[ExI] Warren Buffett is worried too and thinks Republicans are "asinine"

Kelly Anderson kellycoinguy at gmail.com
Sun Oct 20 17:00:16 UTC 2013

On Sun, Oct 20, 2013 at 9:11 AM, John Clark <johnkclark at gmail.com> wrote:

> On Sat, Oct 19, 2013 at 11:29 PM, spike <spike66 at att.net> wrote:
> > creationism.  The Tea Party holds no position on that subject.
> I don't know how you determine the position of the Tea Party about
> anything except by looking at the position of Tea Party members, and nearly
> all of the most prominent ones are creationists, and very vocal and
> militant ones too. And there is a connection, if you're irrational in one
> subject, like biology, I think you're probably more likely to be irrational
> in another subject, like economics. At any case it would certainly be
> irrational and an avoidance of reality to claim that there is not a strong
> connection between the Tea Party and creationism.

But John, other than threatening to default on the debt, which I attribute
to political theater only, what CRAZY economic theory do you attribute to
the Tea Party?

> > This world must not depend on money which has value based only on trust
>> and faith.
> Spike, that's the only type of money there is and it is the only reason
> any form of exchange has value.

True enough. We need a currency based on Work, in the Physics sense. You
could value oil in the amount of Work it would do, and then you could value
everything else in terms of oil. Then you could have other "currencies"
based on the Work done by solar, wind, nuclear, whatever. Just a thought.

And since oil is tied to the US dollar, that is the closest currency to
this ideal. Unfortunately, with the Fed printing dollars at an unusually
high rate, it takes us farther from that ideal.

> > We need money that represents actual wealth,
> Actual wealth? Like what, atoms that contain 79 protons and 118 neutrons?
> The only reason that stuff has value is that people think it has value and
> they have faith that value will continue in the future. That's why it's
> money, although a form of money that is not nearly as important to the
> world economy as the US dollar is. And if we go along with your plan and
> dump thousands of tons on the market the faith in the future value of that
> stuff will be destroyed too just like the value of the dollar, and with
> nothing left to use we'll be bartering 2 skinned squirrels for one can of
> beans.

Money's main purpose is to simply avoid barter. To store wealth in between
transactions. Anything will serve this purpose, but the purpose will be
served better if there aren't people who exert a lot of pressure on what
the medium of exchange is worth. That is, if you have a central power that
can create inflationary or deflationary pressure on a currency, then the
currency is less stable or trustworthy for use as a medium of exchange.

The reason that some of us like Bitcoin is that it is just such a currency,
and is largely independent of centralized meddling (other than just
declaring it illegal).

> > based on evidence and frequent verification by exchange.
> The US dollar has been the backbone of world exchange for nearly a
> century, and you want to destroy that and make gold worthless too.

I'm not sure where this idea comes from. Spike does not want to make gold
nor dollars worthless, I'm sure.

> And you think the world economy can withstand those two devastating head
> shots and continue on as if nothing has happened. I think there will be
> blood in the streets, in fact there would be blood in the streets today if
> more people had voted Ted Cruz's way on Wednesday night.

No. The president would have folded in the face of such pressure, and the
individual mandate for Obamacare would have been sensibly put off for a
year, just as the mandate for companies and unions and everyone else with
power has. The problem is that the people have no power, and we get the
short end of every stick.

Nobody, including the POTUS in particular, is going to allow the government
to go into default. But if the people are truly represented by the House of
Representatives, then we can get off of the crazy spending binge we
currently observe.

> You have produced no evidence to convince me that we can continue to
>> borrow three billion dollars a day and sustain that indefinitely.
> I don't know about indefinitely but there is plenty of evidence it's not a
> immediate problem. I'm sure you believe in the wisdom of the free market as
> I do, and the market is saying that the government HAS NOT printed too much
> money in the last few years; inflation is the lowest it's been in many
> decades, in fact it's so low it's starting to scare economists. And
> interest rates are also the lowest they've been in decades which means the
> free market is not expecting inflation to pick up anytime soon.

I have reason to believe that the interest rate has a lot to do with the
derivatives markets. If the interest rate does begin to creep up into the 6
or 7 range, I think that's going to make the housing market problems in
2008 look like a walk in the park.

> Inflation happens when there is more money in circulation than there are
> things to buy, but today it's the very opposite; there are millions of
> houses with nobody living in them and factories are operating far below
> their maximum capacity, the lowest level in my lifetime. Right now the big
> danger is deflation not inflation.

The problem most people have with the debt and deficit is not related to
deflation or inflation, it's related to fairness. How can the government
operate in perpetual deficit when individuals and corporations can not?

>> > My shocking theory: all governments and all nations must live within
>> their means.
> That is incorrect. The government of the USA has not lived within its
> means since 1835, and yet it continues.

Sad that. Always been a big fan of Andrew Jackson for that reason.

> >All governments must balance their books,
> No government on earth balances their books nor do they need to because
> they have the power to print money. True, that power can be abused but it
> can be abused in 2 different ways, printing too much and printing too
> little. Today there is zero evidence the USA is printing too much

Every time the government prints a dollar, the dollar in your pocket goes
down in value just a little. It is just another hidden tax and taxes are
high enough already.

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