patrick.net
An Antidote to Corporate Media
1,193,722 comments by 13,881 users - HeadSet, stfu online now
Saved By Landlord-Warden, only $7 more! ( was: ..rent increase)
invite response
2015 Jul 30, 4:11pm 35,563 views 73 comments
« First « Previous Comments 35 - 73 of 73 Search these comments
indigenous
2015 Aug 2, 7:44pm
Inequality is not a byproduct of inflation. This should be obvious as inflation has been at very low levels for decades while inequality has been increasing.
Not so look at RE and the Stock Market
btw--what's the problem with 2% inflation, anyway?
Compounding interest to the point that the dollar is worth 4 cents in 1913 money. Now you will say that wages adjust, but not instantly or in the case we have today of not for 6 years. This is very regressive.
Gold standard would make offshoring worse--fyi, the exchange rate is already determined by the market.
Not so it is determined by central banks
As are interest rates.
Also central banks
ubbles, by definition, are not rational, and can happen under strict or loose monetary controls.
And they always follow loose monetary policy.
Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.
Deflation increases the value of ones wages
There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.
It is the ONLY real solution
indigenous
2015 Aug 2, 7:55pm
Muttley no matter how many times I say it you still hold up your stupid graphs and claim they show what ever you pull out of your ass.
The basic problem once again is that you are trying to apply the empirical method to something that does not lend itself to the scientific method.
IOWs graphs do not show context.
tatupu70
2015 Aug 3, 5:42am
We have had 4 trillion injected into the economy over the last 6 years, yet the velocity of money is at all time lows. Greenspan made a lot of money available for housing starting in 2000 and it didn't show up/ cause a problem until 2007
The housing bubble was caused by deregulation and outright fraud. Not low interest rates.indigenous says
Inequality is not a byproduct of inflation. This should be obvious as inflation has been at very low levels for decades while inequality has been increasing.
Not so look at RE and the Stock Market
I don't know of any measure of inflation that includes assets. Regardless, stock market gains reflect increasing profits and cash flow at corporations. RE reflects a lack of supply.
Gold standard would make offshoring worse--fyi, the exchange rate is already determined by the market.
Not so it is determined by central banks
If you don't know basic facts, you really shouldn't post here. You're never heard of the Forex market?
https://en.wikipedia.org/wiki/Foreign_exchange_market
As are interest rates.
Also central banks
Wrong again. Seriously--this is very basic stuff. The fact that you have no clue about fundamental economic activity should be eye-opening for you.
https://en.wikipedia.org/wiki/Libor
ubbles, by definition, are not rational, and can happen under strict or loose monetary controls.
And they always follow loose monetary policy
Really? Can you support this thesis?
Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.
Deflation increases the value of ones wages
Assuming your wages stay the same. Which would most likely NOT be the case. Real wages tend to perform better under low inflation than under deflation historically.
There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.
It is the ONLY real solution
Except it failed every time it's been tried.
tatupu70
2015 Aug 3, 7:23am
I don't know
That's just another day here at Patnet with you!
Do you ever post anything useful?
indigenous
2015 Aug 3, 9:50am
The housing bubble was caused by deregulation and outright fraud. Not low interest rates.
Another example of the empirical method.
indigenous
2015 Aug 3, 9:53am
I don't know of any measure of inflation that includes assets. Regardless, stock market gains reflect increasing profits and cash flow at corporations. RE reflects a lack of supply.
Telling...
If you don't know basic facts, you really shouldn't post here. You're never heard of the Forex market?
Back at ya
Wrong again. Seriously--this is very basic stuff. The fact that you have no clue about fundamental economic activity should be eye-opening for you.
Wow
Assuming your wages stay the same. Which would most likely NOT be the case. Real wages tend to perform better under low inflation than under deflation historically.
As in today's dollar will buy 4 cents in 1912 goods?
tatupu70
2015 Aug 3, 10:11am
As in today's dollar will buy 4 cents in 1912 goods?
Yep, and productivity gains have allowed today's wages and salaries to substantially outgain inflation.
Inflation is a distraction. If productivity is increasing, the economy is fine. Like I said previously--real wages seem to do better under low to moderate inflation then under deflation.
The breakdown of Bretton-Woods and turning the USD into pure fiat money led directly to:
1. immediate massive inflation in the 1970's;
2. as the banksters controlled inflation and deflation, they massively benefited the big banks themselves at the expense of the rest of the economy; financial industry profit rose from around 10% of total corporate profit back then to nearly half of total corporate profit in recent cycle peaks.
3. exacerbate wealth inequality as personal connections with the banksters make CEO's far more valuable than workers
You're still posting this nonsense?
No. They are facts, unlike your nonsense.
1. Banks are more profitable because of deregulation.
Really? Has the airline industry become massively more profitable after deregulation? Has Uber undermining taxi regulations led to massive profit increase in the taxi industry? What counter-factual planet do you live on? Deregulation does not automatically lead to higher profitability in any industry. It is the heads they win, tail everyone else lose system unique to the financial industry under fiat money system that makes uncontrolled gambling highly profitable. Otherwise, deregulation would just lead to more fierce competition (i.e. reducing profitability for the industry, just like the airline industry after deregulation) and more chances for the banksters either go bankrupt or unable to collect winnings from bankrupt counter-parties, unlike their ability to collect fake winnings from the taxpayers under the fiat money system.
Why do you think they have to spend so much on lobbying?
Because the banking industry is one of the most regulated industries, therefore influencing regulatory details and how regulations are carried out is a big stakes game.
2. Each time you come up with a different reason for increasing wealth disparity, they get more and more ridiculous.
This is not the first time, or even the second time, that I pointed out the fiat money system is a leading force increasing wealth disparity. So your fake surprise is not convincing.
Please give me an real life example of how a CEO's connections to bankers is worth tens of millions/year.
Are you really that dumb as not to recognize the importance of business connections? and how business connections veer into a grey area when it is connections to regulators? Do you really need an explanation on the difference between Goldman Sachs boss vs. the bosses of Lehman and Bear Sterns? Goldman Sachs was the pioneer in encouraging its alums into key government positions; one of the methods it pioneered was rapid vesting of unvested shares and options often worth tens of millions if the person takes a government position (presumably will subsequently make policy choices beneficial to Goldman Sachs). Here are a couple lists of some Goldman alums:
http://www.forbes.com/2007/01/10/treasury-governor-global-business-cz_nw_0111goldman_slide.html
I don't know of any measure of inflation that includes assets.
That's because you are clueless. Asset inflation is very real, and one of the primary drivers behind wealth disparity. The have's have more assets, whereas the have-not's don't have enough exposure to assets. When the artificially low interest rate drives up asset inflation, it disproportionately benefit the have's at the expense of the have-not-and-waiting-to-buy. As a patnet reader, you should be familiar with this, unless you are truly clueless or just a paid shill.
Regardless, stock market gains reflect increasing profits and cash flow at corporations. RE reflects a lack of supply.
Either utter nonsense or pointless distraction. Both stock prices and RE prices are heavily influenced by the interest rate when calculating the present cash value of a future stream of cash flow.
Inequality is not a byproduct of inflation.
Inequality is fundamentally a natural human condition: human beings would never have evolved if our female ancestors were non-discriminating and faced men that were all exact equals. However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.
This should be obvious as inflation has been at very low levels for decades while inequality has been increasing.
The real inflation rate, when taken into account asset inflation, has not been "very low." The asset inflation caused by the artificially low interest rate imposed by the FED is exacerbating the inequality.
btw--what's the problem with 2% inflation, anyway?
Are you trying to copy Milton Friedman? He advocated abolishing humans from running the central bank, and let computers keep money supply growth rate at 2% constantly. That has not been the world that we live in. The FED officials have been causing fluctuating inflation rate, not a constant 2%.
Gold standard would make offshoring worse--
Why? Gold standard would slowed down unbalanced trade simply due to depletion of gold on one side of a trade partnership.
fyi, the exchange rate is already determined by the market. As are interest rates.
A fiat currency is not a naturally occurring phenomenon. Exchange rates and interest rates are determined/influenced by how much the central banks are printing the particular fiat currency.
Bubbles, by definition, are not rational, and can happen under strict or loose monetary controls.
Almost all financial bubbles took place under a loose money regime, where money and credits were rapidly created to excess.
Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.
Why? Do you not understand that employment, living conditions and productivity gains are all results of trade? (reference The Wealth of Nations if you want to quibble about this point). Why do you think a sound money would inhibit trade whereas a debasing money would facilitate trade?
There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.
Every ruling clique has abandoned the gold standard because fiat money is a handy tool for expropriating the working and productive man. If the ruling class can get away with tyranny, it of course would, including monetary tyranny. Sound money is simply a check on the tyranny by the ruling class.
However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.
Every ruling clique has abandoned the gold standard because fiat money is a handy tool for expropriating the working and productive man. If the ruling class can get away with tyranny, it of course would, including monetary tyranny. Sound money is simply a check on the tyranny by the ruling class.
Yep.
tatupu70
2015 Aug 4, 5:05am
Has the airline industry become massively more profitable after deregulation?
Not sure how that's relevant as we're talking about the banking industry. I hope you don't think all regulation is the same--that is pretty small minded. Deregulation didn't lead to more competition in banking, it led to less. Removing Glass Steagall led to massive mergers and less competition. Which led to higher profits and a lot of fraud.
This is not the first time, or even the second time, that I pointed out the fiat money system is a leading force increasing wealth disparity. So your fake surprise is not convincing.
But each time you give a slightly different take on it. This time it's access to bankers. .
Are you really that dumb as not to recognize the importance of business connections?
Business connections sure. But, business connections are important under any monetary scheme. And that's not what you said. Further, you didn't answer my questions. Give me a concrete example of how access to bankers makes a CEO worth millions more than a guy without inside access to the bankers. Not how Goldman Sachs gets its employees government jobs--that's an entirely different discussion.
tatupu70
2015 Aug 4, 5:17am
I don't know of any measure of inflation that includes assets.
That's because you are clueless. Asset inflation is very real, and one of the primary drivers behind wealth disparity. The have's have more assets, whereas the have-not's don't have enough exposure to assets. When the artificially low interest rate drives up asset inflation, it disproportionately benefit the have's at the expense of the have-not-and-waiting-to-buy. As a patnet reader, you should be familiar with this, unless you are truly clueless or just a paid shill.
You're hilarious. I didn't say that assets never go up in value, idiot. I said there are no measures of inflation that include assets.
Assets rising in value is a symptom of wealth disparity--not a cause. As a pat.net reader, I am familiar with your nonsense about artificially low interest rates. Low rates are another symptom of high wealth disparity, not because of the Federal Reserve.
tatupu70
2015 Aug 4, 5:27am
Inequality is fundamentally a natural human condition: human beings would never have evolved if our female ancestors were non-discriminating and faced men that were all exact equals. However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.
Thanks for the history lesson. Nobody is arguing for complete equality. The second sentence is more of your usual BS. Inflation is a distraction.
The real inflation rate, when taken into account asset inflation, has not been "very low." The asset inflation caused by the artificially low interest rate imposed by the FED is exacerbating the inequality.
There is no "real" inflation rate that includes assets. Assets have been rising because of high wealth disparity--it's not the cause.
Are you trying to copy Milton Friedman? He advocated abolishing humans from running the central bank, and let computers keep money supply growth rate at 2% constantly. That has not been the world that we live in. The FED officials have been causing fluctuating inflation rate, not a constant 2%.
Huh? Just asking the "inflation is bad" crowd why low to moderate inflation is bad.
A fiat currency is not a naturally occurring phenomenon. Exchange rates and interest rates are determined/influenced by how much the central banks are printing the particular fiat currency.
No kidding. Your buddy indigenous claimed that the central banks sets the exchange rate. Which is obviously incorrect.
As in today's dollar will buy 4 cents in 1912 goods?
and the average daily wage of $1.33 in 1912 will buy how much goods in 2015? Average wages across all industries were 400 a year in 1900 and 39000 a year 2010. On a six days a week the average daily wage was 1.33 in 1900. A pound of butter was .25 so you could buy 5 lbs of butter with a days wage. On a 5 day work week in 2010 the daily wage is 156.00. Butter is say 4.00 in 2010 and that's generous. So an average worker in 2010 could buy 40 lbs of butter with a days wage. These number hold for pretty much any food staple. Want to look at manufactured goods? Price of a bicycle in 1900 was16.00 or 12 days wages. Today a good bike is $300 or 2 days wages.
Yea, life was grand 100 years ago with that gold standard thing going on. It's really too bad you don't understand that money in and of itself has no meaning, it's only value is to represent goods and services.
That's because you are clueless. Asset inflation is very real, and one of the primary drivers behind wealth disparity. The have's have more assets, whereas the have-not's don't have enough exposure to assets. When the artificially low interest rate drives up asset inflation, it disproportionately benefit the have's at the expense of the have-not-and-waiting-to-buy. As a patnet reader, you should be familiar with this, unless you are truly clueless or just a paid shill.
You're hilarious. I didn't say that assets never go up in value, idiot. I said there are no measures of inflation that include assets.
You are only proving the fallacy in your school of economics in defining inflation as survey price of a bureaucratically chosen sampling of consumer goods.
Asset price inflation is very well reflected when inflation is defined by money supply.
Asset price inflation not being included in "government price inflation" led directly to the 1920's bubble as the FED was not seeing the monetary inflation when it focused on consumer price inflation while willfully ignored asset price inflation that brought a windfall to the wealthy. The result of continuous FED stimulation was the crash that led to the Great Depression. Focusing on consumer price inflation alone while ignoring asset price inflation makes the FED bureaucratic monopoly on money all the more susceptible to bubbles and busts . . . perhaps by design! Bubbles and busts are highly profitable to the insiders who can take profit from bubble then short the bubble and have the government forcing taxpayers to pay up for what the counter-party would be unable to pay. Both the bubble and bust are highly profitable to insiders like Goldman Sachs.
Assets rising in value is a symptom of wealth disparity--not a cause. As a pat.net reader, I am familiar with your nonsense about artificially low interest rates. Low rates are another symptom of high wealth disparity, not because of the Federal Reserve.
Of course asset price inflation is highly beneficial to the have's. Federal Reserve is in the business of suppressing interest rates; in fact, its primary business! Low rates enable governments to borrow more in the name of the taxpayers and give the proceeds from the borrowing to insiders via government contracts and "bailouts," further exacerbating wealth disparity. Low rates also enable the insiders to gamble at higher leverage at lower interest rate.
tatupu70
2015 Aug 4, 2:04pm
You are only proving the fallacy in your school of economics in defining inflation as survey price of a bureaucratically chosen sampling of consumer goods.
Nope--the purpose of CPI and other inflation definitions is to gauge the impact of rising prices. If my Van Gogh painting goes up in value by $10K, it has zero impact on my weekly expenses. Same with my stock portfolio. Even if the price of the Van Gogh is going up due to money supply, restricting money isn't the answer. Redistributing wealth is.
Asset price inflation not being included in "government price inflation" led directly to the 1920's bubble as the FED was not seeing the monetary inflation when it focused on consumer price inflation while willfully ignored asset price inflation that brought a windfall to the wealthy.
Hardly. The problem was inequality-just like now.
Of course asset price inflation is highly beneficial to the have's. Federal Reserve is in the business of suppressing interest rates; in fact, its primary business! Low rates enable governments to borrow more in the name of the taxpayers and give the proceeds from the borrowing to insiders via government contracts and "bailouts," further exacerbating wealth disparity. Low rates also enable the insiders to gamble at higher leverage at lower interest rate.
The Federal Reserve is in the process of monitoring money supply to create conditions of full employment and low inflation. It only appears that they want low rates now because of the wealth inequality. The economy can hardly function so all they can do to keep it out of recession/depression is to keep a loose monetary policy. The rest of your post is nonsense. Low rates allow everyone to "gamble" at market rates. Bailouts are irrelevant and have nothing to do with the discussion at hand.
Inequality is fundamentally a natural human condition: human beings would never have evolved if our female ancestors were non-discriminating and faced men that were all exact equals. However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.
Thanks for the history lesson. Nobody is arguing for complete equality. The second sentence is more of your usual BS. Inflation is a distraction.
Inflation is a process whereby those who get the new money first reap the benefit of spending new money against old prices, at the expense of those who get the money later who have to spend against new higher prices before the new money arrives in their hands. It's a flow scam benefiting the cronies at the expense of the rest of the society.
The real inflation rate, when taken into account asset inflation, has not been "very low." The asset inflation caused by the artificially low interest rate imposed by the FED is exacerbating the inequality.
There is no "real" inflation rate that includes assets. Assets have been rising because of high wealth disparity--it's not the cause.
Your definition of "inflation" by focusing on consumer price alone has led to wrong monetary policies numerous times, because consumer price inflation is not the complete picture on inflation. People can put new money towards anything they want. In order to see the whole picture, you have to count asset price inflation along with consumer price inflation and producer price inflation (for intermediate goods).
Asset rising is not caused by wealth disparity but caused by decreasing interest rate: lower interest rate makes the present value of a future cash stream higher. It's just like a 10year coupon bond would be worth more at present if interest rate is higher; the coupon bond still pays out the exact same amount of coupon at each period, there is no increase or change in future wealth created. However, when the interest rate is lower, the present cash value is higher. Fairly simple math and accounting, none of which you seem to understand.
Are you trying to copy Milton Friedman? He advocated abolishing humans from running the central bank, and let computers keep money supply growth rate at 2% constantly. That has not been the world that we live in. The FED officials have been causing fluctuating inflation rate, not a constant 2%.
Huh? Just asking the "inflation is bad" crowd why low to moderate inflation is bad.
"Low to moderate inflation" is subjective. Government officials managing and creating inflation is what makes inflation bad: because government officials are human beings too, and they have friends and families who can benefit from the new money at the expense of the rest of the society who receive the new money later. Inflation created by government is not exactly carried out by burying random jars of cash to be discovered, like John Maynard Keynes suggested. In fact, mineral gold under gold standard is actually somewhat like the randomly buried jars of cash recommended by Keynes. LOL!
A fiat currency is not a naturally occurring phenomenon. Exchange rates and interest rates are determined/influenced by how much the central banks are printing the particular fiat currency.
No kidding. Your buddy indigenous claimed that the central banks sets the exchange rate. Which is obviously incorrect.
Many (most) central banks have "target rates" for both exchange rates and interest rates: they approximate/achieve those targets by pulling on the levers of money creation.
You are only proving the fallacy in your school of economics in defining inflation as survey price of a bureaucratically chosen sampling of consumer goods.
Nope--the purpose of CPI and other inflation definitions is to gauge the impact of rising prices. If my Van Gogh painting goes up in value by $10K, it has zero impact on my weekly expenses. Same with my stock portfolio. Even if the price of the Van Gogh is going up due to money supply, restricting money isn't the answer. Redistributing wealth is.
Utter nonsense. You are repeating the exact same mistake that the FED made in the 1920's, and again in the 1990's: the FED focused on consumer price inflation and allegedly not seeing any, therefore allowed for all sorts of stimulative monetary policies despite obvious rising asset prices, eventually leading to massive bubble and crash!
The purpose of measuring inflation is to estimate money supply conditions in the economy, because money supply is what the central bankers have influence/control over. The idea that CPI is the full picture for inflation has repeatedly proven to be wrong, repeatedly leading to disasterous monetary policies, that massively enrich the wealth and then plunge the whole economy into depression to be paid for by the rest of the society. Perhaps, that is precisely the purpose of wannabe central planners using CPI as stand-in for real inflation!
tatupu70
2015 Aug 4, 2:12pm
Inflation is a process whereby those who get the new money first reap the benefit of spending new money against old prices, at the expense of those who get the money later who have to spend against new higher prices before the new money arrives in their hands. It's a flow scam benefiting the cronies at the expense of the rest of the society.
Bullshit. Please explain to me how anyone "gets the new money first" How does that process work? Is there a line at the Federal Reserve where I can go to get the new money? Or do you have to work at Goldman Sachs to get in that line?
Asset rising is not caused by wealth disparity but caused by decreasing interest rate: lower interest rate makes the present value of a future cash stream higher. It's just like a 10year coupon bond would be worth more at present if interest rate is higher; the coupon bond still pays out the exact same amount of coupon at each period, there is no increase or change in future wealth created. However, when the interest rate is lower, the present cash value is higher. Fairly simple math and accounting, none of which you seem to understand.
Nope--the main cause is wealth disparity. Rich save a much higher percentage of their marginal increase than do the poor. So, as wealth disparity increases, assets get bid up as money goes from the poor and middle class (who would spend it) to the 1% (who invest it). You're right that low rates will naturally cause the present value of any future stream of cash to increase, but it's a small effect compared to the effect of increasing wealth disparity. Further, the low rates are also caused by inequality-so it's the root cause in both cases.
Government officials managing and creating inflation is what makes inflation bad: because government officials are human beings too, and they have friends and families who can benefit from the new money at the expense of the rest of the society who receive the new money later.
Again--Bullshit.
Many (most) central banks have "target rates" for both exchange rates and interest rates: they approximate/achieve those targets by pulling on the levers of money creation.
Again--so what? They don't set exchange rates. They are set by a market. I can't believe you are arguing this.
The Federal Reserve is in the process of monitoring money supply to create conditions of full employment and low inflation. It only appears that they want low rates now because of the wealth inequality. The economy can hardly function so all they can do to keep it out of recession/depression is to keep a loose monetary policy. The rest of your post is nonsense. Low rates allow everyone to "gamble" at market rates. Bailouts are irrelevant and have nothing to do with the discussion at hand.
The economy can barely function precisely because the FED price-control on money. If the government tries to price-control on bread, flour and other food, the result would be shortage of food and mass starvation, just like happened in numerous countries throughout history.
Why are they trying to price-control money? Because the government itself severely in debt, and because the big banks are heavily in debt. The extremely low short-term interest rate enabled the big insider banks to borrow at next to nothing to service existing debts.
That price-control on money is precisely why we have repeated misallocation of capital in recent decades. Low rates do not allow everyone to gamble at market rates: you try borrowing at 0.25%! In a free market place, there would be very little reason why a bank with massive bad debts should have been able to borrow at rates much lower than what you or I can borrow with our pristine credit. Yet, those functionally bankrupt banks being able to borrow at extremely favorable rates was precisely what happened.
Inflation is a process whereby those who get the new money first reap the benefit of spending new money against old prices, at the expense of those who get the money later who have to spend against new higher prices before the new money arrives in their hands. It's a flow scam benefiting the cronies at the expense of the rest of the society.
Bullshit. Please explain to me how anyone "gets the new money first" How does that process work? Is there a line at the Federal Reserve where I can go to get the new money? Or do you have to work at Goldman Sachs to get in that line?
Instead of throwing around content-free epithets, you should really learn how inflation works in the real economy: inflation does not hit all prices at all locations at the same time. When the government borrows a new $1T into existence, it spends the money on government contractors and government employees first. Those first recipients of new money get to spend the new money against old lower prices before prices are bid up. The new money gets into other people's hands after bidding up prices. Those who get the money later would see the prices rise first before the new money arrives in their pockets. That's why prices are so much higher in DC, NYC and SF (all places where newly created money arrive first) than the fly-over country.
Nope--the main cause is wealth disparity. Rich save a much higher percentage of their marginal increase than do the poor. So, as wealth disparity increases, assets get bid up as money goes from the poor and middle class (who would spend it) to the 1% (who invest it). You're right that low rates will naturally cause the present value of any future stream of cash to increase, but it's a small effect compared to the effect of increasing wealth disparity. Further, the low rates are also caused by inequality-so it's the root cause in both cases.
You have the cause and effect entirely backwards. Assets get bid up because of new money creation. Without new money creation, even the rich would have to sell a different asset in order to buy an asset. Because, obviously, even you realize the rich do not get rich by letting existing money sit idle collecting next to no interest. Leverage and new money creation are what bid up asset prices in general. Low rates obviously facillitate leverage and new money creation: to the benefit of the have's.
tatupu70
2015 Aug 4, 2:33pm
Instead of throwing around content-free epithets, you should really learn how inflation works in the real economy: inflation does not hit all prices at all locations at the same time. When the government borrows a new $1T into existence, it spends the money on government contractors and government employees first. Those first recipients of new money get to spend the new money against old lower prices before prices are bid up. The new money gets into other people's hands after bidding up prices. Those who get the money later would see the prices rise first before the new money arrives in their pockets. That's why prices are so much higher in DC, NYC and SF (all places where newly created money arrive first) than the fly-over country.
No, the epithet was well placed. And the post had the content needed to show your errors. The government spends X. How do you determine which of that X is the "new" money. Welfare spending went up--so the welfare recipients are getting the "new" money? They're bidding up the stock prices?
This whole theory of yours is ridiculous anyway because you're talking about fiscal spending which the Federal Reserve has ZERO control over. Are you now saying it isn't the Fed causing the inflation?
Government contractors are in NYC and SF? Really? Please tell me more.
Bullshit. Please explain to me how anyone "gets the new money first" How does that process work?
------------
I'm interested to hear how you think that money (currency) enters the system.
tatupu70
2015 Aug 4, 2:38pm
I'm interested to hear how you think that money (currency) enters the system.
Here's a quick primer explaining currency. Not sure if that's what you're asking.
http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html
Obviously the Federal Reserve will buy bonds and other assets (at times) to inject money as well.
No, the epithet was well placed. And the post had the content needed to show your errors. The government spends X. How do you determine which of that X is the "new" money.
The epithet was a good description of your own content. The new money is simply the government spending in excess of tax collection, and other money borrowed into existence via the fractional reserve system. The crucial difference between government borrowing vs. private sector borrowing is that government borrowing is borrowed via identity theft: future tax payers' identities are on the hook; this also applies to borrowing by institutions that are back-stopped by the government.
Welfare spending went up--so the welfare recipients are getting the "new" money? They're bidding up the stock prices?
The govenment bureaucrats on average making double the average private sector job receive much more money than the alleged welfare recipients. The fractional reserve banks receive interest payment on money created out of thin air. Both bid up stock prices.
This whole theory of yours is ridiculous anyway because you're talking about fiscal spending which the Federal Reserve has ZERO control over. Are you now saying it isn't the Fed causing the inflation?
FED is the enabler of government expansion and borrowing; the government is the reason why worthless pieces of paper and ledger entries created by the FED are worth anything: fiat money power. The two are the two sides of the same coin ripping off the American people.
Government contractors are in NYC and SF? Really? Please tell me more.
NYC is the location of the most government back-stopped big banks. SF is the location of technology bubble, which attracts much of the new money borrowed into existence.
tatupu70
2015 Aug 4, 4:45pm
The new money is simply the government spending in excess of tax collection, and other money borrowed into existence via the fractional reserve system. The crucial difference between government borrowing vs. private sector borrowing is that government borrowing is borrowed via identity theft: future tax payers' identities are on the hook; this also applies to borrowing by institutions that are back-stopped by the government.
Not really. The vast majority of it is simply borrowed. Not monetized. When I buy a government bond, no new money is created.
And, I'm curious--what institutions are backstopped by the government right now? This agreement is in writing, right?
The govenment bureaucrats on average making double the average private sector job receive much more money than the alleged welfare recipients. The fractional reserve banks receive interest payment on money created out of thin air. Both bid up stock prices.
But you were talking specifically about "new" money. If the only part of the budget that increased is welfare, then only welfare recipients are getting "new" money, right?
FED is the enabler of government expansion and borrowing; the government is the reason why worthless pieces of paper and ledger entries created by the FED are worth anything: fiat money power. The two are the two sides of the same coin ripping off the American people.
Actually, the US was free to borrow money before the existence of the Federal Reserve. It had a $75MM debt after the revolutionary war.
NYC is the location of the most government back-stopped big banks. SF is the location of technology bubble, which attracts much of the new money borrowed into existence.
Excellent--can you show me the exact backstop agreement? When does the US government step in? Is it loans or equity?
Regardless, private banks aren't getting government paychecks so that theory is nonsense. And neither are technology companies in SF so that is nonsense as well. Like most of your postings.
The new money is simply the government spending in excess of tax collection, and other money borrowed into existence via the fractional reserve system. The crucial difference between government borrowing vs. private sector borrowing is that government borrowing is borrowed via identity theft: future tax payers' identities are on the hook; this also applies to borrowing by institutions that are back-stopped by the government.
Not really. The vast majority of it is simply borrowed. Not monetized. When I buy a government bond, no new money is created.
Nonsense. When the FED buys government bond, the FED creates money out of thin air and enable the government to spend the money (perhaps already spent).
And, I'm curious--what institutions are backstopped by the government right now? This agreement is in writing, right?
In writing is quite unnecessary, so long as the money can be spent without being personally held responsible for paying it back. Fanny and Freddie were bailed out to the tune of hundreds of billions if not trillions despite not having written agreement for back-stopping; in fact, the writing was explicit that they were not backed up. LOL!
The govenment bureaucrats on average making double the average private sector job receive much more money than the alleged welfare recipients. The fractional reserve banks receive interest payment on money created out of thin air. Both bid up stock prices.
But you were talking specifically about "new" money. If the only part of the budget that increased is welfare, then only welfare recipients are getting "new" money, right?
No. Without new money constantly being created to finance the government, the bureaucrats would not be able to get raises every year; heck would probably face massive lay-off's and cut-backs. Their purchasing power is very much dependent on the constantly flow of new money financing the government (i.e. resources that could have been better allocated to capital improvement higher productivity and higher living standards.) Debt that can never be paid off.
FED is the enabler of government expansion and borrowing; the government is the reason why worthless pieces of paper and ledger entries created by the FED are worth anything: fiat money power. The two are the two sides of the same coin ripping off the American people.
Actually, the US was free to borrow money before the existence of the Federal Reserve. It had a $75MM debt after the revolutionary war.
Have you not heard of the expression "not worth a Continental"? Without the central bank holding the interest rate down, the government would have to borrow at much higher interest expense.
NYC is the location of the most government back-stopped big banks. SF is the location of technology bubble, which attracts much of the new money borrowed into existence.
Excellent--can you show me the exact backstop agreement? When does the US government step in? Is it loans or equity?
They are called Systemically Important Financial Institutions. It is an official list at the Treasury Department.
Regardless, private banks aren't getting government paychecks so that theory is nonsense.
Of course they are: the "systematically important financial institution" is able to borrow at the FED window at near-zero percent, then turn around and lend to the US government at around 2-3%. The institution is taking zero risk and has no capital tied up, yetfor every $100 Billion lent to the government, it is rippping $2-3Billion from taxpayers every year!
And neither are technology companies in SF so that is nonsense as well. Like most of your postings.
Technology companies in SF are where the gamblers are chasing higher returns with their low cost money. You are just too dumb to look beyond the silly propagandas; or perhaps you are paid to be a propagandist.
indigenous
2015 Aug 4, 7:45pm
and the average daily wage of $1.33 in 1912 will buy how much goods in 2015? Average wages across all industries were 400 a year in 1900 and 39000 a year 2010. On a six days a week the average daily wage was 1.33 in 1900. A pound of butter was .25 so you could buy 5 lbs of butter with a days wage. On a 5 day work week in 2010 the daily wage is 156.00. Butter is say 4.00 in 2010 and that's generous. So an average worker in 2010 could buy 40 lbs of butter with a days wage. These number hold for pretty much any food staple. Want to look at manufactured goods? Price of a bicycle in 1900 was16.00 or 12 days wages. Today a good bike is $300 or 2 days wages.
That would be isn't technology grand. That is the prime driving force behind what you indicate.
The inflation occurs in the margins, the inflation occurs ahead of the wage increases so that the investors are guaranteed returns from inflation. Yea the wages increase but not before the inflation occurs. Especially right now.Take a look at this graph since 2010
That would be isn't technology grand. That is the prime driving force behind what you indicate.
The inflation occurs in the margins, the inflation occurs ahead of the wage increases so that the investors are guaranteed returns from inflation. Yea the wages increase but not before the inflation occurs. Especially right now.Take a look at this graph since 2010
Absolutely irrelevant to your assertion the dollar has lost 96% of it's purchasing power in the last 100 years. People can buy multiples of what they could buy 100 years ago for the same day of labor. The fact that technology mad it possible is also absolutely irrelevant. If the dollar lost 96% of it's purchasing power then people could only buy 4% of what they could 100 years ago for the same days labor. Money is a medium of exchange, nothing more or nothing less.
indigenous
2015 Aug 4, 10:11pm
If the dollar lost 96% of it's purchasing power then people could only buy 4% of what they could 100 years ago for the same days labor.
As usual you are missing the point.
The difference is in the margins, during which time the wages are not as valuable and the worker loses purchasing power. See the graph for the past 5 years.
Technology makes the purchasing power of the dollar go up which further masks the affects of inflation.
Fiat paper money was first introduced in the far east around the 12th century! John Law tried to copy that in France some 600+ years later. Both led to massive bubbles and collapses, with numerous bubbles and collapses due to the fiat money plague ever since.
Actually the first paper money was introduced in the 7th century by the tang dynasty. Called flying cash because it could blow away. Not fiat money at all, it was more a receipt that could be redeemed. You are actually talking about the song dynasty which was the first to make extensive use of paper notes starting in 960. By the 1100's the government took over all the printing issuing the jiaozi.. Again not fiat money at all. The notes were backed. When the song dynasty fell to the mongols in 1279 the mongols printed paper notes called the chao that were not backed. That was the first fiat currency. The ming dynasty ousted the mongols in 1368 and continued to print until 1450 then stopped, silver became the money used in china until the 1800's. There were no massive bubbles and collapses during the mongol empire or the early ming empire.
John Law was fraud plain and simple, not fiat currency. He issued bank notes that were supposed to be backed but weren't.
Most of the bubbles and collapses in history happened in hard money societies, either paper money backed by hard currency or just hard currency. They were caused by credit speculation or plain old fraud, not fiat money. Tulips were speculation on futures contracts with a 2.5% down payment. South sea bubble was classic pump and dump stock fraud. the bus and panic of 1819 was also fraud since the bus never acquired the gold backing as required in their charter, etc., etc..
If the dollar lost 96% of it's purchasing power then people could only buy 4% of what they could 100 years ago for the same days labor.
As usual you are missing the point.
The difference is in the margins, during which time the wages are not as valuable and the worker loses purchasing power. See the graph for the past 5 years.
Technology makes the purchasing power of the dollar go up which further masks the affects of inflation.
Irrelevant to your original statement. As usual you keep changing the point when you can't defend it. You said the dollar lost 96% of it's purchasing power in the last 100 years. Your simple minded no qualifications statement. Stay on track and defend that statement which is obviously absurd. Is the average person buying more or less of the same product for the same amount of labor as they were 100 years ago? The possible answers are more or less. Are they buying 96% less. The possible answers are yes or no.
indigenous
2015 Aug 5, 3:01am
Irrelevant to your original statement. As usual you keep changing the point when you can't defend it. You said the dollar lost 96% of it's purchasing power in the last 100 years. Your simple minded no qualifications statement. Stay on track and defend that statement which is obviously absurd. Is the average person buying more or less of the same product for the same amount of labor as they were 100 years ago? The possible answers are more or less. Are they buying 96% less. The possible answers are yes or no.
Nope, of course they do not have 4% of the buying power, that is NOT the point never was.
Actually the first paper money was introduced in the 7th century by the tang dynasty. Called flying cash because it could blow away. Not fiat money at all, it was more a receipt that could be redeemed. You are actually talking about the song dynasty which was the first to make extensive use of paper notes starting in 960. By the 1100's the government took over all the printing issuing the jiaozi.. Again not fiat money at all. The notes were backed. When the song dynasty fell to the mongols in 1279 the mongols printed paper notes called the chao that were not backed. That was the first fiat currency. The ming dynasty ousted the mongols in 1368 and continued to print until 1450 then stopped, silver became the money used in china until the 1800's. There were no massive bubbles and collapses during the mongol empire or the early ming empire.
The "Flying Cash" of the Tang Dynasty was more like checks and bank drafts. The early Song privately issued paper notes had to be backed or faced bank-run's when such backing was in doubt. By the 12th century (we both agree on this, your "1100's" is my "12th century"), the Song government took over all the printing and issuing of Jiaozi. We agree so far. Why did it have to be government exclusive printing and issuing? For the same reason that the Federal Reserve was founded: politicians and banksters want a central bank for fiat money creation without the risk of bank runs exposing the under-backing/over-issue fraud: by transferring such risk to the public via government issued fiat currency. It took only a few years for massive inflation to take place after Song government started the fiat currency regime. "Monetary reforms," striking off multiple zero's off the number like Zimbabwe did a few years ago and Venezuela about to do soon, were frequent in late Song Dynasty, throughout Mongol Yuan Dynasty and early Ming Dynasty, every few years to a handful of decades. Ask yourself, why did Ming Dynasty give up the printing of paper money? The silver money was not a government choice, but the people's choice starting in private practice. In fact, initially Ming Dynasty waged wars on the coast against "Japanese pirates" that were shipping silver mined in Japan to China; the "Japanese pirates" were often Chinese merchants and bootleggers involved in the shipping of a money that was more readily acceptable to the Chinese public than government issued paper money was due to the latter's constant massive inflation . . . just like the USD became de facto currency in Zimbabwe when the Zim Dollar hyperinflated. By mid-Ming Dynasty, the government gave up on the enforcement against silver money, and stopped printing of paper money as paper money became literally worthless. That also explains why the Chinese silver money during Ming and Qing dynasties were lump metal of weight, not any officially denominated coins, despite the country having known coinage and saw widespread use of coins from about 300BC to 1000AD: the fiat moneys of late Song, Mongol and early Ming had so thoroughly discredited government issued money that even the Chinese population (despite their traditional faith in centralized government) figured out that the only thing the big centralized government can do to a lump of precious metal is making it worth less in the long run by debasing content in similar coins while keeping the same image on the outside.
The repeated massive / hyper- inflations in late Song, Mongol Yuan and early Ming dynasties of course produced economic bubbles and busts in the market place (price inflation does not hit all sectors at the same time; massive increase in money supply create bubbles in certain sectors). The Chinese court historians simply had more important things to write about, such as wars, conquests and mass slaughters (some accounts claim China lost more than half of its population during Mongol conquest and occupation, which lasted only some 80 years or so, a very short dynasty by Chinese standards). The most pernicious bubble during those 100-200 years was actually the government bubble: the fiat money essentially financed the Mongol conquest of not only most of Asia but also the Middleast and Eastern Europe, through the mobilization power of a fraudulent promise (the money/credit promise) that is more sophisticated than the 72-virgin martyrdom promise and the usual paradise/reincarnation promise. Fiat money has tremendous mobilization power during wars, able to reel in a somewhat sophisticated population not easily swayed by the 72-virgins. The Mongol use of it led to the biggest empire in term of land area, ever in human history . . . with unimaginable misery and strife for humanity. That was the most significant bubble from the Song-Mongol/Yuan-Ming fiat money episode, before the people of east asia rejected all paper money and all government minted money, embracing lump metal as money despite government violent enforcement against honest money.
John Law was fraud plain and simple, not fiat currency. He issued bank notes that were supposed to be backed but weren't.
John Law was in charge of French government finances, and implementing those policies in the name of the French government. Yes, all governments are forms of fraud and con game to some degree. It is a fictiticious entity for a small group of people to defraud the gullible public.
Most of the bubbles and collapses in history happened in hard money societies, either paper money backed by hard currency or just hard currency. They were caused by credit speculation or plain old fraud, not fiat money. Tulips were speculation on futures contracts with a 2.5% down payment. South sea bubble was classic pump and dump stock fraud. the bus and panic of 1819 was also fraud since the bus never acquired the gold backing as required in their charter, etc., etc..
The bust and panic of 1819 was due to prior suspension of gold standard during the Napoleonic War. British central bank was set up to run gold standard during peace time, then suspend gold standard during major wars in order to mobilize societal resources. There had been massive monetary/credit expansion during the Napoleonic Wars. After Napoleon was captured for a second time and sent to the island of Helena in south Atlantic, the central bank had to contract money supply and return to normalcy. In the other instances, government sponsored credit speculation and fraud were/are by definition not hard money societies.
« First « Previous Comments 35 - 73 of 73 Search these comments
My building changed ownership again and in a couple of days I'm ready to get hit with another rent increase.
Do I suffer the slings and arrows, or end them?
Somedays I think I should just move into the cheapest place in the country.
Why wouldn't I live here, for example? As low as $268 for a 1-bed!
Arbours at Fort King Apartments 12838 Stately Oak St., Dade City, FL 33525
http://www.apartmentfinder.com/Florida/Dade-City-Apartments/Arbours-At-Fort-King-Apartments?refer=CRITEO&bk=88619&utm_source=criteo&utm_medium=cpc&utm_campaign=lower+funnel
#housing