

The Trillion Dollar Website (a story of quantitative easing) - iwwr
http://tbwa.com/#lsi121ci5b0q

======
tapiwa
As a Zimbabwean myself, I would have to say that most of the posters here
totally missed the point of the site.

The site was not a critique of quantitative easing. It is a commentary on the
Zim government's attack on a newspaper that dared to criticize their fiscal
policy (in this case a whole lot of printing money, or ... _ahem_ quantitative
easing).

The paper then fought back, using this effectively worthless money (available
in huge quantities, and cheaper than paper), to front their guerrilla
campaign.

Looking at the box of Zim dollars under my desk, you can see how the currency
got steadily worse (physically), as the currency got steadily worse
(economically). The last straw was the EU sanctions that then prevented the
German company from exporting banknote 'paper' to Zimbabwe ... the notes after
that were sad. Really sad.

Interestingly, at the height of the Zim crisis, a friend of mine in Germany
sent me a couple of notes from the hyper inflation days in Germany
(apparently, even now, there are still so many of those notes around that they
are not worth much). The 1919 '50 mark' note feels like real money (quite oily
too), while the 1923 '500 million mark' note, is just a plain paper bill,
printed on one side, with just a bit of colour.

When the govt starts printing money on paper, instead of cotton, then you know
you are in big trouble.

I suppose the point I was trying to make, was that while you can debate the
similarities between the Zim situation and the Fed's quantitative easing, the
site is really about the fight between one paper and the Mugabe government.

Incidentally, the Zim Dollar died a couple of years ago. The only currency you
will find in widespread use, is the South African Rand, and the US Dollar.

------
dev_jim
Couldn't you just post the link without tacking on a passive aggressive
comment? Do you actually think Zimbabwe's actions are even in the same realm
as the Fed's quantitative easing?

~~~
haploid
I do. QE1, QE Lite, and QE2 might not be there, yet. But QE3, QE4, and QE5 are
all but inevitable.

It's just a matter of time.

~~~
dev_jim
Would you stop with the fear mongering. It's financial illiterate comments
like this that confuse the issue for everyone.

btw, Core inflation rose 0.8% YoY. Zimbabwe here we come!!!

~~~
pzxc
You are using the "official" inflation numbers. Do you really think they
report it accurately, when so much depends on it -- not just confidence in the
economy, but COLA adjustment for our massive social programs, etc. That is
like asking an encyclopedia salesman if you should buy an encyclopedia.

The official inflation numbers have all kinds of wonky adjustments in them.
For one thing, food and energy are not included (because they are too
"volatile" we are told), yet food and energy are the #1 expense for most
American households. Also if something rises in price too fast, they use
"substitution" (saying that people will buy something else instead of that)
and therefore that products inflation is not included in the "official"
number.

It's no different than the games they play with the unemployment numbers --
not including people who have been out of work longer than unemployment covers
them, people who have accepted part-time work when they really wanted full-
time work, so-called "discouraged" workers who have stopped looking, etc.

I don't know what products you buy, but I can tell you that where I am the
price of milk, bread, and almost everything else I buy has gone up a helluva
lot more than 0.8% per year in the last few years. The few products that
haven't risen in price considerably, have gone to smaller product
sizes/containers. Some products have done both.

Now, I'm doing just fine so inflation isn't much a burden to me -- yet. But
for millions of Americans who are either low-income or worse on a fixed-
income, it is a very big deal. Quoting the fed's own numbers about inflation
to say everything is alright is like trusting the fox to guard the henhouse --
that is the true definition of a financially illiterate comment. Don't take
their word for something as critical as this, research it yourself and use
facts to support your position.

And admit to yourself that they have an inherent bias, a conflict of interest,
to make things seem rosier than they are, because it allows them to sell
public debt, treasury bonds and short-term T-bills, to fund our massive
deficits. If they actually reported the truth of everything suckers around the
world wouldn't be as likely to let us keep spending trillions more a year than
we earn like a teenager who doesn't understand how credit cards work.

Call it fear-mongering if you like, I'd rather face the realities of our
situation than stick my head in the sand. You have to admit you have a problem
before you can address it.

~~~
dev_jim
What is it about inflation that brings the crazies out.

> You are using the "official" inflation numbers.

Should I use the "unofficial" numbers?

> Do you really think they report it accurately, when so much depends on it --
> not just confidence in the economy, but COLA adjustment for our massive
> social programs, etc. That is like asking an encyclopedia salesman if you
> should buy an encyclopedia.

You're right, a tremendous amount DOES depend on them and that's why the
statistics are scrutinized heavily. If the Government was systematically
underreporting inflation through the CPI then you'd hear about it outside of
the conspiracy theory websites.

> The official inflation numbers have all kinds of wonky adjustments in them.

Of course they do. Inflation is a very complex thing to measure.

> For one thing, food and energy are not included (because they are too
> "volatile" we are told),

Food and energy are included in the "official" inflation numbers. It's called
the CPI which is used by the Government for adjusting SSN payments, tax
brackets, etc. Btw, the CPI is at 1.1% - very very low.

I quoted core inflation number which is used to estimate the rate of change in
inflation.

> yet food and energy are the #1 expense for most American households.

Incorrect - Housing is.

> Also if something rises in price too fast, they use "substitution" (saying
> that people will buy something else instead of that) and therefore that
> products inflation is not included in the "official" number.

You should read a little bit more about how this works instead of just copying
from a buy gold website.

> It's no different than the games they play with the unemployment numbers --
> not including people who have been out of work longer than unemployment
> covers them, people who have accepted part-time work when they really wanted
> full-time work, so-called "discouraged" workers who have stopped looking,
> etc.

These numbers are all reported in the official statistics. It's all in the U-6
measurement which is released at the same time as the headline number, the U-3
measurement, that the news agencies pick up on.

> I don't know what products you buy, but I can tell you that where I am the
> price of milk, bread, and almost everything else I buy has gone up a helluva
> lot more than 0.8% per year in the last few years. The few products that
> haven't risen in price considerably, have gone to smaller product
> sizes/containers. Some products have done both.

Thanks for the anecdote - I'll stick to statistics thank you very much. And
while food/energy prices have risen above the trend - housing has crashed 30%
in the past few years. You can't just pick and choose which items to pay
attention to.

> Now, I'm doing just fine so inflation isn't much a burden to me -- yet. But
> for millions of Americans who are either low-income or worse on a fixed-
> income, it is a very big deal.

What will help lower income Americans is a good economy. You cannot have a
good economy with inflation running so low.

> Quoting the fed's own numbers about inflation to say everything is alright
> is like trusting the fox to guard the henhouse -- that is the true
> definition of a financially illiterate comment. Don't take their word for
> something as critical as this, research it yourself and use facts to support
> your position.

A lot of people inside and outside the Fed research inflation. This is just
hysterical if you think it's a massive coverup.

> And admit to yourself that they have an inherent bias, a conflict of
> interest, to make things seem rosier than they are, because it allows them
> to sell public debt, treasury bonds and short-term T-bills, to fund our
> massive deficits.

Stop. This is the must illuminating of statements you made - You really don't
understand how the financial system works. The Fed does not sell public debt:
That would be The Treasury.

> If they actually reported the truth of everything suckers around the world
> wouldn't be as likely to let us keep spending trillions more a year than we
> earn like a teenager who doesn't understand how credit cards work.

People buy U.S. Government Debt because it's backed by the taxpayers of the
largest economy of the world. That's about as safe of an investment as there
is.

> Call it fear-mongering if you like, I'd rather face the realities of our
> situation than stick my head in the sand. You have to admit you have a
> problem before you can address it.

Again. Inflation at 1.1%. Core inflation at 0.8%. There isn't a problem with
inflation.

~~~
pzxc
> Should I use the "unofficial" numbers?

You should consider all the numbers, including the way inflation used to be
reported (see www.shadowstats.com).

> You're right, a tremendous amount DOES depend on them and that's why the
> statistics are scrutinized heavily. If the Government was systematically
> underreporting inflation through the CPI then you'd hear about it outside of
> the conspiracy theory websites.

I'm sure you think people like Jim Rogers, Peter Schiff, Congressman Ron Paul,
and David Walker (former US comptroller and head of the GAO which does most of
the intergovernmental analysis you mention) are all crazies just like me. No
really, I _am_ pretty sure you think that, so I won't bother to ask.

> Of course they do. Inflation is a very complex thing to measure.

That justifies adjustments (like seasonal, perfectly reasonable, which I did
not mention), it does not justify wonky adjustments which hide inflation. As
you said, only the headline numbers get reported by the mass media. It's all
part of the confidence game. I'm not objecting to the confidence game, it has
to be played especially considering our deficit situation, I'm only objecting
to pretending the confidence game doesn't exist or doesn't have an effect on
how the headline numbers are calculated.

> Incorrect - Housing is.

You're right, I was wrong on that. I was writing passionately and didn't
check. It doesn't change my argument, though, even as the #2 expense food and
energy inflation has a critical impact on how low-income families survive, or
people on fixed incomes. No COLA for SS recipients 2 years in a row can really
hurt if everything at the grocery store costs more. Maybe, with inflation so
low as you claim, everyone's rents have gone down. I dunno, mine hasn't.

> You should read a little bit more about how this works instead of just
> copying from a buy gold website.

You should think a little bit more about how this works instead of just
copying from Ben Bernanke's speeches. I suppose he is unbiased, though, and
has no part in the confidence game.

> These numbers are all reported in the official statistics. It's all in the
> U-6 measurement which is released at the same time as the headline number,
> the U-3 measurement, that the news agencies pick up on.

Yeah, and you can still calculate growth of the money supply in the broadest
terms (M-3) if you wanna do it yourself, the numbers are still there in the
reports they just don't do the calculation for you anymore. People are not
gonna do this, they are gonna watch CNBC and hear everybody but Peter Schiff
say "everything's fine, don't worry about our deficits, don't worry about the
fact that the largest creditor nation in the world has become the largest
debtor nation, don't worry about the possibility of inflation from the
necessity of monetizing the debt, I'm sure we can just tax everybody a little
more or raise the retirement age and it'll be fine" -- and then think that
Peter Schiff is the crazy one. (Just like me, I'm proud to say)

> Thanks for the anecdote - I'll stick to statistics thank you very much. And
> while food/energy prices have risen above the trend - housing has crashed
> 30% in the past few years. You can't just pick and choose which items to pay
> attention to.

Who's picking and choosing? Yeah, housing has really come down. That's great
for the millions of people who can't buy a house now since thankfully the
lending standards have become sane again.

> What will help lower income Americans is a good economy. You cannot have a
> good economy with inflation running so low.

If your economy depends on inflation, sure. If your government and your
population are in massive debt, inflation is VERY necessary to a good economy.
Unfortunately inflation hurts lower-income Americans the worst, because a
larger percentage of their income is spent on necessities.

> A lot of people inside and outside the Fed research inflation. This is just
> hysterical if you think it's a massive coverup.

I don't think it's a massive coverup. And I don't think there is a problem
with inflation, RIGHT NOW. I think there could be a big problem with inflation
in the near future if we continue with massive deficits, and yeah I'm a little
worried about it. It took from George Washington to Ronald Reagan to amass the
first trillion in debt. It took from there to GWB to get to ten trillion. Now
with Obama we are adding over a trillion a year. I shouldn't have to explain
the power (and the danger) of compound interest to someone on HN.

> Stop. This is the must illuminating of statements you made - You really
> don't understand how the financial system works. The Fed does not sell
> public debt: That would be The Treasury.

I didn't say the Fed sold public debt. I apologize for the hanging antecedent
-- I meant that they (the government, including the Fed) have a bias to make
things seem rosier than they are because it allows them (the government,
including the Treasury) to sell public debt. Don't deny that there is a
confidence game going on, that the value of the dollar depends on people's
confidence in its stability. Spending a couple trillion dollars a year more
than you take in, and promising to spend tens of trillions in the coming
decades to support people whose invested money you have already spent, is not
conducive to stability.

> People buy U.S. Government Debt because it's backed by the taxpayers of the
> largest economy of the world. That's about as safe of an investment as there
> is.

An individual cannot survive spending more than he earns indefinitely. A
business cannot survive spending more than it earns indefinitely. A government
cannot survive spending more than it earns indefinitely, unless it can pull
the wool over other countries's eyes indefinitely (China, Japan, the largest
holders of US public debt) to allow it to happen.

I like this analogy by Peter Schiff: imagine each country is a person on a
deserted island. Everyone's job is to gather food for the American to eat, and
every night they have a banquet where they bring all the food and the American
eats it. Now, you could say, America is vital to this island's economy!
Without him, none of the others would have jobs. The truth is, without him,
they could do something else, gather more food for themselves or maybe relax
on the beach. It's a gross oversimplification but it gets the point across --
just because China holds trillions of our debt and doesn't want to see the
value of its holdings go down as the dollar goes down, does not mean they will
continue to buy more dollars indefinitely and throw bad money after good. They
have already started to pare this back.

Copy and paste off a buy gold website? Hell, I could probably write one of
those websites better than they could. I'm wayyyy deep into the crazy. "In
times of universal deceit, telling the truth is a revolutionary act."

> Again. Inflation at 1.1%. Core inflation at 0.8%. There isn't a problem with
> inflation.

I don't have a problem with crack cocaine. I just crashed after my last high
and slept for 48 hours straight. That's 48 hours I've been sober. I don't have
a problem.

Inflation/borrowing allows politicians to give people things without paying
for it, which gets them re-elected, unlike taxing which is politically
unpopular. It's the perfect system. Spend whatever you want. Make a big deal
about promising to be fiscally responsible in the future, but don't give it
more than lip service. It won't be your problem when the consequences come
knocking. Live on the high hog, it's a free ride, and all it costs you is
mortgaging your grandchildren's future. How's that for some fear-mongering?
Sadly it isn't especially far from the truth.

------
uptown
Physical currency is really nothing more than an agreement between parties
that the paper is representative of some value. In actuallity, it's really
just another piece of paper, but it's considerably easier to exchange than
goats or cows or gallons of fuel.

I'm a fan of their use of the 'Rock Band' typeface on the Trillion Dollar
notes.

~~~
shin_lao
Actually currency is more a debt than an agreement.

When you have a 20 € bill, the European Central bank "owns you 20 €".

Since people have faith in the bank ability to pay its debt, everybody uses
the note as money.

~~~
anamax
> Actually currency is more a debt than an agreement. When you have a 20 €
> bill, the European Central bank "owns you 20 €".

What does it mean for the central bank to owe me 20 euros? Specifically, what
do I get when they pay me what I'm owed?

If the answer is 20 euros....

~~~
brianbreslin
I think they mean $20 worth of value be it gold or some other bankable
theoretical material. Originally us dollars were tied to physical gold assets

~~~
anamax
> I think they mean $20 worth of value be it gold or some other bankable
> theoretical material. Originally us dollars were tied to physical gold
> assets.

While dollars were originally tied to physical assets, I'm asking about what
the central bank give me today for my 20 euros or dollars.

~~~
jsharpe
It doesn't matter. You get nothing directly, but that's not the point (and is
part of the reason they got rid of the gold standard). The point is that the
store will accept it as payment for an actual thing, and its employees will
accept it as payment for actual work, and the stores they go to will accept it
as payment for actual things, and their employees will accept it as payment
for actual work, etc.

What you get is the stuff that you buy. Or more directly, what you get is
_buying power_.

~~~
anamax
> It doesn't matter.

The person who claimed otherwise disagrees - he said that it was a payable
debt.

> You get nothing directly, but that's not the point

Except that it is. If the answer is "nothing", than a 20 euro note is nothing
more than confidence in competence of the financial system.

While you may not see any alternatives to said confidence, that doesn't mean
that it is justified.

How much confidence do you have in them?

------
oceanician
I'd genuinely like to exchange some money for some trillion dollar
notes....It'd be great playing Monopoly with them eh :)

~~~
prawn
Multi-trillion dollar notes are all over eBay and seem pretty cheap.

------
groby_b
I'd read it, except the cacophony of colors in the background makes it a total
disaster. (Not to mentioned the rather stupid web interface.)

Ah well, I'll try again post-coffee

~~~
pzxc
I hate websites that make you click back 50 times instead of once after
reading what should be a single page.

~~~
oceanician
does actually preserve the typical web interface, rather than dump the
presentation into a flash interface.

Good thing?

