Capitalism made easy

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  • Thu, Feb 12, 2009 - 06:24am

    #1
    kmarinas86

    kmarinas86

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    Capitalism made easy

The way capitalism works is that people invest money in a business now in hopes for future returns.

If we replaced the stock market with an easier system, I think that system would be one where the company actively sets the value of a stock. The value of the stock would simply be an exponential rate. For example, let’s say a company has a initial public offering of 10,000 shares of $10 growing 3% a year. That 3% a year would be guaranteed by law. Now if someone wants to trade, then they would pay for the original amount of a $10 a share and get whatever rate there now is, which 3 years down the road could be 5% instead. The more likely a company is going to grow, then the more they need development capital and the more likely they are going to promise a higher return. These methods, I think, are far superior to the type of market activity now in existence.

  • Thu, Feb 12, 2009 - 07:45am

    #2
    Peak Prosperity Admin

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    Re: Capitalism made easy

[quote=kmarinas86]

That 3% a year would be guaranteed by law.

[/quote]

 

How? On whose pocket?

 

  • Thu, Feb 12, 2009 - 08:02am

    #3
    Peak Prosperity Admin

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    Re: Capitalism made easy

"How? On whose pocket?"

Who would trust a company that says it will pay 3% a year for x amount of shares but doesn’t? The law here is that people will be less likely to invest in that company. Instead of illusions set by exuberant shareholders which jack up the share prices beyond that of what company can afford, the company should set the rate of return with financial integrity in mind. We must understand that everyone needs their bills to be paid. The law would be a fee on bad judgment, but the market of self interests already provides that! That’s the law.

  • Thu, Feb 12, 2009 - 08:05am

    #4
    Peak Prosperity Admin

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    Re: Capitalism made easy

Some one on YouTube responded: "No. That’s wrong. The company should be valued based on it’s earnings."

 

My response: It’s obvious that if a company expects higher return on capital, then it can expect to attract investors to get capital to make those earnings happen. The company should set the rate because its can project the earnings (how much and why) better than most shareholders can. And of course shareholders on the board of directors can become involved and influence how the company sets the rate.

  • Thu, Feb 12, 2009 - 02:10pm

    #5
    Peak Prosperity Admin

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    Re: Capitalism made easy

[quote]

The way capitalism works is that people invest money in a business now in hopes for future returns.

If we replaced the stock market with an easier system, I think that system would be one where the company actively sets the value of a stock. The value of the stock would simply be an exponential rate. For example, let’s say a company has a initial public offering of 10,000 shares of $10 growing 3% a year. That 3% a year would be guaranteed by law. Now if someone wants to trade, then they would pay for the original amount of a $10 a share and get whatever rate there now is, which 3 years down the road could be 5% instead. The more likely a company is going to grow, then the more they need development capital and the more likely they are going to promise a higher return. These methods, I think, are far superior to the type of market activity now in existence. [/quote]

You can’t possibly be serious?

  • Thu, Feb 12, 2009 - 02:32pm

    #6
    Peak Prosperity Admin

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    Re: Capitalism made easy

Are you aware of the exponential function?
How is any company going to guarantee an 3% "Exponential rate" as you say?

I’m mean this with absolutely no disrespect intended, but have you even watched the Crash Course?
Have you watched "The Most IMPORTANT video you’ll ever see"?

Because you’re throwing out a lot of arbitrary information that wouldn’t really do anything to solve the real problems, which are:
1. Overpopulation
2. Fiat money creation on an international level.

Cheers!

Aaron

  • Thu, Feb 12, 2009 - 03:11pm

    #8
    Peak Prosperity Admin

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    Re: Capitalism made easy

Capital is anything beyond "breaking even".

Capital is profit.

That’s easy, right?

  • Thu, Feb 12, 2009 - 03:24pm

    #9
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    Re: Capitalism made easy

Kmarinas86,

Well… where to start. Can I assume you did not watch the crash course or Dr. Bartlett’s explaination of the exponential function?

You said:
[quote]Well, you can remind those who want their investment to increase 3% a year to tell them that their expectations for exponential growth in invested in the market is unsustainable[/quote]

I don’t really need to, because the people I choose to keep as company prefer their riches in life experience, family, agriculture and personal growth. Not some arbitrary amount of fiat capital being exchanged three thousand miles away by greedy men in business suits who spend hours on treadmills in lieu of a hard days work.

So when it comes to explaining why peoples investments are in the tank, and why they won’t be getting "exponential growth", I just shake my head because I realize that they don’t even understand the concept.

[quote]To tackle fiat money creation on an international level, you will have find some way to make it where currencies are not speculated for profit.[/quote]

Are you serious? Why wouldn’t you speculate a currency that has abosolutely no intrensic value?
It’s almost mandatory that you do – because the paper itself doesn’t exactly have any attractive features as a medium of exchange. If it’s "value" is not "speculated on", it has no value.

It’s far simplier to use the Austrian School of thought and have a currency backed by tangible goods.

[quote]When imports are bought, money is exported and is effect out of circulation if not in the hands of those who will spend it on goods and services. To make up for the lost liquidity, the bandaid has been to print more money, and that devalues the currency[/quote]

What does it matter if the money itself has no value?
These are problems with the fiat money system, not capitalism. Capitalism has it’s own set of flaws that neednt be confused with the Fiat money system.

[quote]The only way to avoid this is to keep the liquidity of a dollar constant at all times to have a constant presence in circulation. This makes some degree of wealth redistribution necessary, but in the end a global retail currency would be needed to fix the problem of reduced liquidity. [/quote]

The "Only" way?
Quantify that. What knowledge or experience are you drawing upon here?

[quote]As for overpopulation evidences shows that by fixing the economic system to allow societies to progress in higher standards of living much will be gained in terms of curbing overpopulation. As economies mature, it will be become politically easier than before to put a legal limit on how many children a couple can have. [/quote]

You’re failing to see the exponential function again. Not to mention, you’re underminding individual liberty, suggesting the government take an active role in civic birth control, and all the while basing it on the pretense that a "mature economy" with sooth those things into effect.

How exactly will a mature economy make it "politically easier" to put a "legal limit on how many children a couple can have"?

If anything, we can see empirically and historically that "mature economies" have a higher standard of living, and overconsume, not to mention have a higher rate of birth, and lower risk of death.

You’re logic needs review. Before you do anything else, do yourself this one, big favor, and watch these:
https://www.peakprosperity.com/crashcourse
http://www.youtube.com/watch?v=F-QA2rkpBSY

Cheers!

Aaron

  • Thu, Feb 12, 2009 - 03:28pm

    #7
    Peak Prosperity Admin

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    Re: Capitalism made easy

[quote=Aaron Moyer]

Are you aware of the exponential function?
How is any company going to guarantee an 3% "Exponential rate" as you say?

I’m mean this with absolutely no disrespect intended, but have you even watched the Crash Course?
Have you watched "The Most IMPORTANT video you’ll ever see"?

Because you’re throwing out a lot of arbitrary information that wouldn’t really do anything to solve the real problems, which are:
1. Overpopulation
2. Fiat money creation on an international level.

Cheers!

Aaron

[/quote]

Well, you can remind those who want their investment to increase 3% a year to tell them that their expectations for exponential growth in invested in the market is unsustainable. If we do get rid of this feature of investment, why would any one ever invest in the stock market again? If there was no way to get even a little 3% a year from the market, business would have to rely on other sources of funding. If that is not debt or capital then it would have to be something like grant money or bootstrapping. If the exponential function is to be gone from the market, then stock market should not even exist. The stock market failed because it made promises that it couldn’t afford. This was because prices of stock were based on the investor’s demand and not the company’s supply. The demand in the stock was greater than supply and so you have a lot of people approaching retirement with 401ks that are not really worth as much as people hope they are. If a burst of people pull their 401k out, the value per 401k drops drastically, because the money simply is not there in the first place.

To tackle fiat money creation on an international level, you will have find some way to make it where currencies are not speculated for profit. When imports are bought, money is exported and is effect out of circulation if not in the hands of those who will spend it on goods and services. To make up for the lost liquidity, the bandaid has been to print more money, and that devalues the currency. The only way to avoid this is to keep the liquidity of a dollar constant at all times to have a constant presence in circulation. This makes some degree of wealth redistribution necessary, but in the end a global retail currency would be needed to fix the problem of reduced liquidity.

As for overpopulation, evidence shows that by fixing the economic system to allow societies to progress in higher standards of living that much would be gained in terms of curbing overpopulation. As economies mature, it will be become politically easier than before to put a legal limit on how many children a couple can have.

  • Thu, Feb 12, 2009 - 03:40pm

    #10
    Peak Prosperity Admin

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    Re: Capitalism made easy

kmarinas,

With all due respect, you have no idea what you’re talking about.  I do not even understand what you’re saying.  I suggest you do some basic studying, not just with the Crash Course, but also with a site like http://www.investopedia.com

 

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