Zimbabwe, sound money and no more debt

[Erdogan]

As you know, Zimbabwe went through a hyperinflation, and now effectively has sound money. And, different from Greece, they can not take up more government debt. In this article, that largely moan and cry for the non-ability for the government to spend money it does not have, I found this tidbit:

"Mugabe [...] said the government would repeal all laws hampering businesses [...]"

So, it works.

http://www.bloomberg.com/news/articles/2015-09-02/from-hyperinflation-to-deflation-no-end-to-zimbabwe-s-decline

 

[cypherdoc]

yes, a bad situation.

dollarized, the tallest of all pigmies w/o a debt market. that's death for many years to come. the world has entered a global deflation and peripheral mkts like ZBWE will suffer the most. what will be interesting is when Yellen is forced to start printing again to drive down the dollar. i suspect that perversely that will just make things even more worse in ZBWE as suddenly the citizens will be able to afford even less the cost of goods and services. and all so that the US can save the UST market.

 

[Erdogan]

They have had a bad leader for some time, but I wanted to point out that sound money restrains the government, and now we see that he will repeal all laws hampering business... That can only be good, they will start to produce, and they will not starve.

 

[cypherdoc]

The question is if the dollar is really sound money.

I think it is the tallest pigmie. This crisis, I don't think it goes up. Seems obvious it should. Where them does the value go? UST's most likely. Bitcoin? Some. Gold, I doubt it.

Can Bitcoin help counties like ZMBE? I think so. The people for sure. The gvt, not so much. They should try it.

 

[Erdogan]

It is relatively sound for now, as the government do not get the proceeds of the dollar printing. Just like Greece, they could not fuck the money system, like Venezuela has done. Zimbabwe now has the possibility to heal their economy, starting from a low level. But yes, bitcoin and gold and silver is sound money.

 

[theZerg]

They have had a bad leader for some time, but I wanted to point out that sound money restrains the government, and now we see that he will repeal all laws hampering business... That can only be good, they will start to produce, and they will not starve.

Yes, the most important quote IMO was how investors won't invest b/c mugabe requires companies to be majority owned by Zimbabweans. Trust is gone so things won't improve until his govt is gone...

 

[Erdogan]

If a region is starved from capital, either from historic reasons or if for some reason the people living in the region do not want to save and invest, foreign money can come in and do the same job. For that to happen, the money or the capital invested must not be confiscated by the government, neither the profit. That is, private property must be respected. The capital will go to where it is most needed, where the investment level and productivity currently is low. The signal is the profit rate. This could really solve the non-developed contra developed area schism.

The current government should go, but really, the next one also. It is not needed. Only a government can produce famine, as happened in Zimbabwe when the farms were confiscated.

 

[majamalu]

"The capital will go to where it is most needed, where the investment level and productivity currently is low. The signal is the profit rate. This could really solve the non-developed contra developed area schism."

That's why Doug Casey has set its sights on Africa: http://www.internationalman.com/articles/doug-casey-on-why-you-should-go-to-africa-instead-of-college

 

[Zarathustra]

It is relatively sound for now, as the government do not get the proceeds of the dollar printing. Just like Greece, they could not fuck the money system, like Venezuela has done. Zimbabwe now has the possibility to heal their economy, starting from a low level. But yes, bitcoin and gold and silver is sound money.

Debt and only debt is money. All other things are (more or less liquid) commodities.

 

[cypherdoc]

@Zarathustra i agree that the vast majority of money out there is debt. that's the setup for bad things to happen.

 

[Erdogan]

Debt and only debt is money. All other things are (more or less liquid) commodities.

I think you have proposed this before, and I am still not in agreement. Differences are that debt can be paid back or written off, affecting the money quantity, the creditor (the one who "has" the "money") can not be sure they will not be lost, governments and others can take up loans without ever planning to pay back. All of these differences have very real life consequences for the holder.

 

[Erdogan]

Fiat money is also not debt, but real money, here talking about the actual fiat paper rectangles and the result of the quantitative easing. The fiat money are money, just not that good money, since more can relatively easily be printed. The ease with which it can be printed is the same as the seigniorage.

 

[cypherdoc]

the way i see it, money is the sum of the monetary base plus private and national debt. the debt dwarfs the monetary base. the debt is really what has driven prices in the years leading up to 2008 which required a massive series of QE in order to prevent the entire debt pyramid from collapsing. it will be fascinating to see which gets hit the hardest in the next downturn, which has probably already started, UST's or USD's or both.

 

[Erdogan]

Yes, the debt is at least ten times more than the base money. If debt is extinguished, it really could take prices on a downwards tour. The debt makes the system unstable.

 

[Zarathustra]

Fiat money is also not debt, but real money, here talking about the actual fiat paper rectangles and the result of the quantitative easing. The fiat money are money, just not that good money, since more can relatively easily be printed. The ease with which it can be printed is the same as the seigniorage.

It can't be printed easily. Ask Mugabe. You cannot create additional money by printing paper and exchanging it against debt. They just can dilute existing money (which is debt). Commodities are always valued in debt, which is the one and only money from the very beginning (mesopotamia and before). Forget the barter story of the mainstream schools of economy (austrian, keynesian et al.).

http://buecher.fivetechno.de/barter.pdf

 

[Erdogan]

Mugabe was one of those who overdid it, so how can you give him as a proof of it not being simple?

Commodities are not always valued in debt. Go deeper. All imaginable things are compared two and two, in specific amounts, by individuals, for their own personal and unknown reasons.

When individuals trade on those valuations, we get historical price pairs, that is a price of something expressed in something else.

Now, and you need to have some imagination to follow: Those price pairs, in aggregate, give us the general market. For some price pairs, we can follow a standardized price pair by the second, with accuracy to a tenth of a percent and easily observable. Other price pairs, like a house in the suburbs priced in flats in the inner city, gives an inaccurate price history, not easily observable, with a large gap between ask and bid.

Money is just one of the things in the market, due to its qualities it is almost always used as an intermediate, so you do two trades with money instead of the trade you really want to to.

End rant...

 

[Zarathustra]

An economy starts with debt (tribute to priests/warlords/state). There is no such thing as a market in an environment beyond such organizations of organized violence. In an environment beyond organized violence (rain forest) there is no market - there is anarchism (= self sufficiency).

No debt - no market

https://bitcointalk.org/index.php?topic=68655.msg12083840#msg12083840
https://bitcointalk.org/index.php?topic=68655.msg12084158#msg12084158

 

[Erdogan]

I opt out of this sea of confusion.