patrick.net

Reality says

You might have confused me with someone else. The example I gave was regarding the computer industry, which is a classic example of productivity increase driving down price.

True--but the text you quoted was replying to another post (which was copied). Before you replied to me, you should have understood the context.

Reality says

In any case, stop handing out newly printed money to inefficient government central planning agencies would automatically increase productivity. When the FED expands money supply, it does not go to everyone in the society all at once. It is the political cronies that get the new money first. That in itself produces inefficiency.

The part about politicial cronies is debatable, but regardless--the answer is to stop cronyism, not shrink the money supply.

tatupu70 says

Reality says

Linking price level (inflation) to jobs (employment/unemployment) is essentially re-stating the Phillips Curve theory, which has long been discredited. Prices falling is usually the result of productivity increase, for example the computer prices have always been falling for the last half century, but the industry has not been experiencing massive job losses for all those decades.

Except that your example specifically made reference to reducing the money supply--not increased productivity.

No it didn't. Nobody is advocating destroying money - just stopping the printing. Sure, jobs will always initially be lost when supply tightens, but in the long they will be gained back while the economy stand on healthy footing (very little to no inflation). There is not much evidence that the massive printing and credit injection created a significant amount of jobs in the US over the past years, 8% is still horrid. And if you look at Germany post-war, it had some of the best economic growth during the 50s while some of those years showed deflation.

mell says

Sure, jobs will always initially be lost when supply tightens, but in the long they will be gained back while the economy stand on healthy footing (very little to no inflation).

lol--The jobs will be gained back because there is little to no inflation?? How exactly does that work?

I'm not saying money printing creates jobs, only that if you let credit markets dry up, jobs will be lost. And they won't magically return.

In order to really improve the employment picture, the income/wealth disparity must be fixed.

tatupu70 says

The part about politicial cronies is debatable, but regardless--the answer is to stop cronyism, not shrink the money supply.

FED / government money supply / spending into the economy is the primary means by which cronyism is carried out. There is no magic button that the FED can push that everyone's pocket will be fattened up by the same amount. Instead, when the FED creates money (or the government spending the money after FED buys government debt), it has to go to someone first. That someone is the crony!

FED "expanding money supply" is the most sickening form of trickle-down economics: The aggregate money supply expanding $1T by my getting $1T from the FED does not help you at all, but in all likelihood enables me to buy up everything that you wish to buy, ahead of you!

tatupu70 says

ol--The jobs will be gained back because there is little to no inflation?? How exactly does that work?

Just like how it worked for the US in the late 19th century, the period when the American standards of living improved the quickest. Just like the computer industry in the past half century: rapid drop in good price yet good paying jobs as productivity increase.

I'm not saying money printing creates jobs, only that if you let credit markets dry up, jobs will be lost. And they won't magically return.

Credit market would recover much quicker by writing off bad loans and bankrupting big old banks that made those loans. So that the rest of the society don't have to service those loans via bailouts plus interest on the bailout.

In order to really improve the employment picture, the income/wealth disparity must be fixed.

Income/wealth disparity would be drastically reduced if there were no FED and the government constantly squeezing the little guys to benefit the big oligopolies with special access to government.

Reality says

Just like how it worked for the US in the late 19th century, the period when the American standards of living improved the quickest. Just like the computer industry in the past half century: rapid drop in good price yet good paying jobs as productivity increase.

Again--productivity increases are not due to lack of inflation. Please don't confuse the two.

Reality says

Credit market would recover much quicker by writing off bad loans and bankrupting big old banks that made those loans. So that the rest of the society don't have to service those loans via bailouts plus interest on the bailout.

I hear this argument a lot. Explain to me how freezing the credit markets and eliminating all working capital for businesses would help the recovery? When healthy companies can't make payroll because there is no credit market and are forced to lay off or fold, that's going to help?

Reality says

Income/wealth disparity would be drastically reduced if there were no FED and the government constantly squeezing the little guys to benefit the big oligopolies with special access to government.

Again--if you want to stop cronyism, go for it. But eliminating the Federal Reserve won't do it.

tatupu70 says

Again--productivity increases are not due to lack of inflation. Please don't confuse the two.

Glad you are finally separating monetary inflation from productivity increase and employment improvement. You are the one who kept insisting recovery, productivity increase and improving employment is impossible without inflation.

tatupu70 says

I hear this argument a lot. Explain to me how freezing the credit markets and eliminating all working capital for businesses would help the recovery? When healthy companies can't make payroll because there is no credit market and are forced to lay off or fold, that's going to help?

You are mistaken on what's a healthy company. A company that relies on "factoring" to make payrolls is not a healthy company anymore than an alcoholic relying on payday loan sharks to make rent payment is leading a healthy life. A company that does that sort of thing is essentially letting in the loan sharks to rent-seek the industry. The industry and its workers would be far better of having those companies liquidated so that the workers can go work for a far healthier company in the same industry that does not rely on loan sharks to make payrolls.

Since we are on a real estate forum, let me phrase it this way: the company that you have described is akin to a developer or home buyer that depends on zero-down NINJA easy loans to keep refinancing every month to make payments. The availability of such loans is not actually helping a healthy market but merely raising the cost of doing business and owning homes as such ponzi players are limited wasting resources that can be better utilized by other people running tighter ships. Of course the bailed-out banks love such characters as they allow the banks latch onto the fattest rent on money.

tatupu70 says

Again--if you want to stop cronyism, go for it. But eliminating the Federal Reserve won't do it.

Federal Reserve is the biggest enabler of cronyism. Everything it does is cronyism, simply because newly created money has to have specific points of entry into the economy, and those points of entry are precisely where cronies are located.

Reality says

Glad you are finally separating monetary inflation from productivity increase and employment improvement. You are the one who kept insisting recovery, productivity increase and improving employment is impossible without inflation.

Uh, not sure where you would have gotten that idea. I'm the one who kept trying to tell you that those are two different scenarios. You kept insisting that low inflation causes computer prices to go down.

Reality says

You are mistaken on what's a healthy company. A company that relies on "factoring" to make payrolls is not a healthy company anymore than an alcoholic relying on payday loan sharks to make rent payment is leading a healthy life

You obviously don't understand how corporations do business.

Reality says

Federal Reserve is the biggest enabler of cronyism

Obviously you dislike the Federal Reserve. Don't let it cloud your judgement, however. Removing big money from politics would do more to curb cronyism....

tatupu70 says

Uh, not sure where you would have gotten that idea. I'm the one who kept trying to tell you that those are two different scenarios. You kept insisting that low inflation causes computer prices to go down.

No I did not. I pointed out that the computer industry prospered despite computer prices going down . . . thereby refuting your assertion that only rising goods prices would raise employment and productivity in industries/economies.

tatupu70 says

Reality says

You are mistaken on what's a healthy company. A company that relies on "factoring" to make payrolls is not a healthy company anymore than an alcoholic relying on payday loan sharks to make rent payment is leading a healthy life

You obviously don't understand how corporations do business.

I own several corporations. Corporate borrowing habit is the result of favorable tax treatment of borrowing (result of bank lobbying) and past history of bailouts. That's exactly why our economy ground to a halt due to the debt burden. Recession is supposed to be a cleansing opportunity that corrects those bad corporate behavior that caused the problem to begin with. How else do you suppose corporations would be induced to wean off over-reliance on debt? The way you falsely accuse me of not understanding corporations exploitation of tax advantage of debt, you may as well accuse me of not understanding the corporate benefit of buying congressmen and senators!

tatupu70 says

Obviously you dislike the Federal Reserve. Don't let it cloud your judgement, however. Removing big money from politics would do more to curb cronyism....

Federal Reserve and the big bank interests that it represents are the biggest of big money in politics. Look up how much money the top banks contribute to political campaigns, and look up how much money the Federal Reserve spends on buying economists to write up favorable propaganda pieces.

tatupu70 says

There would be no leftover because more and more people have nothing.

Its more complex than that. The currency is tending towards collapse, and its not damned if you do, damned if you dont.

War is probably the only way to cure the lethal cancer the dollar has at this point.

Inflation without wages going up is just as bad, potentially worse, then slight deflation and a proper deleverage.

We wont find out.

U6 is 15%, so whatever they are doing to today to keep UE low isnt really working either.

Reality says

for an arbitrary goods/service basket

Exactly. The basket changes and the currency index changes for them to promulgate the lie.

tatupu70 says

reducing the money supply

He might have been suggesting running the printing press at say, 10% of "full capacity" rather than having a while true :; do print money ; done loop that is executing at breakneck speeds. And I use the programming analogy to point out that in the past, physically printing it was required. Now days bernanke can inject trillions with computer keystrokes.

Robert Sproul says

Goldman Sachs

The politicians are owned by the banking cabal and megacorps and oligarchs. Anyone injecting L/R or other FOX/MSNBC rubbish are blithering morons at this point. They are about 90% of the population. Others in the top tier want the system that is working for them to continue to they pick a "team" and let the games continue to their benefit.

Reality says

There's nothing free market about the privileges.

Funny how "the man of the people" who's regime is in office isnt doing anything to fix this. Big surprise. But duckboy will defend this rat to the end. Because it suits him. The system serves him. Its like if he was a high ranking SS Oberstgruppenfuhrer at Krupps in 1935.

mell says

And if you look at Germany post-war, it had some of the best economic growth during the 50s while some of those years showed deflation.

The mark was a relative gold standard of currencies before it was made into a toxic piece of crap known as the Euro. Now they owe the Greek bums a living.

tatupu70 says

only that if you let credit markets dry up, jobs will be lost.

So with U6 @ 15% and the printing press on, how much longer are you going to debase this country and its currency before you try another tact?

Reality says

FED / government money supply / spending into the economy is the primary means by which cronyism is carried out.

Of course. And the banks always win, the ones that lose are consolidated into too big to fail banks, and We The People always, invariably ALWAYS lose.

Thats how it works.

Reality says

Income/wealth disparity would be drastically reduced if there were no FED and the government constantly squeezing the little guys to benefit the big oligopolies with special access to government.

Big government likes big banks and they like big business and they also like big police state spy-game companies like Google.

Its easier to cut deals with a bunch of mafia Dons rather than have a real, diverse free market.

tatupu70 says

But eliminating the Federal Reserve won't do it.

Its a start. Unelected shadow banking rats that refuse audits and debase currency to which there are no recourse is not working.

Reality says

.

Dont worry, the farm animals addicted to the easy money of Matt Lesko and NAR fantasies will only realize the mistake when they've lead their children to the slaughter.

tatupu70 says

Obviously you dislike the Federal Reserve. Don't let it cloud your judgement, however. Removing big money from politics would do more to curb cronyism....

Let's do both. End lobbying, and shadow banking. I'd be willing to bet you would be marginalized like Ron Paul (called a racist, etc), or you would be outright terminated.

Reality says

thereby refuting your assertion that only rising goods prices would raise employment and productivity in industries/economies.

Again--that was NEVER my assumption. As I clearly pointed out several times.

Reality says

I own several corporations. Corporate borrowing habit is the result of favorable tax treatment of borrowing (result of bank lobbying) and past history of bailouts. That's exactly why our economy ground to a halt due to the debt burden. Recession is supposed to be a cleansing opportunity that corrects those bad corporate behavior that caused the problem to begin with. How else do you suppose corporations would be induced to wean off over-reliance on debt? The way you falsely accuse me of not understanding corporations exploitation of tax advantage of debt, you may as well accuse me of not understanding the corporate benefit of buying congressmen and senators!

Wow--I don't know where to begin addressing all the inaccuracies in this paragraph. Corporations routinely use short term paper because revenues are somewhat unpredictable and bumpy. Surely you understand what working capital is, since you own so many corporations.

Reality says

Federal Reserve and the big bank interests that it represents are the biggest of big money in politics. Look up how much money the top banks contribute to political campaigns, and look up how much money the Federal Reserve spends on buying economists to write up favorable propaganda pieces.

Why don't you post a link for me showing how much the Federal Reserve spends buying economists? I'd like to see that.

As to the banks--I'm all for eliminitating money in politics. That is a completely separate issue from the Federal Reserve though.

Mick Russom says

U6 is 15%, so whatever they are doing to today to keep UE low isnt really working either

That's a false assumption because we don't know where UE would be without their efforts. Maybe it would be at 25%...

tatupu70 says

Again--that was NEVER my assumption. As I clearly pointed out several times.

Then please tell us again why you think monetary inflation is necessary for employment and prosperity.

tatupu70 says

Wow--I don't know where to begin addressing all the inaccuracies in this paragraph. Corporations routinely use short term paper because revenues are somewhat unpredictable and bumpy. Surely you understand what working capital is, since you own so many corporations.

That's what corporate reserve capital is for. Corporate captains running their corporations on short term paper is no better than individuals relying on credit cards for funding. That's not financial health for house keeping or healthy corporation.

tatupu70 says

Why don't you post a link for me showing how much the Federal Reserve spends buying economists? I'd like to see that.

The Federal Reserve spends over $400million a year buying research papers (in an industry that has only a few hundred practitioners). Here is a link to the more in-depth analysis:

http://www.lewrockwell.com/north/north962.html

As to the banks--I'm all for eliminitating money in politics. That is a completely separate issue from the Federal Reserve though.

The Federal Reserve is the very reason why those megabanks still exist! Otherwise, they'd have gone bankrupt in the last recession, and therefore wouldn't be around to pay the billions of dollars of political bribes to silence the American public.

tatupu70 says

That's a false assumption because we don't know where UE would be without their efforts. Maybe it would be at 25%...

4+ years into a recession, if not for persistently high debt load and high expected taxation (due to bailouts plus interest ultimately to be paid by future tax) preventing business expansion on one hand and government printing money to enable people file for UE benefits on the other hand, people would have had to find a job or start a business of their own! instead of sitting home and filing for UE benefits

Using government's own logic, if there had been no filing (and there wouldn't be if there is no UE benefit) there wouldn't be UE, so the UE rate would be 0% if there isn't FED printing the money to enable UE as a way of making a living.

KarlRoveIsScum says

I have a novel idea, why can't we print money to make jobs!!!!!!!!

Because unless what the job produces is valued more highly by the rest of the society spending their own money as free individuals than what it costs to maintain the job position, what you have created would just be like having someone digging a hole in the ground and another filling it back up.

The problem with those negative-sum jobs is that eventually you end up with a social upheaval on your hand, just like the original 1848 version in France.

The whole advantage of money system is keeping track of those incremental profitabilities of human endeavors. If you really have that much faith in central planning by a few wise men, why bother printing money at all, just issue fiat commands instead!

Mick Russom says

Of course. And the banks always win, the ones that lose are consolidated into too big to fail banks, and We The People always, invariably ALWAYS lose.

Thats how it works.

In the game of consolidation and concentration of power, ultimately nobody wins. The cattle may think he is harvesting the grass roots, and growing fatter, but the beef does not belong to the cattle but to the farmer.

KarlRoveIsScum says

Oh please!!! It's an institutionalized crime.

They work with economists,, colleges and universities. They work with teachers, students, and principles. Likely the people they work with end up at the FED!

Unless and until the theories are put to the market test in real life, what the institution with government funding doing is no different from the medieval church: forcibly collecting a tithe on the population while feeding a bunch of scholarstics singing praises of the state religion.

The result is not intellectual freedom or integrity.

tatupu70 says

Maybe it would be at 25%...

If that's what it takes to hit bottom and the deleveraging is completed, maybe then we can recover. But preventing corrections literally forever, mostly for political purposes, pretty much always ends the empire.

U6 is 15% now, reported is 8%, and what they are going to do is change how we report unemployment to keep this in an acceptable range, say, 4-9%, but we all know its a lie. The UE rate of 25% is what it takes to do a correction, if thats what its going to take, it will happen. It will just go unreported.

Reality says

megabanks still exist!

How quickly the words "too big to fail" left the vernacular. Nothing to see here, folks.

But but but, end glass steagall, promote goldman, do sarbox, dodd-frank, etc, and somehow, with all this going down, the big banks got even bigger and mixed retail and investment banking.

Reality says

preventing business expansion on one hand and government printing money to enable people file for UE benefits on the other hand

They painted themselves into a corner and need to walk the knife edge now. The problem is we are at ZIRP/negative real rates of return, not much further you can go from here.

KarlRoveIsScum says

Keep dreaming.......

Then all political discussions are really just another form of entertainment. If no one wants to address the root cause, just sit back for the end of an empire. Might be quick, might take a while, who knows.

KarlRoveIsScum says

Likely the people they work with end up at the FED!

The leadership at the fed is coming from the banking institutions they regulate. Its eyes wide shut crime empire.

tatupu70 says

I'm not saying money printing creates jobs, only that if you let credit markets dry up, jobs will be lost. And they won't magically return.

Jobs suck, anyway. They're bad for your health.

Money is all that matters.

Reality says

what you have created would just be like having someone digging a hole in the ground and another filling it back up.

The problem was how to keep the wheels of industry turning without increasing the real wealth of the world.
Goods must be produced, but they need not be distributed. And in practice the only way of achieving this was by continuous warfare.

War, it will be seen, accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way. In principle it would be quite simple to waste the surplus labour of the world by building temples and pyramids, by digging holes and filling them up again, or even by producing vast quantities of goods and then setting fire to them. But this would provide only the economic and not the emotional basis for a hierarchical society. What is concerned here is not the morale of masses, whose attitude is unimportant so long as they are kept steadily at work, but the morale of the Party itself. Even the humblest Party member is expected to be competent, industrious, and even intelligent within narrow limits, but it is also necessary that he should be a credulous and ignorant fanatic whose prevailing moods are fear, hatred, adulation, and orgiastic triumph. In other words it is necessary that he should have the mentality appropriate to a state of war. It does not matter whether the war is actually happening, and, since no decisive victory is possible, it does not matter whether the war is going well or badly. All that is needed is that a state of war should exist. The splitting of the intelligence which the Party requires of its members, and which is more easily achieved in an atmosphere of war, is now almost universal, but the higher up the ranks one goes, the more marked it becomes. It is precisely in the Inner Party that war hysteria and hatred of the enemy are strongest. In his capacity as an administrator, it is often necessary for a member of the Inner Party to know that this or that item of war news is untruthful, and he may often be aware that the entire war is spurious and is either not happening or is being waged for purposes quite other than the declared ones: but such knowledge is easily neutralized by the technique of doublethink. Meanwhile no Inner Party member wavers for an instant in his mystical belief that the war is real, and that it is bound to end victoriously, with Oceania the undisputed master of the entire world. All members of the Inner Party believe in this coming conquest as an article of faith. It is to be achieved either by gradually acquiring more and more territory and so building up an overwhelming preponderance of power, or by the discovery of some new and unanswerable weapon. The search for new weapons continues unceasingly, and is one of the very few remaining activities in which the inventive or speculative type of mind can find any outlet. In Oceania at the present day, Science, in the old sense, has almost ceased to exist. In Newspeak there is no word for " Science ". The empirical method of thought, on which all the scientific achievements of the past were founded, is opposed to the most fundamental principles of Ingsoc. And even technological progress only happens when its products can in some way be used for the diminution of human liberty. In all the useful arts the world is either standing still or going backwards. The fields are cultivated with horse-ploughs while books are written by machinery. But in matters of vital importance - meaning, in effect, war and police espionage - the empirical approach is still encouraged, or at least tolerated. - George Orwell, 1984

.

JodyChunder says

Jobs suck, anyway

Most of the jobs have devolved into worthless paper pushing, clinging to life against automation, bureaucratic crap, or the paper pushing required for all the citizens being prosecuted by the police state.

Hardly anyone does real work, and even fewer innovate.

Its the slave sheeple class and society the bankers have always dreamed of.

KarlRoveIsScum says

Let's do both. End lobbying, and shadow banking

Keep dreaming.......

That's actually good advice. I rate dreaming far above resignation and sneering.

Mick Russom says

Most of the jobs have devolved into worthless paper pushing, clinging to life against automation, bureaucratic crap, or the paper pushing required for all the citizens being prosecuted by the police state.

Hardly anyone does real work, and even fewer innovate.

Its the slave sheeple class and society the bankers have always dreamed of.

Automation never coughed up a good pair of boots. Never wrote a good book or made a good film or dreamt up a new recipe or strung together some interesting chords.

When machines can dream, then I'll start sweating.

Reality says

Then please tell us again why you think monetary inflation is necessary for
employment and prosperity.

I think a very low level of inflation is probably the best comporomise.

Reality says

That's what corporate reserve capital is for. Corporate captains running
their corporations on short term paper is no better than individuals relying on
credit cards for funding. That's not financial health for house keeping or
healthy corporation.

I disagree. Forcing coporations to keep large reserves is not the ideal situation. It will hamper corporate investment and job creation.

Reality says

The Federal Reserve spends over $400million a year buying research papers (in
an industry that has only a few hundred practitioners). Here is a link to the
more in-depth analysis:

That's interesting--I wasn't aware how much they spend on research. Obviously, you have a poor opinion of the Federal Reserve so it taints your perspective, but it is possible that they are doing research.

Reality says

The Federal Reserve is the very reason why those megabanks still exist!
Otherwise, they'd have gone bankrupt in the last recession, and therefore
wouldn't be around to pay the billions of dollars of political bribes to silence
the American public.

Yes--the Federal Reserve tried to keep the country's economy from imploding. Like I said though--let's get campaign finance reform and get the money out of politics.

Speaking of no difference between R and D. Do you think a Democratic Supreme Court upholds Citizen United?

tatupu70 says

I think a very low level of inflation is probably the best comporomise.

Monetary inflation is theft from the downstream masses.
i guess you are only advocating petty theft.