That’s so kind of you Mr. Jurgen. I will certainly try to do that should I have the opportunity to visit again.
:)

Dear Mrscracker, let me know, when you come to Switzerland next time. Would be nice to actually see you and hear your voice.

Steven Meyer, you asked, how the mechanism works that transfers wealth from the poor and the working middle classes to the redistributors and the risk.

I gave the answer and my answer is correct .

Now you say, that the impact of money printing is not relevant to the poor and the middle classes.
Your comment is wrong and in some sense also correct.

Money printing causes wealth transfer through inflation. That is the same as stealing, so it is relevant.

But the thieves do not want the citizens to notice what happens. For this reason they prefer a mild inflation, say in the range of 2 to 4 percent annually. Yes, the citizens including the apple farmers would just get used to that and not complain, many would even agree that such a small inflation was not relevant.

But do never forget, such inflation works basically like a tax on all citizens and private companies.

If such inflation tax is collected over 20 years, a huge amount of wealth would be transferred.

And by the way, interest rates would be artificially lowered, so that it would be easier for a leading grocery chain to acquire competitors left and right. Result: a duopoly and competition gone. …. And all the farmers complaining.

Steven, you probably think that you have compassion for the poor and the middle classes, when you fight against the monopolists and oligarchs.

However, these oligarchs like what you say, because it helps them, not the poor.

Hello Mr. Jurgen,
I had the great blessing of visiting Switzerland last year. The scenery was absolutely amazing.
I was just wondering what Switzerland might be like today had it not held other powers’ money in the past.

Some years ago there was a poll of people who had retired to Florida. The shocking result was that a simple majority regretted ever having children. My take is that they were probably lousy parents. But it indicates that not all people want children. Now I could not imagine not having children. I was born to raise children. Hopefully my children agree.

mrscracker,

Sometimes, when it’s too late, women do regret their decision to remain childless. And sometimes they don’t.

We all make decisions we regret in later life.

But what is different is the rising number of women in their 20s and early 30s who are adamant that they do not want children. Period.

This is a new phenomenon.

The Institute for Family Studies, a conservative think tank, documents this well.

“By now, it’s not news to anyone that America’s fertility rate is falling. But there are different ways fertility can fall. One way is that the average family size can shrink as people shift from having four kids to three, two kids to one, etc. But the other way is by people not forming families at all. Most of the drop in fertility in America in the last two decades is driven by this second factor: more Americans are staying single and never having children at all, as Wendy Wang recently documented on these pages. But among people who have children, fertility rates have been comparatively stable.”

Jürgen Siemer

In the real world the problem for the apple farmer is not wicked money printing. It is oligopolistic supermarket chains squeezing the price of their inputs. The individual apple farmer has little bargaining power.

Here’s a good summary of the plight of farmers in Australia where the Coles/Woolworths duopoly is squeezing family farms out of existence:

“Family farms will be gone in 10 years because of supermarket practices, fruit grower tells Senate inquiry”
https://www.theguardian.com/australia-news/2024/mar/12/family-farms-gone-ten-years-senate-supermarket-price-gouging-inquiry-woolworths-coles

Note: It’s the duopoly, not money printing. The idea that the apple farmer can just double the price of his apples in the face of the power of the duopoly is sheer fiction.

Your example doesn’t happen in the real world unless the government goes crazy with its spending in which case everyone except the ultra-wealthy goes bankrupt.

As for the “mythical multiplier” – don’t get me started. The Bank of England explains it better than I can.

Money creation in the modern economy
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy

The fantasies of the so-called “Austrian School” of economics simply do not match up with what happens in the real world.

Incidentally, one of the problems the Habsburg Empire faced was that many of its liabilities were denominated in Sterling rather than its own currency. Had they expanded the Empire’s money supply instead of borrowing in a foreign currency they might have weathered the panic of 1873 better. In fact, in that case the panic of 1873 might never have happened. This is an over-simplification but you get the point.

Why are you asking?

I am not saying that we are going to live without banks, if we returned to honest money, which would be a system without money printing.

Yes, the financial sector is important in Switzerland. And you may remember that the bank Credit Suisse imploded last year, leading to a shotgun wedding between the almost dead Credit Suisse and UBS. And a lot of employees of Credit Suisse had to find a new job.

The Swiss banks benefitted in the past from the secrecy of bank-accounts in Switzerland. But that is gone.

Switzerland has a strong high-tech industry including companies supplying to BMW, Audi and Mercedes, a biotech- and pharma industry, a watch-industry, with Nestle a global leader in the food industry, and some tourism.

Switzerland historically was a poor country that mainly exported its citizens as emigres, some as mercenaries, such as the Swiss Guard of the Vatican.

I believe the Swiss success story is primarily built on its constitution, where most power and a big portion of the tax income is directed to the smallest entities, the communities and the cantons. And the Swiss citizens vote on almost everything, every 2 or 3 months there are a few public votes, that range from local issues, such as zoning plans to national issues, such as the purchase of fighter jets for the army.

The Swiss citizens could vote for EU membership and Nato membership. But so far, they have rejected such Initiatives. They are proud to be neutral, so neutral that they joined the UN really late.

The Swiss tend to vote responsibly. Many proposals made by politicians are rejected when the voters are concerned by tax-increases required by the proposals.

The central government in Bern is much less relevant than the central government in Paris to the common Frenchman.

The Swiss even banned the building of new minarettes by such a public vote, which was of course criticized by all woke neighbors around Switzerland. Yet many Muslims live happily in Switzerland.

A proud Swiss has his army weapon at home and participates in the annual shooting exercise.

While all other nations around Switzerland tell their people how inefficient the Swiss political system is, Switzerland is a success story in Europe.

Even with a much smaller banking industry, and that industry is currently shrinking, Switzerland is great country. I love it.

Mr. Jurgen, I think I remember that you comment from Switzerland? Where would Switzerland be today without banking?

Yes, Mr. Steven. Women who don’t want children at all are a part of our falling birthrates, too. But if and when they change their minds later on in their 30’s it can be too late. I’ve heard that story before. And sadly, their partner may then leave and take up with a younger, still fertile woman and begin a family.
Sometimes you don’t know what you’ve lost till it’s gone. Men have much more time to figure that out than women do.

Steven, you have asked how money printing would transfer from the not-rich to the rich.

I have argued that money printing transfers wealth from the not-rich to those who redistribute. The redistributors are the governments and the banks, and here I am primarily thinking of the big banks, especially those few big banks with direct or primary access to the central bank or, in the case of the US, who own the central bank.

Of course the big banks are owned by the rich, so a lot of wealth is transferred to the rich.

Firstly, you need to understand that the majority, some economists say up to 80% of money printing takes place in the fractional reserve banking system, before the central bank actually creates new bills and coins. The core secret is that the bank uses the dollar, that you have as an accounting item on your checking account twice (well, it precisely uses it on average 1.1 times). It uses it to book your rent payment to your landlord and at the same time it is lending it to somebody totally strange to you to create additional interest income. I know that this is hard to believe by the common man, but believe me, this is really how fractional reserve banking works, and it explains (to a significant extent) why the big banks have been able to generate outside profits in the past decades.

But then there comes a time, when the banks need more bills and coins. That point in time is when people demand more cash from the banks, cash the banks actually do not have anymore…

So the central bank creates additional funds, including coins and bills, basically out of thin air, and sends them to the banks.

Here,I believe, begins part of the explanation easier to understand:

Let us assume there is an apple farmer, who usually sells his 2 apples for 1 dollar to his neighbor in the village.

Now the government or some banker also shows up at the apple market. The government or the banker brings another dollar, that did not exist before.

What happens? The farmer would of course increase the price for the apples: new price for 2 apples: 2 dollars.

1 apple for each of the 2 customers.

So effectively the poor guy living in the village has lost half of his wealth, his purchasing power, it went to the government or the governments banker.

You can develop the story further, but in the end the farmer will also lose.

Wealth is created by work, not by redistributing it.

Hope that helps.

mrscracker,

No, I am not talking about people who say they want kids but keep postponing it. I am talking about the growing number of people, especially women, who decide from the outset:

No kids! Period.

This CNBC piece summarises it well:

‘Neither of us feel interested’: More Americans don’t want kids, and it’s not just because of the money
https://www.cnbc.com/2024/08/16/why-more-americans-dont-want-kids.html

Jürgen Siemer

I’ve lately become fascinated by the history of the Habsburg Empire. It was not the economic utopia so-called “Austrian economists” would have you believe, Google, for example, the panic of 1873.

One of the Empire’s more interesting characters was Alfred Redl. He was chief of intelligence of the Austrian army 1907-1912 and also a spy for Czarist Russia. So the Russians knew the Austrian war plans at the outset of World War 1 and effectively knocked the Austrian army out of the war in 6 weeks.

But let’s get back to present day economies as they actually are, not as we may wish them to be.

Money Printing:

Please explain the mechanism of how printing money, in and of itself, transfers wealth from the not-rich to the rich.

When governments print money they’re generally doing one of three things:

–Buying something – it may be an intercontinental ballistic missile or the services of a plumber. In these cases people in the private sector are getting paid

–Paying out various types of welfare benefits. These may include unemployment benefits or paying for healthcare

–Paying the salaries of civil servants.

None of these in and of itself represents are transfer of wealth from the not-wealthy to the wealthy.

Of course, the way public programs are implemented can, and often are, grossly unfair to the poor. But that has nothing to do with the printing of money per se.

For example, the way American social security is financed results in a massive transfer of wealth from the poor to the not-poor. Many actuaries have tried to explain this but the American public seem either too dumb, too distracted or too disinterested to pay attention.

We can have a great talk about economic policies and the way they’re implemented. For what it’s worth, I think we are headed for the mother of all avoidable crashes mainly because of stupid politicians and their even more stupid followers.

But it has nothing to do with money printing per se. And you have yet to demonstrate how it transfers wealth away from poor people:

Oligopolies:

I did not explain myself properly.

Oligopolies, if not actual monopolies, are inevitable. The economics of scale mean that just a few corporations will dominate most industries. That’s one of those things the Bearded Old Jew You Love to Hate (BOJYLtH) got right.

BOJYLtH got something else right. Oligopolies also become oligopsonies – they are the dominant purchasers. That means they can suppress the prices they pay for their inputs including the price of labour aka wages.

The economics “profession” has been wilfully blind to this reality. In addition to market power, oligopolies also have political power.

And, in the end, it’s all a case of who has power. And, as Warren Buffett, definitely not a “disciple” of BOJYLtH pointed out, The billionaire class has the power.

If the not-rich want power they have to organise and use their collective power.

Oh well, these robots were made for walking and “They’re gonna walk right over you.”

https://www.youtube.com/watch?v=gTSFBFmRJVs

Good morning Mr. Steven. I find lots of recipes on the internet also.
:)
I wrote that postponing childbearing was a very important reason for falling fertility rates, not the only factor.
Some women do choose to be childless but more put it off too long while they prioritize education and careers. Surveys typically show that couples want more children than they actually go on to have.

And: money printing actually starts in the banking system, when banks start lending funds taken from daily accounts ( accounts that are for daily withdrawals) for terms longer than a day. Check fractional reserve banking if you want to learn more

Fractional reserve banking systems need central banks to basically insure the risks of the fraud. The central banks are the central evil in finance….

Governments and big banks in our system, one is the prostitute and the other the prostitute’s client.

A corrupt and commercial relationship.

Stephen, I have to correct a typo: we agree on a few things the bearded old Jew said.

A

Dear Stephen, I am thankful, that at least you are interested in my criticism of money printing.

We agree on many observations, but we disagree on our conclusions.

We disagree on, for instance, some of the things the bearded old Jew and his disciple Warren Buffett are saying: yes, we are in a class war, and yes money printing has been going on for a long time, sometimes more sometimes less.

But we disagree here: I am saying that money printing is always stealing, as it is shifting the ownership of assets, wealth, away from those, who work and create values, to those who print money and redistribute values, the banks and the governments. I say all money printing is bad, and I would like to add that longer periods of little money printing – what you do accept as ok – inevitably and always lead to events of excessive money printing – what you not accept.

If it is an additional 200 USD bill or if it additional 2 trillion USD to bail out the banking system and the government. Both cases are in essence the same: theft, stealing from those who work and their children and moving the stolen to those who redistribute.

You have to agree on this point, it is indisputable.

But of course, we disagree on the conclusion, you have explained that.

It seems to me that you make a mistake in your assumption. You seem to say that we could not live without money printing, with (I suppose) mild inflation and therefore without big redistribution.

Please, take a look back into history: there are examples, where countries were basically living for decades with a constant or almost constant quantity of money flowing around it’s economies, for instance under the Habsburgs and in the US.

Inflation in these times in these countries was slightly negative for long periods, purchasing power of the poor and the middle classes was growing, and middle classes grew and grew relative to the poor and very rich strata of society.

We could have that again.

I find it almost tragic, that, in spite of declaring your fight against the rich, the monopolies and oligarchs, you are actually fighting FOR them. They, see our friend Warren Buffett, like what you say – for very egoistic reasons not for some philanthropic reasons.

Best, Jürgen.

First the pipes:

My point is that most people cannot fix pipes, hence they need a plumber.

While I acknowledge that we see a lot of innovation and productivity increases in the processing of information, there is really not much productivity increase in various work that old fashioned craftsmen do, like plumbers.

So: when there are not enough plumbers, there are not enough plumbers,(and chat-gpt) would not help.

mrscracker,

Your demographer son is wrong. The biggest single factor driving the drop in fertility in the United States and other industrial countries is the growing number of women opting for zero children.

It’s not the only factor. Postponing having children is also a factor. But voluntary childlessness is a bigger factor..

Jurgen Siemer

Stop money printing?

Printing money is NOT the cause of growing income and wealth inequality.

Once I’ve finished explaining money I’ll let you into a secret: the true cause of growing inequality.

So first a brief lesson on money.

All money is a confidence trick and that includes gold.

Let’s look at gold. I can’t eat it. I can’t drink it. It won’t shelter me from rain. It won’t keep me warm. It can’t transport me. It’s not a great building material. Why on Earth should I accept gold in payment for my labour?

I’d accept it because I have confidence I can exchange it for food or a good whisky or a concert ticket or a bus ticket if I need transport. I’m confident a landlord would accept it if I needed shelter.

So, in the end, even gold is a con trick.

But, of course, we don’t use gold. We use fiat currency. So let’s see how that works in practice.

Suppose the government needs a plumber. The toilet in the president’s official residence is blocked. They call Plumber Mamma (see below), she fixes it and submits a bill for $200. The government then instructs the central bank to deposit $200 in Plumber Mumma’s bank account. Plumber Mumma then uses the $200 to buy Christmas presents for her kids.

Where does the central bank get the money? It simply decrees it into existence. That’s it. Poof. Money out of nowhere. Once upon a time they would have had to print physical banknotes. Now even that is not necessary.

Notice the taxpayer has not entered the scene. The government doesn’t say, “You’ll have to wait for your money Plumber Mumma. Jurgen Siemer has been a bit late paying his taxes. We’ll have to wait until he pays up.” The central bank just creates money out of nothing.

In theory the government doesn’t even have to tax people or borrow the money. It can just keep “printing.”

This is sometimes called “modern monetary theory” or MMT. But that’s nonsense. MMT is just a description of what happens in practice.

Let me emphasise this point. I’m not proposing some wild theory. All I’m doing is describing in simplified, perhaps a bit oversimplified, terms, the mechanics of what actually happens. This is the way it works.

But let’s carry this a step further. “What about inflation?” I hear you say.

First, what is inflation?

It’s a general rise in prices. We have inflation when the cost of all the stuff we really need, energy, accommodation, food, whisky, all go up more or less simultaneously.

What causes inflation?

One cause is the government printing money at a faster rate than the economy can increase the supply of goods and services. Keynes called this “too much money chasing too few goods.”

Note, it is NOT the printing of money that causes this sort of inflation. It is EXCESS money printing.

Another cause of inflation is the disruption of supply chains due to war of pandemics. There is a catastrophic decline in the ability of the economy to deliver goods and services.

The recent global bout of inflation is the result of both supply chain disruptions and, with the benefit of hindsight, governments printing too much money.

Perhaps the most under-appreciated and malign cause of inflation, and unduly high prices more generally, is monopolies and oligopolies. Most modern industrial economies are dominated by oligopolies. When you have oligopolies you don’t need business people conspiring to keep prices high in the way Adam Smith explained it. The people who run the oligopolies understand the rules of the game. If you start a price war you make things worse for all of us.

But oligopolies are a complicated topic for another time. Suffice to say they do not receive enough attention. In the United States the extraordinary cost of healthcare can be attributed in part to oligopolies and the political power they wield.

OK, but if the government can create money out of nothing, why tax at all?

There are a number of reasons. Here are some: –Inflation control. Cancelling some of the money it creates helps control inflation.

–Redistribution – take more money from the wealthy than from the not-wealthy, use it to provide additional services and income for the not-wealthy.

–Since you have to pay taxes in the fiat currency it helps ensure that there will be a demand for this currency

OK, but why borrow money? Why issue government bonds?

They’re a great savings facility. Most government bonds are owned by pension funds.

Alright, here endeth the oversimplified lesson. Now I hope you have at least a glimmer of an understanding of how the monetary system really works.

If the government stopped printing money it would cause an economic collapse and a deflation. If you think inflation is bad wait until you see deflation.

So, now, what is the cause of rising income and wealth inequality?

And what’s the remedy?

The cause of rising income and wealth inequality is the world returning to normal.

Extreme inequality has been the norm since the agricultural revolution. That’s just the way the world is. The recent post-World War 2 drop in inequality is not the norm. It was an outlier period.

I want to emphasise that point. Extreme inequality is the norm. What we see now is simply the world returning to normal where the not-powerful, that means you, know their place.

So what is the remedy?

Well, for that, I’m afraid we have to see what that bearded old Jew you all so love to hate had to say. He got many things wrong but, in some important matters he got it right.

It’s class warfare. Put quite simply, the wealthier classes, the ones with power, want a bigger slice of the cake for themselves.

If, if you really can’t abide the bearded old Jew, here’s what Warren Buffett had to say:

“There’s class warfare, all right but it’s my class, the rich class, that’s making war, and we’re winning.”

See:

https://www.nytimes.com/2006/11/26/business/yourmoney/26every.html

A lot of all this drivel about “small government”, “stop printing money”, “government is the problem”, “immigrants are taking your jobs”, “my right to bear an assault rifle”, etc is simply psyops in the class war.

The tactics of ruling classes are always the same:

–Bread and circuses

–Divide and rule

Mostly it seems to work. In fact it works so often and so well that I just marvel at it. Simply depict someone as a “communist”, keep saying that loud enough and often enough, repeat the old saws about “evil big government”, never mention “evil big oligopolies” and the non-powerful go like sheep to the slaughter.

Isn’t it wonderful.

So the remedy for inequality is for the not powerful is to get power by organising themselves and demanding a bigger share of the pie. Fight back.

But they won’t. They rarely do. Those “real men” you spoke about are mostly sitting on the couch watching Fox “News”.

So it goes.

Jurgen Siemer

Seriously, why do you think women can’t fix pipes?

Meet Suzi, the Plumber Mumma
https://mrsplumbermumma.com.au/about

I can personally vouch for the quality of her work.

So do I mrscracker. So do I. :)

I get a lot of recipes off the internet BTW.

I ask YouTube for help all the time Mr. Jurgen.
:)

When in the future there are not enough real men around to fix your broken water pipe, you can still ask chat gpt for help.

Good luck.

The US used to be a country with a strong middle class, that basically owned the vast majority of the privat assets in the country.

Today, a much bigger part of the privat assets is owned by the top 1 percent of the US population. The majority of the top 1 percent are big donors to the democrats, and of course they also donate to republicans, just for insurance.

Why? – because they benefit.

Stop money printing, which is a scheme to move assets to the government and to the 1 percent, and the house of cards will fall.

Hello Mr. Fedders. I hope you are doing well.
One of my children is a demographer & what they see as a very important reason for declining fertility is simply women postponing childbearing until their own fertility’s declining.
Until we give a higher status & priority to marriage & child rearing we will continue to see the same decline. Unlike men, women have a finite window of fertility. That will have to be prioritized over advanced education & employment status. Or education & employment providers will have to find better ways to make childbearing/childrearing more feasible for women at a younger age.
Many US universities offered housing for married students & their families back in the day. I think some still do.

Capitalism is ultimately the cause of declining fertility. Housing is egregiously expensive. Right wing governments do everything they can to depress wages under the auspices of ‘flexibility’. In America, Republicans consistently vote against anything that makes families lives easier.

If countries taxed the super-wealthy and massive corporations properly, they would have the money to support families which would lead to bigger families.

It always interests me that right-wing parties always espouse family values but then never vote for pro-family legislation.

Perthaps, Steven. But why would she want him?

David Page,

I’ve seen odder couplings. :)