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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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 Posted: Tue Sep 02, 2008 8:49 am Post subject: |
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| huffdaddy wrote: |
| mises wrote: |
| I agree. A recession, even a terrible one, isn't the end of the world. Inflation, it is gets out of hand, will be very tough on the poor and middle class and that is worthy of discussion. |
Unfortunately, it's a Catch-22. If we increase the earnings of the billions of poor people, this will inevitably drive up the demand and price of many of the raw materials they desire. Thus putting any real improvement in lifestyle out of reach for them. |
This is the Malthusian argument which has been largely discounted due to the ameliorating effects of technological and productivity advances. We can also look forward to greatly increased living standards when those truly overpopulated countries and regions (India, China, Korea, Japan ... ) begin negative population growth.
The only true hinderance to economic growth is socialism. |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Tue Sep 02, 2008 1:46 pm Post subject: |
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| ontheway wrote: |
| huffdaddy wrote: |
| mises wrote: |
| I agree. A recession, even a terrible one, isn't the end of the world. Inflation, it is gets out of hand, will be very tough on the poor and middle class and that is worthy of discussion. |
Unfortunately, it's a Catch-22. If we increase the earnings of the billions of poor people, this will inevitably drive up the demand and price of many of the raw materials they desire. Thus putting any real improvement in lifestyle out of reach for them. |
This is the Malthusian argument which has been largely discounted due to the ameliorating effects of technological and productivity advances. |
Currently, the world only has a limited production capability of things like oil and steel. It may be possible to increase production in the long run, but it will take time. In the meanwhile, greater demand will lead to higher prices which will lead to inflation.
How's the gold holding up? |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Tue Sep 02, 2008 10:10 pm Post subject: |
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| ontheway wrote: |
| huffdaddy wrote: |
| mises wrote: |
| I agree. A recession, even a terrible one, isn't the end of the world. Inflation, it is gets out of hand, will be very tough on the poor and middle class and that is worthy of discussion. |
Unfortunately, it's a Catch-22. If we increase the earnings of the billions of poor people, this will inevitably drive up the demand and price of many of the raw materials they desire. Thus putting any real improvement in lifestyle out of reach for them. |
This is the Malthusian argument which has been largely discounted due to the ameliorating effects of technological and productivity advances. |
You're such a boob. Note the responsibility-evading passive in the comment above. Did you know Darwin's theory of natural selection has been largely discounted? Yep, it has. By whom, you ask, and is the discounting valid and if so, how so? Oh well, only pedants bog down in the details, you know.
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| The only true hinderance to economic growth is socialism. |
Maybe, the only hinderance to economic growth as social good is a lack of socialism. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Sep 03, 2008 8:28 am Post subject: |
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"Maybe, the only hinderance to economic growth as social good is a lack of socialism."
???
The above, ah, sentence? has no meaning whatsoever. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Sep 03, 2008 8:44 am Post subject: |
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Higher demand for one thing does not lead to inflation. If the money supply is fixed, it means that the price of some other item or items will fall. The price level will remain constant.
Inflation is only caused by an increase in the money supply.
The malthusian argument fails because it fails to take into account, as does Huffdaddy, technological advances, new inventions, new ideas, general advancement, productivity etc.
As an example, consider houses. Long ago, built of logs, there is not enough timber on the entire earth to build houses for the current population. But, of course, we learned how to use other materials. How to build walls with wood frames covered with plaster and later wallboard. Concrete, steel, brick, stone, incsulation, better design etc. all allow us to get more out of our resources. Malthus, Keynes and many so-called economists failed to understand economic dynamics. So, the world is full of forests and we have ample housing, (except where socialism has created poverty and its associated homeless and inadequately housed peoples.)
Higher prices for materials and energy means the market needs to adjust. To do so, we have to eliminate the socialism from the system.
As to the price of gold, it is up over 100% since Bush took office, in nominal terms, although this is just inflation. Gold's value is actually virtually unchanged over the last 2000 years. There is a lot of volatility in the dollar these days, as well as other currencies, which means the dollar has been bouncing around a lot. Because you look at prices backwards, this looks like gold has been bouncing around. The opposite is the case.
The dollar has lost nearly 98% of its value since the creation of, and because of, the Federal Reserve. This has not changed, and it continues to get worse. |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Wed Sep 03, 2008 1:46 pm Post subject: |
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| ontheway wrote: |
The malthusian argument fails because it fails to take into account, as does Huffdaddy, technological advances, new inventions, new ideas, general advancement, productivity etc. |
Nice textbook theory. Still haven't stepped outside into the real world, I see. |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Wed Sep 03, 2008 4:11 pm Post subject: |
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| ontheway wrote: |
| Higher demand for one thing does not lead to inflation. If the money supply is fixed, it means that the price of some other item or items will fall. The price level will remain constant. |
Document or retract.
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| Inflation is only caused by an increase in the money supply. |
Document or retract.
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| The malthusian argument fails because it fails to take into account, as does Huffdaddy, technological advances, new inventions, new ideas, general advancement, productivity etc. |
Strawman argument. Nobody has invoked Malthus but you. Huffdaddy's theory was not Malthusian.
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| As to the price of gold, it is up over 100% since Bush took office, in nominal terms, although this is just inflation. |
We've had 100% inflation since Bush took office? Who knew?
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| The dollar has lost nearly 98% of its value since the creation of, and because of, the Federal Reserve. This has not changed, and it continues to get worse. |
Factually wrong. Also, wrong for the reason you wrongly claim everybody else is wrong: it fails to take technological advance into account. What was the cost of a personal computer when the Federal Reserve was created?
Like a lot libertarians, you make a lot of assertions you can't support with anything but ideology, and think that counts as making well-supported assertions. Your history is wrong, your facts are wrong, and you've provided no evidence for anything you've said. |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Sep 03, 2008 7:09 pm Post subject: |
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| luvnpeas wrote: |
| ontheway wrote: |
| Higher demand for one thing does not lead to inflation. If the money supply is fixed, it means that the price of some other item or items will fall. The price level will remain constant. |
Document or retract.
| Quote: |
| Inflation is only caused by an increase in the money supply. |
Document or retract.
| Quote: |
| The malthusian argument fails because it fails to take into account, as does Huffdaddy, technological advances, new inventions, new ideas, general advancement, productivity etc. |
Strawman argument. Nobody has invoked Malthus but you. Huffdaddy's theory was not Malthusian.
| Quote: |
| As to the price of gold, it is up over 100% since Bush took office, in nominal terms, although this is just inflation. |
We've had 100% inflation since Bush took office? Who knew?
| Quote: |
| The dollar has lost nearly 98% of its value since the creation of, and because of, the Federal Reserve. This has not changed, and it continues to get worse. |
Factually wrong. Also, wrong for the reason you wrongly claim everybody else is wrong: it fails to take technological advance into account. What was the cost of a personal computer when the Federal Reserve was created?
Like a lot libertarians, you make a lot of assertions you can't support with anything but ideology, and think that counts as making well-supported assertions. Your history is wrong, your facts are wrong, and you've provided no evidence for anything you've said. |
Inflation is a general increase in the price of goods, not the price of a single good. Prices of specific goods can go up and down with even violent swings but inflation is an increase in the aggregate money supply over and above GDP growth.
The dollar is down about 40% vs a trade weighted basket of currencies. It is down more vs commodities, though with demand destruction and the unwinding of massive amounts of leverage this is changing rapidly. The housing bubble was quickly followed by a commodity bubble, though they existed to some extent at the same time. The $ has lost more than 90% in value since the fed was created. That isn't disputed by anybody, not even the Fed. They argue that the increase in money supply over and above GDP growth stimulates aggregate demand. They may or may not be right, and that may or may not be a good thing.
Malthusian ideas fail for the reason stated; they do not properly take into account technological leaps. India was able to dramatically increase food production in the 70's and 80's and because of this avoid famine despite a growing population. But there can be periods of crises in between the tech leaps and the needs of a population.
Gold is decreasing in value, unexpectedly for many, due to the amazing amount of demand destruction and credit/capital destruction. For whatever reason (mostly tradition) gold is used as a hedge against fiat inflation. The Fed has been pumping trillions into the economy since 9-11 and many bought gold to protect themselves against the decline of the dollar. What has happened is that this new inflation is being dissolved quickly and aggregate money supply is actually contracting, despite the Fed's best attempt otherwise. How long this continues depends on how much further the credit crises has to go. |
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Wed Sep 03, 2008 9:06 pm Post subject: |
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| mises wrote: |
| Prices of specific goods can go up and down with even violent swings but inflation is an increase in the aggregate money supply over and above GDP growth. |
No, inflation is an imprecisely defined term for the increase in the price of goods. An increase in the money supply is a major factor, but not necessarily the only one.
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| The dollar is down about 40% vs a trade weighted basket of currencies. |
In what time period, and why is that time period more significant than a time period in which it is not down 40%?
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| It is down more vs commodities, though with demand destruction and the unwinding of massive amounts of leverage this is changing rapidly. |
Assertion without evidence.
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| The $ has lost more than 90% in value since the fed was created. That isn't disputed by anybody, not even the Fed. |
Assertion without evidence, and without addressing the point made the last time it was asserted. Inflation figures don't take technological advances into account. What did a Prius cost in 1913? A Pentium?
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| Malthusian ideas fail for the reason stated; they do not properly take into account technological leaps. India was able to dramatically increase food production in the 70's and 80's and because of this avoid famine despite a growing population. But there can be periods of crises in between the tech leaps and the needs of a population. |
More ideology. And more irrelevance, as the original suggestion since labelled "Malthusian" was not Malthusian.
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| Gold is decreasing in value, unexpectedly for many, due to the amazing amount of demand destruction and credit/capital destruction. |
Ho hum, documentation? Evidence?
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| What has happened is that this new inflation is being dissolved quickly and aggregate money supply is actually contracting, despite the Fed's best attempt otherwise. How long this continues depends on how much further the credit crises has to go. |
Ho hum.... documentation? Evidence? |
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mises
Joined: 05 Nov 2007
Location: retired
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luvnpeas
Joined: 03 Aug 2006
Location: somewhere i have never travelled
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| Posted: Thu Sep 04, 2008 1:58 am Post subject: |
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| mises wrote: |
http://economics.about.com/cs/economicsglossary/g/inflation.htm
Definition: Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
Representative of the economy as a whole. Which is why it is a monetary phenomenon. |
Doesn't support your claim, which was an equating of inflation with an increase in monetary supply.
This is an op-ed piece. You were asked for evidence, and you produced an opinion agreeing with you. That says it all about this discussion. |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Thu Sep 04, 2008 3:59 am Post subject: |
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| mises wrote: |
Malthusian ideas fail for the reason stated; they do not properly take into account technological leaps. India was able to dramatically increase food production in the 70's and 80's and because of this avoid famine despite a growing population. But there can be periods of crises in between the tech leaps and the needs of a population. |
Which was my point.
Wrt the money supply and inflation, you also need to factor in one additional variable: velocity of money. Thus even with a constant money supply, increased velocity can lead to inflation. Or, as we are seeing now, less velocity can stifle inflationary pressure. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 04, 2008 6:32 am Post subject: |
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| luvnpeas wrote: |
| mises wrote: |
http://economics.about.com/cs/economicsglossary/g/inflation.htm
Definition: Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
Representative of the economy as a whole. Which is why it is a monetary phenomenon. |
Doesn't support your claim, which was an equating of inflation with an increase in monetary supply.
This is an op-ed piece. You were asked for evidence, and you produced an opinion agreeing with you. That says it all about this discussion. |
1) Yes it does.
2) You can look for your own evidence. I don't need to teach every hakwon cowboy with an attitude the fundamentals of a severe recession. |
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gangpae
Joined: 03 Sep 2007
Location: Busan
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| Posted: Thu Sep 04, 2008 6:34 am Post subject: |
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| Instead of letting some banks collapse, and allowing the housing market to find a new equilibrium, politicians are going to compound the current problems with too much intervention. As a result Americans can probably look forward to a decade of zero growth, much like Japan in the 1990s, and another decade of feeble growth. A generation will be marginalized and the idiots responsible for the debacle will be long forgotten. The biggest question is whether some other economic force can fill the breach in the global economy. |
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