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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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 Posted: Wed Dec 02, 2009 9:17 am Post subject: |
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| Kuros wrote: |
| mises wrote: |
You're saying technology advanced because the currency devalued? I suppose that is true to some extent, as the currency was devalued to pay for wars and many of the major game changing inventions have come after initial development from the American military.
That said, I'd rather live in a world where families are not leveraged to all hell, even if it means I have to give up my Blackberry. |
I'm not saying that.
I'm saying that you have to account for productivity gains (and the inventions underlying it) when you're measuring standard of living. |
You also have to account for productivity and inventions (as well as the fact that the US Govt has deliberately understated the CPI) when measuring inflation.
The real rate of inflation of the dollar is estimated to have reduced the value of the dollar by at least 99.6% since 1913.
However, productivity and technological advances and phoney numbers have partially offset the real decline when measuring purchasing power. The CPI is even less representative of actual inflation as it is largely a political number now.
The fact is that in a free market with either a gold standard, or better, competing free market currencies, you would have a nearly fixed money supply that would expand only when the quantity of gold (or other backing commodity) on deposit allowed the issuance of more currency.
Under these conditions, the purchasing power of the dollar would gradually increase due to the impact of productivity and technological gains, savings and investment are encouraged, accelerating annual economic growth, and there will be no recessions or depressions to slow growth.
Inflation is essentially zero. Purchasing power gradually increases as average price levels fall. This increase in purchasing power is not deflation as the money supply is not declining, but rather is the result of productivity and technological gains. |
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Reggie
Joined: 21 Sep 2009
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| Posted: Wed Dec 02, 2009 8:10 pm Post subject: |
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| Hater Depot wrote: |
You're talking about NK as if it were even a somewhat normal country. Only the elites have had savings wiped out, and they got those savings by being corrupt, not by selling food. Everyone else had no savings and was already in so much danger of starvation that their behavior will not be affected.
NK farmers sleeping til noon, give me a break. |
I've always been under the impression that the North Korean leaders are the corrupt elite who drink imported liquor while it's not uncommon for the common men, women, and children to go without food.
The exerpts below from the Washington Post article are what cause me to believe that the currency crackdown will punish the common man and only benefit the North Korean leaders who want a monopoly on commerce and control of everyone's lives.
| Washington Post wrote: |
The currency move appeared to be part of a continuing government crackdown on private markets, which have become an essential part of the food-supply system in the chronically hungry North.
In recent years, some market traders have stashed away substantial amounts of cash, while establishing themselves in profitable businesses that the government struggles to control.
In the past year, North Korea has put increasing pressure on local markets, closing several and limiting the range of goods that can be sold in them.
The government has also criminalized everyday market behavior while creating a new kind of gulag for those it deems economic criminals, according to a report released this fall by the East-West Center, a research organization established by Congress to promote understanding of Asia.
The report says security forces in North Korea have broad discretion to detain without trial nearly anyone who buys or sells in the local markets. But if traders can pay bribes, security officials will often leave them alone, the report says.
If the currency move substantially cripples the operation of local markets in the North, the consequences could be severe for the millions who depend on them for food. U.N. officials have estimated that as much as half the calories consumed by North Koreans come from food bought in markets. |
I'll be the first to admit that I know very little about what goes on in North Korea and that news reports out of Washington DC could very well contain propaganda, so I'd like to hear you out on your opinions about this news piece. I'd especially like to read your opinions about how the sellers at the markets are corrupt and how the currency crackdown won't have a negative impact on the food supply. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Dec 02, 2009 8:18 pm Post subject: |
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| The exerpts below from the Washington Post article are what cause me to believe that the currency crackdown will punish the common man and only benefit the North Korean leaders who want a monopoly on commerce and control of everyone's lives. |
http://en.wikipedia.org/wiki/Debasement
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Reasons for debasement
The primary reason a government will debase its currency is financial gain for the sovereign at the expense of citizens. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds. However, the purchasing power of the citizens� currency and standard of living[citation needed] has been reduced.
Modern currency debasement takes its form when central banks increase the money supply or �print money� as it is called in the common parlance (though the increase is primarily done electronically now). Recently, in the U.S. the Federal Reserve has embarked on an action called quantitative easing. |
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Hater Depot
Joined: 29 Mar 2005
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| Posted: Fri Dec 04, 2009 8:26 pm Post subject: |
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| Reggie wrote: |
| I've always been under the impression that the North Korean leaders are the corrupt elite who drink imported liquor while it's not uncommon for the common men, women, and children to go without food. |
Basically yes, but it's not as bifurcated as that. When I say 'elites' I'm thinking of people who live in Pyongyang. Anybody who lives there is in the top 10 to 15% in terms of living standards and well-educated by NK standards. That seems like a good working definition of elite to me. It's not the whiskey-swilling leadership or the starving masses that KJI needs to worry about but these people, who like having the color TVs and other amenities that they have more of then 10 years ago. They may frequent food markets but the markets don't stand between them and starvation. The sellers in the WT times article are elites.
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| I'd especially like to read your opinions about how the sellers at the markets are corrupt and how the currency crackdown won't have a negative impact on the food supply. |
Obviously it will affect the distribution of food but probably not domestic production, considering that any farmer's drop in production will mean the death of him and his family. I think the likely intended outcome is to re-assert control over elites by wiping out their savings, crack down on markets the state cannot control, and re-direct food from the masses to the elites and the military. I think the same amount of food will be produced. |
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Manner of Speaking
Joined: 09 Jan 2003
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| Posted: Fri Dec 04, 2009 11:20 pm Post subject: |
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It would be nice to think this would lead to a real revolt in Pyongyang and to the end of KJI and his regime, but in all probability this was a carefully thought-out move. If the underground wealthy WERE paying off certain government officials, than those same government officials are getting their rice bowls smashed as well, which could be risky for regime stabilization. But KJI probably thought this out well beforehand in terms of the exchange limit, planning the new currency, etc.
Sad...North Korea really is a country that has no place to go. Or at least, few options besides exporting arms. |
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Kuros
Joined: 27 Apr 2004
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| Posted: Sat Dec 05, 2009 1:28 am Post subject: |
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| mises wrote: |
| Quote: |
| The exerpts below from the Washington Post article are what cause me to believe that the currency crackdown will punish the common man and only benefit the North Korean leaders who want a monopoly on commerce and control of everyone's lives. |
http://en.wikipedia.org/wiki/Debasement
| Quote: |
Reasons for debasement
The primary reason a government will debase its currency is financial gain for the sovereign at the expense of citizens. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds. However, the purchasing power of the citizens� currency and standard of living[citation needed] has been reduced.
Modern currency debasement takes its form when central banks increase the money supply or �print money� as it is called in the common parlance (though the increase is primarily done electronically now). Recently, in the U.S. the Federal Reserve has embarked on an action called quantitative easing. |
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This is far more sly than your usual baldfaced rant against the Fed, mises. Good work. |
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Reggie
Joined: 21 Sep 2009
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| Posted: Sat Dec 05, 2009 5:56 am Post subject: |
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| Hater Depot wrote: |
| Obviously it will affect the distribution of food but probably not domestic production, considering that any farmer's drop in production will mean the death of him and his family. |
What are the production requirements and how is it enforced? |
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Hater Depot
Joined: 29 Mar 2005
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| Posted: Sat Dec 05, 2009 9:40 am Post subject: |
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| For grain I think it fluctuates between 8 and 10 million metric tons per ha (about 0.4 acres). It's high enough that I doubt it is often reached, but there is obviously below which the farmer has nothing once the state takes what it wants. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sat Dec 05, 2009 9:45 am Post subject: |
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| Kuros wrote: |
| mises wrote: |
| Quote: |
| The exerpts below from the Washington Post article are what cause me to believe that the currency crackdown will punish the common man and only benefit the North Korean leaders who want a monopoly on commerce and control of everyone's lives. |
http://en.wikipedia.org/wiki/Debasement
| Quote: |
Reasons for debasement
The primary reason a government will debase its currency is financial gain for the sovereign at the expense of citizens. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds. However, the purchasing power of the citizens� currency and standard of living[citation needed] has been reduced.
Modern currency debasement takes its form when central banks increase the money supply or �print money� as it is called in the common parlance (though the increase is primarily done electronically now). Recently, in the U.S. the Federal Reserve has embarked on an action called quantitative easing. |
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This is far more sly than your usual baldfaced rant against the Fed, mises. Good work. |
I'm not a fan of central banks. Though, if you're implying that I edited that wiki, I didn't. |
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Jeonmunka
Joined: 05 Oct 2009
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| Posted: Tue Dec 08, 2009 12:11 am Post subject: |
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| it fluctuates between 8 and 10 million metric tons per ha |
Crikey, that's an awful lot of rice. |
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visitorq
Joined: 11 Jan 2008
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| Posted: Tue Dec 08, 2009 1:34 am Post subject: |
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| Kuros wrote: |
| mises wrote: |
| Quote: |
| The exerpts below from the Washington Post article are what cause me to believe that the currency crackdown will punish the common man and only benefit the North Korean leaders who want a monopoly on commerce and control of everyone's lives. |
http://en.wikipedia.org/wiki/Debasement
| Quote: |
Reasons for debasement
The primary reason a government will debase its currency is financial gain for the sovereign at the expense of citizens. By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds. However, the purchasing power of the citizens� currency and standard of living[citation needed] has been reduced.
Modern currency debasement takes its form when central banks increase the money supply or �print money� as it is called in the common parlance (though the increase is primarily done electronically now). Recently, in the U.S. the Federal Reserve has embarked on an action called quantitative easing. |
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This is far more sly than your usual baldfaced rant against the Fed, mises. Good work. |
This is not "sly", it's well known, and regularly pointed out by Austrian school economists. It's also explained quite nicely in G. Edward Griffin's book The Creature from Jekyll Island. |
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