patrick.net

control point says

money supply grew more than the economy through the depression and WW2.

Not during the great depression no. It did during WW2 as a means to help finance the war.

The money supply grew in 1967-1980 after 1948. Wealth disparity grew again in the 1970s and grew exponentially after 1980's thanks to the big recession that occurred and has ever since grown rapidly. But the money supply didn't grow rapidly again until the 90s I think and thank's to that we got the dot com bust and ever since then we've been expanding the money supply pretty fast.

So really it still goes back to show that the increase of the money supply has grown the wealth disparity, with the exception of WW2.

But i'll discuss more later I have to go to work.

spydah_hh says

Not during the great depression no.

According to this, money supply bottomed in 1933 and had effectively more than doubled by the time WW2 started in 1941.

http://www.sjsu.edu/faculty/watkins/depmon.htm

Do you see the minor peak on figure 3 around 1933, then falling rapidly after as money supply more than doubled?

Look at the charts!!! What you are saying is 100% untrue!

spydah_hh says

So really it still goes back to show that the increase of the money supply has
grown the wealth disparity, with the exception of WW2.

Nothing, and I mean nothing, of the hard data I have shared with you shows this, at all.

What I have now shown is money supply growing from 1933 through 1980, (47 years) - at the same time as top 1% share of income falling from ~19% to about 9%. Effectively halving.

1. I have shown money supply growing from 1933 through 1942, more than doubling. GDP did not double over same time period.
2. We agree that the money supply grew through WW2.
3. I have shown money supply growing more than GDP from 1947 through present.
4. I provided a chart that showed .5% and 1% share of income from 1910 to present. It shows a falling trend from 1930 to 1980. Money supply only fell from 1930 to 1933. The rest of this time period, money supply grew while inequality fell.

47 years of inequality falling and money supply growing. How do you reconcile this?

spydah_hh says

When you have to find more clients and take money from them in order to pay off
your existing clients, you are by definition running a ponzi scheme

You need to look up the definition of a Ponzi scheme then. A Ponzi scheme depends on always increasing the number of payers into the system. SS does not. That's why it is not a Ponzi scheme.

SS works with a stable population. It does not need growth.

spydah_hh says

Also I can't give you a step by step answer on how the money goes from the fed
to the banks to the hedge funds, mutal funds, and the wealth individuals,
because the in its 100 year history the FED has never been fully audit

Thank you--in other words, you don't know. So, given that you don't actually know how money gets from the Fed to people's pockets and you've been shown data that clearly shows little to no correlatoin between money supply and wealth disparity--any chance you'd rethink your theory?

tatupu70 says

So, given that you don't actually know how money gets from the Fed to people's pockets

http://research.stlouisfed.org/fred2/graph/?g=sM8

tatupu70 says

you've been shown data that clearly shows little to no correlatoin between money
supply and wealth disparity--any chance you'd rethink your theory?

This is where, typically, Fed cultists get their fingers two knuckles deep in their ears.

Let's see how smart this one is.

control point says

This is where, typically, Fed cultists get their fingers two knuckles deep in their ears.

Let's see how smart this one is.

Back at ya, there is a correlation if you don't crater into your graphs.

Certainly now and in the 20s. It is just that inflation is not evenly spread amongst all classes. The opposite was true in deflation but that is not the FED's MO.

The inflation meme is created by the government/cronys which you have sucked like a sponge.

indigenous says

Back at ya, there is a correlation if you don't crater into your graphs.

Right. "you don't crater," meaning don't abandon or cast aside the argument because of the graphs.

In other words, ignore the data and the argument holds. Got it.

indigenous says

It is just that inflation is not evenly spread amongst all classes.

I assume you mean "inflation" here to mean "money supply" since you are a cultist who holds onto 19th century definitions of inflation.

So you are saying that the money supply was not spread evenly across all classes. That is what spydah says - the rich get the money first and this is why they benefit causing inequality. Its not his idea Ron Paul said it a few years ago in an interview.

The problem with all of this is - data shows otherwise. Money supply grew - and the 1% and .5% did not benefit vs. everyone else, from 1933 to 1980.

control point says

I assume you mean "inflation" here to mean "money supply" since you are a cultist who holds onto 19th century definitions of inflation.

The truth is timeless regardless of your coloring it in the pejorative "19th century" thinking.

control point says

So you are saying that the money supply was not spread evenly across all classes. That is what spydah says - the rich get the money first and this is why they benefit causing inequality. Its not his idea Ron Paul said it a few years ago in an interview.

Nobody claimed it was their idea, it is not Ron Paul's either, probably an Austrian's.

But it does illustrate the problem which was most prevalent during the 20s and now.

control point says

The problem with all of this is - data shows otherwise. Money supply grew - the 1% and .5% did not benefit vs. everyone else, from 1933 to 1980.

I would guess that the money supply grew commensurate to the economy. Looking at graphs for inflation I see that inflation was somewhat under control except during WWll and 1970 to 1980. WWll as all wars caused inflation. 1970 is when Nixon took us off of the gold standard followed by the boomers entering the work force.

I would guess that the upper 1% did very well during the war as well?

Even though there has been 6 trillion dollars printed out of thin air the money has not been put into circulation therefore no where near the kind of inflation you would expect.

indigenous says

Even though there has been 6 trillion dollars printed out of thin air the
money has not been put into circulation therefore no where near the kind of
inflation you would expect.

lol--so what's your definition of inflation again? Was that a Freudian slip there?

indigenous says

I would guess that the upper 1% did very well during the war as well?

You would be wrong - look at figure 3. Their share of income fell throughout.

indigenous says

I would guess that the money supply grew commensurate to the economy.

You would be wrong again, the graph provided shows money supply growth outpacing GDP growth.

indigenous says

Even though there has been 6 trillion dollars printed out of thin air the
money has not been put into circulation therefore no where near the kind of
inflation you would expect.

Here is where you are right. You just don't know it. And you also contradict your response here:

indigenous says

The truth is timeless regardless of your coloring it in the pejorative "19th
century" thinking.

Allow me to explain. You said above the money has not made it into circulation so nowhere near the inflation you would expect. You have made this argument before, and correctly identified it as "money velocity" falling.

Well, I pointed out previously that Money velocity is merely derived number = it is GDP/Money Supply.

So what you are saying is that inflation is low in the face of exploding money supply because money velocity is decreasing. Hence, inflation is affected by combination of money supply AND Money Velocity, right?

This is actually true. But lets use some math, shall we?

Inflation = Change in (money supply * money velocity.)
Money Velocity = GDP/Money Supply.
Substitute:
Inflation = Change in (Money Supply * ( GDP/Money Supply))

Therefore, Inflation = Change in (GDP.)

Change in nominal GDP is the sum of all demands this year / sum of all demands last year. To get real GDP, you normalize (compare apples to apples) this years demands to last years demands.

Difference between the nominal and real GDP is inflation.

So, inflation is the difference in demand this year vs. the demand last year of the same goods/services.

Inflation is driven by demand.

tatupu70 says

You need to look up the definition of a Ponzi scheme then. A Ponzi scheme depends on always increasing the number of payers into the system. SS does not. That's why it is not a Ponzi scheme.

SS works with a stable population. It does not need growth.

Yes SS is a ponzi scheme. My definition of a ponzi is the exact same definition you just said.

Please look into SS as you don't seem to understand how it works.

tatupu70 says

Thank you--in other words, you don't know. So, given that you don't actually know how money gets from the Fed to people's pockets and you've been shown data that clearly shows little to no correlatoin between money supply and wealth disparity--any chance you'd rethink your theory?

Like SS you clearly don't seem to understand how the money supply creates wealth disparity and how the FED operates. There are plenty of correlations between money supply and wealth disparity. I've provided my links and my statements just you and control simply refuse to believe in them.

Also how's that higher wagers from one person compared to another person creates wealth disparity argument going? I am still dying for you to tell me how does that person with the higher wage get the wage in the first place.

spydah_hh says

Please look into SS as you don't seem to understand how it works.

I'd ask you to do the same. SS absolutely does not need an expanding population.

spydah_hh says

There are plenty of correlations between money supply and wealth disparity.

Great--please provide some. Any. Because the ones I've seen posted here do not show correlation.

spydah_hh says

Also how's that higher wagers from one person compared to another person creates wealth disparity argument going? I am still dying for you to tell me how does that person with the higher wage get the wage in the first place.

It's going fine. I didn't think I had to go into too much explanation because it's brutally obvious. If one person continuously "earns" more than another, over time their wealth will grow faster and disparity will increase. Isn't that self-expanatory?

There are many ways how/why one person might "earn" more than another. But, that's not the point of the discussion.

control point says

According to this, money supply bottomed in 1933 and had effectively more than doubled by the time WW2 started in 1941.

http://www.sjsu.edu/faculty/watkins/depmon.htm

Do you see the minor peak on figure 3 around 1933, then falling rapidly after as money supply more than doubled?

Look at the charts!!! What you are saying is 100% untrue!

Not sure what that site is but I am getting different readings else where.

http://www.tradingeconomics.com/united-states/money-supply-m0
http://mises.org/content/nofed/chart.aspx?series=TMS
http://bigpicture.typepad.com/comments/2005/11/chart_of_the_we_2.html
http://www.peakprosperity.com/blog/exponential-money-finite-world/29744

tatupu70 says

I'd ask you to do the same. SS absolutely does not need an expanding population.

Omg.. for the last time it does. I've already provided my statements and links same with a few others. If you want to be left in the dark about it be my guess.

tatupu70 says

It's going fine. I didn't think I had to go into too much explanation because it's brutally obvious. If one person continuously "earns" more than another, over time their wealth will grow faster and disparity will increase. Isn't that self-expanatory?

You still didn't explain how that person is earning more and why is that wrong. If a doctor earns more than a taxi driver, are you saying that creates wealth disparity abd enough for people like you to cry over and say, "Hey! That doctor owns too much, I want my fair share!

tatupu70 says

There are many ways how/why one person might "earn" more than another. But, that's not the point of the discussion.

If it isn't then wth is your point?

spydah_hh says

Omg.. for the last time it does.

How do you figure? SS has been running a surplus for the vast majority of its existence. People are living longer so there needs to be an adjustment to reflect that fact--but assuming life spans were stable, there is no reason why an expanding population is necessary.

spydah_hh says

If it isn't then wth is your point?

Are you kidding me? You've gone so far off topic that you don't even remember what the topic was??

The original question was how does inflation/the Federal Reserve cause wealth disparity. You've already admitted that you don't know the answer. And others have shown that historical data doesn't support your thesis.

Do you remember now?

spydah_hh says

You still didn't explain how that person is earning more and why is that wrong

Because it doesn't matter. And it's not "wrong". spydah_hh says

If a doctor earns more than a taxi driver, are you saying that creates wealth disparity abd enough for people like you to cry over and say, "Hey! That doctor owns too much, I want my fair share!

Nope. That's not what I'm saying.

And if indigenous is reading this--that was a stawman

spydah_hh says

Not sure what that site is but I am getting different readings else where.

http://www.tradingeconomics.com/united-states/money-supply-m0

http://mises.org/content/nofed/chart.aspx?series=TMS

http://bigpicture.typepad.com/comments/2005/11/chart_of_the_we_2.html

http://www.peakprosperity.com/blog/exponential-money-finite-world/29744

None of those 4 links provide data on money supply during the Great Depression. Mine does.

They show money supply growth since 1959, which I do not dispute and have already shown. Use one of your links showing money supply growth since 1959, and use this graph (Figure 3) to see falling income inequality from 1959 (11% share for top 1%) to 1980 (9% share of top 1%.) Money supply grows on one graph 1959-1980, inequality falls on the other 1959-1980.

How do you explain that?

I don't enjoy arguing with morons, so last chance.

control point says

Well, I pointed out previously that Money velocity is merely derived number = it is GDP/Money Supply.

How does that account for speculation? or that clearly the velocity of money would be much higher in NY than Jackrabbit gulch NV?

control point says

So what you are saying is that inflation is low in the face of exploding money supply because money velocity is decreasing. Hence, inflation is affected by combination of money supply AND Money Velocity, right?

No it is just money supply the velocity is irrelevant.

control point says

This is actually true. But lets use some math, shall we?

No math is required or apt

control point says

Inflation = Change in (money supply * money velocity.)

As I said before just the money supply and also as compared to the need for additional money.

control point says

So, inflation is the difference in demand this year vs. the demand last year of the same goods/services.

Inflation is driven by demand.

No it is not.

Another thing to consider is that your math is taken from the viewpoint of the aggregate rather than from the viewpoint of how the individual actually behave.

If the velocity of money being exchanged increases then the velocity of goods must also increase. Which limits the velocity of money as only so many goods can be consumed by the customer.

The prices will rise more slowly at the beginning stages of inflation and faster as the inflation continues to a point where it will rise faster than the supply of money towards the final stages of inflation. The point is that the inflation is not proportional to the volume of money. It is actually tied to the desire of the good.

indigenous says

It is actually tied to the desire of the good.

Right. Desire = Demand.

The rest of what you wrote is nonsensical. I don't know why you respond to me; you must be a masochist.

control point says

The rest of what you wrote is nonsensical. I don't know why you respond to me; you must be a masochist

And you say our fingers are up to the 2nd knuckle, yours are up to the third.

Good point about bothering to respond, it is clearly futile.

control point says

I don't enjoy arguing with morons, so last chance.

Well then I think you should stop looking in the mirror.

LOL. Good night guys.

No more high quality macroeconomic education for both of you from me, for free no less.

Let me know when you actually invest real money based on any of your beliefs - I will most likely be a willing and happy counterparty.

control point says

No more high quality macroeconomic education for both of you from me, for free no less.

I know how you feel.

You mean your high quality untested macro economics, that are more delusion than reality. And when they are tested the best you can come up with is ad hominem

control point says

oney supply grows on one graph 1959-1980, inequality falls on the other 1959-1980.

But to answer you question the fall has to do with the tax rates posed on the super wealthy with a few other things.

In 1982 the top tax rate dropped from 81%-91% from the 1940's down to 77% in the 60's and finally 50% in 1982. However, the top marginal tax rate has been at 38.5% since 1987 with some some very small fluctuation here and there except for 1988 where it was 28%. However, this is will my point in the money supply kicks in..

According to your chart the income levels rises around 1987 which is where the top tax rate was 38.5%, in 1993-2003 the top tax rate was at 39.6% yet instead of the wealth disparity staying stagnate for 10 years (like it did from 65-81) it continues to increase rapidly (due to a rapid increase of the money supply) and only drops temporarily after the dotcom bubble.

Even after the Bush tax cuts in 2003 which only reduced it by 4% the wealth disparity continues to increase much more than the rate of the tax cut and even today when Obama increased it back to 39.6% the wealth gap still increases even at a faster pace but only because the money supply is increasing at a faster rate.

Also during the 70s your chart bottoms out which should be so as the money supply increased slowly, however, inflation was high during the 70s and peaked at 81 then quickly turned around to a low by 1983 which is why you see a huge jump of income inequality after 1983. According to my chart in 1983 the money supply jumps again drastically, while taxes were at 50%. Even though taxes don't fall again until 1987 the income equality gap is still rapidly increasing along with the money supply.

My chart and your chart shares the same story. The money supply from the 60s up until the 1983 steadily increase, nothing major but a slow steady increase, however it rapidly increases in 1983, presumably to counter the recession and high unemployment levels (something the FED always does).

Again if you look at my chart with yours you see another rapid increase of the money supply between 2001-2002 from the dotcom bubble while yet inequality still runs rampant but tax on the top stayed around the mid 30% and once again you see an even bigger increase from 2008-2009 while yet again top marginal tax stayed in the mid or even high 30s but yet you still see an even a bigger rate of income inequality.

If anything your chart and my chart share the same story and proves my point.

Here is the straight dope:

http://mises.org/daily/2916

control point says

The inflection points, in the early 1930s and late 1970s, are clear. If money supply was the cause - you would think we would see a change in the money supply as well. We don't - you know and I know that money supply growth has been consistently increasing throughout.

The rate of the increase in 60s-70s was slow, not rapid. I stated this multiple times.

control point says

You have identified it as taxes - and I agree with you. Taxes and regulations - ie restrictions on free market capitalism - were increased starting under the Second New Deal and remained that way

Negative, I identified it as taxes and slow steady of the money supply. Once the money kicked into overdrive it didn't matter what the tax rate was, the wealth gap kicked into overdrive as well.

control point says

Just wanted to point this out - it is a contradiction if you still subscribed to the "money supply = inflation" theory. If inflation was high, then money supply growth must also be high if they are equal.

Incorrect, money doesn't get taken out of the economy over night. You can have money supply increasing slow or fast but with the money supply constantly growing for decades it takes time for all that money to exit the economy even when inflation is high.

Sadly, you didn't learn anything. I am quite disappointed.

You just ignored that once again no matter the tax rate, when the money supply kicks into overdrive so does the wealth disparity.

What will it take for you to learn something? I think i am done giving you free lessons.

spydah_hh says

You just ignored that once again no matter the tax rate, when the money
supply kicks into overdrive so does the wealth disparity.

The data just doesn't show that. Here's how I would look at it:

The tax rates, regulation situation, labor power (leverage) set the stage for whether disparity will grow or fall. Growing money supply simply amplifies the effect.

That's overly simple, obviously...

spydah_hh says

The rate of the increase in 60s-70s was slow, not rapid. I stated this multiple
times.

Are you ready for this? Other than the spike at the peak of the dot com bubble (which, by the way aligns with falling income inequality) - year over year money suply growth ramped up in the 1960s and largely remained rangebound from around 1970 through 2007.

That is, the data once again shows your assertion that "money supply growth in the 1960s and 1970s was slow" at least when compared to the 1980s,1990s, and most of the 200s, is false. If money supply growth in the 1960s and 1970s was slow, it was slow in the 1980s and 1990s as well.

http://research.stlouisfed.org/fred2/graph/?g=sNN

spydah_hh says

What will it take for you to learn something? I think i am done giving you
free lessons.

FFS even your verbal abuse isn't original.

Son, there isn't a single thing you could show me that I didn't already see when poking around mises.org from 2006-2008.

tatupu70 says

The tax rates, regulation situation, labor power (leverage) set the stage for whether disparity will grow or fall. Growing money supply simply amplifies the effect.

So you agree then?

Like I told you you're going to get wealth disparity not matter what. A doctor is going to make more than a taxi driver, a business man is going to make more than his workers, that's just the natural order of economics or economic LAW. However, like you said the growing money supply simply amplifies the effect.

Glad you finally agree.

Now just need to get you to agree on the SS ponzi scheme.

control point says

That is, the data once again shows your assertion that "money supply growth in the 1960s and 1970s was slow" at least when compared to the 1980s,1990s, and most of the 200s, is false. If money supply growth in the 1960s and 1970s was slow, it was slow in the 1980s and 1990s as well.

Now now, lets be consistent you already used my money supply chart and wanted me to explain why the incomes from the 59 though 80s was declining and I already explain why.

Actually no, the money supply drastically increased in 1983 and has so ever since. In fact the drastic increases occurred in 1983, 2001, and 2008. There was more increases to the money supply from 2001 then 1983 but more increases from the money supply in 2008 than 2001. Even today the money supply is still being ramped up more than it was in 2008. What do all those years have in common? Hint starts with an R.

In fact every time we get a recession more money is needed to stimulate the economy and it worked for quite some time. Now though after the 2008 recession the tactic is no longer working and really is just making matters worst as the dollar falls and prices rise, while yet we're still receiving bad economic data. In order words, after decades of being suppressed by the phony economy, the real economy is starting to show its ugly head and it's not pretty. Soon the money supply will increase even more due to more bad economic data but it still won't turn things around, and the bad economics is due to a multitude of reasons. But unlike in 1983 and 2001 we were able to create booms (which are bubbles) to dig us out of the previous recession. However, we exhausted our monetary strategies in creating 2008 bubble, which is why things are still bad and not improving. In fact economic data have gotten much worst since the reduction of QE, it leads me to believe that the FED will increase their QE at some point.

spydah_hh says

Like I told you you're going to get wealth disparity not matter what. A
doctor is going to make more than a taxi driver, a business man is going to make
more than his workers, that's just the natural order of economics or economic
LAW. However, like you said the growing money supply simply amplifies the
effect.

I don't think so. You said inflation/the Fed cause disparity. I say they are not the cause. Unless you now agree that taxes, regulation, labor power/leverage are the true causes. If so, then we agree.

Certainly you will always have disparity--the point is that you want to limit it to a reasonable level. Because the economy simply doesn't function well when disparity gets to current levels. That's why we see all the QE nonsense, bubbles and busts, etc.

spydah_hh says

Now just need to get you to agree on the SS ponzi scheme.

When you figure out the requirements of a Ponzi scheme, then we'll agree.

tatupu70 says

When you figure out the requirements of a Ponzi scheme, then we'll agree.

Funny your definition and my definition were the same. I don't think it's me who needs to figure out what a ponzi scheme is. I think it's you who needs to figure out how social security works.

Perhaps you should explain that to me, how does SS work in your mind?