|
Register | Sign In |
|
QuickSearch
EvC Forum active members: 65 (9164 total) |
| |
ChatGPT | |
Total: 916,914 Year: 4,171/9,624 Month: 1,042/974 Week: 1/368 Day: 1/11 Hour: 0/0 |
Thread ▼ Details |
|
Thread Info
|
|
|
Author | Topic: Social Unrest? | |||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
Then I guess you don't like to see the value of your assets and investments increase. Sucks to be you. 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.
A return to the prosperity of the post-war and pre-reagan economy.
By what mechanism?
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
There's one obvious solution, and it's the only solution. Allow government to pool all the wealth of the people then allow the government to define who needs to live on what. The government has it's experts who's had years and years and years so they would know how to wisely manage the money. 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.
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
I think this is made even worse in the case of poorer folk, who have little unnecessary and saleable property, and instead hold cash (perhaps in a bank account) as their primary exchangeable. While a wealthier person can sell their unnecessary property in an inflation at current exchange (they get more $$ selling tomorrow than if they sold today), the poor person will have the same amount of $$ throughout the inflationary period, and not be able to sell off unnecessary property to gain more, much-needed additional $$. There is more that could be said, but I figured this side-note important to point out, as most folk are on the poorer end of the spectrum. QFT Also, 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."
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
Without inflation the value of your assets do not increase. You seriously want the value of your property and investments to stagnate or deflate? Inflation. Does. Not. Increase. Asset. Value. The value of an asset is independent of money. Money is a measure of that value.
A low to moderate rate of inflation is good for you and the economy.
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?
Do you disagree that having a larger tax base to rely upon allows the government to spend more within the domestic economy? Do you think that the government can not create jobs as well as increase the productivity of the poeple by spending on them? 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.
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
@crashfrog
You 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.
Inflation is when more people have more money, 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=PQM = volume of money V = velocity of money P = the price level Q = the real value of goods and therefore there's more demand for goods and services. 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.
Now, under those circumstances, you have a lot of money trying to chase fewer (but more valuable) goods and services 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.
So businesses are being started; existing businesses are looking to expand. That creates a demand for labor - people to make goods and provide services, or to help other people do that. Yes. Buisnesses getting started creates a demand for labor, NOT more money.
So now Mr. Moneybags is sitting on an asset rapidly increasing in value, because it's an asset very much in demand - his own labor. So your low-income laborer gains a higher income, and buys more goods and services. 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.
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
Commodities and other hard assets DO appreciate in value with inflation. Why do you think they are used as a hedge against inflation? 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:
quote: 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:
quote: 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:
quote: Because it can give people debt relief for one.
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.
What happens when the government decides to give you a nice bonus tax refund check. Why and when would they do that? What are people likely to do with that check?
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.
For the record, when I say 'post-war' I mean after world war 2. As a side note, what was one of the consequence of military soldiers coming home from the war with those big fat paychecks? 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.
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
Because inflation is caused by more money chasing the same amount of goods and services 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.
But that's a good thing. More demand for goods and services puts more people in the business of providing goods and services. Any goods or services that people already have increase in price. Actually, you can have inflation without having a rise in demand, which invalidates your silly theories about positive business growth. From a Macroecon textbook:
quote: 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.
Why would I think that? 100 GBP and 139.12 USD are the same amount of money. Because according to you, assets appreciate in inflation. Apparently, the 139$ is more to you, because it is an inflated currency.
More money creates a greater demand for goods and services, which creates a greater demand for the labor necessary to provide them, due to people getting into the "goods and services" business. This is obviously true. 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.
quote: 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.
I do see it, and I can do math. And your equation says that when the volume and velocity of money increase, so does the price level and value of goods. Wrong. Rises in M or V mean rises in P, but NOT Q. Q doesnt chance, short term.
No, think about the absurd world you're proposing, the one where your corner grocer can't figure out how much the price of tomatoes should be that day until he calls up everyone in the country to find out how much money they have. That's the result of "economics moron" thinking, where the economics moron thinks he's being intelligent when he says "increasing the money supply makes money less valuable", as though the value of the money in your pocket comes from how large a percentage of all the world's money it represents. 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?
Absolutely wrong. The value of money is what you can buy with it. If the government throws bales of money from helicopters tomorrow, people are going to want to spend it on goods and services. That increases the demand for goods and services but not the supply of them, so the price increases. 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.
This is something upon which every economist agrees, so if you find yourself i the position of arguing against the vast economics consensus I'm pretty sure it's not me who's going to be wrong. Hahahahahahahah. Milton Friedman, founder of the Monetarism school of economic thought and recipient of the Nobel prize:
quote: Ludwig von Mises, father of the Austrian school of economic thought and renowned economist and philosopher:
quote: Friedrich A Hayek, winnder of the nobel prize in economics:
quote: 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. 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.
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
You seem to love reading between the lines, responding to only what you feel you can fight.
Every economist disagrees with you. Including the ones you quoted (which is really amazing.) Doesn't that maybe indicate that you're wrong? Lets go over my quotes again: From freidman:
quote: 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:
As you cannot talk about something that has no name, you cannot fight it. Ive bolded the relevant word. If von Mises was for inflation, would he seek to fight it? Let me educate you:
quote: 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:
quote: 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.
|
|||||||||||||||||||||||
Damouse Member (Idle past 4936 days) Posts: 215 From: Brookfield, Wisconsin Joined: |
Right. And that rise is caused by the increased demand for the same amount of goods and services. Supply and demand, remember? 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.
As you pointed out, if the government gives everyone a thousand dollars to bury in their backyard 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.
author of the preeminent textbook on economics: 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:
quote: 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.
quote: 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 | tutor2u Again, 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.
Not in the equation you've posted. Q is a variable, not a constant. You know what those terms mean, right? I mean, you're apparently a math lecturer or something, so surely you would know the difference between a constant and a variable? 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.
|
|
|
Do Nothing Button
Copyright 2001-2023 by EvC Forum, All Rights Reserved
Version 4.2
Innovative software from Qwixotic © 2024