. That's when the party's over.

The value of the dollar is affected by these foreign holdings washing around for reasons totally unconnected with the US economy. This leads to instability and, at present, an over-valuation of the dollar (considering the current account deficit) which prices US workers out of jobs through no fault of their own.

All this is about money, which is actually quite an esoteric subject. In the end the important point is the rate of useful product in an economy. That depends, in part, on the number of people working and the average productivity of the workforce. A "recovery" when jobs are disappearing and real productivity is not increasing (average productivity can appear to increase when low productivity jobs disappear) must surely be more apparent than real.

[shanek]

Originally posted by EvilYeti
1. Large currency exchanges are not made with individuals, they are made with financial institutions, i.e. banks.

Who are acting on behalf of individuals or companies. That's what you keep ignoring.

There is no guarantee that the inviduals that buy U.S. dollars from foreign banks will invest in American interests.

Aside from the aspects I have already covered, they will do just that; otherwise, they wouldn't have gotten the dollars.

2. As I, and others, have attempted to inform Shanek of several times now, its very easy to spend U.S. dollars abroad, independant of the domestic economy. The claim that "nothing else can be done with the money" is blatantly false.

And you continue to ignore my response to that.

3. Where dollars end up is not important economically, its where they circulate.

Dollars always circulate. They never "end up" anywhere. That's something else you refuse to acknowledge.

If the dollars take six months to make it back stateside, thats six months of transactions that benefitted some other economy, not ours.

Except that this is not happening in a vacuum. It's kind of like saying that since the East Coast doesn't see the sun for 12 hours at night that the sunlight is benefitting someone else.

If you'd actually bothered to read the link I provided you'd know exactly how it works and you'd see why this lag is ultimately meaningless. As current transactions are made previous transactions are being completed.

[shanek]

Originally posted by EvilYeti
2. Banks do sit on money, lots of it. Thats how they make it. Where did you learn economics, the back of a cereal box?

You just proved that you don't have a farking clue how these things work. Banks DO NOT sit on money; they only sit on the reserve amount which is used to handle withdrawls of demand deposits. Everything else, they're going to loan out. They DO NOT make money by sitting on it.

[shanek]

Originally posted by EvilYeti
If you make a nice piece of jewelery that someone else is willing to may more than the raw materials are worth, then it has increased in value.

The difference is, you made the piece of jewelry, with your or someone else's labor. That isn't the case with a currency exchange. I explained this to you before.

Finally, if you keep the finished product for yourself and don't sell it, it is invisible from an economic standpoint.

No, it's not. It's invisible to economic indicators, but that's not the same thing. Wealth has still increased.

[shanek]

Originally posted by EvilYeti
Shanek is claiming that banks have no money on hand and just act as middle-men between people looking to exchange money. According to him the bank won't take my dollars unless there is someone waiting to exchange rupees at the same time.

I never claimed any of that and you know it, liar.

[EvilYeti]

Originally posted by shanek

Who are acting on behalf of individuals or companies. That's what you keep ignoring.


And will buy dollars regardless of how many jobs we export. The two are not connected. That is what you keep ignoring. Laying off Americans doesnt magically create Indian investors!


Aside from the aspects I have already covered, they will do just that; otherwise, they wouldn't have gotten the dollars.


You continue to ignore the fact that they may be buying dollars for investment in any number of markets. Lots of people accept dollars abroad!


And you continue to ignore my response to that.


What possible response could you have other than admitting you are wrong? If you can spend dollars abroad your argument has no weight. How does spending dollars outside of the american economy help the american economy?


Dollars always circulate. They never "end up" anywhere. That's something else you refuse to acknowledge.


And if they circulate outside of the country it does nothing for the American economy. Thats what happens when dollars are sent overseas. Thats what you refuse to acknowledge and why your argument holds no weight.


Except that this is not happening in a vacuum. It's kind of like saying that since the East Coast doesn't see the sun for 12 hours at night that the sunlight is benefitting someone else.


Of course its benefitting something else! Do you know the earth roates on its axis and orbits the sun? Are you retarded?


If you'd actually bothered to read the link I provided you'd know exactly how it works and you'd see why this lag is ultimately meaningless. As current transactions are made previous transactions are being completed.

If you had any reading comprehension skill you would understand the link supports me, not you. Thanks for the support, Zippy!

[EvilYeti]

Originally posted by shanek


You just proved that you don't have a farking clue how these things work. Banks DO NOT sit on money; they only sit on the reserve amount which is used to handle withdrawls of demand deposits. Everything else, they're going to loan out. They DO NOT make money by sitting on it.

I said they "sit on money". The reserve amount is money, thats what I meant and is clear from the context.

In international banks, the reserve amount is going to be pretty friggen big!

The banks make money by loaning out the money they have on hand to people they feel will be able to pay it back. They don't go throwing it away willy-nilly.

[EvilYeti]

Originally posted by shanek

The difference is, you made the piece of jewelry, with your or someone else's labor. That isn't the case with a currency exchange. I explained this to you before.


And I explained, clearly, the gold example was bogus anyways. I was proving a point.


No, it's not. It's invisible to economic indicators, but that's not the same thing. Wealth has still increased.

If there is no way to detect it, how do you know its there? Oh yeah, you are a paranormalist!

[EvilYeti]

Originally posted by shanek

I never claimed any of that and you know it, liar.

Its the only way your scheme could work, pinhead.

You can't have it both ways, if I'm a liar then you agree with me and you've lost the argument. If not, then you are admitting you believe that 100% of the dollars in overseas accounts are immediately sold on the currency marked for investment in U.S. only interests.

I take this as tacit admission of your defeat.

[EvilYeti]

Originally posted by CapelDodger

Banks therefore like to have as large a reserve as possible. The make-up of the reserve - cash, government paper, gold, letters of deposit and a variety of other liquid assets - is dependent on the judgement of the bank. Some will inevitably be in cash, and a proportion of that will likely be in dollars (which is much in demand as a reserve currency). So dollars going abroad don't necessarily come back in the medium-term. When people start losing confidence in dollars they'll come back in a tidal wave. That's when the party's over.


Thanks for the info CapelDoger, very informative. The gallery will note that this supports my position entirely, many of the dollars sent overseas are going to stay there.

I find it interesting that if Shanek was right and all those overseas dollars came roaring back it would be disasterous. Why am I not surprised? :D

[jj]

Give it up, Yeti, we're arguing with the Judge Moore of economics here.

Some day, somebody is going to take this macaroon for serious, and I want to sit in the gallery and watch when he tells the judge how the law should read ...

[shanek]

Originally posted by CapelDodger
The international bank reserve requirement is, I believe, 8% of liabilities (some national systems require larger reserves). That means that any cash held supports the creation of about 12 times as much (interest-earning) credit.

Just for everyone's information, the formula for this is 1/(reserve rate). So, with a reserve rate of 8%, the money created is 1/0.08, or 12.5 times as much money.

When people start losing confidence in dollars they'll come back in a tidal wave. That's when the party's over.

And that's actually what you want to avoid. It's good to have people demanding your currency; that's another thing EvilYeti refuses to understand.

The value of the dollar is affected by these foreign holdings washing around for reasons totally unconnected with the US economy.

Well, it has to do with how many people with a particular currency want the dollar vs. how many people with dollars want that other currency. If a lot of people with yen want dollars, then it will take more yen to buy a dollar. Conversely, if not so many people with yen want dollars, then it won't take as many yen to buy a dollar.

But this doesn't affect the economy back home; it just affects the price of dealing with goods, services, and investments to and from other nations. If no one else wanted dollars, we could keep the economy going at home because we've got the amount of domestic goods and services still giving value to the dollar.

[shanek]

Originally posted by EvilYeti
And will buy dollars regardless of how many jobs we export.

But not regardless of how many people want to exchange dollars to and from other currencies. And exporting of jobs, as long as the company is still American-owned and sells goods in America, will of necessity have to exchange dollars for foreign currency.

You continue to ignore the fact that they may be buying dollars for investment in any number of markets. Lots of people accept dollars abroad!

I DON'T ignore that...I HAVEN'T ignored that...I've RESPONDED to it!!! AND YOU KEEP IGNORING MY RESPONSES!!!! :mad:

What possible response could you have other than admitting you are wrong?

Go back and read. I responded to it several times.

And if they circulate outside of the country it does nothing for the American economy. Thats what happens when dollars are sent overseas. Thats what you refuse to acknowledge and why your argument holds no weight.

Nice dodge; but you know that doesn't do the first thing to refute my point above.

Of course its benefitting something else! Do you know the earth roates on its axis and orbits the sun? Are you retarded?

Are you saying we "lose out" on sunlight at night? Or does it not much matter since, on the whole, we have all the sunlight that we need?

If you had any reading comprehension skill you would understand the link supports me, not you. Thanks for the support, Zippy!

And yet, you can't do the first thing to demonstrate that the site somehow supports your insanity...

[shanek]

Originally posted by EvilYeti
I said they "sit on money". The reserve amount is money, thats what I meant and is clear from the context.

No, it wasn't. You clearly said that they sit on as much money as they can because that's how they make money, and that just isn't so! Now, you're trying to move the goalposts yet again to cover up for the fact that you're wrong yet again.

In international banks, the reserve amount is going to be pretty friggen big!

Why? And how would they make more money that way?

The banks make money by loaning out the money

Which means it's NOT IN RESERVE!!!!

[CapelDodger]

From shanek:
But this doesn't affect the economy back home; it just affects the price of dealing with goods, services, and investments to and from other nations. If no one else wanted dollars, we could keep the economy going at home because we've got the amount of domestic goods and services still giving value to the dollar.
The US economy would have to get by without the 400billion or so that is the projected current account deficit for this year. The US economy is affected by the value of the dollar since it is not completely disconnected from the world - far from it. The price of exports depends on the value of the dollar, so exports are lower with the current dollar value (and the poor state of US manufacturing due to low investment). That reduces demand for labour. Imports are cheaper which reduces home production and further reduces demand for labour.

The problems associated with having your currency used as a reserve currency have been extensively studied (not least in the UK, which suffered endemic instability due to sterling's one-time reserve status). The currency value fails to respond to the state of the economy - with such a huge current account deficit the dollar should be falling and thus boosting home production and demand for labour.

Sod this, if I'd wanted to be an economics teacher I would have become one. Those who wish to know should read Money - Whence it Came and Where it Went by J K Galbraith (or any of his writings, it's all good).

[shanek]

Originally posted by EvilYeti
Its the only way your scheme could work, pinhead.

No, it isn't. I've explained how it works, and you've done nothing but pretend otherwise.

I take this as tacit admission of your defeat.

I'm sure your bigoted little mind does...

[shanek]

Originally posted by CapelDodger
The US economy would have to get by without the 400billion or so that is the projected current account deficit for this year. The US economy is affected by the value of the dollar since it is not completely disconnected from the world - far from it.

That's true, but it's also true that we're not as dependent on the value of our currency anywhere near as much as other countries are. We produce enough at home so that our money can have value at home.

The price of exports depends on the value of the dollar, so exports are lower with the current dollar value (and the poor state of US manufacturing due to low investment). That reduces demand for labour. Imports are cheaper which reduces home production and further reduces demand for labour.

But again, that is offset by its inverse relationship with foreign investing.

Sod this, if I'd wanted to be an economics teacher I would have become one. Those who wish to know should read Money - Whence it Came and Where it Went by J K Galbraith (or any of his writings, it's all good).

And for the sake of balance, you should also read, An Economic Misinterpretation of History: A Critique of J.K. Galbraith's Account of American Capitalism by Chris R. Tame.

[EvilYeti]

Originally posted by shanek

And exporting of jobs, as long as the company is still American-owned and sells goods in America, will of necessity have to exchange dollars for foreign currency.

Untrue. Some overseas workers prefer to be paid in dollars, which they keep in their savings account and only exchange as needed.

How are dollars sitting in foreign savings accounts the same as dollars spent in America?


I DON'T ignore that...I HAVEN'T ignored that...I've RESPONDED to it!!! AND YOU KEEP IGNORING MY RESPONSES!!!! :mad:

If you can spend dollars abroad AT ALL, it becomes possible for American funds to circulate endlessly. That renders your entire premise fradulent. I'm not ignoring anything, you aren't making any rational arguments to respond too. Stop using the wookie defense.


Are you saying we "lose out" on sunlight at night? Or does it not much matter since, on the whole, we have all the sunlight that we need?

I'm saying the earth spins on its axis and rotates the sun. You claim otherwise.


And yet, you can't do the first thing to demonstrate that the site somehow supports your insanity...

You are making the extraordinary claims, the burden of proof is on YOU.

I offered the JREF $1000 in your name to provide independant, third-party evidence of your theory. You provide nothing but irrational assertions and whining.

[EvilYeti]

Originally posted by shanek

Why? And how would they make more money that way?


Because, ignoramus, the bigger the reserve is the more they can lend out!!! How can you be so completely and utterly wrong about everything, even facts that have just been very clearly presented to you?

If the law mandates an 8% reserve, the bank CANNOT loan out any more than 12.5X the amount of liquid assets on hand! If they want to loan out more money they have to increase their reserve, they have no other options. And foreign banks love having dollars in their reserves!


Which means it's NOT IN RESERVE!!!!

The money banks loans out COMES from the reserve. Where else would it come from? Oh yeah, you think you can spend the same dollar twice, so banks can loan the same dollar twice.

[EvilYeti]

Originally posted by shanek

No, it isn't. I've explained how it works, and you've done nothing but pretend otherwise.


No you havent, you've just repeatedly asserted it works and demand we take this on faith.


I'm sure your bigoted little mind does...

Why don't you provide evidence of your claim that 100% of exported U.S. salaries are invested in America, so I can write that check to the JREF?

[CapelDodger]

From EvilYeti:
The money banks loans out COMES from the reserve. Where else would it come from? Oh yeah, you think you can spend the same dollar twice, so banks can loan the same dollar twice.
Actually the money banks loan out is created by the banks. When they loan money they open an account with the loan in it; no actual money changes hands. That's why they can create 12 times as much credit as they have liquid reserves. As long as the loan is not taken out in cash - and it is more likely to be transferred by cheque to another bank account - and eventually gets paid back everything's fine. The 8% reserve is there to cover the cash part of the loans that may be withdrawn somewhere down the line. The 8% refers to 8% of the bank's liabilities, which is represented by its customers' account balances plus bonds and such. The non-reserve assets are the debts owed for the loans.

Banks can create money from thin air. When I discovered that (shortly after I'd ben told that magic wasn't real) I knew what business I wanted to be in. Of course, if people come to get their "money" all at once it's a good idea to be out of the country.

That's it. I'm giving away the secrets of the priesthood now.

[CapelDodger]

from shanek:
But again, that is offset by its inverse relationship with foreign investing.
Do what? Most of the money that funds the current account deficit - the "capital account" - is not invested, it's lent for consumption and it's the aforementioned thin-air-money. Which will swoop out again one day - just as happened in Argentina recently. And don't assume the US couldn't go that way by 2030. We're well into the end-game of the American Long-Century (1900-202?). (In my yet to be produced seminal work on the subject we're in the fourth part, 2000-202?, entitled "The End of the Experiment".)

[EvilYeti]

Originally posted by CapelDodger
The 8% reserve is there to cover the cash part of the loans that may be withdrawn somewhere down the line. .

Thanks again for the input CD.

I was refering to cash loans being paid from the reserve, as of course thats the only real money the bank has.

[shanek]

Originally posted by EvilYeti
You are making the extraordinary claims,

No, I'm not. My claims are exactly what you'd learn in an introductory macroeconomics class. Why don't you go take one?

[EvilYeti]

Originally posted by shanek


No, I'm not. My claims are exactly what you'd learn in an introductory macroeconomics class. Why don't you go take one?

Considering that no one supports you and you have yet to provide any evidence to reinforce your assertions, I would suggest you are making an extraordinary claim.

Provide documented third-party evidence that supports your claims and I'll cut a check to the JREF.

You can't of course, as you've made it all up based on your religous faith and faulty understanding of high school economics.

[shanek]

Originally posted by EvilYeti
Because, ignoramus, the bigger the reserve is the more they can lend out!!!

No, no, no! The bigger the reserve the LESS they can lend out! That's what the reserve means—the reserve is what they CANNOT lend out!

Read this, from the best website on the planet:

http://money.howstuffworks.com/fed3.htm

The Reserve Requirement
In order to combat the problems of insufficient cash reserves (and the inability to pay depositors) that were faced before the creation of the Federal Reserve System, banks now have to set aside a certain amount of cash in "reserve." The reserve balance that banks must maintain is typically a percentage of their total interest-bearing and non-interest-bearing checking account deposits (currently 3% to 10%). In other words, the amount of a bank's required reserves will fluctuate depending on their account totals. The reserve is very important because it helps to ensure that the bank will always be able to give you your money when you ask for it.

This percentage of required reserves directly affects how much money they can "create" in their local economies through loans and investments. It is this connection between the required reserve amount and the amount of money a bank can lend that allows the Fed to influence the economy. If the reserve requirement is raised, then banks have less money to loan and this will have a restraining effect on the money supply. If the reserve requirement is lowered, then banks have more money to loan.

(emphasis mine)

How can you be so completely and utterly wrong about everything, even facts that have just been very clearly presented to you?

One should ask this question of you.

If the law mandates an 8% reserve, the bank CANNOT loan out any more than 12.5X the amount of liquid assets on hand!

No, it means it cannot lend out 92% of the reserves on hand. The 12.5x comes from the fact that those who borrow that money deposit it and the cycle happens again.

So, if I deposit $100, my bank would keep $8 and loan out $92. The person who borrowed the $92 would deposit it and their bank would lend out $84.64 (92% of $92), and the bank that money goes end to would loan out $77.87, and so on. By the time it all peters out, the total amount of money created in the economy is $1,250. That's where the 12x comes from.

I'm BEGGING you—take a basic economics class!

If they want to loan out more money they have to increase their reserve, they have no other options.

No, if the reserve is increased to, say, 10%, then the amount created is 10x, not 12x. I deposit $100, $90 gets loaned out, then $81 gets loaned out, and so on. And a total of $1,000, not $1,250, is created.

The money banks loans out COMES from the reserve. Where else would it come from?

The amount that is NOT the reserve!

[shanek]

Originally posted by EvilYeti
Why don't you provide evidence of your claim that 100% of exported U.S. salaries are invested in America, so I can write that check to the JREF?

Any basic macroeconomics book will confirm it.

[shanek]

All right...here's a blindingly simple lesson on currency exchange:

http://mcel.pacificu.edu/mcel/projects/fcx/fcx0.html

Some excerpts:

What determines how much a dollar (or the yen) is worth? That depends on how many people, actually having yen, would rather have dollars, and on how many people, actually having dollars, wish they had Yen.

Also, look at the sections that talk about having "a piece of the pie" or "a piece of the action." This is EXACTLY what I've been talking about.

A piece of the pie:

"Wanting a piece of the pie" is a way of saying one wants a product from that economy. But, as was mentioned earlier, people expect to get paid in the kind of currency which they think of as "Money." So you, the customer, have to come up with the right kind of "money" if you want to buy any good from outside the U. S. Normally, this is all done for you by businessmen and middlemen, but it does have to occur when you buy an imported good. The more imports from Japan we want, the greater is our Demand for Yen, and our Supply of Dollars we are willing to trade.

And a piece of the action:

"A piece of the Action" suggests that someone wants to share in the profits generated by a country producing goods that others want to buy. There are several ways a person might do this:

Buy commercial property or land in the country
Buy a factory or business in the country
Invest in bonds issued by the country's government
Invest in that country's stock market
Invest in the commodity markets in the country

In each of these cases, the investor must first change her or his money into the currency of the country. This may be done almost automatically, using the exchange rate in effect on the day of the sale, but it is always done, whether the investor thinks about it or not.

BTW, I got 5 out of 5 on the quiz. Let us know (honestly!) how you did!

And afterwards, you might want to swallow your stupid, foolish pride and admit you've been wrong the whole time.

[CapelDodger]

From shanek:
No, no, no! The bigger the reserve the LESS they can lend out! That's what the reserve means—the reserve is what they CANNOT lend out!
shanek, you have completely the wrong end of the stick. What you are referring to as the reserve is the reserve requirement . If that increases the multiples of credit that the reserve can legally support reduces. But at the same level of reserve requirement a larger reserve allows larger credit creation.

[CapelDodger]

From shanek:
No, I'm not. My claims are exactly what you'd learn in an introductory macroeconomics class. Why don't you go take one?
Been there, done that, no they ain't.

[EvilYeti]

Originally posted by CapelDodger
From shanek:

shanek, you have completely the wrong end of the stick. What you are referring to as the reserve is the reserve requirement . If that increases the multiples of credit that the reserve can legally support reduces. But at the same level of reserve requirement a larger reserve allows larger credit creation.

What a surprise, Shankek is wrong, again. And he even proved it for us, with a nice quote. Red text highlights and everything. Brah-vo.

Question for you CD, as you obviously know your stuff.

If the bank has loaned out the maximum amount it can support legally, what happens if someone wants to withdraw funds? Does the bank refuse the transaction? Give them the money and hope no one notices until they can make up the difference? I'm curious.

[shanek]

Originally posted by CapelDodger
shanek, you have completely the wrong end of the stick. What you are referring to as the reserve is the reserve requirement .

No, the reserve requirement is the minimum they can hold in reserve. They can hold more than that if they want, but they generally don't because they want to lend out as much money as possible.

Back to HowStuffWorks:

Reserve money is used to process check and electronic payments through the Federal Reserve and to meet unexpected cash outflows. These reserves can be held as "cash on hand," as a reserve balance at a regional Reserve Bank, or both.

They have to use the reserves to give to people withdrawing money from their accounts, writing checks, etc. That's what the reserves are for. They can lend the rest out because not everyone gets their money at the same time. A reserve requirement of 10% works if people on average don't get any more than 10% out at one time.

More in reserve means less they can loan out, in every class I've taken, every book I've read.

[shanek]

Originally posted by EvilYeti
What a surprise, Shankek is wrong, again. And he even proved it for us, with a nice quote. Red text highlights and everything. Brah-vo.

Anyone can see the red quoted part supports what I've been saying all along. This is your pathetically dishonest tactic: to pretend that it really supports YOU somehow, yet doing nothing to show HOW it does so.

Your original claim:

Because, ignoramus, the bigger the reserve is the more they can lend out!!!

The emphasized portion:

If the reserve requirement is raised, then banks have less money to loan and this will have a restraining effect on the money supply.

You say BIGGER means MORE. HowStuffWorks said that when it's raised (which means it's BIGGER) then it's LESS. It's the exact opposite of what you said! And it's exactly the way I said it.

If the bank has loaned out the maximum amount it can support legally, what happens if someone wants to withdraw funds? Does the bank refuse the transaction?

They can't do that legally. So they have to draw on the money held in reserve at their district bank; and if their district bank is tapped out, then it goes to the Fed. The Fed lends money to the banks at the reserve rate so that the banks can cover the funds.

It's all in the HowStuffWorks article:

http://money.howstuffworks.com/fed.htm

[EvilYeti]

Originally posted by shanek


No, the reserve requirement is the minimum they can hold in reserve. They can hold more than that if they want, but they generally don't because they want to lend out as much money as possible.

More in reserve means less they can loan out, in every class I've taken, every book I've read.

I'm really hoping this is just an honest mistake on your part. Otherwise I think you should see a doctor to find out if you have dyslexia or some other learning disorder, I'm serious.

I'm talking about the reserve, the actual liquid assets. The banks cash holdings.

I've never said anything about the reserve requirement. The bank can't change that so its a constant, its not going to be raised or lowered.

What CAN be controlled by the bank is how much they hold in the reserve. For example:

Say my local bank has a million dollars in the reserve and a 10% reserve requirement. That means they can lend out, legally, at most 10 million dollars.

What can the bank do if they want to lend out more money, say 20 million? They can't change the reserve requirement to 5%, the Fed sets that.

What they can do is increase their reserves to two million dollars. Two million is 10% of 20 million dollars.

So the reserve requirement stays the same while the credit limit increases with the cash holdings (reserve).

Do you understand yet? I know I often use ambiguous phrases, like "sit on the money", but I've been pretty clear in this discussion.

The "How Stuff Works" article is incomplete on this topic, as it doesn't explain that banks can increase credit by increasing the reserve instead of hoping the Fed decreases the reserve requirement %. Its pretty clear to infer from what they do tell you, I don't see why you can't understand it.

(Edited to add)
P.S. Do you even realize you are claiming the more cash a bank has the less it can loan out? A bank with a million dollars in cash can loan out less than a bank with 100 dollars in cash? What about a bank with zero dollars in cash? It should be able to loan out an ifinite amount. You should start your own bank Shanek! You'll be able to take over the world economy singlehandedly!

P.P.S. I hope to God I'm being trolled, no human should be this stupid.

[shanek]

Originally posted by shanek
All right...here's a blindingly simple lesson on currency exchange:

Hmmm...looks like EvilYeti is completely ignoring this, since he already responded to a post below it. Not even he could probably pretend that it really somehow supports him and not me... :rolleyes:

Run away, EvilYeti! Run away...it beats having to admit that you're wrong.

[EvilYeti]

Originally posted by shanek

Anyone can see the red quoted part supports what I've been saying all along. This is your pathetically dishonest tactic: to pretend that it really supports YOU somehow, yet doing nothing to show HOW it does so.


Beause CD and I have been talking about monetary reserves, not the reserve requirement.

Increasing reserves increases credit.
Decreasing reserves decreases credit.
Increasing reserve limits decreases credit.
Decreasing reserve limits increases credit.

Thats right from the article. I'm doing nothing dishonest, I'm just pointing out the article you are quoting actually says the exact opposite of what you are claiming.


You say BIGGER means MORE. HowStuffWorks said that when it's raised (which means it's BIGGER) then it's LESS. It's the exact opposite of what you said! And it's exactly the way I said it.


You either don't understand the difference between the reserve limit and the reserve or you have the math backwards. I've always been talking about the reserve (i.e. cash holdings), not the limit

Read the article again, think about it, then look at my above example.


They can't do that legally. So they have to draw on the money held in reserve at their district bank; and if their district bank is tapped out, then it goes to the Fed. The Fed lends money to the banks at the reserve rate so that the banks can cover the funds.


So I guess they just break the law and get fined or something if they get caught.

[shanek]

Originally posted by EvilYeti
So I guess they just break the law and get fined or something if they get caught.

No, they borrow the funds from their district bank or the Fed at the reserve rate.

And you're free to quote the article supporting you. Why don't you?

By the way, here's me quoting another part of the article that supports me:

In order to combat the problems of insufficient cash reserves (and the inability to pay depositors) that were faced before the creation of the Federal Reserve System, banks now have to set aside a certain amount of cash in "reserve." The reserve balance that banks must maintain is typically a percentage of their total interest-bearing and non-interest-bearing checking account deposits (currently 3% to 10%). In other words, the amount of a bank's required reserves will fluctuate depending on their account totals. The reserve is very important because it helps to ensure that the bank will always be able to give you your money when you ask for it.

That's reserves. The reserve requirement is simply the minimum amount they have to put in reserve. THEY CANNOT LOAN OUT THE RESERVES UNDER ANY CIRCUMSTANCES! If they do, they're just not reserves!

[EvilYeti]

Originally posted by shanek


Hmmm...looks like EvilYeti is completely ignoring this, since he already responded to a post below it. Not even he could probably pretend that it really somehow supports him and not me... :rolleyes:

Run away, EvilYeti! Run away...it beats having to admit that you're wrong.

No, I'm just getting a little uncomfortable at how often you are embarrassing yourself. I also suspect you have some sort of disability and I have a thing about not berating the handicapped. If you can assure me you are mentally sound I would feel more comfortable responding.

I took the quiz and got 5 out of 5, without even reading the pages. It wasn't hard.

There is nothing in the article that I can see that supports your position, as its discussing foreign currency markets and monetary exchange, not moving jobs offshore. You have a tendency of imagining things in order to support your position (like you did in the howstuffworks article) so you are going to have explain how the article supports your position. Nothing fancy, just a few sentences. Just quoting it and nodding smugly won't cut it.

[shanek]

Originally posted by EvilYeti
No, I'm just getting a little uncomfortable at how often you are embarrassing yourself.

Uh-huh. Nice evasion.

There is nothing in the article that I can see that supports your position,

The ENTIRETY of it supports my position! And the parts I quoted show that!

Can you do NOTHING other than deny, deny, deny?

as its discussing foreign currency markets and monetary exchange,

As are we! And it has shown that EVERYTHING you've claimed about currency exchange is wrong, wrong, WRONG!!!

And now you're pulling a George W. and saying it wasn't really about that anyway...

You have a tendency of imagining things in order to support your position (like you did in the howstuffworks article)

I imagined nothing. I quoted ANOTHER part talking about the RESERVES (not the "reserve requirement," since you suddenly decided to differentiate between the two, Ed only knows why) and it STILL SUPPORTS ME AND NOT YOU!

How can you be so stupid, so ignorant, and so pigheaded not to acknowledge that? It's obvious to anyone who can read!!!

so you are going to have explain how the article supports your position. Nothing fancy, just a few sentences. Just quoting it and nodding smugly won't cut it.

All along, I have been saying that there are two things people can do with American dollars: Spend them or invest them. That is the WHOLE POINT of the article talking about "a piece of the pie" and "a piece of the action," as I quoted. And it directly says:

Importing or buying a country's goods and services, then, provides a piece of the pie; investing in a country, by contrast, is a way to get a piece of the action.

WHICH IS EXACTLY WHAT I'VE BEEN SAYING ALL ALONG!!!!

What do you have to say for yourself now? How many times can you possibly pretend that my sources say the opposite of what you pretend that they do?

[espritch]

In case anyone missed this:

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=3&u=/nm/20030905/bs_nm/economy_jobs_dc

From the article:

The number of workers on U.S. payrolls outside the farm sector slid 93,000 in August, the seventh consecutive month of declines, after dropping 49,000 in July. The number was far worse than the increase of 12,000 expected by economists.

As UnrepentantSinner so eloquently put it: “Economic recovery my a**!”

[EvilYeti]

Originally posted by shanek

No, they borrow the funds from their district bank or the Fed at the reserve rate.


Great, thanks for the info.


And you're free to quote the article supporting you. Why don't you?


As I already said, the article omits that part for some reason.

Do a google search on excess reserves, here's the definition

"excess reserves: The amount of bank reserves over and above those that the Federal Reserve System requires a bank to keep. Excess reserves are what banks use to make loans. If a bank has more excess reserves, then it can make more loans. This is a key part of the Fed's ability to control the money supply. Using open market operations, the Fed can add to, or subtract from, the excess reserves held by banks. If the Fed, for example, adds to excess reserves, then banks can make more loans. Banks make these loans by adding to their customers' checking account balances. This is of some importance, because checking account balances are an major part of the economy's money supply. In essence, controlling these excess reserves is the Fed's number one method of "printing" money without actually printing money."

The more excess reserves a bank has, the more loans it can make.

Why is this so hard for you to understand?


That's reserves. The reserve requirement is simply the minimum amount they have to put in reserve. THEY CANNOT LOAN OUT THE RESERVES UNDER ANY CIRCUMSTANCES! If they do, they're just not reserves!

What about excess reserves?

[EvilYeti]

Originally posted by shanek

Uh-huh. Nice evasion.



Are you retarded? I'm asking, really.


The ENTIRETY of it supports my position! And the parts I quoted show that!

Can you do NOTHING other than deny, deny, deny?


Explain how. Just a few sentences, why can't you do that?

Can you do NOTHING but assert, assert, assert?


As are we! And it has shown that EVERYTHING you've claimed about currency exchange is wrong, wrong, WRONG!!!


Explain how or shut your mouth.


I imagined nothing. I quoted ANOTHER part talking about the RESERVES (not the "reserve requirement," since you suddenly decided to differentiate between the two, Ed only knows why) and it STILL SUPPORTS ME AND NOT YOU!


Because they are two totally different things!


How can you be so stupid, so ignorant, and so pigheaded not to acknowledge that? It's obvious to anyone who can read!!!


Find one person to agree with you. DC agrees with me, and he's a banker!


All along, I have been saying that there are two things people can do with American dollars: Spend them or invest them.
That is the WHOLE POINT of the article talking about "a piece of the pie" and "a piece of the action," as I quoted. And it directly says:

quote:
--------------------------------------------------------------------------------
Importing or buying a country's goods and services, then, provides a piece of the pie; investing in a country, by contrast, is a way to get a piece of the action.
--------------------------------------------------------------------------------


Another way to look at exporting jobs is importing labor. Or buying Indian services. Importing labor from India buys me a piece of Indian pie, not American pie. Your article supports my position.

As I, and others have said several times now, overseas dollars are not guaranteed to be invested in American interests. Not everyone want's a piece of our action.


What do you have to say for yourself now? How many times can you possibly pretend that my sources say the opposite of what you pretend that they do?

Shanek, I can only point out so many times that you are not comprehending the articles you are reading. Have you noticed that no one is supporting you and a BANKER says you don't understand simple economics?

[shanek]

Originally posted by EvilYeti
As I already said, the article omits that part for some reason.

Ah. How convenient for you. Why would such a fine website, so detailed in every other way, leave out such an important aspect?

I don't know where you got that quote from, but it is WRONG. The Fed CANNOT take funds from or put funds into the banks as excess reserves. It can only do that with the reserves IT holds FOR the banks. Also, loans are NOT added to the customer's checking account balances, although of course a customer may deposit them there.

Excess reserves are very simple:

http://www.investorwords.com/cgi-bin/getword.cgi?1795

Amount held by a bank above the reserve requirement.

And reserve requirement:

Amount of money and liquid assets that Federal Reserve System member banks must hold in cash or on deposit with the Federal Reserve System, usually a specified percentage of their demand deposits and time deposits. also called Federal Reserve requirement and reserve ratio.

http://www.investorwords.com/cgi-bin/getword.cgi?4207

So the Federal Reserve can only set a rate that the banks MUST hold in reserve. They don't have a thing to say about how much in reserve the individual banks or even the district banks hold above that level. They only control the reserves THEY hold on behalf of the district banks, who are acting on behalf of the individual banks.

What about excess reserves?

As I said, if the bank lends them out, they aren't reserves anymore! A bank keeps excess reserves because they're worried about people withdrawing more than the reserve requirement. Once it becomes apparent that's not going to happen, they start loaning out the funds again. The only difference is that they're not required to hold reserves greater than the reserve requirement, and if they do they can turn around and take them out of reserves and loan them out at any time.

[shanek]

Originally posted by EvilYeti
Explain how. Just a few sentences, why can't you do that?

I did, and everyone here knows it.

As are we! And it has shown that EVERYTHING you've claimed about currency exchange is wrong, wrong, WRONG!!!

No, it has been ASSERTED...but I am the ONLY one producing evidence for my position, and explaining why it supports me, when all you do is ASSERT that it really supports you with no explanation whatsoever!

Because they are two totally different things!

That doesn't change the fact that it supports me. The part talking about RESERVES, which YOU said was the different part, still supports me! And you have done NOTHING to show otherwise!

Find one person to agree with you.

I've found several!

Another way to look at exporting jobs is importing labor. Or buying Indian services. Importing labor from India buys me a piece of Indian pie, not American pie. Your article supports my position.

BULL$#!7!!! You're dishonestly taking advantage of the fact that the example the article uses HAPPENS to be the opposite of what we're talking about!

As I, and others have said several times now,

But NEVER proven and NEVER provided evidence for.

Not everyone want's a piece of our action.

Then they want a piece of our pie. As the article says, that's the only thing the money is good for—and that DOES NOT SUPPORT YOU!!!

[shanek]

More about reserves, and this according to the Federal REserve Bank of Cleveland:

http://www.clev.frb.org/bsr/Conditions/v3n4/interest.htm

What Are Reserves?
Depository institutions may hold three types of balances with the Federal Reserve: required reserve balances, contractual clearing balances, and excess reserve balances. Required reserve balances are held in depository institutions' accounts at the Federal Reserve to meet the mandated reserve requirements.

Depository institutions also may commit, on a contractual basis, to holding additional clearing balances when they need a higher level of funds to clear checks or wire transfers or to minimize the possibility of overdraft. Although clearing balances do not earn interest, they do earn credits that institutions may use to offset the cost of using certain Federal Reserve services.

Finally, excess reserve balances are funds held in excess of the required reserves and contractual clearing balances. Depository institutions must maintain their specified levels of required reserves and contractual clearing balances on a daily average basis over a two-week period.

The Federal Open Market Committee (FOMC) can affect the increase or decrease of reserve balances through open market operations — that is, the sale or purchase of government securities. Reserve account balances fluctuate as institutions purchase (account balances go down) or sell (account balances go up) these securities. By using open market operations to adjust the aggregate supply of deposit balances held at Reserve Banks, the FOMC can influence the federal funds rate.

So, just as I said, EvilYeti is talking about reserves held BY THE FED, not by the individual banks. And they're STILL not the funds banks use to make loans!

Still not good enough? Check out this paper from the Philadelphia Fed (PDF):

http://www.phil.frb.org/files/br/brnd98jw.pdf

WHAT ARE RESERVES, AND
WHY DO BANKS HOLD THEM?
A bank’s reserve balance is simply an
amount that it holds as cash in its vault or on deposit at the Federal Reserve. Currently, depository institutions in the United States are legally required to hold some reserves against transaction deposits, such as checking accounts. Even if they weren’t required to, banks would still hold some reserves to settle transactions.

For example, your bank uses its account at a Federal Reserve Bank to transfer funds to other banks to settle checks you wrote or electronic transfers you made. It also uses its reserve account to accept funds from other banks to settle checks or transfers made to you by others. When a bank sends payments on behalf of its customers, the Federal Reserve debits the bank’s reserve account, and its reserve balance goes down. When a bank receives payment, the Fed credits the bank’s reserve account, and its reserve balance goes up.

[...]

Sometimes banks hold excess reserves, reserves in amounts above the required minimum. Excess reserves guard against unexpected payment outflows that could drain reserves below the required level and lead to an overdraft penalty. But there is a cost to holding excess reserves: a bank could have earned interest by lending or investing those funds. Similarly, required reserves, which bankers sometimes call idle or sterile balances, cannot be used to make loans and earn interest. To minimize the loss of interest, banks have reduced reserves by improving reserve management and, more recently, by creating or expanding sweep accounts.

So excess reserves, are to guard against "unexpected payment outflows that could drain reserves below the required level and lead to an overdraft penalty." And they can't do that if they've loaned the money out!

[crackmonkey]

It's not that the reserves are loaned out, it's that the reserves must comprise a given percentage of money loaned out. Therefore, if a bank's reserve is already 10% of outstanding loans (and that's the minimum percentage they are required to retain), the bank would be unable to loan any more money until the reserve is increased.

[EvilYeti]

Originally posted by shanek

Ah. How convenient for you. Why would such a fine website, so detailed in every other way, leave out such an important aspect?


As I've said before, if you understand logic, percentages, totals and fractions you can figure that out based on the article. I'm not surprised you can't, but its plain to see to everyone else with a grade school understanding of math.


I don't know where you got that quote from, but it is WRONG. The Fed CANNOT take funds from or put funds into the banks as excess reserves. It can only do that with the reserves IT holds FOR the banks. Also, loans are NOT added to the customer's checking account balances, although of course a customer may deposit them there.

link (http://www.amosweb.com/cgi-bin/gls.pl?fcd=dsp&key=excess+reserves)

Its an economic glossary dude, I'm not making this stuff up.

The important parts are:

1. Excess reserves are what banks use to make loans.

2. If a bank has more excess reserves, then it can make more loans.

Why don't you call your bank and ask them if this is how it works?


As I said, if the bank lends them out, they aren't reserves anymore!

Read your websites, again, as you still are not understanding how this works. The banks are required to have a PERCENTAGE of all outstanding debts on hand at any given time. That is called the reserve. The more credit they create the more reserve they need to cover the loans. Excess reserve's aren't loaned out, they are used to create new loans that increase the banks total credit. Once the new loans are made the excess reserves are no longer excess, they are just considered reserves. They didn't go anywhere, but the total reserves have increased.

Why is this so hard for you to understand?

[EvilYeti]

Originally posted by shanek

I did, and everyone here knows it.


Who? No one here is going to agree with you, as they are a pretty smart crowd. CarpalDoger is a career banker and he says you are full of baloney. Who knows more about banking, you or him?


No, it has been ASSERTED...but I am the ONLY one producing evidence for my position, and explaining why it supports me, when all you do is ASSERT that it really supports you with no explanation whatsoever!


No, you are misinterpreting evidence to support yourself. You explinations are illogical and internally inconsitent, so they are invalid. Stop using the chewbacca defense.


That doesn't change the fact that it supports me. The part talking about RESERVES, which YOU said was the different part, still supports me! And you have done NOTHING to show otherwise!


I've been talking about the reserves the whole time, you are the one that brought the reserve limit and tried to claim it was the same thing.


I've found several!


Yes and you have failed to understand any of them. The link I supplied, which explained this in the absolute simplest terms possible, you reject because it contradicts your religion. Nice work, Mr. Skeptic.


BULL$#!7!!! You're dishonestly taking advantage of the fact that the example the article uses HAPPENS to be the opposite of what we're talking about!


Har, har, har, har. This is such a trivially transparent dodge its laughable.


But NEVER proven and NEVER provided evidence for.


I have, several times now, yet you refuse to accept it, even when its in your face, like the above link. You are not a skeptic, you are a religious zealot.


Then they want a piece of our pie. As the article says, that's the only thing the money is good for—and that DOES NOT SUPPORT YOU!!!

How is buying a piece of Indian pie the same as buying a piece of American pie from the point of view of the domestic economy?

Thats what I've been asking you since this debate started and you have failed to explain.

Could you please just answer this one question?

Which of the following transactions will benefit the domestic economy more?

A. Purchasing goods and services from a domestic supplier.
B. Purchasing goods and services from a foreign supplier.

You may answer A or B. Which is it?

[EvilYeti]

Originally posted by shanek

So excess reserves, are to guard against "unexpected payment outflows that could drain reserves below the required level and lead to an overdraft penalty." And they can't do that if they've loaned the money out!

Again, you are displaying almost total ignorance of how this system works.

The excess reserves are not loaned out when a new loan is drafted. The bank simply makes the money up "out of thin air" and credits it to the account of individual who took out the loan. As CarpelDoger pointed out, this is the magic of how banks "create money".

This increases the total credit and liabilites, due to the reserve requirement. The amount of liquid assets the bank must hold (reserves) now increases. The excess reserves are now reserves. They don't go anywhere.

Excess reserves could are also used for small cash loans or to cover wire transfers or withdrawls. That was the example I used previouslly, which CarpelDodger pointed out isn't really how banks make their money. Banks make money on big loans, not small ones.

Required reserves are the minimum assets a bank must withold against outstanding debts to remain in federal compliance. This money can't be loaned out, as in effect it already has been.

Lets figure this out mathmatically.

Total reserves (T)= Required reserves + excess reserves

Credit (C)= amount the bank can legally loan out.

Reserve requirement = % of total credit the reserve can legally support. This is a constant, lets use 8%. Expressed as a ratio this would be 12.5 (R).

Now, the credit limit is determined my multiplying the reserve requirement ratio by the total reserves, C = T * R or:

C = T * 12.5

Ergo, as T increases C increases.

Therefore, as the total reserves increase the amount of credit available to the bank increases and the bank can loan out more money.

I've just proved this mathematically, but I'm sure you are going to try and claim otherwise, as you don't understand science or even basic math.

Why is this so hard for you to understand? Are you retarded?

[EvilYeti]

Originally posted by crackmonkey
It's not that the reserves are loaned out, it's that the reserves must comprise a given percentage of money loaned out. Therefore, if a bank's reserve is already 10% of outstanding loans (and that's the minimum percentage they are required to retain), the bank would be unable to loan any more money until the reserve is increased.

See, the crackmonkey understands it, why can't you?

Does anyone else disagree?

[shanek]

Originally posted by crackmonkey
It's not that the reserves are loaned out, it's that the reserves must comprise a given percentage of money loaned out. Therefore, if a bank's reserve is already 10% of outstanding loans (and that's the minimum percentage they are required to retain), the bank would be unable to loan any more money until the reserve is increased.

Actually, the reserve limit is the percentage of total money, not the percentage of money loaned out. But still they can't loan out the money in reserve, otherwise it isn't in reserve.

This is very basic and simple, and yet EvilYeti refuses to understand it no matter how many sources I quote.

[shanek]

Originally posted by EvilYeti
Read your websites, again, as you still are not understanding how this works. The banks are required to have a PERCENTAGE of all outstanding debts on hand at any given time. That is called the reserve.

It's a percentage of ALL their deposits, not just their debts. The sources say that clearly.

Excess reserve's aren't loaned out, they are used to create new loans that increase the banks total credit.

No, no, no! Read the sites again!

Sometimes banks hold excess reserves, reserves in amounts above the required minimum. Excess reserves guard against unexpected payment outflows that could drain reserves below the required level and lead to an overdraft penalty.

How can they guard against unexpected payment outflows if they've loaned the money out? They can't! If they loan out the money, it isn't in excess reserves!

Once the new loans are made the excess reserves are no longer excess, they are just considered reserves.

No, they're not! They're not reserves AT ALL anymore!

Why is this so hard for you to understand?

Because EVERY SINGLE SOURCE&mhash;INCLUDING THE FDERAL RESERVE—SAYS IT ISN'T TRUE!!!!

[shanek]

Originally posted by EvilYeti
How is buying a piece of Indian pie the same as buying a piece of American pie from the point of view of the domestic economy?

It isn't, and I'm not saying that. This is anohter of your pathetic strawmen.

You have to buy a piece of the Indian pie with rupees. You have to buy a piece of the American pie with dollars.

Thats what I've been asking you since this debate started and you have failed to explain.

I have explained it numerous times!

Which of the following transactions will benefit the domestic economy more?

A. Purchasing goods and services from a domestic supplier.
B. Purchasing goods and services from a foreign supplier.

You may answer A or B. Which is it?

It's a false dichotomy, as I have already explained.

[shanek]

Originally posted by EvilYeti
The excess reserves are not loaned out when a new loan is drafted. The bank simply makes the money up "out of thin air" and credits it to the account of individual who took out the loan. As CarpelDoger pointed out, this is the magic of how banks "create money".

Except that isn't how it works AT ALL. Banks don't just make the money up; they have to have the money on hand first. This is taken out of the portion of deposits which are NOT HELD AS RESERVES! The reason why this creates money is that the depositor considers the money to still be there. They're just taking advantage of the fact that not everyone will withdraw all of their money at the same time.

Lets figure this out mathmatically.

Your math is completely and totally and pathetically WRONG.

Let's say a bank has $1,000,000 and the reserve requirement is 10%. The bank has $1,000,000 in liabilities.

But as long as it holds 10%, or $100,000, in reserve, it can loan the rest out. The $100,000 is to handle money outflow caused by people writing checks, withdrawing money, etc. THAT is the reserve. The $900,000 that it loans out is NOT, IN ANY SENSE, IN RESERVE!

Now that $900,000 gets deposited by whomever took out the loans. So that bank is going to keep 10%, or $90,000, and loan out the other $810,000, and so on.

The ratio comes about because the total amount of money created by all of these transactions after it all peters out is 1/reserve requirement, or, in this case, 1/10%, or 1/.1, or 10. So that $1,000,000 has actually created $10,000,000 of new money in the economy.

THAT is how it works. THAT is how any economics class will explain it to you. And THAT is what ALL of my sources have confirmed!

Ergo, as T increases C increases.

No, it doesn't. If the reserve requirement rises to, say, 10%, then the total amount created is now 1/.2, or 5 times as much, not 10 times as much. The $1,000,000 would only create $5,000,000 in new money, not $10,000,000.

Why is this so hard for you to understand? Are you retarded?

No, but I've just concluded that you're a troll. It can be the only explanaiton for you OUTRIGHT IGNORING all of my information.

[shanek]

Here's a site that explains the above:

http://ingrimayne.saintjoe.edu/econ/Banking/Checking.html

Notice that the public now has $100 more in checking accounts than it previously had: money has been created. This creation of money is not readily apparent to anyone in the banking system. Bank A did not intend to create more money--it merely wanted to exchange non-interest bearing assets for assets that earn interest. Bank B receives the new money, but this new money looks to it just the same as the "old" money that it received when Jones wrote a check to Smith. The creation of money, an aspect of the banking system that economists consider central, is to the banking system merely a side effect or by-product of its quest for profit.

Banks also create money when they lend money to borrowers and they destroy money when loans are repaid. But banks cannot create money in unlimited amounts. Their ability to create money is limited by the amount of legal reserves they have and by regulations that tell them how much reserves they must hold. Banks cannot create or destroy these reserves, but the central bank can. Hence it is the central bank that ultimately determines how much money circulates in an economy.

How long will EvilYeti continue to deny the truth?

[EvilYeti]

Originally posted by shanek


Actually, the reserve limit is the percentage of total money, not the percentage of money loaned out. But still they can't loan out the money in reserve, otherwise it isn't in reserve.



No, the reserve limit refers to the percentage of the banks liabilities that must be retained in liquid assets. The money in reserve is a guarantee against funds that have been already "loaned out" so to speak. Excess reserve is whats used to create loans, $12.50 (8% reserve limit) in credit can be created for each dollar of excess reserve a bank holds.

Read the web pages, again.

[EvilYeti]

Originally posted by shanek

It's a percentage of ALL their deposits, not just their debts. The sources say that clearly.


No, its a percentage of their total liabilities. Read the pages again.


No, no, no! Read the sites again!


You first.


How can they guard against unexpected payment outflows if they've loaned the money out? They can't! If they loan out the money, it isn't in excess reserves!


As has been stated before, banks loan out money they don't have. Its how they create wealth. If everyone trys to empty their accounts at once, its a good idea to be out of the country, as CarpalDodger said. The banks and the federal reserver together wouldnt be able to cover it.


No, they're not! They're not reserves AT ALL anymore!


You don't understand what reserves are, so you are can't make any claim regarding their nature.


Because EVERY SINGLE SOURCE&mhash;INCLUDING THE FDERAL RESERVE—SAYS IT ISN'T TRUE!!!!

No, you are unable to understand written English, so you've misinterpreted all the sites you've read. The one site I pointed you too, that uses english at your reading level so you can understand it, you reject.

[shanek]

EY, you're now an obvious troll. Go away.

[billydkid]

Originally posted by a_unique_person
it is quite simple really, they should all be getting paid the same as the guys overseas, and accept their working conditions. The libertarian paradise.

No, overseas is not the libertarians paradise. The fact is government intervention is what has driven manufacturing out of the US. Hardly any of those overseas jobs are in free societies. It is easy to dismiss libertarianism when you don't truly understand it. In fact, a genuinely libertarian society would be far more compassionate and far better outcomes for all than any society today. People make critical remark positing hypotheticals - what if this happened or that - of course neither I or Shanek has all the answers to these kind of things, but there are good, meaningful answers for most of these considerations, but you need to go to libertarian web sites to get the real picture.

Now, it would be different if things were going really well now or if you could point to a society in the world where there aren't a lot of seemingly insoluble problems. It seems to me that it might be reasonable to at least try genuine liberty and freedom just to see how it works. If there ever were a truly free society and you could point to its failure maybe then simply being dismissive of libertarianism would be justified.

[EvilYeti]

Originally posted by shanek

You have to buy a piece of the Indian pie with rupees. You have to buy a piece of the American pie with dollars.


Thats obfuscation on your part. Its doesnt matter.


I have explained it numerous times!


No, you've asserted it numerous times, now you are asserting you asserted it. Provide evidence. Proof.


It's a false dichotomy, as I have already explained.

It is in no way a false dichotomy, despite your assertions to the contrary. Exchanging money for goods and services is what drives economies. I can spend my money in one economy, or the other, so it will benefit one or the other.

Answer the question, A or B. Stop evading.

[shanek]

Originally posted by EvilYeti
Thats obfuscation on your part. Its doesnt matter.

Yes it is, troll. You want a piece of the American pie? You need dollars. Want a piece of the Indian pie? You need rupees. This is the EXACT point you've been blathering on avoiding, and now you say it's irrelevant.

No, you've asserted it numerous times,

No, I have explained the logic AND provided evidence. But you won't accept that, because you're just a troll.

Answer the question, A or B. Stop evading.

I'm not evading. I just refuse to conform to your strawmen, troll.

[EvilYeti]

Originally posted by shanek

Except that isn't how it works AT ALL. Banks don't just make the money up; they have to have the money on hand first.


That is a completely and totally false statement and any banker will tell you otherwise. Call one up and ask.

All they need is the excess reserve to secure the credit to create the loan. Thats the whole idea of credit! Do you even know what credit is?


Your math is completely and totally and pathetically WRONG.


You are mentally handicapped.


Let's say a bank has $1,000,000 and the reserve requirement is 10%. The bank has $1,000,000 in liabilities.


That means they have $900,000 in excess reserves and can therefore loan out $9,000,000 more. Read the pages you keep quoting.


But as long as it holds 10%, or $100,000, in reserve, it can loan the rest out. The $100,000 is to handle money outflow caused by people writing checks, withdrawing money, etc. THAT is the reserve. The $900,000 that it loans out is NOT, IN ANY SENSE, IN RESERVE!


Wrong, the banks liquid assests ARE the total reserve; which in this case is $1,000,000, of which $100,000 is the required reserve due to the 10% reserve limit and the million dollar liability. The $900,000 is the excess reserve, which may be used for cash outflow or used to secure credit for loans, at which point they become required reserves. The $100,000 required reserves cannot legally leave the bank at any time. Read the web pages.


Now that $900,000 gets deposited by whomever took out the loans. So that bank is going to keep 10%, or $90,000, and loan out the other $810,000, and so on.


No, the $900,000 is created, out of thin air, by the bank as credit and THAT is what is loaned out. $90,000 of the excess reserve is now considered reserved and cannot be used for anything else. The bank still has the same $1,000,000. This is why it pays to be a banker, they can make money. The bank is loaning credit, not cash.


THAT is how it works. THAT is how any economics class will explain it to you. And THAT is what ALL of my sources have confirmed!


Find one career banker or economics teacher to agree with you and I'll concede defeat. Until then this is nothing more then your misinterpretation of the English language.


No, it doesn't. If the reserve requirement rises to, say, 10%, then the total amount created is now 1/.2, or 5 times as much, not 10 times as much. The $1,000,000 would only create $5,000,000 in new money, not $10,000,000.


Rises from what? We've been using 10% all along. Did you mean 20%? And you've said banks can't loan money they don't have. So where does the money come from?


No, but I've just concluded that you're a troll. It can be the only explanaiton for you OUTRIGHT IGNORING all of my information.

Lets make it ahother $1,000 to the JREF, in your name, if you can provide third party party support from a career banker of your assertions. Thats free money for the JREF, at no risk to you.

Put up or shut up, Zippy.

[EvilYeti]

Originally posted by shanek
Here's a site that explains the above:

http://ingrimayne.saintjoe.edu/econ/Banking/Checking.html

How long will EvilYeti continue to deny the truth?

Supports me 100%, again. You are one magnificient mongoloid.

The link says banks "create and destroy money". How can a bank "create" money if it can't loan out money it doesn't have?

[EvilYeti]

Originally posted by shanek
EY, you're now an obvious troll. Go away.

Prove it and the JREF gets $1,000 in your name. $2,000 if you can prove your first assertion via a third party source and provide a banker willing to verify the second.

Until then you are nothing but a whining coward.

Why won't you accept a 0 risk wager to support the JREF? Maybe because you ain't no skeptic?

[EvilYeti]

Originally posted by shanek

Yes it is, troll. You want a piece of the American pie? You need dollars. Want a piece of the Indian pie? You need rupees. This is the EXACT point you've been blathering on avoiding, and now you say it's irrelevant.


You can help one economy or the other, not both. Which one is it, put up or shut up.


No, I have explained the logic AND provided evidence. But you won't accept that, because you're just a troll.


You've provided nothing but assertions. All your evidence supports me, you just lack the reading skills to understand that.


I'm not evading. I just refuse to conform to your strawmen, troll.

You are evading. I asked one simple, unambigious question, one from one of the web pages YOU PROVIDED and you REFUSE TO ANSWER. You have proved yourself a liar, a coward and an ignorant fool.

[shanek]

Originally posted by EvilYeti
Lets make it ahother $1,000 to the JREF, in your name, if you can provide third party party support from a career banker of your assertions. Thats free money for the JREF, at no risk to you.

Put up or shut up, Zippy.

I gave you DIRECT EVIDENCE FROM THE FEDERAL RESERVE ITSELF!!! You just simply assert that anything I give to you somehow supports you, with no explanation how.

Your offer is as bogus as the $10,000 creationism award. You are not interested in skepticism or debate. You are a troll.

Go away.

[EvilYeti]

Originally posted by shanek

Your offer is as bogus as the $10,000 creationism award. You are not interested in skepticism or debate. You are a troll.

Go away.

Find a JREF'er who is a banker and agrees with you and the JREF gets $1,000 in your name.

Put up or shut up, sissy.

[shanek]

Originally posted by EvilYeti
Find a JREF'er who is a banker

Oh, now they have to be a JREFer AND a banker! Despite the fact that a JREFer is in no better position to know what it is than anyone else, nor is any more credible...and also completely ignoring the fact that, according to the Fed, the process is largely transparent to the banks.

Your "challenge" is invalid. If you won't accept the word of the Federal Reserve, then there is nothing you will accept as they are the ultimate authority and controller here. You are a troll.

[EvilYeti]

Ok, I finally figured out exactly where Shanek is confused. Its a question of definitions and omissions.

Shanek is under the impression that the required reserve, i.e. the minimum amount of held assets as defined by the reserve limit is the whole "reserve".

That is not quite accurate. One of the problem with "howstuffworks" type sites is they suffer from "the Britannica Syndrome". In an effort to dumb down subjects so the average joe can understand them they can fuzz over some important concepts. Precise definitions are often a casualty. Anyone doing internet based research should be aware of this phenomenon.

A banks "reserve" is simply the liquid assets it has on hand; for example, cash in the vault.

This reserve is composed of two parts, the "required" and the "excess" reserve. The required reserve is the amount of liquid assets that the bank must hold by law. Shanek is correct that this money cannot be lent. He is incorrect in stating that money from the reserve in general can't be let out. The money for any loan, cash or credit is going to come out of the "excess reserve" portion of the "reserve".

His second error is not understanding the difference between loaning credit and loaning cash. This is largely due to this diagram:

http://static.howstuffworks.com/gif/bank-growing-money.gif

Shanek is making the erroneous assumption that banks only loan liquid assets to other banks. Driving bags of money around in armored cars I would guess. This is untrue.

As CarpelDoger pointed out, if a bank lends money to one of their own account holders, there is a very clever dodge they can pull. All they have to do to satisify federal banking law is to have enough in the reserve to cover the required portion of the loan, say 8%, and the rest is added to their liability. The bank can now collect interest on money created from "thin-air". Any money withdrawn from the account where the loan was deposited will be debited from the excess reserve, if the bank doesn't have enough it can just borrow more, at a lower interest rate then what the customers are paying. Thats how they make their money. This is the type of loan I was discussing, and by far the most common.

The moral of the story is, Encyclopedia's don't count as sources, even on the Internet. Just like your high school history teacher said.

[EvilYeti]

Originally posted by shanek


Oh, now they have to be a JREFer AND a banker! Despite the fact that a JREFer is in no better position to know what it is than anyone else, nor is any more credible...and also completely ignoring the fact that, according to the Fed, the process is largely transparent to the banks.

Fine, any banker then, I don't care. The bet stands for anyone who wishes to take it.

The problem is you don't understand what you are reading and some of your sources are incomplete. See my above post for a description of where you messed up.

Why don't you just admit your error and move on?

[UnrepentantSinner]

I'm sorry to get off on a tangent, but what the hell does Fed monetary policy have to do with the fact that an American worker who is laid off due to outsourcing doesn't have money to spend or invest in American companies?

I guess I'm just focused on Joe Buttonpusher, not on macroeconomics and the bottom line for the top tier capitalists of the world. :(

[shanek]

Originally posted by EvilYeti
Shanek is under the impression that the required reserve, i.e. the minimum amount of held assets as defined by the reserve limit is the whole "reserve".

No, I'm not, and I specifically said otherwise.

A banks "reserve" is simply the liquid assets it has on hand; for example, cash in the vault.

And once they loan it out, it's no longer on hand, hence, it's not in reserve anymore! You're acting like they just make up money to lend out and the money deposited is all still on reserve—I've spent several posts explaining to you why that isn't true!

For example:

But as long as it holds 10%, or $100,000, in reserve, it can loan the rest out. The $100,000 is to handle money outflow caused by people writing checks, withdrawing money, etc. THAT is the reserve. The $900,000 that it loans out is NOT, IN ANY SENSE, IN RESERVE!

You have to have the cash in reserve in order to cover cash withdrawls and other such outlays. If you don't, you have to pay an overdraft penalty to the Fed in order to cover it.

Shanek is correct that this money cannot be lent. He is incorrect in stating that money from the reserve in general can't be let out.

I didn't claim that! I've said that if the money is loaned out, it's not on reserve! Now you're trying to change YOUR claim to match what I'VE been claiming, and making MY claim into something other than it was, all to avoid admitting that I've been right all along!

Shanek is making the erroneous assumption that banks only loan liquid assets to other banks.

Again, I never made this assumption. It's another piece of bogosity that you're attributing to me.

You focussed on ONE site that I mentioned that breaks it down more simply, while ignoring the more detailed sites—including two different Federal Reserve offices—to make it look as if I were oversimplifying!

You're a troll. Go away.

[shanek]

Originally posted by EvilYeti
Fine, any banker then, I don't care.

The Federal Reserve doesn't count as a "banker"?

Go away, troll.