Author Topic: A quick lesson in basic economics ...  (Read 265 times)

Offline Baruch (OP)

A quick lesson in basic economics ...
« on: July 07, 2017, 07:04:30 PM »
In traditional economy, there are three flows. The real economy is agricultural, along with what is required to prosper agriculture. To prosper agriculture there has to be labor specialists, usually in villages or cities, that provide non-agricultural products and services. The monetary flow is bifurcated, between a liquidity flow and a money-as-commodity flow. The liquidity needs to be sufficient to cover all transactions, no more, no less. Originally money-as-commodity flow was based on the currency as physical asset with some market value. Metal money for instance; gold, silver or bronze. Eventually with the rise of banking, paper money became viable as commodity money, with the paper money being commoditized by … interest (implicit or explicit) and money markets. We left the traditional economy behind, when we dropped all connection of the paper money with metal money, so that the government/commercial combine was free to expand liquidity and financial asset at will. We have yet to see what will come of the non-traditional economy … which minimizes agriculture, minimizes metal money, maximizes non-agriculture products and services, and financializes everything (making everything into paper money or the equivalent).

The present time is always an open ended experiment in the unknown.  Simple examples to follow.
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Offline Baruch (OP)

Re: A quick lesson in basic economics ...
« Reply #1 on: August 16, 2017, 01:03:51 PM »
Let us assume a city state, like a US county, with a main city, surrounded by agriculture.  Let us assume a temporarily fixed population and no outside trade.  Let us assume that the urban population is 90% and the rural population is 10%  So the rural population has to grow food at 10x subsistence for just the rural population.  Let us assume that each family requires $100 per week above subsistence to survive.  Let us assume that the currency (liquidity, not value) circulates thru each family 4x per year.  So each family contribution to the annual GDP is 4x52x$100 or $20,800.  The total annual GDP is simply the number of families times that amount.  So with 10,000 families, we would have a total annual GDP of $208,000,000.  So basically each family on average has to generate that much paid labor per year to survive at that standard of living (assumed higher than subsistence).  Let us assume that currency wears out each year, so the government has to produce $52,000,000 in currency each year, which circulates 4x, and then tax at a rate of $52,000,000 per year.  This completes the liquidity cycle.  We are assuming that nothing slows down the flow of money to less than 4x per year, and that the amount of currency produced each year, meets the minimum.  This is steady state.  How is the prosperity distributed, and how does it respond to disruption?  That is the next post.
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Offline SGOS

Re: A quick lesson in basic economics ...
« Reply #2 on: August 17, 2017, 09:22:47 AM »
The present time is always an open ended experiment in the unknown.  Simple examples to follow.
Now we have digital money.  Not even paper, not even recorded on a piece of paper.  Ten years ago, when I sold my boat, the broker sent a wire transfer to my bank.  I then used the digital record of this digital "money" to buy a house.  Wealth just gets pushed here and there, transferred from one digital account to another, and represents wealth.  But there is no money.  We call it money, and I suppose by some loose translation it is still "money," but it's just a bunch of electrical circuits switched on or off that becomes a Hexadecimal record of how much we are worth.  Since we no longer use a thing of commodity to hold our wealth, I suppose we could say that modern money is just a concept.

In fact, the very idea of storing one's wealth in a commodity, although it's still a digital waving around of hands, is considered kind of a wonky investment:  "Do you really want to buy commodities?  They are risky, and fluctuate wildly.  Why don't you buy something sensible, like a mutual fund?"

Offline Cavebear

Re: A quick lesson in basic economics ...
« Reply #3 on: August 17, 2017, 10:06:49 AM »
Now we have digital money.  Not even paper, not even recorded on a piece of paper.  Ten years ago, when I sold my boat, the broker sent a wire transfer to my bank.  I then used the digital record of this digital "money" to buy a house.  Wealth just gets pushed here and there, transferred from one digital account to another, and represents wealth.  But there is no money.  We call it money, and I suppose by some loose translation it is still "money," but it's just a bunch of electrical circuits switched on or off that becomes a Hexadecimal record of how much we are worth.  Since we no longer use a thing of commodity to hold our wealth, I suppose we could say that modern money is just a concept.

In fact, the very idea of storing one's wealth in a commodity, although it's still a digital waving around of hands, is considered kind of a wonky investment:  "Do you really want to buy commodities?  They are risky, and fluctuate wildly.  Why don't you buy something sensible, like a mutual fund?"

Sci-fi books always refer to "credits".    It's the same.  "Actual Money" hardly even exists today.  I have a $100 in my wallet.  It has been there for months.  I'd buy a pack of gum with my credit card these days.
Atheist born, atheist bred.  And when I die, atheist dead!

Offline SGOS

Re: A quick lesson in basic economics ...
« Reply #4 on: August 17, 2017, 10:39:38 AM »
Sci-fi books always refer to "credits".    It's the same.  "Actual Money" hardly even exists today.  I have a $100 in my wallet.  It has been there for months.  I'd buy a pack of gum with my credit card these days.
Yeah, I go to the ATM machine once every three months.  I like to have cash for things like leaving tips, which seems more personal, and I don't like to put the tip on the credit slip when I pay my bill.  I always wonder if management doesn't help themselves to a bit of the employee's tip.  I live in a kind of a wonky rural area, and many businesses don't accept credit cards.  Even my dentist wants cash, but I pay him with a fucking check.  It's like he doesn't trust me to pay him.  But what are you gonna do?

Offline Cavebear

Re: A quick lesson in basic economics ...
« Reply #5 on: August 17, 2017, 11:30:01 AM »
Yeah, I go to the ATM machine once every three months.  I like to have cash for things like leaving tips, which seems more personal, and I don't like to put the tip on the credit slip when I pay my bill.  I always wonder if management doesn't help themselves to a bit of the employee's tip.  I live in a kind of a wonky rural area, and many businesses don't accept credit cards.  Even my dentist wants cash, but I pay him with a fucking check.  It's like he doesn't trust me to pay him.  But what are you gonna do?

I was a waiter for 2 Summers.  Every tip was shared with all the staff dishwashers and everyone. I once got a $50 tip for helping a foreign host with the local wines.  It was the equal of 25 hours work.  I had to share it 5 ways.  The other waiter, the chef, dishwasher and the busboy.  I regreted the busboy share least, since that had been my previous job.  But the Chef cooked the food, the other waiter could just as well got the same table, etc, and someone had to provide the clean plates. 

Looking back on it now, it was fairer than I thought at the time.  I sure could have used those $50 myself. (perpetually struggling to pay my share of a 5 guy apartment)....  But the chef used to sometimes send me home with a serious pizza.  So it all worked out.

Probably why I'm not quite a capitalist but not quite a socialist either.  You work, you get, but everyone helps some.
« Last Edit: August 17, 2017, 01:23:56 PM by Cavebear »
Atheist born, atheist bred.  And when I die, atheist dead!

Offline Baruch (OP)

Re: A quick lesson in basic economics ...
« Reply #6 on: August 17, 2017, 12:59:51 PM »
Been busy.  First I forgot about this post ... and now don't have time to complete the example.

Digital currency won't change the fact ... of white collar crime.  But that isn't the point of my example ... when I finish it.  The point will be ... this is basically how things work ... though almost all people are ignorant of economics (other than political propaganda).  The example works with any kind of money.
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Offline Cavebear

Re: A quick lesson in basic economics ...
« Reply #7 on: August 26, 2017, 11:28:07 AM »
Been busy.  First I forgot about this post ... and now don't have time to complete the example.

Digital currency won't change the fact ... of white collar crime.  But that isn't the point of my example ... when I finish it.  The point will be ... this is basically how things work ... though almost all people are ignorant of economics (other than political propaganda).  The example works with any kind of money.

Ah money...  The shells we all use to trade goods with.  I like the sci-fi idea of mere "credits".  Serves the same purpose.  Anything we all agree on for symbolic value. 
Atheist born, atheist bred.  And when I die, atheist dead!

Offline SGOS

Re: A quick lesson in basic economics ...
« Reply #8 on: August 26, 2017, 12:05:45 PM »
I was a waiter for 2 Summers.  Every tip was shared with all the staff dishwashers and everyone. I once got a $50 tip for helping a foreign host with the local wines.  It was the equal of 25 hours work.  I had to share it 5 ways.  The other waiter, the chef, dishwasher and the busboy.  I regreted the busboy share least, since that had been my previous job.  But the Chef cooked the food, the other waiter could just as well got the same table, etc, and someone had to provide the clean plates. 

Looking back on it now, it was fairer than I thought at the time.  I sure could have used those $50 myself. (perpetually struggling to pay my share of a 5 guy apartment)....  But the chef used to sometimes send me home with a serious pizza.  So it all worked out.

Probably why I'm not quite a capitalist but not quite a socialist either.  You work, you get, but everyone helps some.
I washed dishes in Vail Colorado part of a winter.  It was the lowest job in the resort.  The busboys and waiters got tips.  The dishwashers got nothing. All employees at the hotel got breakfast and supper, not off the menu, but it wasn't bad.  Every once in a while, the cook would prepare one of his special dishes late at night, just for us dishwashers.  We would turn over a couple of giant pots and sit and devour the schnitzel in-between loading the dishes, and hand scrubbing pans, but the real pay off was the free ski pass, and I was happy to be a dishwasher for that alone.

I remember walking into the hotel at night when I got to Vail, and asking the busboy if there were any jobs.  He shook his head, and told me all the jobs were taken.  But someone told me one time you can ALWAYS get a job washing dishes; It was a guarantee I was told, so I said, "I'll wash dishes," and the bus boy sent me over to the Maitre d', who hired me on the spot and I went to work the next morning. 

Seven days a week, just me and another guy, the same guy, every morning and evening shift.  Up at 6 AM and to bed at 12 Midnight, with three hours every afternoon to ski, and I skied every day, but after a couple of months, I had enough washing dishes 12 hours a day.  Apparently, they couldn't get any other dishwashers, and I couldn't have made enough to pay the rent on my flop house if they had.  But my skiing improved probably to expert, although I can't say I know how you actually identify "expert."  But those long skis on my feet did become a part of my body by the end of it.  Skiing became as thoughtless and second nature as walking.

I skied everyday all day for another three weeks after I quit washing dishes.  And one day they finally caught me using a pass I was no longer entitled to, and sent me packing back to Montana.

Offline Cavebear

Re: A quick lesson in basic economics ...
« Reply #9 on: August 26, 2017, 12:37:51 PM »
I washed dishes in Vail Colorado part of a winter.  It was the lowest job in the resort.  The busboys and waiters got tips.  The dishwashers got nothing. All employees at the hotel got breakfast and supper, not off the menu, but it wasn't bad.  Every once in a while, the cook would prepare one of his special dishes late at night, just for us dishwashers.  We would turn over a couple of giant pots and sit and devour the schnitzel in-between loading the dishes, and hand scrubbing pans, but the real pay off was the free ski pass, and I was happy to be a dishwasher for that alone.

I remember walking into the hotel at night when I got to Vail, and asking the busboy if there were any jobs.  He shook his head, and told me all the jobs were taken.  But someone told me one time you can ALWAYS get a job washing dishes; It was a guarantee I was told, so I said, "I'll wash dishes," and the bus boy sent me over to the Maitre d', who hired me on the spot and I went to work the next morning. 

Seven days a week, just me and another guy, the same guy, every morning and evening shift.  Up at 6 AM and to bed at 12 Midnight, with three hours every afternoon to ski, and I skied every day, but after a couple of months, I had enough washing dishes 12 hours a day.  Apparently, they couldn't get any other dishwashers, and I couldn't have made enough to pay the rent on my flop house if they had.  But my skiing improved probably to expert, although I can't say I know how you actually identify "expert."  But those long skis on my feet did become a part of my body by the end of it.  Skiing became as thoughtless and second nature as walking.

I skied everyday all day for another three weeks after I quit washing dishes.  And one day they finally caught me using a pass I was no longer entitled to, and sent me packing back to Montana.

Outstanding!  Some lousy jobs are worth the perks.  You got a lot out of washing dishes.  And BTW, to me "expert skiing" is not falling down on the bunny slope.  I could fall off a sled.  On the other hand, I used to piano juggle with golf balls.  Everyone has a talent.
Atheist born, atheist bred.  And when I die, atheist dead!

Offline pr126

Re: A quick lesson in basic economics ...
« Reply #10 on: August 26, 2017, 01:32:06 PM »
That reminds me. Justin Trudeau was a ski instructor at one time. 

« Last Edit: August 26, 2017, 01:34:38 PM by pr126 »
‘War is Peace. Freedom is Slavery. Ignorance is Strength.' 1984

Offline Cavebear

Re: A quick lesson in basic economics ...
« Reply #11 on: August 26, 2017, 01:53:15 PM »
That reminds me. Justin Trudeau was a ski instructor at one time. 

(Image removed from quote.)

Who?
Atheist born, atheist bred.  And when I die, atheist dead!

Offline Baruch (OP)

Re: A quick lesson in basic economics ...
« Reply #12 on: August 26, 2017, 02:55:05 PM »
Who?

Leader of Soros Empire north of the US.  Eh?
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Offline aitm

Re: A quick lesson in basic economics ...
« Reply #13 on: August 26, 2017, 03:03:30 PM »
  I have a $100 in my wallet.  It has been there for months. 

In the classic game of "onemanupship" I have 2 100 bills in my wallet. One gets exchange about every 8-9 months. The back-up I have had for 5 years. Emergency money......or a poor girl what needs some ready cash...........  kinda.....
A humans desire to live is exceeded only by their willingness to die for another. Even god cannot equal this magnificent sacrifice. No god has the right to judge them.-first tenant of the Panotheust

Offline Baruch (OP)

Re: A quick lesson in basic economics ...
« Reply #14 on: August 26, 2017, 03:21:08 PM »
In the classic game of "onemanupship" I have 2 100 bills in my wallet. One gets exchange about every 8-9 months. The back-up I have had for 5 years. Emergency money......or a poor girl what needs some ready cash...........  kinda.....

My grandfather used to keep a $1000 bill, behind is belt buckle, for emergencies.  Back then that was a lot of money compared to today.  Yes, some are like the guy at the work social luncheon, who says ... only have $100, can't make change, will someone cover me until I get change? ;-))
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