The bubble in government paper

Using money as a store of value is inherently problematic. One can store value as canned beans, as rice, but as money?

The usual trick to this is to lend money to young people to build homes and start families. The value is stored in their home, the bank holds a lot of mortgages to these homes, and these back a lot of on demand deposits.

This creates the notorious problem of term transformation, which can be ameliorated by flexible interest rate mortgages – or by an alarming willingness of the government to print money for cronies, but I am here addressing a different problem.

Suppose there are not enough young people building homes and starting families.

We then face the problem of money with nowhere to be stored. So the natural rate of interest falls to zero and tries to go negative So instead of storing it in young people’s promises to work hard and build a life for their families, we store it in taxpayer futures. Governments borrow to buy votes, and to “stimulate the economy” So money is backed by a liability on taxpayers.

An ever larger liability on ever fewer taxpayers.

But, surely money can store value even if backed by absolutely nothing. Money is always a bubble. So why worry. How can the capacity of government to borrow enormous amounts of money at negative real interest rates be a bad thing. Surely the interest rates that governments are paying show that our governments are more solvent than ever. The decline of the high IQ working taxpaying population and its replacement by people on welfare and single women in makework jobs has been a huge bonanza for governments, that has deluged them with free money. Indeed, the more single women in makework jobs, the less they will reproduce, and the more money the government can borrow.

Assuming a virtuous and competent government, a deluge of free money is not going to cause that government any harm. If, on the other hand, we assume government thinks no further ahead than the next election …

31 Responses to “The bubble in government paper”

  1. Edvard says:

    Assuming the government is the one doing the thinking, rather than the currency-issuing central bank, is erroneous. It is, after all, not in fact, government paper, but the scrip of a private corporation which is unconstitutionally substituted for the government’s statutory currency, which is never used by anyone but top-level banks in extremely rare internal transactions.

    • jim says:

      Central bank is controlled directly by the government.

      • VXXC says:

        Well the Central Bank and the Government are one, as is Finance.

        Mr. Edvard,

        I swore to defend the Constitution and have to the utmost short of my death, but even I’m not delusional enough to think it applies to our National Government at this point.

        On the other hand I am therefore bound by nothing to that government, and they have voided the contract and my Oath as regards them.

        Thanks for the training, experience and valuable contacts.

        Perhaps we can do this again sometime soon.

      • Edvard says:

        Its board of directors and chairman are appointed. In no other way way is the Fed controlled by anyone but itself.

        • Peppermint says:

          So, the entire leadership is controlled, and this means the organization is not controlled.

          This is like saying that the Jews don’t control the US because they only control which candidates get favorable press coverage.

          • Edvard says:

            The leadership is not controlled in any meaningful sense. The same oligarchy which owns the member banks influences whom is appointed, or did you think Goldman Sachs being the treasury department in all but name gave them no influence whatsoever?

  2. Peppermint says:

    Semiconductor fabs, nuclear power plants, and Big Digs cost as much as ten thousand homes, or, maybe more if we deduct the cost of the land that is otherwise going to host something less important to developing the human capital of the nation. Is there a billion-dollar capital project for every ten thousand single moms?

  3. Edvard says:

    Anyway, the only reason Federal Reserve notes have a value is that by law they are the only legal tender and the only means by which we may ransom our constitutional rights from the state via income tax. It’s artificial scarcity of currency which enables this system to work at all. Make more yourself and they call it counterfeiting – because you’re interfering with their pre-existing counterfeiting operation to devalue and then by credit indenture buy up the wealth the middle classes spent ~400 years in producing. It’s not a government operation. The government is merely the enforcer.

    • Peppermint says:

      Why are we arguing whether the bank Jews control the government Jews or vice versa? They go on the same Hajj trips to Auschwitz together and tag team the same underage White girls, and the NRx movement has known about this since its beginning (Moldbug, who blew the whistle, mentioned that he might be able to think of more hedonic activities he could be engaging in, but the stress of co-parenting with a modern woman meant he just wanted some sleep).

      • Edvard says:

        Probably to make it clear that whatever happens allowing Jews anywhere near a currency system is a catastrophe in the making.

        • peppermint says:

          After all, as people said 100 years ago, Communism is Judaism…

          • jim says:

            Communism is a branch of Judaism. Despite my many criticisms of B’s Judaism, it is a very different branch.

            Progressivism, however, is a branch of Christianity. Hence progressive Jews do in practice predictably act like conversos.

          • peppermint says:

            haha, i’m just making him say what he’s going to say. because people who don’t know what they’re talking about deserve to be trolled sooner rather than later

          • Contaminated NEET says:

            It’s abundantly clear that B doesn’t get you at all, peppermint. How many more demonstrations do we need?

    • jim says:

      It is more they have value by the accumulated accidents of history. They have value because everyone else thinks the have value.

      • josh says:

        You have to pay taxes in US dollars or they will throw you in jail and you will be anally raped. Pretty sure that adds some value.

      • Edvard says:

        No, Federal Reserve Notes have value because they are the petrodollar. That is the only historical connotation which lends them potency and it has been enforced since Bretton Woods by the force of arms present in American and Israeli intelligence agencies. See: Mossadegh; Qadaffi; Hussein.

        • peppermint says:

          » » Anyway, the only reason Federal Reserve notes have a value is that by law they are the only legal tender and the only means by which we may ransom our constitutional rights from the state via income tax.

          » No, Federal Reserve Notes have value because they are the petrodollar. That is the only historical connotation which lends them potency and it has been enforced since Bretton Woods by the force of arms present in American and Israeli intelligence agencies. See: Mossadegh; Qadaffi; Hussein.

          well, come back with your report when you and Edvard finish debating the issue

  4. JS says:

    The very of “storing value” is problematic. If you trade all your stuff for canned beans you haven’t “stored” anything. It’s just that now you have a whole bunch of canned beans. What you get back for those canned beans in further trade depends on a host of conditions outside of your control.

    Things don’t have any more intrinsic value than man-made financial objects.

    • peppermint says:

      a can of beans has value because it can be used as food, and a dollar has value because it can be traded for a can of beans…

    • Contaminated NEET says:

      Are you out of your mind? What could be more intrinsically valuable than food? As long as an economy is made up of human beings, food will be valuable.

  5. Dave says:

    Any thing used as a store of value naturally commands a higher price than if that thing were not used as a store of value, a bubble of sorts. The ideal store of value would be something with few other uses, to minimize the side effects of this “bubble”.

    Gold once served this purpose nicely, but now we use real estate as a store of value instead. This is perverse, because young adults need safe, spacious, affordable housing close to good jobs if they are to marry and raise children. Forcing them to live with their parents or rent studio apartments leads to Japanification and eventual extinction. Section 8 makes this worse by bidding up rents on family-sized apartments, and subsidizing only the families least likely to incubate productive citizens.

  6. j says:

    Jim is saying that society has a problem when there are too few young people, like now in Japan. However, Americans need not worry yet: excess savings are loaned to China and the interest will fund your pensions, America has investments in foreign countries that can be realized when the time comes, and then, one million young workers are immigrating each year and more can be let in if necessary.

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