Sasha Radeta: “Of course, this bubble was not created by consumer’s real preferences, but the artificially low interest rate, that were targeted by FED in order to fight the reality-check (recession) at the beginning of the century.”

False. If it wasn’t created by consumer’s real preferences, nobody would have traded $500,000 for houses.

So tell us stupid, how come people only traded $500,000? Why not $900,000? Why not $600,000? Why not $400,000?

You’re a disgrace.

Sasha Radeta: “It was the result of falsified market signals, created by the ruling banking cartel.”

Sounds like Marxism 101 blaming man’s nature.

Sasha Radeta: “Anyway, the resulting shift of investments away from final goods (cause of larger current account deficits) and toward capital intensive projects — are nothing to cheer about in the economy based on false interest rates and false money.”

Unproved drivel worth jack squat. Try understanding why trade occurs first.

Alex MacMillan: “But, if the apple(s) traded for $10 and the orange traded for $4, then the Apple Country had exports of $10 and imports of $4. Now, national accountants (Don’t throw anything at the computer screen.) say that Apple Country had an export surplus of $6 (a capital account deficit of $6), and that Orange Country had an import surplus of $6 and a capital account surplus of $6. You know they do.”

Wealth increased for all parties in both instances. There’s no surplus of $6. A surplus is something extra you don’t want.

http://dictionary.reference.com/browse/surplus

sur·plus

1. something that remains above what is used or needed.

Which clearly makes what accountants “say” false. You don’t trade for what you don’t want or don’t need, ever.

Calling fiat currency capital at any time a deficit when it is traded for is also absurd. By definition of trade it has subjective value.

http://dictionary.reference.com/browse/capital

cap·i·tal

4. the wealth, whether in money or property, owned or employed in business by an individual, firm, corporation, etc.

One thing is traded by one to another. Nothing disappears by that action. The same exact things still exist after trade as existed before trade. They have just been exchanged to where they are subjectively valued higher at the moment of exchange.

Plus you can’t only just account for the fiat notes exchanged but must also account for the other goods and services exchanged, the apples and oranges, if accounting is to record reality.

It’s a total absurdity to maintain that $10 was exchanged for $4. That never occurs unless someone is charitably giving away $. That’s exactly what the accountants must be maintaining to accord a surplus and deficit to the trades. That’s false.

Go back to the baseball bat example.

Alex MacMillan: “If Country B doubles its fiat money supply overnight and widely announces such in the morning, the prices of Country A’s baseball bats will rise by exactly the same amount in terms of B’s currency as will Country B’s bats, and Country A’s bats will not be any more competitive relative to Country B’s bats than they were before Country B’s monetary expansion. This would be true for any other products that people of Country A and B might trade with one another. The value of Country A’s currency rises in terms of Country B’s currency to allow this result.”

What is true for baseball bats is just as true for any other good or service, fiat currency included.

This is what happens when a mentally retarded individual discoveres subjectivism. RTR says:

False. If it wasn’t created by consumer’s real preferences, nobody would have traded $500,000 for houses.

You poor cretin, I explained that people’s preferences can often be misguided by fraud. That is always the case with malinvestments induced by artificially low interest rate and false credit (based on non-existing money). You can often fool people by using fraud — but you can’t possibly blame their preferences for their resulting injuries.

At any rate, when value of purchased capital goes way below what we paid for it — it is obvious that we suffered a loss and accounting will have to record it. Such clusters of error occur regularly in fractional reserve banking and they get even worse in the total absence of real money (when we have a forced fiat currency).

rtr: In spite of your real agreement with everything I said in my last post, you seem bent on inventing disagreement. As I said, the apples for oranges trade benefited all those trading. Period! There was no surplus or deficit in any welfare sense. But, at the same time, as you well know, national income accountants define deficits and surpluses as simple numerical monetary quantities. Those who understand basic economics know these accounting “surpluses” and “deficits” have no inherent welfare connotations. You seem to be saying that since national income accountants use the words “surplus” and “deficit”, when you would prefer them to drop these terms, you are going to treat these words whenever used as though they implied welfare gains and losses, respectively, even though you and the national income accountants know that they don’t. Usage of certain words can confuse people. Such is the case with the words “debit” and “credit”. Some people think credits are good and debits are bad. Should this terminologly be changed?

Sasha: Relax a bit. These discussions are worthwhle, but it’s probably best if we all take a few deep breaths every now and then and approach things calmly. Simply state your logic as you believe it. Either I get it or I don’t. I’ll do the same. Either you get it or you don’t. At this point, I don’t know how much of our disagreement is one of semantics and how much is one of basic economics. Some of it sure seems to be about basic economics.