Vintage Things That Have Disappeared In Your Lifetime?

[HudsonHawk]

Another way of paying for a war is inflation. "Printing money" is old fashioned. They print government bonds, send them to the big banks, the banks "buy" them and credit the government's account. The result is the same but they are not "printing money" they are issuing debt with the added advantage to the banks of paying interest.

The money spent this way goes into the economy the same as if they printed the stuff and threw it out the window. The result is inflation. Prices of everything doubled between 1940 and 1945 in other words the value of the dollar dropped by half.

The term "printing money" is somewhat of a misnomer. The government *can* simply print more notes or notes of higher denomination (some countries have tried that and ended up with things like $100,000,000,000,000 bills), or do like you say, simply go into debt. As you say, the result is the same, more "money" in circulation causing the cost of goods to rise and the value of the currency to decline.

 

[LizzieMaine]

As witness Germany, c. 1923.

 

[BlueTrain]

Everything just mentioned can happen without the government doing anything. A bank can lend you money, thereby increasing the money supply. There are naturally a lot of factors involved and absent any controls or insurance, things can get out of hand and bad things happen.

 

[HudsonHawk]

Everything just mentioned can happen without the government doing anything. A bank can lend you money, thereby increasing the money supply. There are naturally a lot of factors involved and absent any controls or insurance, things can get out of hand and bad things happen.

Excessive lending can indeed lead to inflation. I don't think anyone's suggesting that the government putting more money into circulation is the *only* cause, only that's the result of the government trying to print it's way out of debt. There are many 20th century examples of this.

 

[BlueTrain]

So far, all they've tried to do is borrow their way out of debt.

 

[HudsonHawk]

So far, all they've tried to do is borrow their way out of debt.

I'ts a vicious cycle. To date, the US has never defaulted on a debt, but it can't go on forever like this.

 

[Fading Fast]

I'ts a vicious cycle. To date, the US has never defaulted on a debt, but it can't go on forever like this.

The irony is that since the US has a fiat currency (nothing backing it but the wonderfully sounding but not materially meaningful phrase "the full faith and credit of the US Gov't") and all (or almost all) of our Gov't debt is denominated in dollars, the US never has to default as it has the legal power to print (or electronically create) all the dollars it ever needs to pay off its debt.

Default is a problem for countries that have borrowed in currencies other than their own (Greece would have simply printed more Drachma to get out of its recent debt crisis prior to joining the euro). Inflation is the end game for a debt crisis in a country who has a fiat currency and debt denominated in its own currency.

Right now, the US has a historically high ratio of Gov't debt to GDP, but (1) it is smaller than some other countries, like Japan for example, that have no problem borrowing - to date and (2) as the world reserve currency, the US will be able to carry on as is for much longer than other countries.

That said, without improving our financials, at some point, a day of reckoning is coming.

Note: I don't think there are any political views in the above but generally mainstream economic views (that are, however, disputed by some not-mainstream economists).

 

[HudsonHawk]

The irony is that since the US has a fiat currency (nothing backing it but the wonderfully sounding but not materially meaningful phrase "the full faith and credit of the US Gov't") and all (or almost all) of our Gov't debt is denominated in dollars, the US never has to default as it has the legal power to print (or electronically create) all the dollars it ever needs to pay off its debt.

Default is a problem for countries that have borrowed in currencies other than their own (Greece would have simply printed more Drachma to get out of its recent debt crisis prior to joining the euro). Inflation is the end game for a debt crisis in a country who has a fiat currency and debt denominated in its own currency.

Right now, the US has a historically high ratio of Gov't debt to GDP, but (1) it is smaller than some other countries, like Japan for example, that have no problem borrowing - to date and (2) as the world reserve currency, the US will be able to carry on as is for much longer than other countries.

That said, without improving our financials, at some point, a day of reckoning is coming.

Note: I don't think there are any political views in the above but generally mainstream economic views (that are, however, disputed by some not-mainstream economists).

It's a bit of circular logic. We never defaulted on a debt because we can simply print more money to pay off debts because we've never defaulted on a debt. This works as long as none of our creditors demand repayment in something other than US dollars and the value of the dollar doesn't drop drastically due to too much of it being printed. What is the risk of that changing from a global borrowing perspective?

And tying this back to the CSA...this is essentially what they tried and it failed. The Confederate states had little or no cash, and the only large capital they had was tied up in land and slaves, things that could not be sold to anyone outside of themselves. So they issued war bonds and printed money backed by their "good faith and credit", driving up the price of their goods. Which worked until other countries backed the north, refused to do business in CSA dollars, and the US government flooded the market with counterfeit currency. It got so bad that the CSA legalized some of the counterfeit money to try to stop it. The result, hyperinflation and the currency being basically worthless.

 

[BlueTrain]

No, they don't just print more money. What the federal government does should be even more obvious; they roll over the debt and increase the total debt. But it's not like that the only problem. We have a trade deficit, which is even more significant than the national debt. What that means is that we buy more from other countries than we sell to them. It varies a great deal from country to country. Mexico is not the problem with trade and if no one knows which country is, they should start reading labels.

The trade deficit means that more money passes into foreign hands, although it doesn't necessarily leave the country. It is just as likely to stay in banks in the country (and not necessarily American owned banks, either). That money goes to buy up property in this country, even to include highways, as well as debt instruments.

It's all very complicated and no one really controls everything and a host of factors enters into what causes changes. But it won't fit on a bumper sticker, so nobody talks about it. In the case of the confederacy, prices went up because of basic commodity shortages, mostly caused by the blockade. In wartime, everything is in short supply.

In a sense, metal money, be it copper, nickel, silver or gold, is still a form of fiat money in spite of the fact that it is made from metal and not just precious metal. The fact that gold and silver are precious metals means that it is subject to value changes as a marketable commodity in the absence of any controlling factor. But it only has value because most everyone says it has value. As money, the only difference is that it is produces in (presumably) easily identifiable units, typically coins. Ironically, we can state the value of gold in terms of dollars but not the other way around, after a fashion, even though you can buy gold.

 

[HudsonHawk]

No, they don't just print more money. What the federal government does should be even more obvious; they roll over the debt and increase the total debt.

Yes. Everyone understands this. This is not in dispute.

 

[HudsonHawk]

In a sense, metal money, be it copper, nickel, silver or gold, is still a form of fiat money in spite of the fact that it is made from metal and not just precious metal.

If the decreed face value of the coin is more than the commodity price of the raw material. A gold coin may have the decreed value of say $50, but only contain gold in the amount worth $25 as a raw commodity. It can also go the other way, where the value of the raw material is more than the face value of the coin itself. We saw this with copper cents here in the US.

 

[BlueTrain]

I work for a trade show company that produces custom exhibits for use at trade shows, among other things, and interestingly enough, three of our clients are companies that actually print currency, one of them being Crane, another Giesecke & Devrient. Crane only produces the paper that the U.S. uses to print paper money but they also print currency for other countries.

 

[LizzieMaine]

Vintage currency designs have disappeared in our lifetime, to be replaced by achingly unattractive-looking Monopoly money. The new coins are especially distasteful, especially that creepy nickel where Jefferson is looking straight at you with his beady little demonic eyes.

 

[BlueTrain]

Oh, I don't know. I think all money looks good and I wish had more of it. Some of the new coins look a little odd but others look especially good. The new penny with the shield on the back looks like an old streetcar token.

 

[Fading Fast]

Heck, I miss the old subway tokens. Not only did some of them have cool designs, but I loved the process. You bought them at a token booth from a real person, you felt like you got something for your money, putting them in the turnstile's slot had a tactile satisfaction to it and I liked seeing them sitting on top of my dresser.

Now I buy and refill my Metrocard from a machine - the card is flimsy and ugly - there's nothing satisfying about swiping it and I keep it in my wallet as I don't want it out on my dresser. Also, the gov't plays games with this "money" as the cards get "corrupted" once in awhile or expire periodically and you get trapped with some value on it. Yes, you can mail it in for a refund - which I've done a few times, sometimes successfully, sometimes not (!).

The "war against subway tokens" was a dress rehearsal of for the just-starting war on physical money our gov't is mounting.

 

[BlueTrain]

The government doesn't run the subway here and whoever does isn't doing a very good job.

After my father-in-law passed away, we discovered a collection of street car tokens, all mounted on a board, presumably for display. They were attached in an odd way, on little rings, possibly so both sides could be seen, but they had to have a hole drilled in them near the edge to do that. They would have been for the streetcars in Washington, D.C., which I rode the first time I came here in the late 1950s.

 

[LizzieMaine]

Metrocards (and the Boston equivalent, the "Charlie Card") are the bunk for those of us who only visit the city occasionally -- I always put mine aside figuring I'll take it with me the next time I go, and always lose it and have to buy another one, which I will also lose. Bah.

That shield penny looks like something you'd find in a play money set from Woolworths in 1965. And the "state quarters" are rarely short of hideous. The reverses almost always look like clip art, and the obverse is completely ruined by the flattening of the relief of Washington bust and the cramming-in of all the inscriptions. This is what happens when you let the Boys From Marketing take control of a coinage program. Even Charles E. Barber was an artist compared to these guys.

 

[HudsonHawk]

The problem with coinage design is that too many people scream bloody murder every time the government wants to do anything with any style. "Wasting our tax dollars, there's nothing wrong with the old ones!" It's like the wave of unattractive architecture of public buildings, fire houses, schools, etc. It's not that we've lost the ability to design attractive buildings, it's that people lose their minds if it's not a plain, brown, utilitarian box.

 

[Inkstainedwretch]

And then there were whorehouse tokens. That was a currency with a genuine, recognizable value. Out West, some employees were paid with them.

 

[BlueTrain]

A plain, brown, utilitarian box pretty much described the courthouse in my hometown, which was built in 1930-31. It was designed by an architect who was born in Lynchburg, Virginia, and attended the École des Beaux-Arts in Paris. The courthouse is supposedly "Art moderne." So, plain brown boxes (and it is brown between cleanings) have been around much longer than I have. The same man was still active into the 1970s and designed the high school I attended in the 1960s when it was only a few years old, as well as a few quite distinguished looking buildings in the area. The high school (now the middle school), however, could be described as a plain box, only red.

The original high school from which my mother graduated in 1932 and which I attended as the junior high school, was quite elaborate in comparison. I don't know what the style was called, though, maybe classical revival. The architect designed all sorts of buildings, from nice homes to buildings where I went to college, and in all sorts of styles, too. Some were coal town company stores and mostly not noted for their style but a few actually were. Few were actually brown.