NationStates Jolt Archive

Simple question eh?

Personally, seems like better than nothing, but so far all talk.... But can you expect more from 1 meeting after 3 weeks of buildup? Should you? Will they keep their promises?

summary of the communique:

http://www.telegraph.co.uk/finance/financetopics/g20-summit/5095750/G20-communique-Point-by-point-analysis.html

It's a gettogether of a bunch of politicians. Automatic fail. Don't even have to start answering the question "will they keep their promises".

Better than I hoped. Also a good source of lulz and drama.

Better than I hoped. Also a good source of lulz and drama.

I know the REAL story was Michelle Obama's visit to a London school, and whether she would "go sleeveless" during tea with the queen.... But I guess $1.1 trillion is also important :)

G20 is just a tribal congregation for politicians, to put it creatively. They're sort of owl-like, in a way. Sorry, taken the pun of "a parliament of owls" too far...

We can hope that something good comes out of it. Not likely though. I don't reckon every country will stick to it, so it'll likely start falling apart. Shame about that.

I'm literally drowning in optimism here!

Complete fucking travesty. Global quantitative easing, commitment by everyone to stiff the taxpayer. Typical.

These people are a menace, and should be hung from the nearest lampost. The anarchist loonies are right about that.

Failure. Nothing got decided, and the language they announced that in was something I'd usually find funny. But really, it's just sad.

Interesting: http://www.businessspectator.com.au/bs.nsf/Article/Fantasy-banking-pd20090403-QQUPX?OpenDocument&src=sph

About as well as could be expected given that they were getting together 20 heads of state from vastly differing ideologies and hoping to come to a consensus or some time. Realistically we won't be able to judge it's success or failure until we see the outcome of what was decided and it's implementation.

I guess it depends on what the measure or success or failure is and whether or not the expectations are realistic or related to what actually could be accomplished by such a meeting. As it is the question seems vague enough for me to be able to decree it a failure because they did not complete a Popsicle replica of the Golden Gate Bridge for me to play with.

Err.. no idea.

Simple question eh?

Personally, seems like better than nothing, but so far all talk.... But can you expect more from 1 meeting after 3 weeks of buildup? Should you? Will they keep their promises?

summary of the communique:

http://www.telegraph.co.uk/finance/financetopics/g20-summit/5095750/G20-communique-Point-by-point-analysis.html

Of course it was all talk. They are politicians. What were you expecting, charity mud wrestling?

You know, they really need me to plan these events for them. :p

They have to follow through for it to be called a success.

I will go over this point for point.

IMF Resources:
The increase is not really needed. Whats needed is a stable dollar. The IMF exist to give loans to stabilize currencies. If anything the printing of money to give the IMF will make the situation worse.

Selling off IMF's gold is even more stupid, and potentially more destabilizing of currency.

Bankers' pay

Stupid. The government should not dictate maximum pay in any profession, let alone a international body. This is simply a move to make banking part of the bureaucracy.

Global "quantitative easing"

Again destabilizing the currency.

Fiscal Stimulus

Fiscal stimulus only works if it attempts to fix the underling problem. If it is just money throw randomly projects then as soon as you stop spending money your in the same boat except now deeply in debt.

Offshore tax havens

With government spending like this it is the duty of every patriotic citizen in the world to avoid paying taxes.

Toxic Assets

Doesn't address the issue that created the toxic assets in the first place. The inflationary practices of the central banks.

Protectionism

The only thing that makes sense to come out of the G20.

Beefed up international financial monitor

The banks can not be stable until the currencies are stable.

Trade finance:

The reason people are not investing and trading abroad is because the currencies are unstable. When people are unable to predict what their return will be on an investment/sale overseas they simply do not sell overseas. Stabilize the currency and trade will resume.


Conclusion:
The world will be a lot better off if they do fulfill the majority of their promises.

IMF Resources:
The increase is not really needed. Whats needed is a stable dollar. The IMF exist to give loans to stabilize currencies. If anything the printing of money to give the IMF will make the situation worse.

Selling off IMF's gold is even more stupid, and potentially more destabilizing of currency.


I think a lot of gold reserves are going to be sold off over the next 24 mos.

I think a lot of gold reserves are going to be sold off over the next 24 mos.

I think they are trying to decrease the price of gold.

But for some reason I doubt the IMF has enough to dent the market.
Also selling gold to decrease the price of gold is self defeating when the gold is partially used as backing for your currency.

I guess it depends on what the measure or success or failure is and whether or not the expectations are realistic or related to what actually could be accomplished by such a meeting. As it is the question seems vague enough for me to be able to decree it a failure because they did not complete a Popsicle replica of the Golden Gate Bridge for me to play with.

Indeed, the question of what you consider success was implicit. Sorry if you found that a bit challenging.

Of course it was all talk. They are politicians. What were you expecting, charity mud wrestling?

You know, they really need me to plan these events for them. :p

The Mexican delegation might agree with your choice of food, and the photoshoot would be more interesting with the addition of pie (especially as they would probably all gang up on Berlusconi)

The best thing about the G20, is that unlike the G8, you can get a good conga-line going.

I will go over this point for point.
SNIP

Thanks for a comprehensive and well-presented answer!

I want to address a central point; why is currency value so important, above all else?

Yes, it has a bearing on who can afford to pay a debt, but its not the only factor.

And isn't it a bit chicken and egg? The success or failure to pay can affect the value of a currency as well as vice a versa. Isn't that the angle the G20 is coming from?

Thanks for a comprehensive and well-presented answer!

your welcome

I want to address a central point; why is currency value so important, above all else?

Unstable currency provides disincentive for investment and trade.
Investment because people do not know how much the return on the investment is worth.
Trade because a producer of goods and services over seas does not know how much he will get for selling an item in the US(or elsewhere) with the currency influx.

Yes, it has a bearing on who can afford to pay a debt, but its not the only factor.

And isn't it a bit chicken and egg? The success or failure to pay can affect the value of a currency as well as vice a versa. Isn't that the angle the G20 is coming from?

Except if the stimulus doesn't fix the problem the chicken instantly dies and becomes worthless bones once the government stops running a massive deficit, which we eventually have to.

Unstable currency provides disincentive for investment and trade.
Investment because people do not know how much the return on the investment is worth.
Trade because a producer of goods and services over seas does not know how much he will get for selling an item in the US(or elsewhere) with the currency influx.


But why is that more problematic than lack of demand? Or lack of liquidity, or investment options, or credit insurance? Plus currencies have always fluctuated, there has always been uncertainty.

I know currency value can make the value of everything uncertain, but then everything being uncertain has an effect on currency value too. In that sort of feedback loop, why pick on currency value only?

But why is that more problematic than lack of demand?
Say's Law If you have the markets and profit potential you have the demand.
Or lack of liquidity, or investment options, or credit insurance?
So what got us into this mess was too much easy credit? And the solution you propose is more easy credit? Investment options are directly related to their return if the currency is unstable the only solid investment becomes gold


Plus currencies have always fluctuated, there has always been uncertainty.

Incorrect...
Currencies have only been in flux since the 1970's, when Nixion took us off the gold standard. Prior to that we had fixed exchange rates with the Breton Woods system.
Then we have the Gold standard years. 1876-1913. Fastest world wide economic growth in history, and a far more globalized period then today.

I know currency value can make the value of everything uncertain, but then everything being uncertain has an effect on currency value too. In that sort of feedback loop, why pick on currency value only?
Currency value is the only thing that is the government's responsibility.
Governments in short can not effectively make jobs and run industry.
The government needs to do its job and simply let the private sector get back to doing what it does best make profits.

Say's Law If you have the markets and profit potential you have the demand.

That sentence reads tautologically. 'markets' looks like a synonym for demand. And since when did profit in a thing have anything to do with demand of that thing? Unless you mean utility of the thing when possessed?

So what got us into this mess was too much easy credit? And the solution you propose is more easy credit? Investment options are directly related to their return if the currency is unstable the only solid investment becomes gold
Should we all go back to gold coins as currency?

Incorrect...
Currencies have only been in flux since the 1970's, when Nixion took us off the gold standard. Prior to that we had fixed exchange rates with the Breton Woods system.
Then we have the Gold standard years. 1876-1913. Fastest world wide economic growth in history, and a far more globalized period then today.
My mistake, 'always' was incorrect. But we have had functioning markets and growth without the gold standard. Unless you are saying dropping it was an intrinsic factor in this latest crisis.

As for globalism and growth in that period, I think it has more to do with the reach of colonialism and the realization of the USA's natural resources than currency pegging.

Currency value is the only thing that is the government's responsibility.
Governments in short can not effectively make jobs and run industry.
The government needs to do its job and simply let the private sector get back to doing what it does best make profits.

This argument has been done to death a million times. I disagree, but I don't think we're going to say anything new about it.

That sentence reads tautologically. 'markets' looks like a synonym for demand. And since when did profit in a thing have anything to do with demand of that thing? Unless you mean utility of the thing when possessed?

The market is the environment. A stable market has qualities like war free, open trade, stable currency, and minimum government interference.

Should we all go back to gold coins as currency?

That's not how the gold standard worked. Back the currency in gold provide the gold on request. The problem with gold is it is a pain in the ass to haul around. Their on conditions we have to meet to get on the gold standard namely relative parity in the size of several of the world economies, and gold reserves.
These conditions are not met at the current time.
However, what we can do right now is have the fed reserve adjust interest rates based on gold prices. Gold goes above 925 USD then raise interest rates, Gold goes below 875 USD lower interest rates. Pretty much what the Fed reserve did in the 1980's, with good results.

My mistake, 'always' was incorrect. But we have had functioning markets and growth without the gold standard. Unless you are saying dropping it was an intrinsic factor in this latest crisis.

The 1919 to 1922 recession (worst in our history), was caused by federal reserve mismanagement of the gold standard. The 1930's was caused primarily through poor currency mismanagement and protectionism.

As for globalism and growth in that period, I think it has more to do with the reach of colonialism and the realization of the USA's natural resources than currency pegging.

More like trade and globalism flourished despite colonialism. one of the first things most colonial powers did was try to make their colonies only buy goods from the mother country(didn't work out too well the colonized country was too poor to afford the goods normally).
Natural resources are nice, however look a Russia Similar land mass, more natural resources and (if their populations had not been killed or fled) similar populations. the differences between the US ans Russia are Russia has poorly managed their currency since the end of WWII (really WWI but so did the US), and Russia has had much more heavy handed handed government intervention.

This argument has been done to death a million times. I disagree, but I don't think we're going to say anything new about it.
It will devolve into yet another monetarist Vs Keynesian argument.

All I can say is if I were in London, I would have been tempted to give the rioting anarchists a few bricks to smash out some windows ;)
Seriously, though, this is just the beginning, I think we are going to see a serious attempt at merging the economies of nations through the G-20, European-Union style

That sentence reads tautologically. 'markets' looks like a synonym for demand. And since when did profit in a thing have anything to do with demand of that thing? Unless you mean utility of the thing when possessed?


He's saying supply creates demand. And it does. But only in a stable money environment.

We came out looking pretty good I think...

So, sure, seems pretty successful imo, lol...

He's saying supply creates demand. And it does. But only in a stable money environment.

you are familiar with Say's law.

you are familiar with Say's law.

Just read the wiki on it. I wish I had done that months ago instead of reading all the arguments here, it would have been a lot simpler!

Surely if you could unequivocally prove Say's law, we wouldn't have any arguments?

Also, I now see why a stable currency is necessary for Say's law to function, as I understand it the law had nothing to do with monetary exchange - so you want to eliminate that uncertainty for the "law" to "work".

Surely if you could unequivocally prove Say's law, we wouldn't have any arguments?

It does work more or less. The trouble is it is extremely hard to create a stable money environment. Even if you adopt a gold standard you aren't guaranteed one. If credit is widely available and granted on loose terms (as say in the late 1920s US), then you are in pretty much the same boat as with a fiat currency (as credit spends like money). Or, if new and huge gold supply is discovered, that also has the same effect. (See Spain in the 16th-17th century).

Also, it tends to be deflationary and raise the standard of living for the general population - either via more disposable income, or more leisure time. Neither of which are politically desirable.

But you can see it in action in the US during the fifties. Of course back then the standard of living and deflation issue was dealt with by the gargantuan military budgets (by today's standards). link (http://www.truthandpolitics.org/military-relative-size.php)

It's also worthwhile noting that during the vietnam war era, defense spending as a %GDP was less than during the 50s (when we were fixin to whip some commie ass).