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andurilAug 9, 2010
That's just Tea Bagger rubbish, and it's racist too! Inflation does *not* exist.
decoy26517Aug 9, 2010
/s?
andurilAug 9, 2010
/no
gamerxr72Aug 9, 2010
I want to see this trolling defended with logic. Explain it.
coljungAug 9, 2010
Way to go Mugabe !!!
andurilAug 9, 2010
Well, it's actually good for Zimbabwe that the government there is inflating the money supply. It works as a stimulus.
If we had any sense, we'd inflate the hell out of our money here to stimulate our economy.Comment is buried, click here to see the rest.
7jbdwAug 9, 2010
/s?
when people aren't in a spending mood, making their money worth significantly less isn't going to help. Small amount of inflation encourage spending but large amounts hurt bank accounts
andurilAug 9, 2010
Anytime the government spends money... via inflation or not... it's a good thing.
goatfounderAug 9, 2010
I went to Zim about 4 weeks ago for a meeting with a potential customer. They run a huge security firm there. They told me that before they went over to the US dollar. They actually notified all there employees 2 hours before they would get paid. So they can withdraw all there money and buy the first thing they can find. Due to property retaining there value better and later trade it for something they need.
jeffwmartinAug 9, 2010
What school of economics did you study? School in Pajamas.com?
wjsalm3Aug 9, 2010
In the case of Zimbabwe, I think the US becomes less of a comparison because they are working with a currency that is pegged to a good. Also, the United States' currency is fiat, and the psychology around the United States and their investors is much different.Comment is buried, click here to see the rest.
frezikAug 9, 2010
Don't knock it. Mugabe made everyone in the country a billionaire.
zoltan9Aug 9, 2010
These are actually very good examples of very bad inflation.
oneilcoolAug 9, 2010
Right when I opened up I thought to myself, "These examples don't seem that bad..."
piesforyouAug 9, 2010
Yeah, they could have shown some really bad examples. They dodged a bullet there.
daimposterAug 9, 2010
the worst example of a bad headline.
stormwernAug 9, 2010
Why an inflation graph about the 20'th century when the text is about the 19'th?
cyberdorkAug 9, 2010
Why people would digg you down for pointing out an obvious fact is beyond me.
xampleAug 9, 2010
worst. grammar. ever.
tomdylanAug 9, 2010
The Fed Reserve can't exist without inflation/ or increasing the money supply...it will never go away until the Fed Reserve does...
s73v3rAug 9, 2010
Inflation also happens without the Federal Reserve, too. Look into the history of the 19th Century. There were boom/bust recessions constantly.
gn84Aug 9, 2010
@s73v3r
You are mixing two issues. Pre-Fed US inflation correlates to war, not necessarily to recessions.
Many of the recessions were related to government interference with the economy-- free handouts to insolvent railroads, introduction of paper money by banks, periods of excessive government debt, etc.
greevarAug 9, 2010
Inflation happened before the Federal Reserve because there were other central banks created in America that were later dissolved because they were damaging the value of our currency. The reason behind the American Revolution was that the Bank of England was trying to control our economy like they controlled England's. England had just gone through a very expensive war with France and had borrowed large amounts of money from the Bank of England to fight it (sound familiar?). We had an interest free currency in the colonies and we were prosperous. The BoE didn't like that because they weren't getting a cut of the action nor holding them under perpetual debt like they have with England, so they cried to King George to outlaw their currency and tax the hell out of them. That resulted in a depression in the colonies and mass unemployment. That's why we revolted.
That's why it's very bad that we have a central bank. It's a system designed, by the "Money Trust", to hold the American government and it's people under perpetual debt to secure an endless supply of profit that they have no right to in the first place.
greevarAug 9, 2010
Correct. The Fed Reserve Act and the 16th Amendment were passed at the same time to facilitate this. The government fleeces us for taxes to pay back the money they borrowed from the Fed when they increase the money supply and the Fed uses that money to cover banks. Debt is what our money system is all about. If people didn't owe money to the banks, they couldn't make loans.
wjsalm3Aug 9, 2010
If anything, Deflation is a much much much larger issue for the United States than Inflation. When a nation that has a large amount of debt owed and held all of a sudden cannot make any money off that debt (ie. people loan you money because of interest) because the currency is devaluing itself in a cyclical way, it becomes trapped. Look at Japan.
Anyhow, if you are interested in the true realities of Inflation and the United States a good academic article is this:
http://www.levyinstitute.org/pubs/wp_603.pdf
catalysisAug 9, 2010
Exactly. The great depression was a deflationary spiral. People don't seem to understand that excessive cash hoarding without a system to create liquidity will cause rapid economic collapse for everyone.
richmomzAug 9, 2010
Delfation will never be a problem now that the currency isn't tied to a limited gold supply - the Federal Reserve can print as much as it wants. The problem is that this could easily put us in the same situation as Weimar Germany or even Zimbabwe if abused.
The bottom line is that monetary policy manipulation can only do so much to counter economic failure before a serious monetary crisis results, no matter how much the Keynesians would like to think otherwise.
govtdoesnotworkAug 9, 2010
http://research.stlouisfed.org/fred2/graph/?chart_type=line&width=1000&height=600&preserve_ratio=true&s[1][id]=AMBNS
They can bury the comment, but the graph shows the facts.
richmomzAug 9, 2010
That's more like it (and damn scary)
wjsalm3Aug 9, 2010
Um The St.Louis Fed who happen to generally agree with you about deflation and the fear of inflation, recently came out and said that we are heading towards deflation.
so...yeah.
and here's a link to the story.
http://www.npr.org/templates/story/story.php?storyId=128936438Comment is buried, click here to see the rest.
wjsalm3Aug 9, 2010
um you can dig me down, but the article is very real.
brookedunneAug 9, 2010
> "Delfation will never be a problem... "
When your home has lost half its value in 4 years, 1 of 5 homes in your city is bank-owned or in foreclosure, and there are no construction jobs to be found, it might leave you thinking deflation could, theoretically, be a problem.
richmomzAug 9, 2010
@brook - that's not deflation; deflation would be if the prices of *all* goods/services started dropping. Real estate is going through a correction period after having been an isolated, inflated asset-class (or "in a bubble" as some call it) and falling victim to the laws of supply&demand. You don't see similar problems in the price of cars, food, gold, medical care, or just about anything else.
linuxpersonAug 9, 2010
Drops in real estate value having nothing to do with deflation. In fact, home owners who have lost a lot of value would in most cases benefit from deflation because the value of the fewer dollars that their home is worth would be greater since the supply of money would be more limited than before.
avengingturnipAug 9, 2010
That was a correction, not deflation. Home prices had been pumped up to levels that did not reflect true prices by interventions in the market by the Federal Reserve and federal government backed GSEs.
njdoo7Aug 9, 2010
You know something is wrong with fiscal policy when lower prices are a concern.
richmomzAug 9, 2010
Lower prices are only good if you can assume people will have the same or greater amount of money at their disposal.
wjsalm3Aug 9, 2010
See Njdoo7, there you go applying "common sense" to economics without really knowing about anything about it. Goods costing less can happen for a few reasons, but in the United States if good's cost less that means that someone in this world is losing money. That money loss that ripples down all the way to the consumer eventually.
It's about balance. A balance of profit increase, with consumer spending and wealth. Comment is buried, click here to see the rest.
catalysisAug 9, 2010
There is a reason why it's called a "spiral." If prices collapse, nobody can make money. Manufacturing stops and people stop producing or selling goods because they are essentially worthless.
avengingturnipAug 9, 2010
There is also something called 'stagflation' which popped up first during Jimmy Carter's presidency in which an economic slow down was accompanied by inflation. It gave the Keynesians fits at the time but they got over it and never re-examined their assumptions.
wjsalm3Aug 9, 2010
This is true. But no one is worried about inflation right now. Even the most "hawk-ish" of the Federal Reserve Banks:
http://www.npr.org/templates/story/story.php?storyId=128936438
Comment is buried, click here to see the rest.
linuxpersonAug 9, 2010
" It gave the Keynesians fits at the time but they got over it and never re-examined their assumptions."
Correction: it gave the Keynesians fits at the time so they blamed it on the "free market" and demanded more centrally planned control over the economy.
avengingturnipAug 9, 2010
Who is this nobody, wjsalm3?
http://www.nytimes.com/2010/02/17/business/economy/17fed.html
skipinatorAug 9, 2010
The first Gulf War happened in 1987.... good to know.
pw378Aug 9, 2010
Yeah, that was a WTF? for me as well.
dukeeeeyAug 9, 2010
"However, the collapse of the economy resulted in rampant inflation."
Err no, the only way you can get rampant inflation like that if the printing presses are running 24/7.Comment is buried, click here to see the rest.
snow2day4meAug 9, 2010
Why is this being dugg down? Inflation is simply caused by too much money chasing too few goods. Anyone who has studied US history can see that inflation began climbing rapidly when the US was taken off the gold standard which subsequently removed the natural spending barrier of the government, forcing the feds to do what everyone else does: you can't spend more than you make without going into debt.
Once this barrier was lifted, the US simply ordered the Fed to put more money into circulation (which, when an economy is growing, is necessary or you get deflation). The problem is that they are printing TOO much, hence dukeeey's reference to running the printing presses.
Unpleasant truths may make you want to digg someone down, but they don't change the facts of the matter.
wjsalm3Aug 9, 2010
I think your interpretation of the "facts" is different than ours.
snow2day4meAug 9, 2010
A simple Google search "cause of inflation" will give you a nice Wiki article.
http://en.wikipedia.org/wiki/Inflation#Causes
Both the Keynesian and Monetarist views show that the supply of money (I.E. how much is printed) is one of, if not the primary cause of inflation.
There is no interpretation needed in such a basic idea. If the total money supply of a nation doubles, yet the goods produced remains constant, then prices double since the relative value of each product being consumed/produced has increased due to the larger quantity of money chasing those goods. In a world economy, other factors contribute to inflation, but the underlying cause is still the same. Too much money flowing chasing too few goods.
In the example of the money supply doubling, let's assume one person held the newly doubled money in some vault and it never entered circulation. Then prices would remain constant. However, if he/she were to unload that new cash into the system, prices would go up undoubtedly.
This is what the Fed does on a daily basis. By printing more money, the Fed gets all of the benefits of the money while it retains value, and after a certain period of time, as it enters circulation, prices go up. The value of the goods remains relatively constant, but there are now more pieces of paper chasing the same quantity of goods.
Since you do not have the ability to print money, you are being "taxed" by having the value of your money diminished. I'll make it easy to educate yourself.
http://en.wikipedia.org/wiki/Inflation_tax
These are simple truths and facts, unpleasant as they may be.
greevarAug 9, 2010
It has nothing to do with how much currency is printed. The fact is, printed currency only makes up a small fraction of the money supply in America. The majority of our money supply exists in records. How can that be? Easy, the banks loan money that doesn't exist. They make loans out of nothing, essentially creating new money. All of the money in existence that has no physical currency to account for it was created by a bank when people signed for loans. You agree to borrow $1,000 and they just add the amount to your account. They didn't draw the money from other depositors nor from other sources of wealth. They just made it up on the spot. Now, there's $1,000 (actually more than that, because of fractional reserve) more in the economy and they didn't add any real wealth, they just made it cost more.
juankovoAug 9, 2010
Fiat currencies always fail. The USD will see its demise eventually.
gamerxr72Aug 9, 2010
I've always liked the quote of "Paper money eventually returns to its intrinsic value".
countess666Aug 9, 2010
while true why is that a problem?
by the time a 1 dollar bill is worth less then the paper its printed on, different bills will have long since been printed and the 1 dollar bill will no longer be in use.
your wages will have been increased to compensate and your savings will have accumulated interest to more the compensate for inflation.
the low and predictable amount of inflation associated with a fiat currency is preferable to the unpredictable, hard to control and susceptible to outside influences deflation intrinsic to a non-fiat currency.Comment is buried, click here to see the rest.
Closed AccountAug 9, 2010
The problem is there is no 'precious' substance abundant enough on earth to support the US Economy. Gold wouldn't work, since we'd have to obtain every piece of gold in or above the crust of the planet to get even close to our actual economic value.
Fiat currencies are almost necessary now.
stochioAug 9, 2010
Looking at the price of gold in the present and applying that to what would be needed to support the current level of economic activity is incorrect. You're treating a dynamic system as static. The price of gold, silver, platinum, etc would adjust to support its new role.
What you are doing is akin to saying we have $X of GDP today. If we increase taxes by Y%, then we will get $XY more in tax revenue, not realizing that $X will change as a result of Y. So, too, the price of gold would change.
orangerevelAug 9, 2010
If you artificially jack up the price of gold to beyond it's intrinsic value, guess what? You've just created a fiat currency made of gold.
juankovoAug 9, 2010
There can't be *not* enough of a "precious" substance, because the market will adjust to correct for that. If gold is too rare to serve as a general monetary backing, it will, to some degree, be replaced by other assets. I don't want to see a gold "standard", but the free and unrestricted right of people to use what they want to for money. The Federal Reserve has a monopoly on our money, and they are leaving us with Monopoly Money.
s73v3rAug 9, 2010
The US Constitution gives Congress the right to establish a monopoly on money. And so they delegated that to the Fed Reserve.
Closed AccountAug 9, 2010
The Federal Reserve bank isn't some sort of evil conspiracy like Ron Paul people make it out to be. It is our nation's central bank, and is under strict control of the executive branch of the government. The fact that it is 'privately owned' means essentially nothing in the long run. Every country has a central bank, and most of these central banks operate just like the Federal Reserve without issue. It's only when people who don't understand what the Fed actually does, and is paranoid that anything the government does is explicitly evil when we start to have problems.
vbullingerAug 9, 2010
"The US Constitution gives Congress the right to establish a monopoly on money. And so they delegated that to the Fed Reserve."
Really? Where? Article I, Section X, Clause V says:
The only thing that can be made legal tender in the US are gold and silver.
Nowhere does it say "The federal government can do whatever it wants, no matter how bad of an idea it is and we just have to take it right up the ass." In fact, the Constitution prohibits this. The Federal Reserve Act is unconstitutional.
How ridiculous is it to think that central banking isn't a profit-making venture? You think that's some strange conspiracy theory? You think Thomas Jefferson is a conspiracy theorist for being against it? Or Andrew Jackson? Or many of the founding fathers? Hence them putting it into the Constitution to prevent it?
Here's a quick primer:
http://video.google.com/videoplay?docid=-466210540567002553#Comment is buried, click here to see the rest.
Closed AccountAug 9, 2010
vbullinger, that prohibits the -states- from issuing their own currency.
That clause actually gives more power to the federal government, not take it away.
richmomzAug 9, 2010
I like the people that think the Euro will be any better though - always gives me a chuckle.
Remember kids, when it comes to cars and money, Fiat = Fail!
yangj08Aug 9, 2010
Depends on how strong the government backing it is. The HK$ is only backed by the US$. And yet, they seem to be doing perfectly well. The RMB is backed by nothing but the Chinese government. On the other hand, they're strong enough that the world mostly just sits there and listens to them dictate the exchange rate. ("mostly" because apparently enough pressure was applied to get them to let up a little)
wjsalm3Aug 9, 2010
The European currency isn't inherently fiat.
"The term derives from the Latin fiat, meaning "let it be done", as the money is established by government decree."
Not one government has control over their currency, they share it.
A true fiat currency is one that is wholly owned by a sole proprietor government. Other nations can peg to your currency, but you still control it. The European nations share control.
But yeah, keep using your useful jingles to solve economic problems. Comment is buried, click here to see the rest.
richmomzAug 9, 2010
The term has nothing to do with who controls the currency - only whether it has any intrinsic value or not.
countess666Aug 9, 2010
and you have a workable alternative to fiat?
a non fiat currency is far more susceptible to outside influences and manipulation.
no 1 precious metal can supply the amount of money needed.
increasing the price of said precious metal would make it useless for use in industry with all the effects that will cause.
a non-fiat currency will completely collapse if the supply of material it's based on is suddenly increased greatly.
at the end of this century we should be well on our way to mining asteroid. as soon as that happens the prices of metal. particularly the supply of precious metals will suddenly increase astronomically.
why switch to something we know is going to fail.
a fiat currency however will continue to loss a predictable ~2% of its value each year if some care it taken with its use.
no matter how little a dollar is worth in 100 years, it makes little difference. it will still loss 2% of its value each year.
your wages will have been adjusted you're savings will have accumulated interest to more then compensate, and unless something went really wrong with the world your buying-power will have most likely increased.Comment is buried, click here to see the rest.
vbullingerAug 9, 2010
^^ Countess: bimetallism. Gold and silver, as the Constitution mandates. f**king _M-A-N-D-A-T-E-S_. The Federal Reserve is unconstitutional. You can't horde silver, and even if you did, there'd be gold.
You have this irrational fear of non-fiat currency that is completely unfounded in thousands and thousands and thousands of years of history. And fiat money always, always, always fails. So what the Hell is in your head that makes you think otherwise?!?
Bimetallism worked in this country for over 100 years. Our currency held almost constant, with very little movement, usually caused by wars. As soon as we went to the gold standard, our currency started to slip. As soon as we went to a fiat currency, our currency began it's slide downward.
The dollar is now worth about 3 cents compard to what it was when the Federal Reserve got a hold of it. That means that it constantly loses value. Every time you put money away, every time you save money in a bank account, 401k, social security, sock drawer, mattress, etc. it LOSES VALUE EVERY SINGLE DAY! Every time you keep money in your pocket and don't spend it immediately, YOU ARE BEING ROBBED EVERY SINGLE DAY!
Don't you get this?!? Do you not see this?
countess666Aug 9, 2010
so your going to make 2 metals increase in value so much that they will be useless for industry. yes great.
and who gets to decide which ratio or gold and silver will be used? will that be set for life or renegotiable.
any gold or silver miner/mineral land owner will do whatever it takes too increase their ratio. so a flexible ratio means nothing has changed(money still subject to politics). and with a fixed ratio hoarding gold becomes viable again to influence prices.
"That means that it constantly loses value. Every time you put money away, every time you save money in a bank account"
no it doesn't, interest rates reflect the the fact we use a fiat currency. they are higher because of it.
you're buying power isn't decreased when your money is in the bank or the 401k or social security.
and you shouldn't put money in a sock or under the mattress anyway, that's just dumb.
the 401k and social security are effect by stock-market growth which has increased much more since the introduction a fiat currency then with the old gold standard. so has the average purchasing power btw.
"it LOSES VALUE EVERY SINGLE DAY!:"
yes a whopping 0,0054% on average. so when was the last time you carried 10,000 dollars in your pocket? well you lost ~50 cents that day. you would have made ~75 cents on a low interest savings account. much more on a proper one.
and during the gold standard the dollars value wasn't stable. it fluctuated wildly in the time scale of 2 decades from 100% of its 1790 value to 50% back up 100% and on to 130%. 3 such wild swings can be seen in the time scale of just 120 years.
a stable and controllable decline in its value (which is now a arbitrary number so far less influential) is far more desirable.Comment is buried, click here to see the rest.
canadianmacfanAug 9, 2010
That's a pretty easy thing to say. Given enough time everything fails. Ideas, people, countries, ecosystems, planets, suns, and even galaxies will go away given enough time. The real trick is in knowing when.
richmomzAug 9, 2010
Some things 'fail' faster than others though. On the monetary side of things, gold has functioned as a currency (either directly or indirectly) since the dawn of civilization. The longest a pure fiat currency has ever lasted by comparison was a couple of centuries (in medieval China I believe) and usually fail much sooner.
wjsalm3Aug 9, 2010
Why are people obsessed with Gold?
It could be f**king rocks. It doesn't matter. Gold's value is fake.
The entire gold standard argument predicates on the idea that Gold is inherently worth something without goverments giving it value, which is false. It's a shiny, colored rock.
richmomzAug 9, 2010
It doesn't *have* to be gold, it's just that it's the easiest example to give of a 'tangeable' currency (and by far the most widely used in history, along with silver).
Gold in fact does have value, for the same reason *anything* tangeable has value frankly - because lots of people find it desirable and are willing to "exchange" it for goods and services.
s73v3rAug 9, 2010
The only actual values gold has are its being shiny and pretty, and that it is useful as a conductor. That's about it.
greevarAug 9, 2010
All currency is fiat. The reason gold was used as currency was because most people agreed that it was acceptable as payment for goods. Salt was once considered a form of currency because people accepted it in trade for goods. Currency is merely what society agrees as acceptable for payment for goods and debts. For that matter, water could be currency if everyone agreed it was.
wjsalm3Aug 9, 2010
What's actually proven from history is that empires who use non-fiat currency always crumble. We are the first empire to use a fiat currency to the degree at which it is used today.
richmomzAug 9, 2010
It's true - throughout history switching to a pure fiat currency has been a sure sign that an empire/power has reached it's twilight years, and, depending on how long it can push that fiat on others, has roughly 50 years of economic life left before the SHTF, give or take a decade or two.
If someone wants to provide a historic example that proves this untrue I would be interested in hearing about it though.
wjsalm3Aug 9, 2010
I think you would be interested in reading this:
http://www.levyinstitute.org/pubs/wp_603.pdf
blatsekAug 9, 2010
This is when everyone in debt will be happy they can't control their money :D
greevarAug 9, 2010
All currency is fiat. What constitutes currency is the consensus of the people that a certain thing is valid for trade. Water could be currency if everyone agreed it was.Comment is buried, click here to see the rest.
juankovoAug 9, 2010
In the U.S., it is illegal to use anything but the USD for trade. Hardly the "consensus of the people".
greevarAug 9, 2010
You're going to try to tell me that I can't trade my car for other goods, like against the value of a new car? It's commonly accepted that a car can be used as payment for another car. If I had more than one car to trade, I'm sure I could find a dealer that would take them in trade for a new car. All that is required for a good to become a currency is that people agree to take it as payment. If the people wanted to trade water for goods, they can. You can't refuse the USD if offered as payment in the US, but you aren't required by law to refuse any other form of payment in favor of the dollar. Based on those facts, you're argument is invalid.
wjsalm3Aug 9, 2010
Most people want to apply "rationale" logic into their economic theory. They have little to no Economics knowledge and say things like "We need to balance the budget!" "This spending is out on control!" But in reality, as Keynes continually pointed out, the paradox of thrift is how capitalism thrives.
Too many people on Digg are self proclaimed Libertarians. That's why you hear so many people on here claiming that our government needs to spend less, not bailout wall street, etc. But they really don't understand Economics. They think they can read about an economic situation and apply "rationale logic" to it and frankly they don't know jack squat about it.
Just my opinion, at least.
andurilAug 9, 2010
I know. People don't think about compassion. Compassion is really equivalent to economics.
juankovoAug 9, 2010
That doesn't even make sense.
andurilAug 9, 2010
Maybe if you valued equality it would make more sense, Juan.
x9002Aug 9, 2010
Compassion is the measuring stick of philosophy majors and others who don't know anything about economics, but thinks they do.
stochioAug 9, 2010
"One of the great mistakes is to judge policies and programs by their intentions rather than their results."
--Milton Friedman
vbullingerAug 9, 2010
After anduril's first comment, I thought he was joking. I thought it was a bad trolling attempt. After his second comment, I realized he's just that dumb.
juankovoAug 9, 2010
Keynes was an idiot.
wjsalm3Aug 9, 2010
I don't really understand the compassion thing. Or the racism thing.
But Keynes definitely wasn't an idiot, and if you disagree with his ideas so be it. But clearly you have a theoretical disagreement with Keynes, fiat currency, and maybe the structure of our system. So I think we can agree to disagree.
vbullingerAug 9, 2010
I thumbed you up, Juan, but I'm of the assertion that he wasn't an idiot.
Keynes knew what his theories would do to an economy and welcomed it.
Closed AccountAug 9, 2010
People on digg seem to think economics is some sort of obvious easy thing, when it's about as obvious and easy as building a nuclear bomb from paperclips and camping lanterns.
There's a reason why economics degrees exist. It's because economics, particularly on a scale of 14 trillion dollars a year, isn't something the average schmuck should be left in charge of. So many diggers think they have the solution (cut spending), and have no idea just how deep the repercussions of blindly cutting spending wold have. We've got 300,000,000 people in this country, and every single one of them is reliant on government provided services to life. Cutting spending on the most vital things (which our right wing friends seem to want to do) would end in absolute chaos.
We've also got absolute crap as far as infrastructure, education, health care, etc... All because people want to cut government spending, but leave one or two sacred cows intact. The right won't let anybody cut military spending, even though we spend more than the rest of the world combined every year on it. If we cut our military budget in half, we wouldn't notice a difference, and we'd actually be able to fund stuff people actually need.
juankovoAug 9, 2010
Economics really isn't that complicated until you start mixing in a bunch of government interventions which distort the normal functioning of the free market, and/or you fall for a few basic fallacies like the Broken Window Fallacy.
wjsalm3Aug 9, 2010
The Broken Window theory is not related to this discussion.
And I won't ask why if Economics is so simple, why have we gone through so many fluxes of economic growth and decline. I know you will launch into some wild tale about conspiracy, idiots, and the elite class.
Closed AccountAug 9, 2010
A perfectly free market is perfectly free to be corrupt and monopolize. The government needs to impose strict regulations, otherwise companies will start selling mortgage packages designed to fail, pouring millions of gallons of oil into the ocean, and build megastores in tiny towns that effectively destroy all of the small business there is.
greevarAug 9, 2010
@ftc08
"A perfectly free market is perfectly free to be corrupt and monopolize. The government needs to impose strict regulations, otherwise companies will start selling mortgage packages designed to fail, pouring millions of gallons of oil into the ocean, and build megastores in tiny towns that effectively destroy all of the small business there is."
That will never happen. Oh wait...
I agree with your original post as well. There seems to be a severe lack of altruism in America. In fact, we seem to harbor an "every man for himself" mentality.
Americans don't want to pay for basic services for others like health care, but they think they're entitled to it themselves. If you want things like clean water, library books, health care, education, roads, and police/firefighters, you should be willing to share in the cost of maintaining these services for everyone who benefits from them. "But people try to abuse these services and that costs me more money!" So? I'd rather pay for the few that abuse the system, then not have these things at all. People are going to try to abuse anything they can, it's inevitable. We can make it fair as possible with laws that regulate their use, but we can't make it perfect. The alternative is handing over essential services to private entities that care more about profit than service. They're goal is to provide as little as possible for as much as they can get. That's why everything is made in China. Is that how you want your basic essential services handled folks?
stochioAug 9, 2010
Are you pretending that there are not different schools of thought? If so, it makes your statement quite ironic.
njdoo7Aug 9, 2010
So you're saying the science of economics should not be based on rational logic? And then move on to say people who use logic and reason in the field don't know squat...
No wonder you think keynes theories hold any weight.
greevarAug 9, 2010
Economics is completely irrational. The market is bound to the whims and emotions of those that trade goods on it. It's a science of trying to predict what people will do. There is no rationale to economics. If economics was an exact science like calculus, every economist would be filthy rich. This was the first thing I learned in my economics class.Comment is buried, click here to see the rest.
wjsalm3Aug 9, 2010
I'm saying your logic is faulty. You don't understand the system.
njdoo7Aug 9, 2010
I never stated my logic..please explain your position as it appears to be logic has no place in economics
Closed AccountAug 9, 2010
That 20th century graph about the United States is depressing as hell.
cyberdorkAug 9, 2010
It's not depressing at all. Considering that the Dollar needed 100 years to drop that low while other currencies needed just hours to drop to similar levels.
njdoo7Aug 9, 2010
Let us ignore the problem as long as others fail faster than us.
cyberdorkAug 9, 2010
You guys have been claiming since the 70s: "Just wait, the Dollar is about to collapse."
How long do we still have to wait? Another 40 years? Fine with me.
njdoo7Aug 9, 2010
First, I have only been alive since 1987..not sure what the basis of your first claim is:
Second, since 1970 the dollar has lost 80% of it's value. I guess this is a good thing in your book, as long as some other countries have lost more than 80%.
countess666Aug 9, 2010
why do you care that the dollar lost 80% of its value?
wages have adjusted upwards, and interest on savings more then made up for the difference.
the only difference is that the 'meaningless number' is higher. on average your spending-power has only increased.
greevarAug 9, 2010
@Countess666
That's just it, wages have not adjusted with inflation and interest on savings almost never outstrips inflation. Interest on savings is typically 1 to 2 percent. Inflation has been around 3 to 4 percent per year over the past 10 years. That means that you've lost 2 to 3 percent of the value of your savings per year that it sits in the bank. If you have $10,000 in the bank at the 1 percent interest, you'll have over $11,000 in ten years, but that $11,000 is worth less now, than the 10,000 was worth ten years prior.
vbullingerAug 9, 2010
^^ Why do I care if the dollar loses value? If you try to save anything, the value of your savings drops, thus you get robbed. Literally robbed. New dollars are printed, backed by nothing, and the current money supply is devalued. Every dollar in your pocket is now worth less. Over your lifetime, the currency will drop by 50+%. Horrible. Even worse: you think that's a good thing.Comment is buried, click here to see the rest.
countess666Aug 9, 2010
@ greevar : i dont know where you save but I'd find a different bank.
i can get 4.5% on a 10 year account, 4% on a 5 year account.
and the last 10 years of inflation are influenced by bush who deliberately lowered the value of the dollar in a attempt to stimulate exports.
3-4% is exceptionally high historically speaking. 2, 2.5% is a far better average.
"wages have not adjusted with inflation"
only minimum wages are not inflation adjusted automatically (which is a mistake) but all the rest, on average, has.
http://www.dailyfinance.com/story/the-wages-of-recession-average-2010-raise-will-barely-cover-inf/19351004/
here its news that wage increases only barely keep up with inflation during a recession.
it wouldn't be news if what you say is true.
doctechnicalAug 9, 2010
The good news is I'm a billionaire. The bad news is, only in Zimbabwe.
gamerxr72Aug 9, 2010
People actually take advantage of situations like that to purchase foreign services on the cheap and sell the resulting product back to their own country for a large bonus.
If you had the knowledge on how to do so, you really could become a billionaire.
s73v3rAug 9, 2010
The Good News is that most chicks who care about that thing won't know why that's a bad thing.
oneilcoolAug 9, 2010
They basically said that 90% of the world has the "worst inflation" which doesn't make sense. When you include Zimbabwe, Asia, Europe, South America, The United States (The third biggest Country in the world after China and India, both covered under Asia). What's left? The rest of the countries in Africa, Mexico, and Canada? They must have really good inflation.
richmomzAug 9, 2010
The fact is that most of the world really *is* screwed inflation-wise, since just about everyone moved to a full-fiat currency system (that is, currencies that have no tangeable value basis).
nolibertiesAug 9, 2010
Doesn't matter what their base is. It only maters what you can buy with your currency and how it is valued vs other world currencies.
richmomzAug 9, 2010
That's the point NoLibs - the currency may have value now but without a sound basis the possibility exists that the underlying value could very quickly evaporate during a monetary crisis.
govtdoesnotworkAug 9, 2010
http://research.stlouisfed.org/fred2/graph/?chart_type=line&width=1000&height=600&preserve_ratio=true&s[1][id]=AMBNS
What could possibly go wrong?
countess666Aug 9, 2010
not a whole lot.
all the dollars printed by the fed are backed by world wide oil demand. that created a huge world wide demand for dollars. the fed needs to print dollars to prevent huge deflation in fact.
because of the high oil price's, a short time increase in the amount of dollars printed will do little for its value.
as long as oil is only trade in dollars, America has a licence to print money. enjoy it while it lasts.Comment is buried, click here to see the rest.
vbullingerAug 9, 2010
^^ What happens as the world moves away from the dollar as the only currency that it will accept for oil, as they're currently doing? Iran switched to euros, as is (did?) Venezuela. Those are two huge reasons why the value of the dollar is tanking, and will not recover.
Oh, very conveniently, we're going to go to war with both of those countries in the relatively near future. Serves them right for hurting our dollar, huh?
* I don't actually think it's a good idea to go to war with Iran or Venezuela *
wjsalm3Aug 9, 2010
I don't really understand the compassion thing. Or the racism thing.
But Keynes definitely wasn't an idiot, and if you disagree with his ideas so be it. But clearly you have a theoretical disagreement with Keynes, fiat currency, and maybe the structure of our system. So I think we can agree to disagree.
dusanmalAug 9, 2010
Zimbabwe - take from rich to give to the poor
Europe - Spend into huge deficits
S.America - Borrow like there is no end
....
Obama - take from rich to give to the poor and spend into huge deficits and borrow like there is no endComment is buried, click here to see the rest.
theworldisflatAug 9, 2010
Please take your fail statements elsewhere kiddo.
yangj08Aug 9, 2010
Except that with China all but pegging its currency to the US$ (and officially pegging the HK$ to the US$) they have a reason to not let it collapse either.
greevarAug 9, 2010
Right, because no one in government was doing that before he came to office.
edwarddouglasAug 9, 2010
A run on banks is what caused most of those problems to go from bad to horrible.
juliusthecatAug 9, 2010
This account has been closed by the user
x9002Aug 9, 2010
I hate it when people who don't understand economics talk about economics. Well not so much talk about it as state Normative "facts" and pass them off as Positive facts.
richmomzAug 9, 2010
The problem is that the people who allegedly do "understand economics" have been completely inept at forecasting our recent problems or effectively dealing with them, so some public scrutiny and commentary on their abilities is warranted I think.Comment is buried, click here to see the rest.
richmomzAug 9, 2010
I think a logarithmic inflation graph would have been more telling - going from $5 to $1 is just as bad on a percentage value loss as from $20 to $10, but the graph doesn't reflect that.Comment is buried, click here to see the rest.
nolibertiesAug 9, 2010
We call that lying with numbers. or in this case graphs. Just keep looking until you find one that proves YOUR point.
richmomzAug 9, 2010
I take it economics and statistics aren't your strong point. Logarithmic graphs are commonly used for things like stock prices so people can see at a glance how prices change on a percentage basis...
But as a big stock expert and econ PhD you already knew all that, right? /sComment is buried, click here to see the rest.
nolibertiesAug 9, 2010
Graphs are used for comparisons. Or they are used to look at possible future extensions. They do not prove things.
richmomzAug 9, 2010
Uh, yes - that's the whole *point* in using a logarithmic graph, so you can "compare" the percentage change in something over time.
Closed AccountAug 9, 2010
Okay hopefully this will not be poorly written out, and someone can help. I am freely admitting money, economics and math are my very weakest attributes. I do not understand how inflation/deflation works with the value of money and am hoping someone can explain it it a way I might understand. As I understand it, the more money that is printed the lower the value of the currency becomes.. however this does not help me understand WHY. Who put the rule in place that there is a set amount of $1 bills in rotation, and if there is more, it is now worth (an example) 75¢. How is it decided that if i print 10 more dollars .. it is no longer worth a dollar? I know this all has something to do with going away from the gold standard, but I don't fully understand that either beyond having something to turn your money in for because gold was considered valuable.
*sigh* Well hopefully I won't get buried into oblivion without an answer, the google answers I found made my head spin
richmomzAug 9, 2010
"I do not understand how inflation/deflation works with the value of money and am hoping someone can explain it it a way I might understand."
A lot of people don't understand the concept (or have a totally warped misconception, like thinking inflation is directly tied to certain asset prices), so don't feel bad.
Inflation/deflation is simply a measure of the relative value of the currency supply over time. A net increase in the currency supply over goods/services in circulation results in inflation, and the inverse causes deflation. A popular misconception is that a price change in a specific good or service (say gasolene for example) is tied to inflation, when in fact its usually just a result of supply/demand fluxuations in that specific good/service. The only way to accurately measure inflation is to measure it against *all* goods and services (something which government CPI statistics don't do, resulting in a typically under-reported inflation rate).
That's my 2 cents on the matter - I'm sure someone else can explain further. Comment is buried, click here to see the rest.
nolibertiesAug 9, 2010
Not to the average person on the street. Inflation/deflation is the rise or fall in their cost of living. The other stuff is technical bulls**t!
wjsalm3Aug 9, 2010
RichMomz is right.
It's not the interpretation of inflation which people disagree on. It's the problems of inflation, or the opposite, deflation, which causes arguments.
omgwtflawlAug 9, 2010
Inflation is simply a general rise in the price of goods and services. Deflation is a fall in the price of goods and services. There can be many causes of inflation or deflation, the supply of money expanding or contracting is only one of those causes.
richmomzAug 9, 2010
Specifically there are only two things that can influence inflation/deflation - fluctuation in the monetary supply, or fluctuation in the supply of general goods/services available. There can be many sub-causes which influence either of those factors, but that's the basic nuts-and-bolts about how inflation/deflation works.
Closed AccountAug 9, 2010
OKay, so i get the rise and fall of prices and money. I guess what i'm asking for is an explanation fo the nuts and bolts of the process..the WHY
In goods and services it is about supply and demand
when demand is high but the amount of product is low.. the price goes up
when demand is low but the amount of product is high.. the price goes down
However there is also the amount that the consumer is willing to pay which gets taken into effect, as a product cannot be priced higher than the market will bear (okay I might be over-reaching here, did i get all that right?)
But when it comes to money.. supply and demand don't seem to factor into it as far as i can see.. as we have a lot of money in supply.. but the demand for said money is higher.. so if money works on the supply/demand premise.. shouldn't the value of the dollar be high right now?
wjsalm3Aug 9, 2010
Money's supply and demand is similar to.
If you have made too much money (money isn't made anymore, we use credit and debt) than it's not worth anything because everyone has it.
If you make too little, than obviously no one has it and goods become impossible to buy and etc etc.
The value of the dollar is something that can be argued. Like I would argue that the value of the dollar is more inherent than not, whereas (and someone correct me if I'm wrong) RichMomz would argue that over-producing the dollar at this moment would create a drop in it's worth.
Closed AccountAug 9, 2010
Anybody who is screaming for Obama's head on a silver platter should look at this, look around them, and realize even with a president who is black, they've got it pretty damn good.
nolibertiesAug 9, 2010
Good point. many of these idiots think we are in a depression. That's because they have no idea what a depression is. And they probably don't know anyone who has lived through one. Today's generation is a spoiled bunch of whiners.
richmomzAug 9, 2010
It's too early to pass judgment on this administration, but I'm pretty certain that the inflation curve is going to take another dive before long (not due to Obama per say, but because of pre-existing problems that have been manifesting for decades that nobody has dealt with, such as a privately-owned and controlled Federal Reserve setting monetary policy with no public oversight).Comment is buried, click here to see the rest.
nolibertiesAug 9, 2010
Oh my, not the inflation curve. I heard two woman discussing the inflation curve at the grocery store the other day. They were extremely concern about it. /sComment is buried, click here to see the rest.
wjsalm3Aug 9, 2010
I dugg up RichMomz because we should always be concerned about the inflation curve. I disagree about what may happen, but that doesn't mean we should toss it out the window.
leepiiAug 9, 2010
Reality time. Peanut Butter has tripled in cost in the last 4 years. Flour, doubled. Rice up 20%. I recorded the prices of 10 basic items we shop for everyday 4 years ago, inflation is considerably higher than any government shill claims. I see just how little food I am putting into our shopping cart compared to just 4 years ago.
Comment is buried, click here to see the rest.
kamakazitpAug 9, 2010
the $1 double cheeseburger at McDonald's is still the same price....
remingtonhAug 9, 2010
yeah really what's up with that? I was watching 1980s commercials on youtube and fast food prices havn't changed.
greevarAug 9, 2010
It is a bad thing. The food McDonald's is selling came from heavily subsidized crops and factory farms. The reason their food is so cheap is because we paid the remainder of the cost through taxes. Don't ever assume the price you pay at the checkout is the whole cost. If it's seems too cheap, you're paying for it somewhere else.
joemanmanAug 9, 2010
Really? You recorded that information for 4 years? As like a hobby?
Closed AccountAug 9, 2010
Coming to the US really soon!
Gary Johnson 2012
wjsalm3Aug 9, 2010
No one is pretending that contrary opinions do not exist. However, I think what both ftc08 and I were speaking about was a growing thought that economics is simple and that its as easy as balancing a check book, or a credit card. WE believe this growing opinion is hurting this country's ability to manage the fiscal crisis we are enveloped in currently.
Whether you think Keynesian spending, or some Chicago school of thought is the correct answer, all economists should strive to remind the world that the Glenn Beck's and Rachael Maddow's of the world don't really know diddly about the economy and how it works.
(I picked two opposing "journalists". not a political commentary.)
vbullingerAug 9, 2010
It's simple enough that any reasonably intelligent person can figure it out.
We shouldn't just "trust the experts" that got us into this mess and assume they're altruistic and won't abuse their power, as history shows us that they always, always, always will do.
Always. Emphasis on always.
wjsalm3Aug 9, 2010
\What is logical for an individual, is illogical for the system in capitalism.
That is what I am saying. So while something may be seem logical to you, an easy fix. It is a science that has different and complex models that you seem to lack any grasp of.
oninboninAug 9, 2010
"During the American Civil War, the Confederate States issued their own currency and that caused the Lerner Commodity Price Index for leading cities in the eastern Confederacy to increase from 100 to over 9,000" <---------
donkzAug 9, 2010
This is all pretty cool on paper, when when i watched russian ruble fall 400% against USD --overnight--, that was some scary s**t. Aftermath followed: financial crash, poverty, deficits, killings, suicides....
libertyfrogAug 9, 2010
"When most of us think of inflation, we see it as a minor annoyance that has caused prices to rise, slowly, over the 20th century." If this statement is accurate then this country is f**ked.
wjsalm3Aug 9, 2010
I didn't mean like some chicago school i don't know to name, i just forgot what to call it. The U of Chicago thought is similar to Austria, which is indeed, needed to balance Keynes.
And I think it's fair to say that people in power abuse that power, historically. But I think the academics are more trustworthy than the politicians. However, we should be critical and scrutinize everyone.
and I disagree that anyone can figure it out, i think the general principles yes, but even those have complex subtlies and what not. More importantly, I guess I think there is a level of ignorance on the basic thoughts of economics and people STILL think they can contribute to the conversation.
But I am a keynesian and therefore a part of me is an elitist, and I am obviously a bit bias.