[T]he way fractional reserve banking in general and the Federal Reserve in particular is set up, there is always more debt built into the system than there are dollars in circulation. That's because debt is attached to money the moment it is created; i.e. for every X dollars in circulation there is always X+Y debt. This system is just not sustainable. How could it ever do anything but ultimately fail?

Dear Parent, I presume you understand the fractional reserve system so you can skip down to paragraph 4 whilst I provide an Economics 101 refresher for the gallery (and this really is first-semester stuff; I taught it earlier this year):

You and all your friends deposit money at the bank. The bank holds a fraction of the money in reserve (hence the name), at minimum the amount the law specifies, usually plus some amount X. We'll come back to this. The rest of the money it lends to people who want to borrow it; they pay interest, you get interest, the bank takes a cut, hooray.

These borrowers spend the money, and the people who get it stick some of it back into the bank, where the cycle starts afresh. It depends on how much money the bank holds in reserve and how much the populace deposits but, yes, usually there is more debt around than originally produced currency.

Now, you claim that this is a Bad Thing (TM). You don't state why. Presumably you are relying on the intuitive logic that having more debt than official assets can't be good. That intuition relies on the following crucial point: having more debts than assets is only a problem when people try and collect on their debts. Amazingly, this very rarely happens.

You have the absolute right to go to the bank and demand your money, in bar. All of it. Buy who does that? Practically no-one. You ask for a portion of it; some here, some there, more at Christmastime and during the holidays. So long as the banks have enough money to give everyone what they want – and this is the amount X from above – holding the rest of it would just be inefficient, since none of the depositors want it and there are plenty of borrowers who can do productive things with it. Fact: if the banks decided to hold more money in reserve, the government/central bank would simply create more 'original' dollars until the effective level of money is back where it was.

The fractional reserve system does have its problems. But the problems lie in deciding how high the reserves should be – too low, and when people do decide they want their money everything comes crashing down (e.g. AIG). Too high, and businesses can't borrow money and productive potential lies wasted (e.g. the current situation in much of Europe and the US). But the system is not inherently flawed. If the right level of reserves are held – and this is usually the case – the system provides a much more flexible and efficient supply of money than a representative currency.

Surely "Where does X come from?" is always a science question?

Not where I come from. Where do you come from?

Q.E.D.

The Economist's latest figures have the unemployement rate at 9.8% Sweden, 3.8% Denmark and 3.1% Norway. Sweden's rate is not seasonally adjusted.

Where are your 2% figures from?

Anyone wishing to actually do a proper comparison of unemployment and education should probably look at Eurostat's Unemployment rates of the population aged 25-64 by level of education (at least for Europe).

I have been to the concerts of three big acts and forked over almost $500 in tickets and merchandising. A large proportion of that money will go straight to the artists' pockets - far more so than if I had spent $500 on their CDs/DVDs.

That used to be true, but isn't any more. From personal conversations with successful bands (The Living End and Hilltop Hoods) I know that the days of bands being screwed around by record labels – the Courtney Love model – are in decline. Bands can now make plenty of money off CD/electronic music sales. Plenty of bands even use tours as "loss leaders" to promote themselves in areas where their exposure is low to guage reception and generate music sales. As example I again refer to the two aforementioned bands' tours in (continental) Europe.

Conclusion: some bands make more from touring, others from music sales. The relationship varies from band to band, from tour to tour, and even from album to album depending on what sort of contract they have. The popular generalisation that merch and concerts support bands more than CD sales isn't as true now as it was 10 years ago.

(As an aside: the rest of your post is insightful and I agree with near all of it)

Edit: first sentence should read: "My friends may be good for recommending ITEM_1, but they're no good for recommending ITEM_2"

Several posts I've read here say things like "My friends may be good for recommending , but they're no good for recommending ", or "I don't want recommendations from people, who are prone to errors, but from algorithms, which are objective and logical."

I can't really understand that argument: the primary difference between Facebook's and Google's search models is the level of data aggregation.

Want to find a website that sells digital cameras? A Facebook search would "ask" your friends, and perhaps their friends, and maybe members of groups and networks you're in, whatever. Then it combines the answers and recommends one or more websites for you.
A Google search differs in that it "asks" everyone.

I've put "asks" in quotations marks because, obviously, there is no directing questioning occurring: the search engines are simply aggregating information from user behaviour. But the process is the same for Facebook as it is for Google. Everything eventually goes back to what users do, which in turned in a result of their subjective choices.

Let's assume a search function that simply returns the most popular site. If my group of Facebook friends visits the top-ranked digital camera page twice as often as the second ranked page, is that result more or less useful to me than if all internet users (whose traffic Google can track) visit Page A twice as often as Page B? The answer depends on how you regard your friends' suitability to make those recommendations.

People who say they prefer Google's results are, at root, saying they prefer the recommendation of the masses over the recommendation of their friends. Sure, there's algorithms that adjust the numbers so that links from more frequented pages count more than links from less frequented pages – but let's not kid ourselves: there is no expert opinion involved here. Google hasn't hired consumer experts to check out digital camera pages and rank them, and neither will Facebook. The important thing is whose data is being used as basis for the calculations.

Now, there is quite clearly a place for "social searching". All of us have, at some point or another, asked people we know to recommend products or services. We don't ask all of our friends, though, just the ones we think know what they're talking about. So Facebook's problem is going to be evaluating the responses of all of our friends to the "question" of "What is the best digital camera website". Comparing its algorithms with Google's is a little (or possibly even a lot) like comparing Google's with Bing's.

What it will (should) come down to for most of us is, "Do I trust my friends or the masses more to give me a good recommendation?". Based on that answer, we'll choose Facebook search or Google, respectively.

The reverse of that would be so much cooler.

I repeat my statement from another sub-thread that I did not advocate these alternative tax systems, merely present them as alternatives to a clearly flawed one. As such, you cannot infer anything about my ideology from my posts.

However, as you have been kind enough to implicitly confirm your own dyed-in-the-wool status by responding with, "And you're not?", I feel it only fair to define my own stance somewhat more clearly.
I am probably closest to what is commonly understood as a utilitarian, though my position is mutable and as recently as last year I wouldn't have described myself as a utilitarian.

However, the concept of increasing net sociatal welfare by income redistribution I find, in principle at least, to be an undeniably good thing. Taking $100 from the richest person and giving it to the poorest person is a net societal gain, I believe. Where the process ends – how much one should be allowed to take from the rich to give to the poor: equal marginal utility of income, equal average utility of income, equal total utility of income – is an issue I do not have a fully developed stance on yet.

As it is, you seem to reject the entire concept of redistribution. You are dyed-in-the-wool in the sense that you inhabit the very end of the redistributional spectrum, whereas I am dyed-in-the-wool only in the sense that I do not inhabit that same end. Where exactly I stand is not certain.

You are welcome to your position, but I hold no respect for it and have no desire to enter into a debate of its merits. Good day.

The point isn't to "leave" just enough for people to get by on, it's provide for those who don't have enough to get by on. Surely you aren't so callous as to suggest cutting welfare payments altogether?

As far as "tearing down the most productive people goes", either you're a dyed-in-the-wool ideologist or you don't understand the concept of diminshing marginal utility of income.

Neither scenario leaves much scope for reasoned debate.

Several other posters have eloquently pointed out and responded to your fallacious arguments regarding.. well, pretty much everything you wrote is fallacious, actually. But the point I want to address (for the general public more so than for you) is the following:

simply give everyone a basic income (say, US$11000 - the US Poverty Threshold in 2008) and then tax every dollar of income.

Ah, a sort of fiscal perpetual motion machine, then? Why not simply redistribute less of someone else's income to the people who get the freebies, and not collect tax from them? Oh, because you think it's more efficient to involve more money moving around, more tax professionals needed to keep track of who gets what, more record keeping... more friction in the system that generates the heat of corruption, political power grabbing, and all of the rest that naturally comes from more government involvement in money flowing two directions, instead of just one? You aren't working for a government employee labor union's public relations office by any chance are you?

The relevant question is:
Why not simply redistribute less of someone else's income to the people who get the freebies, and not collect tax from them?

And the answer: if I give someone $11,000 and tax him on everything he earns, they have a minimum income $11,000, even when unemployed. If I exclude someone's first $11,000 of income from being taxed, they have a minimum income of $0.

Which is more social?

Though it probably won't stop a further rabid attack, please note that I did not advocate these alternative tax systems, merely present them as alternatives to a clearly flawed one.

A 2.5% flat income tax? 2.5%?? My dear friend, I don't even need the back of an envelope to tell you that you'll never take in enough tax with that to cover even the most basic of public services. Making up the shortfall with a tax on luxury goods won't work because, well, they're luxury goods! Per definition people are willing to forgo their purchase. And, even if they weren't, I highly doubt the turnover on luxury goods is high enough that even a 100% tax would fill the Government's coffers much.

Further, your flat income tax suggestion ignores the ability-to-pay-principle: those who can afford to pay more, should (i.e. progressive taxation). Otherwise you are expecting the weak to carry the same burden as the strong, when the weak should be supported by the strong. Because the weak (poor) spend a greater proportion of their income on the necessities of life than their strong (rich), a flat tax hits them proportionally harder – though it seems counter-intuitive, a flat tax discriminates against low-income earners. Also supporting the ability-to-pay-principle is the decreasing marginal utility of income.

A possible ammendment to your suggestion would be to have a tax-free threshold that would allow everyone to purchase the necessities of life, then taxing flatly from then on -- the tax is then weakly progressive, as with each dollar you earn your average tax rate rises, though the marginal rate remains unchanged. This flat tax has been calculated to be (for Australia) around 40% (I'm going from memory here, so +/- 10%). In any case, an order of magnitude higher than your suggestion.

Another possibility, though less accepted in the anglo-saxon world (a little more so in Europe, where socialism isn't a dirty word), is to simply give everyone a basic income (say, US$11000 – the US Poverty Threshold in 2008) and then tax every dollar of income.

How will we start beach bonfires?

Kindling?

Or for the fact that I have Back Turtle Neck envy.

I, too, wish the back of my neck were protected by a hard protective shell. It might provide protection from the objects people fling at me when I point out their orthographical errors.

As it is, I rely on *ducks*

"It's amazing how the coalition fed us the bullshit of historical consecutive surpluses and 'fiscal conservatism' but managed to DOUBLE the national debt to a trillion dollars in ten years."

Dude, were you asleep during high school economics? National Debt = Government (Public) Debt + Household & Business (Private) Debt. If the Coalition did one thing right (and it may very well be one of the few things), it's eliminate the public, i.e. Government debt. Which they did through, yes, consecutive surpluses and fiscal conservatism.

If the private sector wants to go and borrow bucketloads of money to buy cheap shit from Taiwan, that's not the government's fault. Or would you like the state to "direct" your spending via more taxes so that you don't increase the current account deficit? From there it would only a short hop to "directing" your internet usage.

the most rational decision would be the one that makes the most optimal trade

The most optimal? Is that like the most highest, most best, and so forth?

In the economists' sense, rationality is choosing the optimal option – all sub-optimal choices are irrational. Which is what GP Monnet has already said.

As far as your points regarding freedom and information go, I can't really understand how you read those arguments into the GP's post, so I'm not going to address them. The GP seems perfectly capable of defending himself at any rate, at least on the subject of economics.

(For the record, I have read Adam Smith ^_^)