Federal Prime what now?

[asterroc]

There's this Federal Prime Interest Rate sorta thing. And the Feds change it. And somehow it makes all other interest rates change and whether people can get mortgages and stuff.

Explain.

Comments

[seekingferret.livejournal.com]

I think it's overly simplistic to dismiss the entire economy as a shell game. Yet at the same time, it sometimes seems frighteningly apt. Since the country went off the gold standard, our economy seems to be primarily founded on our own faith in it, a massive trade deficit, and a massive budget deficit. In other words, the only reason why our economy doesn't collapse is that we'd take the entire world with it, and we (and other financial powers) have made the semi-conscious decision not to let that happen.

[galbinus-caeli.livejournal.com]

Well, it might be a bit dismissive. But the entire banking system is based on the movement of intrinsically valueless instruments, 90% of which don't even exist. If that is not a shell game, I don't know what is.

The fact that that system is supported by the single most powerful entity in the history of the world does make this shell game a fairly reliable method of regulating and enhancing the economic structure of six billion people.

[tiurin.livejournal.com]

It's definitely a shell game to a large extent, but it's not like anything has intrinsic value- things have value to humans because humans want them. It's just that we've moved to a type of money/thing which has fewer physical restraints than previous types...which leads to the potential of "Helicopter Ben" dropping greenbacks from the sky.

Currencies are a lot like a bunch of people all falling towards each other, holding each other up with outstretched arms. It's fine if everyone cooperates. But when people start defecting...

Like I said, everyone should have 10% of their non-housing assets in gold to hedge against the slow devaluation of the dollar.

[galbinus-caeli.livejournal.com]

Ah, but gold has no more intrinsic value than any other means of exchange. (Well not entirely, it is pretty and conducts well.) Gold is only valued because other people value it.

Skills might be a more eternal currency. Well, unless you can build your own gene bank.

[seekingferret.livejournal.com]

A genetic economy would be awesome. Make it so.

[galbinus-caeli.livejournal.com]

To some extent a genetic economy exists. Sales of hybrid crop seeds are effectively a lease of genes for one growing season. To grow the same crop again the farmer has to buy a new set of seeds each year.

[tiurin.livejournal.com]

Oh, I am well aware that gold has no intrinsic value- it amuses me greatly when gold bugs argue that it does. However, the sheer quantity of people who believe that it has great value, along with the thousands of years of cultural weight, makes it a phenomenal hedge against currency crises. There's 2.5 billion people in China and India who want the shiny.

There's plenty of black comedy to go around- an expensive war or two and the fiat money printing press will trigger massive inflation. Go to a gold standard, and it sets the country up for some really ugly deflation.

[zandperl.livejournal.com]

I feel like diamonds have a bit more inherent value, as they are used as tools more readily than gold is. But then again, with synthetic diamonds out there, maybe their monetary value is less stable than the monetary value of gold.

[dirkcjelli.livejournal.com]

That value is quite low, and backed on slaves.

[dirkcjelli.livejournal.com]

Skills might be a more eternal currency. Well, unless you can build your own gene bank.

Trotskyist's would agree... then would probably point out that the Capitalists own and exploit the labor of their little proles.

[galbinus-caeli.livejournal.com]

Well, I don't want to get into political philosophy here, but unconstrained capital will trump labor almost every time.

[gemini6ice.livejournal.com]

No, in canned food and fresh water. In an economic collapse, gold will have no value. Only survival items will.

[tiurin.livejournal.com]

Notice that I said _slow_ devaluation. Though even in a rapid devaluation and/or hyperinflation, it is highly probable that gold will still be able to act as a store of value.

In the case of a devaluation or hyperinflation so complete it results in total economic collapse, gold may or may be viable as a store of value. However, you forgot arguably the most important item necessary besides canned food and fresh water- weaponry.

As for whether I have a cache for those items as well is left as an exercise to the reader.

[galbinus-caeli.livejournal.com]

Those run out.

Learn to be a blacksmith or a midwife if you want to survive total economic collapse.

[gemini6ice.livejournal.com]

or a blacksmith midwife for all those robot deliveries out there