And just what is it about gold or silver that has any intrinsic value or wealth?

They have nothing special, they just are rare.
It limits a state to emit a lot of money on the market.

then how do you explain the countless periods of hyperinflation through history?

Here the problem is more philosophical.
Everyone looks at it in his own way.

I believe that people who have money invest only a small part.
The rest they keeps with the desire to not risk their entire fortune.

People have aversion to risk.
This reduces the velocity of money.
It's like that money does not exist because it's not used.

 

People should be paid what they are worth or what an employer is willing to pay them.

But that should also go for the people at the top of a corporation too. People in the highest places don't contribute as much as the people on the assembly line to the actual product being sold. But they get way more money. And benefits.

 

then how do you explain the countless periods of hyperinflation through history?

Maybe movie 'Zeitgeist' ,influenced me.
They concluded that the solution is to give up money.
That's why I support the reduction of the monetary mass.
Anyway the question is very difficult for me..........I'll think about it.

 

But that should also go for the people at the top of a corporation too. People in the highest places don't contribute as much as the people on the assembly line to the actual product being sold. But they get way more money. And benefits.

I agree. A company or large corporation can pay whatever they see fit. I have yet to figure out why the Cleveland Schools CEO makes a million dollars a year for running the worst school system in the country and why many in high positions are not held accountable? However, on the lower end of the spectrum I don't believe a job at McDonalds was ever intended to provide a "living wage" for a family of four.

Ron

 

Trace the work that goes into a banana into a store near you. Or cocoa, cocaine or whatever is being produced in a country far away from the main cost-"dumber"

Who gets paid% for what might shock you. You probably know this but... If we would pay fair price to every stage of production. Nobody would get WAY MORE rich than the rest. So they wouldn't need more modern slaves.


I agree, However we in the first world are "REALLY" forgetting the part of our "wealth" comes from 3rd world counties where our economical logic is laughable.

If you are saying that there are lots of people out there that aren't being paid what the value of what they produce is, then I agree. If you are saying that the widespread presence of such people has a significant influence of society, then I agree. If you are saying that eliminating that from current society would be highly disruptive, then I agree. If you are saying societies can't exist without the widespread presence of such people, then I don't buy it and would need to see a pretty convincing case for why it is necessary. The case for why unequal wealth distribution is needed in any society of any size is quite convincing, but that doesn't necessitate people not getting paid fairly for what they produce. Quite the opposite, unequal wealth distribution is an unavoidable consequence of people being paid fairly for what they produce.

I've always taken issue with the people that support illegal immigration on the basis that our economy relies on underpaid workers. I'm talking generically here, not about the politics of the day. My stance would be the same on Planet X. For instance, if the incentives for people to enter a country illegally were removed (primarily by removing the incentives for the employers by enforcing sufficiently punitive laws against hiring people not in the country legally so that it would not be profitable for them to risk doing so) then if the costs of things go up, then that's what happens. Prices that are artificially low because of illegal activity shouldn't justify the continuation of the illegal activity. Instead, the illegal activity should be curbed and then people should adapt to the proper prices that ensue.

 

Maybe movie 'Zeitgeist' ,influenced me.
They concluded that the solution is to give up money.
That's why I support the reduction of the monetary mass.
Anyway the question is very difficult for me..........I'll think about it.

And what does this movie say about how things should work after money has been given up?

Let me guess. It probably involves some benevolent entity allocating all resources in an equitable manner for the equal benefit of all of humanity as well as the planet as a whole.

 

I've always taken issue with the people that support illegal immigration on the basis that our economy relies on underpaid workers. I'm talking generically here, not about the politics of the day. My stance would be the same on Planet X. For instance, if the incentives for people to enter a country illegally were removed (primarily by removing the incentives for the employers by enforcing sufficiently punitive laws against hiring people not in the country legally so that it would not be profitable for them to risk doing so) then if the costs of things go up, then that's what happens. Prices that are artificially low because of illegal activity shouldn't justify the continuation of the illegal activity. Instead, the illegal activity should be curbed and then people should adapt to the proper prices that ensue.

"Here's a $6 banana and $1908 barrel of oil". Will it be something else? I'm joking but at sometime this will be a reality.

 

I believe that people who have money invest only a small part.
The rest they keeps with the desire to not risk their entire fortune.

You may believe it, but it's not true. Uninvested money is a wasting asset and anyone that earned their own riches knows that. Rich people don't get rich by having their money not working for them. In fact it's the return on investments that allows people to be what most of us consider rich - not needing to work. Once you have investments to cover your expenses while also growing, you can tell your boss to shove it.

 

You may believe it, but it's not true. Uninvested money is a wasting asset and anyone that earned their own riches knows that. Rich people don't get rich by having their money not working for them. In fact it's the return on investments that allows people to be what most of us consider rich - not needing to work. Once you have investments to cover your expenses while also growing, you can tell your boss to shove it.

Also, keeping money under the mattress actually damages the economy, since it's a capital that is being dormant. It's like having an unused tool, locked up for no one to take advantage of.

 

Also, keeping money under the mattress actually damages the economy, since it's a capital that is being dormant. It's like having an unused tool, locked up for no one to take advantage of.

I think that's what the TS was getting at, but I would wager that poor people are more likely to have idle assets than rich people. It's part of why they're poor.

 

I think that's what the TS was getting at, but I would wager that poor people are more likely to have idle assets than rich people. It's part of why they're poor.

There are several causes for poverty, I think, and not just one. Of course, lack of opportunities (both professional and educational) and injustice are two of them. Another one is lack of financial intelligence... I myself was born with absolutely no instinct for money... it's something that I've had to develop slowly on my own... and I've received painful lessons in the past that I've sworn never to repeat.

 

There are several causes for poverty...

Yes, I wasn't implying that lack of financial savvy was a primary cause of poverty. It's just one more way to not end up rich.

 

I believe that people who have money invest only a small part.
The rest they keeps with the desire to not risk their entire fortune.

And what do you base that belief on? People that are wealthy almost always have a significantly larger fraction of their money invested. They also tend to put a higher fraction of it in riskier investments, such as startups and venture funding, in search of higher returns because they can better afford to absorb the loss.

 

But that should also go for the people at the top of a corporation too. People in the highest places don't contribute as much as the people on the assembly line to the actual product being sold. But they get way more money. And benefits.

You could say the same for the engineers that designed it. Their happy ass isn't on the production line at all.

What about the share holders .... they don't do a damn thing, yet they reap rewards.

So, if you were CEO, what would your compensation be? The majority shareholder might fire you at your first slip up, citing loss of confidence in your ability to lead the company, as they were expecting a quarter per share return and you only delivered a nickel. Wall Street predicted the return would be twenty cents per share and you lost the majority shareholder 15 cents per share, the majority shareholders and wall street's confidence, driving the share price lower.

 

If you are saying that there are lots of people out there that aren't being paid what the value of what they produce is, then I agree. If you are saying that the widespread presence of such people has a significant influence of society, then I agree. If you are saying that eliminating that from current society would be highly disruptive, then I agree. If you are saying societies can't exist without the widespread presence of such people, then I don't buy it and would need to see a pretty convincing case for why it is necessary. The case for why unequal wealth distribution is needed in any society of any size is quite convincing, but that doesn't necessitate people not getting paid fairly for what they produce. Quite the opposite, unequal wealth distribution is an unavoidable consequence of people being paid fairly for what they produce.

I've always taken issue with the people that support illegal immigration on the basis that our economy relies on underpaid workers. I'm talking generically here, not about the politics of the day. My stance would be the same on Planet X. For instance, if the incentives for people to enter a country illegally were removed (primarily by removing the incentives for the employers by enforcing sufficiently punitive laws against hiring people not in the country legally so that it would not be profitable for them to risk doing so) then if the costs of things go up, then that's what happens. Prices that are artificially low because of illegal activity shouldn't justify the continuation of the illegal activity. Instead, the illegal activity should be curbed and then people should adapt to the proper prices that ensue.

I've done a lot of research on the various socio-economic problems in the S.F. bay Area and the role of illegal immigration in the economy.

[1] Many illegal workers are actually being paid under the table and taxes are not being withheld. Consequently, they are able to work for less than native born or legalized citizens (or it appears that way).

[2] Foreign workers then send $$$ back home to Mexico in the form of "remittances" which are wired fund transfers made through multinational banks.

[3] The whole illegal immigration/fund transfer scheme is orchestrated by U.S. businesses who get artificially cheap labor and the Mexican government who gets billions in currency through remittances. Through illegal immigration, the Mexican government also gets to outsource its social services for poor and low income to the U.S. Consequently, Mexico doesn't have to spend government resources on social services and that makes it attractive for U.S. businesses to move down there.

While some have the opinion that the U.S. should help build the economy of Mexico so impoverished people won't have the urge to illegally immigrate to the U.S., the truth is that allowing illegal immigration to the U.S. is the best foreign aid package that Mexico can get!!!

 

And what do you base that belief on? People that are wealthy almost always have a significantly larger fraction of their money invested. They also tend to put a higher fraction of it in riskier investments, such as startups and venture funding, in search of higher returns because they can better afford to absorb the loss.

People that are wealthy also have strong ties to politicians who can bail their fanny out of debt if their investments go south.

However the "Too Big To Fail" principle doesn't apply to the Average Joe citizen who can wind up living in a tent on the street if there's an economic fiasco. Tech investor Ron Conway is a prime example of someone with $$$ for the dogs to pee on. However he's also got ties to the Obama administration and the Clinton Foundation who've both raked in big $$$ in contributions from the S.F. Bay Area.

In fact, Obama and Clinton have visited the S.F. Bay Area a total of 27 times to fund raise -IE- take contributions to grease the palms of politicos in Washington in favor of getting more pork. And they've been sending back truckloads of entire pigs in return!!!

 

And what do you base that belief on?

You neglected my reply that people are risk averse.
https://en.wikipedia.org/wiki/Risk_aversion
From link:
Eg:
"A person is given the choice between two scenarios, one with a guaranteed payoff and one without. In the guaranteed scenario, the person receives $50. In the uncertain scenario, a coin is flipped to decide whether the person receives $100 or nothing"

As you can see, you can calculate the probability if flipping a coin to fall on one face.
These experiments clearly demonstrate that people do not react logically at risk in investing money.
Instead of $ 100 put $ 1,000. Why do they accept the risk in this case?

For example, you meet a person on the street. He tells you that he is doing a study and you accept to participate.
He can give you $ 50 for sure or $ 100 if a specific face of the coin falls.
What do you choose? You choose "for sure". Why?

Then,
He can give you $ 50 for sure or $ 1000 if a specific face of the coin falls.
What do you choose? You choose risk. Why?

Is mathematics behind this decision?Unless we accept a different bias for loss and gain.

People are afraid to risk the money.

I'll give you an example I've seen.
A lot of people bought land with 1E/ square meter. Meanwhile his price has reached 100E/ square meter.

They have become rich without producing anything in the economy.
And the land bought?
They are owners and do not want to use it.

If the state oblige them by law to use it, they find a use that it is not useful to anyone.
Why ?
The lower the supply, the higher the price - that's what the economy teaches us.

They expect to increase the price of those lands.
They does not offer anything useful, just keep land unused or use in the wrong direction and their wealth rises.
Who loses? that they did not produce anything and became rich.
(The relation is between the risk of investing and kept unused for safety)

 

You neglected my reply that people are risk averse.

Just saying that people are risk averse doesn't in any way justify a claim that wealthy people are less willing to invest than nonwealthy people. In fact, the concept of risk aversion argues the other way.

These experiments clearly demonstrate that people do not react logically at risk in investing money.

What experiments are you talking about? The example you cite merely serves to help define the meaning of risk-averse, risk-neutral, and risk-loving.
Consider an investment opportunity where you can invest $10,000 and there are two possible outcomes, your money gets cut in half to $5,000 or it gets tripled to $30,000 and each possibility is equally likely. Clearly the odds favor making the investment. Now, you make $20,000/year and you have a net worth of $15,000. How likely are you to make the investment. More to the point, however willing you might be to make the investment of $10,000, would you be MORE likely to make that same investment if your income were $200,000/yr and you had a net worth of $150,000? Almost certainly, because the RELATIVE risk has gone down. You aren't putting half your annual income at risk, but rather just 5%, or about two to three weeks income. You aren't putting 67% of your net worth at risk, but only about 7%. In most cases, your willing to not only put more money at risk as your income/wealth goes up, but you are willing to put a larger fraction of your income/wealth at risk because the fraction of your income/wealth needed for necessities goes down.

 

And what do you base that belief on? People that are wealthy almost always have a significantly larger fraction of their money invested. They also tend to put a higher fraction of it in riskier investments, such as startups and venture funding, in search of higher returns because they can better afford to absorb the loss.

I can't speak for others but I can speak for myself and my wife. When the US economy crashed we did take a hit but fortunately not a really bad hit. As we planned and approached retirement we dropped any investments which may have been considered high risk. Matter of fact my suggestion to our financial adviser was what I called "snail funds" a reference to lower return but much lower risk. I was not interested in risk as we would never be able to put back any loss before we retired and I wanted to retire, not continue to work trying to cover losses. While we are not rich, we are comfortable and I am good with that. Last year we made about 9% and I was ecstatic with that return. The young can likely afford much better to have a larger share of their investments in higher risk funds than us older people.

Ron

 

You could say the same for the engineers that designed it. Their happy ass isn't on the production line at all.

What about the share holders .... they don't do a damn thing, yet they reap rewards.

So, if you were CEO, what would your compensation be? The majority shareholder might fire you at your first slip up, citing loss of confidence in your ability to lead the company, as they were expecting a quarter per share return and you only delivered a nickel. Wall Street predicted the return would be twenty cents per share and you lost the majority shareholder 15 cents per share, the majority shareholders and wall street's confidence, driving the share price lower.

I can tell you've never worked in the labor side of things.

I can only give things I've actually experienced not any 'theory' on how it works. When I first started at GM, in 1980, the workers had to give up 9 paid days, to keep the company 'afloat' do to the auto industry at the time. Promised that when things got better the days would be given back. when things got better those days were never given back. During the 'give back', the guys at the top, never took a hit, and ended up being given a bonus, in stock, for "saving" the company.

As to the engineers, again from GM point of view. Many of the engineers I worked with, were not even degree certified in what they were doing. Civil engineers designing electrical and mechanical stuff. Doing things that anyone that had a common knowledge of what was needed would never have chosen to do. But we were tasked to make it work, because it was our fault the absurdly incompetently designed machines and processes were designed by unqualified engineers. And because they had a degree, not the one that was needed but a degree, management blamed the peon workers.

As a worker/labor, the blame stops with them. So why doesn't the blame also go to those at the top that are incompetent? Or don't preform up to "expectations"? In my opinion it's because they, at the top, have each others back. And to use a phrase from the military, shit flows down hill.