***BREAKING NEWS** The new Deutsche Mark banknotes are here**Picture will follow tomorrow***

SECOND CURRENCY
Increasing the money supply without causing a devaluation of the euro!

If Greece introduced the drachma internally only, while maintaining the euro for external transactions, Greece could print money freely at home, without affecting the euro!

This may be an alternative solution to abandonment of the euro by Germany or by Greece or other weak countries.

What would happen if the US did the same?!

Maybe, this solution would allow the US$ to remain more credible, while finding a way to pay bills at home!

Swiss Friend any update? Having withdrawals here!!!! Love the info you provide!!!

If your traveling you can email me at [email protected]


Thanks from Texas

My dear italian friend!

The part where you are talking about economics makes me sad, very sad. It looks like you are reciting a colledge textbook, that I have read well enough. So let me try once again to break you out of the common thinking.

The notion of value that you are backing is a well-known approach, one of the practical methods of calculating such a valiue is the discounted cash flow method. This concept of value, as any other one, is rather subjective. As you mentioned, it is not constant, it can suddenly change. You mentioned that it is differnt from a price. A price is something that balances the demand and the supply, so it is very dependent on the cirumstances of the deal. A value in the way you define it accounts for the future price of your product or whatever you can do with the asset to make money woth it, and the risks. In this way, a present-day value of an asset depends on ypur _expectations_ of the risks, on your business plan, on your expectations about a great number of factors. If you think about it, you will understand that a value is even a much more subjective thing that a price it does not only depend on the current cicrumstances, but on the expectations regarding future circumstances. So if you are absolutely unaware about anything and have no expectations (like you don't know if dollar would collapse tomorrow or if there would be a civil war in ypur country), a value of anything falls close to zero. You mentioned that the past costs don't affect future decisions. Yes, it's a right strategy if _your goal is making money_. This concept of value is practical for businessmen or investors. This concept of values is a tool in a toolkit of a businessman, it can be used for decision making by a businessman. But it is not universal. You tried to tell me that that churches earn money like McDonalds does, but they actually don't, they are often subsidised. Similarly fundamental science is also subsidised by a state. It has _some_ value, but because of risks and uncertainty it would be a bad business and nobody would invest. Churches would also be a bad business. The value of such assets can't be measured with the concept of value related to discount cash flows. Every individual does loys of irrational things, owns lots of things for purely sentimental reasons, or just because of an affection, or for many other reasons other than making profit. You can't use the concept of making profit to measure everything, and it's a mistake that some theorists try to. A state is also not a corporation, it's goal is not making profits, but maintaing a decent living standard for the society over a long timeframe. This means that the state must not use the discounted cash flow to measure the value of national assetes; lots of things like cultural heritage or fundamental science or defense must be maintained despite the fact that those spendings don't give an immediate or predictable effect in terms of growing wealth. The Marxist notion of value is a concept better suited for taking political decisions. A cost of anything is combined of the cost of the components, of the labor used to produce it, and the profit. This can be repeated with the components, untill you get to the raw materials and the rent taken by their owers. So basicaly the cost of anything is ultimately a coombination of labor costs plus profits and rent made by people who didn't invest their labor. If you look from the point of view of the state, especially an isolated self-contained state, or the mankind alltogether, you will see that only as much goods can be produced as there're labor available over some period of time, and the more profit is made (eg as more people participate in the consuption of the goods without investing their labor), the less efficient use of labor is taking place. That's why the invested labor is a proper concept of value for political decisions. In fact, if an economy is going to hell, some people make crazy profits, but it means inefficiency. Even the usual capitalist ecomominc science admits that profits are made on unbalanced markets (and in theory must balance the markets - except for numerous cases that are treated as exceptions by economics theorists), and balanced markets are better for an average man. So if there're are huge imbalances in an economy and lots of profit is made, for individual businessmen the capitalist value of their assets is changing and perhaps rising, but the Marxist value of the assets in the economy isn't changing - it reflects the fact that nothing new is actually created. Marxist value is about connecting the labor people with the product of their labor. In a closed economy, or worldwide, you can't make value out of nothing, you have to spend some labor, and if you get more than the economic effect of your labot, than soomebody is getting less than the economic effect of his labor, and it means imbalances and inefficiency. In course of progress, the preaviously created assets are used, that is the labor is accumulated, the wealfare grows. A company is not a closed system; you can buy low and sell high without sacrificing anything, so you can expect your assets to grow in price more than you spend on them, and you can call your expectations "value", because the only valuable thing is benefitting from the imbalances. If tou take the society as whole, imblances are always bad because they make the system less efficient than it could be, so if anybody is enjoying the rise of "value" of his asstes, some other pary suffers losses, and as as the result of all that the whole system is working worse than it could, so those changes of "value" are meaningless. That's why the labor-based concept works better in this case. If the society prefers to build typewriter factories (no matter for waht reason), those who spent their labor for that consumed other goods, so no matter how smart was the decision to build such a plant and make typewriters, it's a part of the society and its economy, that's why it has value for the society. If it didnt't have one, it wouldn't be there. Making decisions on what to build and what not to build are made on a different level.

Shortly about the rest of what you said.. You say they SOLD their shares, and Browder BOUGHT them, and it was legal, as if ypou mean that if something was commited and it was legal than it is OK, and if something is not legal, ot is not OK. I often see Europeans follow the same logic. Maybe it's a cultural difference. Here in Russia there's such a concept as a FAIR deal. Something might be legal, but not fair, or legal but unfair. The laws themselves are constantly changing, something that was strictly prohibited and severly punished 15 years ago is widely accepted and encouraged now, and vice-versa. We in Russia don't respect unfair deals. For example, if Sarcozy fooled Putin into signing a document that was interpreted the way that Russia had to withdraw the army from Ossetia, it doesn't actually mean that Putin would think "oh, damn, I had to think better, but if I signed it, I must follow it". Nobody in Russia thinks that way. If a Russian didn't expect a contarct to work against him, he will never follow it. And the country as a whole won't. It's the way we think. Just remeber it and stop trying to fool us. The deal of acquiring the shares from the people was unfair; the circumstances were unjust, there were legal gaps, there was pressure, and people lacked information after all. It was unfair, and it will not be respected. People themselves don't respect the outcome of those deals, why do you want the government to respect it? If the govermnent says "well, you suffered losses, but you SIGNED it, you stupid morons", the people won't think "well, yes, we signed that, we must be more careful"; they will take the axes and pitchforks ang go crush and kill. Because we Russians never respect unfair deals.

As for the fact that everything could be reverted in a legal way, I agree with you that it would be much better and it is what I personally want. But it happened the way it happened; laws are not respected here, not at all.

As for China story, I am afraid of them. You don't know them at all, and you expect them to keep up with the values that ypu beleve are universal "human values", but those values are an artifact of the late Euriopean culture. Chinese are different; if they don't need you, they will let you starve to death. The world where Chenese are ruling will be very harsh. Histroically, they typically killed the whole nations on territitories they occupied. Their philosophy is Chinese-centric, and even the word for a "foreigner" is translated as "a man from the outlying districts of the empire".



Dear Russian Friend :)

Marxist economics is indeed a bit different from Capitalist economics and there always are some cultural differences that lead to different perspectives and expectations. I can see examples of that even within Italy.

Being aware of such difference makes it easier to communicate.

Yes, the idea of value as an expectation of future benefit is one way to look at it. You are also correct pointing out that in this context there is no "objective" value and that the estimate is, thus, both subjective and constantly changing.

The world, however, is constantly changing and one can speculate about the future (in terms of probability, for example) but one does not know the future. Indeed, even the present cannot be entirely known: each has his own perspective and sees only a part of what is going on, interprets that part and draws inferences. So, reality constantly changes and, as it manifests itself, also changes expectations--and the expected value of things.

What I find puzzling from the Marxist approach (at least, insofar as I have gleaned here), is the requirement that the world is fixed. That assumption then does allow for a valuation of assets in terms of their realization cost. But change and progress will constantly create a contradiction, no? If the expectations change, there will be a discrepancy between the value in terms of costs and the value in terms of expecations.

In the Capitalist model (which is far from perfect), at least change is assumed. Constant disruption is part of the model. This problem is dealt with by promoting constant reallocation of resources.

I don´t quite see how growth is tied to incremental input of labor. Many things formerly done by hand were then done automatically. Think of milling: a water or wind mill substituted a lot of human labor. Yet, the world progressed and people started doing something else. Reducing labor in an essential job actually improved living standards. I think the mechanism can be replicated.

In the example of the typewriters, you point out that people may want to build typewriters and that´s their choice. Yes, of course. But I don´t see why I have to buy it, if I want to use a computer. If everyone wants to use computers and no one wants typewriters, then I see it as inefficient to continue devoting resources to keep producing them. I don´t know how the Marxist model handels this. In the Capitalist model, people have an incentive to innovate and make things in a better way (that is more desirable for the users, cheaper, and so on). Those who are inefficient lose out in that field, yes. But there are open opportunities elsewhere because change is expected and opportunities are open.

Honestly, I would not be pleased if I had to return to the typewriter and also had to mill my own grains by hand...

This does allow some people to make more profits. But the same people can also make big losses. Overall, as with the mill, it has produced an increase in society´s well-being for all.

But it is not a zero sum game, like cutting a pie: if I get a bigger portion, then you must get a smaller one. Value is created by efficiency. And wealth created in one sector creates demand for other sectors.

The crucial point in this model is that money remains a proxy for efficiency. This, in my view, is one of the weakest points. Because the whole system can be turned into a casino--as we have witnessed in financial markets. That indeed leads to people getting rich without doing anything and even compromising the system. This, I believe, is one example of the problems you indicate and I agree with you.

But that has to do a lot more with inadequate regulation or, rather, inadequate application of regulations than with the model itself.

It is true that not everything is made in terms of present value of future cash flows. People build a monument because... yeah, why do people build monuments? I am not sure :) Well, I imagine to celebrate, because it will make them feel better, or because there are political objectives. Going to the movies is another example of something done without a PV approach. People get satisfaction, relax. In this case, that´s consumption, not an investment.

The monument, then, can generate cash flows in the future. Think of the pyramids. I think it was madness to build them. But now they are a good asset for Egypt: many people go there to see them.

Churches can be a bit of all of this. But if you look at the Catholic Church and realize how much money it has amassed, you must come to the conclusion that however it happened, it was a good business indeed! They sell heaven. You pay now and they´ll deliver when you´re dead. Needless to say, no one ever came back to complain! :D

On the expectations about contracts: I think in Asia the approach is similar to the one you describe. The contract is considered more as a reference point... rather than expected to be applied by the letter. In the West the approach is more based on the letter of the law. In the Anglo-Saxon part of the West.

In Italy, formally, it´s the letter of the contract. In practice, nothing is reliable at all. People cheat all the time, the court system doesn´t work and judgement is neither timely nor predictable. The result: business collapses. They don´t like the results, but they don´t like to address the causes either.

I think it´s in the interest of society to find a way that allows people to clearly know what they can do and what they can´t do. If people make an agreement and then are allowed to not respect it, then there is an incentive to be dishonest. If dishonest people prevail, then honest people will likely suffer.

The best way would be that the letter and spirit of the law coincide.

But when a conflict arises, I think it is in our collective interest to promote honesty and responsibility.

Looking at a trade: do you remember the Korobochka? She didn´t want to sell the dead souls because if someone wanted to buy them, they must be worth a lot more! In the end, she didn´t sell and she kept something that was worthless to her.

This is a good example that there is not an absolute value. Also, there is always an asymmetry of knowledge and expectations. That´s the reality. Ben Franklin pointed out that the seller usually knows what he is selling a lot better than whoever happens to buy. Think of your own car or apartment. You know whatever broke in the past. It´s unlikely the buyer knows it as well as you do.

Another point is that the person who at the time sold the vouchers for Company A at 500 roubles, might have then used that money to buy shares in Company B at 200 roubles--and they may be worth 800 roubles now. Or he may have done something else that was more important to him or her.

I don´t quite see the mechanism by which such transaction should be taking place otherwise. What would be the fair value the? And why would people engage in a transaction where they were free to choose, if they thought that the offer wasn´t fair?

I think the problem does not happen when Browder buys or they keep. If they sold, it means they prefered to have the money. So, both parties were willing.

The problem happened when the vouchers and shares were distributed. And another problem happens if people end up being in need of selling. So, they sell not because they want but because they have no choice.

In this sense, I can see why it was not fair.

But these problems were not created by Browder. So, this is the reason I think the transactions could be put into question and possibly reverted.

The people got given the shares and vouchers. Let´s say they got a 100 roubles or a bottle of vodka in exchange. Well, in the end, they ended up with the 100 roubles or a bottle of vodka they did not own before.

I don´t know if Browder in the end lost more than he made.

But it is claiemd that the people who ended up owning the shares got them illegally. So, in the end, it´s just this group of people who benefit.

This process scares both foreigners and Russians from doing business in Russia. It is reported that many rich Russians have bank accounts in Switzerland, Cyprus and own houses in France, UK, etc. Why don´t they put their money in banks in Russia?

That money could create a lot of jobs for Russians.

How do you see this system as beneficial?

As for China, I know that what you say is true. China will definitely take over and the West will become poor.

Look at this now: first the West got them hooked on opium. Now the situation is repeating, but in reverse. We are hooked on debt. They are growing and developing while buy ssilly trinkets and think we´re rich. Actually, we´re just being dumb.

Making dumb decisions is the cause of the demise. Not China. That is: doing what we do, we´ll go broke anyway. I like rationality, prudence, thrift and efficiency. China has planned smartly and has even played in a world where the West set the rules--in its favor. (Think of the US dollar being the reserve currency, for example.) And they have beaten us at our own game!

Is there more to blame or to admire?

If we don´t like it, we should start changing our ways. Unfortunately, peeople will wake up when it will be too late. This also shows how uncritical and irrational our societies have become.

This has happened all the time throughout history. It happens again now. But the only thing we learn from history is that people don´t learn from history! :)

We´ll learn the hard way.

I´m thinking of moving to Asia...
:)

My Russian Friend, the conversation is interesting because we have different perspectives. I think reality is complex and can be seen from many different angles and perspectives. And we see everything through a "lense" of our own culture, experiences and social norms. So, I am not sad to read of a different point of view, but interested. I wonder if, when they meet at the G20, the politicians are really awaer of such misalignment of expectations... maybe they talk and talk and they come out with very unrealistic expectations :)

With best regards,

Poka!

Just got back from a quick visit to germany to stock up on braad worst and duits ale and i paid in EUROS not a DM in sight.

Threads half year old , your "pics tomorrow" are as good a promise as pope john jew russ's.

Threads half year old

As for the west, there may be reasons to start another war. The United States are a few steps away from going bankrupt, they need to survive the meltdown while preserving their world domination. They need a state of emergrgency for that and some extraordinal measures, a kind of total and direct conttrol of the whole national wealth for the period of restructuring, in order to prevent social unrest and revolutions. They need a justification for that. A war would be good for that. They could for example set off a nuclear bomb or two inside the USA and blame North Koreans for that, and use it as an excuse for emergency...

any news??? hrhr

The Euro is dead!
Everyone knows it, Everyone feels it
Its going to happen.... soon!

Und Alle so: Yeah!

Can someone please switch out the lights on this thread now.

Thanks.