Social Unrest?

WHAT?Inflation is not good. Inflation is loss of stability of a monetary system.By definition, the rise in price gained by inflation on assets and investments is NOT an increase in value, under ANY shape or form. Inflation devalues money, which increases the number next to your asset, but it doesnt make more or better asset for you. By what mechanism?

My beating libertarian heart just stopped cold.No. Great intentions, absolutely horrific execution, and a gross violation of natural rights.I cant think of a worse word than horrific to describe this plan, but i need one. This takes you to hell without accomplishing anything but shoving you into a century of economic slum and creating a police state.

QFTAlso, the minimum wage is considered sticky. Should inflation hold at a constant rate, the min. wage will always lag behind, most likely in terms of years. This means that even though your money is worth 10% less than it was 2 years ago, minimum wage earners will be paid at the same rate as they were 2 years ago.Money should be a fixed form of value exchange, not an ever-changing variable."The road to hell is paved with good intentions."

Inflation. Does. Not. Increase. Asset. Value.The value of an asset is independent of money. Money is a measure of that value. I dont know of any school of economic thought that advocates that. Its just not true, either in practice or in theory. Why? How can it be true? I asked you to detail what mechanism you thought led to prosperity, and you posed two questions to me. Hmm.But ill bite. Yes, i think increasing taxes allows the government to spend more. I dont think that that is good, but i think that it is true.Yes, government can create jobs by spending money.NO, government cannot raise productivity by throwing money at the workforce. That doesn't make sense.Thats all beyond the point. Jobs and money are not the products of an economy. Just because the gov't spent a lot of money and made a lot of jobs does not mean it was more productive towards the goals of the economy.The end product of an economy is product. For the record, i agree that the war caused prosperity, but not at ALL by the same way you mean it. The government took a large chunk of money from the economy that could have been used to make products for the use of the citizens, and instead that money was thrown into tanks and bullets, which were eventually expended.The gov't diverted production of capital or consumer goods into military goods, which did not increase prosperity.Edited by Damouse, : No reason given.

@crashfrogYou are so, very, very wrong. This isnt even a wrong in terms of macroecon, where maybe differing schools of thought can disagree on what's what, you have no idea what you are talking about. Im inclined to think you may be joking. No. Inflation is when more money becomes active. More people can have more money and choose to save it, and there is no inflation. The amount of inflation in a system based on the size of the money supply, the velocity of money, the price of goods, and the value of goods is modeled by the equation:MV=PQ
M = volume of money
V = velocity of money
P = the price level
Q = the real value of goods NO. HELL no. See above equation.Inflation by itself does not raise demand. Period. Especially small constant inflation. Generally when you relate inflation with demand, its the demand that causes the inflation, known as "demand-pull" inflation. Read my other two posts where i state in no uncertain terms that value is not tied to money. At. All.Value != money.For example, if i offer you 100 euros for your pencil, you may assume your pencil has a value of 100 euros, which may or may not be true. If i then offer you 139.12 USD for your pencil, under your mindset the value of your pencil has gone up, because i am using an inflated currency. Yes. Buisnesses getting started creates a demand for labor, NOT more money. No. A million times no.The nominal market price of his labor is increasing, but the real price of his labor remains the same. His value does not change.Think about how absurd what you're saying sounds. If you take your pencil and put it in a drawer for 10 years, it will become more valuable as an asset? What sense in the WORLD does that make?For the last time. Money doesn't mean value. Assets dont necessarily rise in value if they rise in price. Ignoring all other considerations, inflation is bad for the sole reason that people like yourself think that greater prices mean that you are becoming richer, and act according to that mindset.

Because they dont LOSE value. If you hold money in a period of great inflation, youre losing wealth just by sitting there. You lose less money by getting rid of all your cash and having assets, because they will eventually rise in price to the new, devalued currency.From the concise encyclopedia of econ:

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Higher anticipated inflation subjects them to the equivalent of a higher tax on their money holdings. Inflation thereby drives transactors into costly strategies for getting by with smaller currency holdings, such as making more trips to the bank to take out smaller amounts each time.

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Higher tax on money holdings means a greater oppertunity cost to holding money. That means it would be less costly to get rid of money and get assets.From wiki:

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Increases in the price level (inflation) erodes the real value of money (the functional currency) and other items with an underlying monetary nature (e.g. loans and bonds). However, inflation has no effect on the real value of non-monetary items, (e.g. goods and commodities, gold, real estate)

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Loans and bonds can suffer. Not the last sentence, reprinted in bold caps:INFLATION HAS NO EFFECT ON THE REAL VALUE OF NON-MONETARY ITEMS (goods, commodities, gold, real estate)From an article titled "How inflation effects the market and book value of assets:

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Inflation can silently erode value when only nominal amounts of money are considered in valuing any asset.

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Yes, and i'd agree with you here that this is a well-known point for inflation. Whether or not i agree with allowing debt-forgiveness on principle is a different story. That money was taken from the workforce in the first place, the govt isnt just magicking you money. There's no additional investment in the workforce to make them spend more, theres the same money that was there in the first place. Oh, i know.The government, instead of allowing money to be spent on capital and consumer goods, threw the money away by spending it on disposable items that didnt improve the prosperity of the USA. Do you disagree?The soldiers coming home and spending money is not what raised prosperity, i would argue. Again, that's just money that came from the same system, its not an injection of productivity.

Wrong.If you could do math as well as you said you could, you would be able to see this.Inflation is a general rise in the price level.By the equation MV = PQ, the price "P" can rise by either a raise in V or M, or a fall in Q. The same amount of money could be after the same amount of goods and services, and you could have inflation. Actually, you can have inflation without having a rise in demand, which invalidates your silly theories about positive business growth.From a Macroecon textbook:

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In the diagram above we see a large outward shift in AD. This takes the equilibrium level of national output beyond full-capacity national income (Yfc) creating a positive output gap. This would then put upward pressure on wage and raw material costs — leading the SRAS curve to shift inward and causing real output and incomes to contract back towards Yfc (the long run equilibrium for the economy) but now with a higher general price level (i.e. there has been some inflation).

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The first part, the large shift in Demand, is demand pull inflation. Note that after this change, wages and average material costs increase untill the SRAS (short run aggregate supply) shifts inwards, CONTRACTING the amount of supply to compensate for the raised Demand. The economy moves BACK towards long run equilibrium.If what you are saying is true, then the only solution we would ever need is to have constant inflation. Because according to you, assets appreciate in inflation. Apparently, the 139$ is more to you, because it is an inflated currency. No, because every case of inflation is not necessarily caused by a change in demand. Cost push inflation occurs because of changes in supply, not demand. Your example doesnt account for this.The inflation arises from the change in demand, it doesn't cause it. Thats why it's called "Demand pull" inflation.

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Demand-pull inflation is caused by increases in aggregate demand due to increased private and government spending, etc.

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Some schools of economic thought think that constant demand pull inflation stimulates investment, but im not sure you's care, because absorbing that much econ would make you a moron, apparently. Wrong. Rises in M or V mean rises in P, but NOT Q. Q doesnt chance, short term. That has a label, its called sticky prices. The grocer doesn't need complete information to act according to what he thinks is the best transaction. Your critique is old and incomplete, it was first heard when capitalism arose as an idea.Sticky prices is a legitimate event, but it doesn't impact the whole picture. Fact is, the grocer changes his prices all the time to compensate for inflation. Inflation is calculated based on the grocer's items.So think about it. If the grocer never changes the price of his goods to reflect inflation, but you CALCULATE inflation based on how much the price of his goods rose, where does inflation come from? Nope. Again.In the following graph, the government threw proverbial bales of money out of helicopters. Short run supply shifts quickly after the price level changes.Can you read this? I have some phone numbers of some economic morons you can dial if its past your grasp of the way things work in the real world. Hahahahahahahah.Milton Friedman, founder of the Monetarism school of economic thought and recipient of the Nobel prize:

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Inflation is taxation without legislation.

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Inflation is always and everywhere a monetary phenomenon. (Ass opposed to a valuation phenomenon)

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Ludwig von Mises, father of the Austrian school of economic thought and renowned economist and philosopher:

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There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it.

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Friedrich A Hayek, winnder of the nobel prize in economics:

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My main aim tonight is to bring out clearly why we must stop inflation if we are to preserve a viable society of free men....

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Now the chief effect of inflation which makes it at first generally welcome to business is precisely that prices of products turn out to be higher in general than foreseen. It is this which produces the general state of euphoria, a false sense of wellbeing, in which everybody seems to prosper. Those who without inflation would have made high profits make still higher ones. Those who would have made normal profits make unusually high ones. And not only businesses which were near failure but even some which ought to fail are kept above water by the unexpected boom. All this means that, unless we are prepared to accept constantly increasing rates of inflation which in the end would have to exceed any assignable limit, inflation can always give only a temporary fillip to the economy,

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What was it you said, that every economist agrees with you, and therefor you MUST be right? It looks like in 5 minutes i could produce 2 Nobel laureates and 2 fathers of modern day economic schools of thought that disagree with you. It really was not all that difficult.

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This statement is false.Tell the blunt, honest truth in the starkest, darkest way. And what will be, will be. What will be, should be.

You seem to love reading between the lines, responding to only what you feel you can fight. Lets go over my quotes again:From freidman:

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Inflation is taxation without legislation.

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Do you think he meant this in a positive way? Do you think modern economists think taxation without legislation is a good thing? Tell, me, my dear frog, how on any terms this indicates Mr. Freidman is for inflation and not against it.From von Mises: Ive bolded the relevant word. If von Mises was for inflation, would he seek to fight it?Let me educate you:

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fight
to engage in battle or in single combat; attempt to defend oneself against or to subdue, defeat, or destroy an adversary.

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It seems that to fight inflation, Mr. Mises would have to consider inflation an ADVERSARY. Interesting. Its almost like von Mises thinks inflation is bad! What a strange concept.From Mr. Hayek, nobel prize laureate:

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...why we must stop inflation if we are to preserve a viable society of free men...

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You're either delusional or illiterate, because clearly Mr. Hayek is arguing against inflation in this quote.You accuse me of not reading my own references, but you cant seem to understand phrases like "...STOP INFLATION....", a direct quote from Hayek.If this is still difficult to understand, ill post the whole letter from Hayek, titled "Can we still avoid inflation?"Your tactics in avoiding any sort of compromise are admirable, but childish. What prevents you from accepting that economists share my viewpoint? Edited by Damouse, : No reason given.Edited by Damouse, : No reason given.Edited by Damouse, : No reason given.

No, again. Inflation is not necessitated by a rise in demand.Supply-push inflation has nothing to do with demand. It is not generated by a rise in the demand curve. This is an example of inflation, not a definition. This encompasses one part of inflation, demand pull inflation.You could EASILY have cost-push inflation resulting in a higher price level without a rise in demand. An author of A preeminent textbook. As in: one author of one textbook, not the authority on econ. He happens to be of the macro school of thought that opposes my own. The fact is, his school disagrees with the school that i tend towards.That notwithstanding, you've still managed to do what you've accused me of:

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So in the long run, an increase
in the money supply does not change real GDP.

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It seems he's saying that inflation, in the long run, does NOT result in a higher productivity or production rate.GDP returns to long run stability. Real GDP. The actual, natural GDP.Are you silly, my man? This is what i have been saying. Not only does inflation not increase asset value, it results in a NORMAL GDP. It. Doesnt. Help. Anything. Longterm.

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People respond to increased demand by increasing supply

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Haahahahaah. Read the above excerpt from your post, where krugman talks about real GDP shrinking back to normal.Then, look at the graph i posted again. Because you love to ignore solid contradictory posts, heres the direct link to the graph i posted.Page Not Found | tutor2uAgain, if it's difficult for you to interpret, feel free to ask a friend. Or telephone your friend krugman, even he will tell you exactly what it means, exactly the same way he said it in the above quote of yours. Short term, Q is a constant. No matter how much less your money is worth, my goods will not get any better. Unless you think your 136$ makes me pencil better than your 100 euros.If the fed were to drop double the amount of money currently in M1 onto the US in two seconds, you honestly think the real value of your pencil would increase in 2 seconds?As another way to appraise true value, think of buying and selling in terms of bartering. This is how i should have said this all along, i feel...If your pencil could be traded for a pen before the inflation, could your pencil be traded for two pens after? In other words, did your pencil double in value after?The answer is obviously no. If i pay you one bill for your pencil now and two bills worth half as much for your pencil later, your pencil didnt appreciate in real value, those two bills you got will still only buy you a pen later.Everyone's asset appreciate in nominal value equally, which means you cannot buy more real value with them after as you could before. Their real value, therefor, doesn't appreciate.Edited by Damouse, : No reason given.Edited by Damouse, : No reason given.Edited by Damouse, : No reason given.