patrick.net

tatupu70 says

The dollar is a medium of exchange, not a store of value.

It's technically both, and you know it. One need only point to the value of labor which is measured in dollars. And yes, it could be argued that debasing the purchasing power of said medium through rate manipulation and commodity inflation is a sneaky form of larceny.

JodyChunder says

It's technically both, and you know it. One need only point to the value of
labor which is measured in dollars.

Absolutely incorrect. Labor is measured in dollars but that labor value (in dollars) is not a fixed number. Said labor might be worth $10/hour today and $10.03/hour tomorrow.

tatupu70 says

Absolutely incorrect.

No, it absolutely is not. Christ, even Wikipedia gets it.

http://en.wikipedia.org/wiki/Money

It states "The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value."

If you want to make the argument that dollars themselves have no intrinsic value as a commodity, fine. But they are most certainly a store of value. People usually put forth this silly argument to dissuade people from saving.

RE: labor value -- the point isn't whether it's fixed number -- that's a completely separate discussion. The point is that the value of labor is measured by and remunerated in dollars. Therefore, dollars are a store of value. If they were not regarded as such, they wouldn't work very well as a unit of payment.

JodyChunder says

even Wikipedia gets it.

You mean the guy who happened to write the section on Wikipedia. I'll grant you that some people think money should be a store of value. And that it's debatable.

JodyChunder says

RE: labor value -- the point isn't whether it's fixed number -- that's a
completely separate discussion. The point is that the value of the labor is
measured and remunerated in dollars. Therefore, dollars are a store of
value.

The point is absolutely whether it's a fixed number. If it's a "store of value" doesn't that imply that it's not changing? I don't get your argument though. You can value labor in terms of lots of things--big macs, barrels of oil, gold. We use dollars because they are the medium of exchange. It's hard to go to the 7-11 and give them barrels of oil to pay for your smokes.

tatupu70 says

You mean the guy who happened to write the section on Wikipedia. I'll grant you that some people think money should be a store of value. And that it's debatable.

Oh come now. Yes, I slummed it, stooping to use Wikipedia...as opposed to relying on Tatupu70 on patnet. Besides, it's a pretty standard text book definition of money.

tatupu70 says

The point is absolutely whether it's a fixed number. If it's a "store of value" doesn't that imply that it's not changing?

It implies no such thing. Name one commodity that has a "fixed" value; that rises and falls in perfect unison with inflation/deflation across all markets. Any investment or otherwise 'store of value' can potentially suffer from inflation/market volatility.

tatupu70 says

You can value labor in terms of lots of things--big macs, barrels of oil, gold.

But people are not remunerated in Big Macs or barrels of oil (two commodities even more volatile than the dollar index, incidentally -- not cool if you're on a fixed income). Any reasonably stable medium of exchange necessarily has purchasing power which can be deferred in a savings account. Short of massive inflation, that same dollar will hold its relative value in one year or likely even two or three. Therefore, it is a store of value. It isn't perfect, but hey...

tatupu70 says

Robert Sproul says

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

only advocating petty theft.

Bullcrap. If you choose to keep dollars in your mattress, then that's your problem. The dollar is a medium of exchange, not a store of value.

You can't make that shit up! It's a contract that the neither government nor the fed is supposed to break. By your logic people should be free to print/counterfeit their own money - after all it's good for the economy and it's the problem of people who put that money away under their mattress for rainy days if their money is suddenly worthless! Or, if I write you an IOU and then simply declare it worthless, hey, that's your problem, you could have traded it in the meantime for some other shit, why are you holding on to it? This is getting better by the day,

The stability of a currency's value is important so that people don't have to constantly chase the next big MOMO play and then suddenly are left holding the bag after the other players front-runned them and left the building. Or do you want grannys to throw out their money for gold, silver, guns and ammo and also get in on some juicy real estate where prices can only go up?

tatupu70 says

Best for the economy.

The history of the US economy shows clearly that the economy does far better during the absence of central banks than during periods with central banks. Central banks not only account for the Great Depression, the 70's malaise, the current Greater Depression, but also WWI, WWII and American Imperialism of the 20th century and on-going. All of which have grave consequences on American standards of living. It's amazing how one can be blind to the link between the founding of the FED to WWI and WWII, and the final delinking between dollar and gold to 4 decades of no real growth in standards of living among the average working Americans.

tatupu70 says

I don't think you understand--ALL companies rely of short term paper. The interest rate is typically very low, so calling it loan sharking is a bit ridiculous.

Have you ever inquired about factoring discount for your own company? It works exactly like payday loans: you get a 5% discount on an invoice that lasts only a few days to a few weeks! Plus a fee! The effective rate is very high.

tatupu70 says

I really don't. First, I have no problem breaking up the TBTF banks. Second, I'm for getting ALL money out of politics, including the financial industry. Think about it for a second. If you get rid of the Federal Reserve, who will decide when and how much money to create?

Under gold coin standard, the working class men and women decide when and how much money to create: when money supply gets tight, they decide to move out and mine gold! The central bank is a device for robbing the working men and women of that natural right.

Congress? Can you imagine how money money will be spent to buy influence with Congresspeople?

You still believe the fiction of central bank independence? I suppose you are against lifting the debt ceiling? If you are for lifting the debt ceiling and never default on government debt, then the FED is simply forced to buy every debt the Congress and the Treasury creates.

Say you break up the TBTF banks. I guarantee you that the next largest banks will grow and spend just as much once the TBTF banks are gone. You need to fix the problem--not the symptoms.

You are arguing against your own point. The root problem is the FED handing out money to big banks at near-zero interest that the rest of the population is not qualified to receive. The interest difference is money. The banks receiving the provilige pass some of the loot to the political class and thereby control the political class.

Reality says

The root problem is the FED handing out money to big banks at near-zero interest that the rest of the population is not qualified to receive. The interest difference is money. The banks receiving the provilige pass some of the loot to the political class and thereby control the political class.

Tell it, brother.

Reality says

Central banks not only account for the Great Depression, the 70's malaise, the
current Greater Depression, but also WWI, WWII and American Imperialism of the
20th century and on-going.

lol--you forgot about Hurricane Sandy and the Japanese tsunami.

Reality says

Under gold coin standard, the working class men and women decide when and how
much money to create: when money supply gets tight, they decide to move out and
mine gold! The central bank is a device for robbing the working men and women of
that natural right.

You can't be serious. That is so absurd, I wonder if you are pulling my leg.

Reality says

You are arguing against your own point. The root problem is the FED handing
out money to big banks at near-zero interest that the rest of the population is
not qualified to receive. The interest difference is money. The banks receiving
the provilige pass some of the loot to the political class and thereby control
the political class.

No--I don't believe I am. Banks make money in many ways, not just the one you describe. Getting rid of the Federal Reserve won't eliminate bank profits and political donations.

tatupu70 says

Reality says

Central banks not only account for the Great Depression, the 70's malaise, the

current Greater Depression, but also WWI, WWII and American Imperialism of the

20th century and on-going.

lol--you forgot about Hurricane Sandy and the Japanese tsunami.

How else would the wars have been funded if not for the central banking system? How else could bubbles have been as big if not for the central banking system?

tatupu70 says

You can't be serious. That is so absurd, I wonder if you are pulling my leg.

What's absurd of people going digging for gold when economy goes bad under gold standard? That's how the New World was colonized: by people looking for gold when the economy of Europe was going through "winter."

tatupu70 says

Banks make money in many ways, not just the one you describe. Getting rid of the Federal Reserve won't eliminate bank profits and political donations.

There's nothing wrong with banks making profits so long as it's by consumer choice, just like any other business. The problem is not profits, but not going bankrupt after mis-allocating capital to such a severe degree as the TBTF banks did. That prevents other banks that consumers like better from emerging and replacing the existing cabal. What you have in the FED is a monopoly-enforcement mechanism. That's why big banks spend money buying politicians, and the latter in turn make laws that favor the cabal at the expense of the public.

Reality says

What's absurd of people going digging for gold when economy goes bad under
gold standard? That's how the New World was colonized: by people looking for
gold when the economy of Europe was going through "winter."

I think most would consider it progress that people no longer have to go digging for gold when times get bad.

Reality says

The problem is not profits, but not going bankrupt after mis-allocating capital
to such a severe degree as the TBTF banks did. That prevents other banks that
consumers like better from emerging and replacing the existing cabal. What you
have in the FED is a monopoly-enforcement mechanism. That's why big banks spend
money buying politicians, and the latter in turn make laws that favor the cabal
at the expense of the public.

I agree that it would have been better if the TBTF banks weren't TBTF and could have been allowed to go bankrupt without destroying the economy. And I'm all for breaking them up now so if there is a next time, they can be allowed to fail. You are way too fixated on that problem though. Step back and take a look at the bigger picture. Money influences politics everywhere. Look at the military industrial complex. Look at health care. Look at Wall St. We need to stop the problem of money in politics and that problem is far bigger than the TBTF banks.

tatupu70 says

I think most would consider it progress that people no longer have to go digging for gold when times get bad.

Why? Why is removing that option considered "progress"? Do you consider slavery a progress because the option of working to improve one's own condition is removed, and allegedly free food, free housing, free education and free medicine is provided by the slave owners?

tatupu70 says

Step back and take a look at the bigger picture. Money influences politics everywhere. Look at the military industrial complex. Look at health care. Look at Wall St. We need to stop the problem of money in politics and that problem is far bigger than the TBTF banks.

Money influences politics only because a small amount of political spending can net the spender a much bigger profit. Where's that profit from? Government spending in the case of most industries, and monetary privilege in the case of TBTF banks. Without the fiat money system, there wouldn't be the monetary privilege, and without the fiat money system the government would have much less money to give to the military industrial complex or the insurance companies or the meds-dependency industry. They would have to sell their goods and services to the sovereign individual consumer for a change.

Reality says

Why? Why is removing that option considered "progress"? Do you consider
slavery a progress because the option of working to improve one's own condition
is removed, and allegedly free food, free housing, free education and free
medicine is provided by the slave owners?

I don't think that deserves a reply.

As a matter of fact, I think we've exhausted this discussion. You think the Federal Reserve is the root of all evil--I don't.

tatupu70 says

I don't think that deserves a reply.

As a matter of fact, I think we've exhausted this discussion. You think the Federal Reserve is the root of all evil--I don't.

That's because you don't have a reply. A fiat money system pretending to provide everything to everyone for free is essentially a slave plantation running on plantation scrips: the housing, food, clothing, education, and medicine are all "free," at the discretion of the slave owner!

Reality says

That's because you don't have a reply. A fiat money system pretending to provide
everything to everyone for free is essentially a slave plantation running on
plantation scrips: the housing, food, clothing, education, and medicine are all
"free," at the discretion of the slave owner

lol--I figured you couldn't let it lie. That analogy is so ridiculous it doesn't deserve to be dignified with a reply. A fiat money system does not pretend to provide anything for anyone. It is a system that allows more freedom to address imbalances in the economy. Look at the booms/busts under a gold standard and compare it to the much greater stability under a fiat system.

There is no perfect system, but a fiat system has proved to be much more stable than the gold standard.

tatupu70 says

A fiat money system does not pretend to provide anything for anyone. It is a system that allows more freedom to address imbalances in the economy. Look at the booms/busts under a gold standard and compare it to the much greater stability under a fiat system.

The Fiat Money system is what enables the massive government spending and consequent slave plantation, where individual self-improvement is deprecated in favor of everything being "free" at the discretion of the slave owner.

An objective money system (like Gold Standard) allows more freedom by all individuals to address imbalances in the economy (including mining for gold as a way of increasing money supply). A Fiat Money system allows more central planning, allowing the Central Planner more unrestrained power to rig the game for the benefit of himself and his friends.

Boom/bust is much worse under the FED than before. Both the Great Depression and the current Greater Depression are caused by the FED money printing causing the bubbles.

There is no perfect system, but a fiat system has proved to be much more stable than the gold standard.

More stable only for the banking monopoly in terms of staying in power. For the rest of the society, it's far more drastic booms and bust in a money system manipulated by a few than in a money system under which everyone is equal.

The idea that the central planners that caused the imbalances to begin with are the very same ones to address the imbalance is more than absurd. It takes religious faith in believe that nonsense.

Reality says

Interest rate decline is the very purpose of the FED, and its primary tool of manipulation. That's how the FED robs the average savers for the benefit of the super-rich, who are far more likely to leverage than the little guys. Big banks are always the biggest leveragers. Who else can be leverage 50:1 to 500:1 like the top Wall Street banks just before the crash? The whole business model of fractional reserve banking is leveraging.

"US Economic Dominance" is first and foremost the institutional dominance over the individual Americans. . . just like the Roman Imperial dominance of the mediterranean meant the bankruptcy of the individual Roman farmers.

That's exactly it. Case closed.

http://www.zerohedge.com/news/2013-02-05/no-inflation-commodities-highest-ever-time-year

"While every central banker and policy-leech spews forth the government-supplied statistics on inflation - noting that all is well, carry on - we recently pointed out that Gas Prices are their highest ever for this time of year. Of course, the standard supply constraints (or technical) reasoning was applied to dismiss this as transitory (even though it has continued to rise since); but what is perhaps more worrisome is the broad-based nature of the real inflation that is leaking into our global supply chain. The 24-commodity heavy S&P GSCI index (widely recognized as a leading measure of general price movements and inflation in the world economy) has never been as high in early February as it is currently - ever. And with global growth stagnating at best, it seems a tough call to blame 'recovery' for this inflating (fastest pace in 8 years) raw material price leaking cost-push inflation (and margin-compression) into the real economy."

tatupu70 says

You think the Federal Reserve is the root of all evil--I don't.

Me neither -- I don't think it's the definition of evil to be a vassal to the mega banks; just terribly unfortunate.

Reality says

The FED is literally robbing the interest value of money by "legal" counterfeiting.

Exactly, and hence forcing, or trying to force, the robbed over into some risk trade. Preferably the highly manipulated housing market, or the High Frequency cesspool of the stock market.

Chris Martenson's take on recent Fed action.
"The Fed is in uncharted territory, having created a monster it can no longer control. In the process, it is blowing new asset bubbles that are benefitting those with first access to the newly-printed money (banks and corporations) at the expense of savers, pensioners, and anyone exercising fiscal prudence. This, of course, is creating a vast and growing inequality between the top 1% and everyone else"
http://www.peakprosperity.com/blog/80790/qe-for-dummies

Robert Sproul says

Reality says

The FED is literally robbing the interest value of money by "legal" counterfeiting.

Exactly, and hence forcing, or trying to force, the robbed over into some risk trade. Preferably the highly manipulated housing market, or the High Frequency cesspool of the stock market.

Yep that's it - there's a reason why joe sixpack is not allowed to print his own money. And it's not because counterfeiting is "good" or "not as effective" on the market, rates and inflation as we think ;)

Robert Sproul says

Exactly, and hence forcing, or trying to force, the robbed over into some risk trade.

Yep. Its a casino that forces everyone to play. At gunpoint. And if you win, you have to play again.

Great thread, fellas, thanks for this.

Reality says

That's why the real productive economy, the private small business and
individual sector, is being starved of capital running up huge real employment
rate while inflation looms . . . something that you Phillips Curve type claim
would never happen.

Starved of capital?? What in the hell are you talking about? Show me 1 business that is not hiring because it can't get capital. One.

Businesses aren't hiring because there isn't enough demand to justify increasing production. Period.

tatupu70 says

Starved of capital?? What in the hell are you talking about? Show me 1 business that is not hiring because it can't get capital. One.

Businesses aren't hiring because there isn't enough demand to justify increasing production. Period.

"Lack of demand" is just another way of saying the business can not lower price enough to attract more customers. Lower prices always bring in more demand, just look at the Black Friday madness. Why is the business not able to lower price further, perhaps to Black Friday price every day? Oh, because the cost of input factors. So why is the cost of input factors going up or not dropping? Because the government waste and money printing bidding up prices of input factors.

A business' capital is not the money it has per se, but the modus operandi that can turn certain input factors into output products and services that other people want. That is the business capital. FED money printing and giving it to the government to waste is drastically distorting the relative market price of input factors and output affordability, thereby destroying capital in the private sector. That's the root cause of high unemployment.

Reality says

Why is the business not able to lower price further, perhaps to Black Friday
price every day? Oh, because the cost of input factors. So why is the cost of
input factors going up or not dropping? Because the government waste and money
printing bidding up prices of input factors.

Come on. You don't really believe that, do you?

Reality says

A business' capital is not the money it has per se, but the modus operandi
that can turn certain input factors into output products and services that other
people want. That is the business capital. FED money printing and giving it to
the government to waste is drastically distorting the relative market price of
input factors and output affordability, thereby destroying capital in the
private sector. That's the root cause of high unemployment.

No, it's really not. The government is not perfect, I'll agree. But to imply that it is the root cause of high unemployment is ridiculous.

tatupu70 says

Come on. You don't really believe that, do you?

Why not? Why are you married to the idea that money value is constant? All values are relative. People lived very happy lives on $8000/yr income when gasoline was 25cents a gallon back in the 50's. It is the relative values and purchasing power that decide one's standards of living, not nominal amount. The value of money fluctuates over time, the FED endeavors to make sure that its real owners the top banks get paid the nominal amount even when the value of money increases dramatically during economic retrenchment. That has the same effect as raising taxes dramatically on the rest of the economy: a "sin tax" on past behavior taking out the loans. Except with bailouts, the "sin tax" is assessed on the rest of the population to pay the bar tenders and drug pushers who let the bums run up the tab to begin with.

tatupu70 says

No, it's really not. The government is not perfect, I'll agree. But to imply that it is the root cause of high unemployment is ridiculous.

Government is of course the root cause for high unemployment:

1. Employment is rooted in division of labor and free market exchange.

2. Government taxation and regulation gets in the way of free market exchange and division of labor.

3. Government money printing distorts the relative price relationship between input factors and output goods/services, rendering existing business model / capital inoperative.

4. Any "job" that the government creates is essentially a bureaucratic job at a monopoly not subject to market competition, therefore has to be paid in more lost jobs in other sectors.

Reality says

4. Any "job" that the government creates is essentially a bureaucratic job at
a monopoly not subject to market competition, therefore has to be paid in more
lost jobs in other sectors.

But a government employee is stimulating the economy via their own purchases so how is that resulting in "more lost jobs in other sectors"?

Robert Sproul says

Reality says

The FED is literally robbing the interest value of money by "legal" counterfeiting.

Exactly, and hence forcing, or trying to force, the robbed over into some risk trade. Preferably the highly manipulated housing market, or the High Frequency cesspool of the stock market.

This is an interesting theory. Who then is their target mark? A potential millionaire that is sitting on lets say $1 million? I remember back in 2007 they could get around 4.5%-5% interest in their saving accounts which would be around 45-50K a year. So by lowering rates to 0.25% they can only get $2500 on their million. Seems like a good "target" to go after to force into a higher risk trade such as stock and bonds. I don't see a relationship to real estate purchases however. The primary determinant of primary residence is the expected lifetime renting costs, not the opportunity cost of investment per se. Now with investment properties, I guess that could be different.

dublin hillz says

But a government employee is stimulating the economy via their own purchases so how is that resulting in "more lost jobs in other sectors"?

I don't blame you, that scam of an idea promoted by typical statists is about as silly as one can solve hunger by eating one's own flesh! The government employee's entire salary comes from taxation or future taxation that has to be paid the businesses. If the latter, interest will have to be added. How many business would like to be "stimulated" by giving you your entire purchase for free or even paying you interest on top of that?

The key question is this. Yes, it is true that overnight lending rate, QE resulted in these pittances that we are seeing in savings accounts which hurts retirees. On the other hand these policies rescued market values of their 401Ks, IRAs and taxable investing accounts. So in terms of "net" did they benefit or not? I believe that they benefited since the savings rate was abysmally low for a long time and anything that they were able to save was most likely in a 401K vehicle.

Reality says

It is the relative values and purchasing power that decide one's standards of
living, not nominal amount.

I agree 100% with that statement. If we are in a period of deflation and your salary drops faster than the overall price level you lose just like if your salary doesn't rise as fast as inflation. Inflation or deflation doesn't matter. Rise of fall of real wages is what matters. The rest of your paragraph is just more garbage.

Reality says

Government taxation and regulation gets in the way of free market exchange and
division of labor.

The free market is not perfect. Regulation is designed to account for externalities that the free market will ignore.

Reality says

Government money printing distorts the relative price relationship between input
factors and output goods/services, rendering existing business model / capital
inoperative.

I don't agree with that. Money printing adjust noiminal prices, but the relationship between input and output shouldn't change. Inflation is very easily accounted for in business and capital models.

Reality says

Any "job" that the government creates is essentially a bureaucratic job at a
monopoly not subject to market competition, therefore has to be paid in more
lost jobs in other sectors.

See earlier answer about externalities.

dublin hillz says

The key question is this. Yes, it is true that overnight lending rate, QE resulted in these pittances that we are seeing in savings accounts which hurts retirees. On the other hand these policies rescued market values of their 401Ks, IRAs and taxable investing accounts. So in terms of "net" did they benefit or not? I believe that they benefited since the savings rate was abysmally low for a long time and anything that they were able to save was most likely in a 401K vehicle.

Two problems with that line of thinking:

1. The men/women with the savings account is not the same men/women with the 401k/IRA/etc.. In fact, it is statistically true that the lower income lower net-worth individuals have lower percentage of their net worth in the latter and more percentage in the former. So the result of the policy is reverse-RobbinHood. That's on top of the fact that high paper asset price benefit the much more wealthy bankers and fund managers even more than the average shareholders.

2. In the long run, 401ks/IRAs/etc. are also hurt by the bailout: the bad debts are not liquidated, so it functions as a burden on the economy like a tumor that is not removed. All other businesses suffer both because some of them would have to indirectly service the debt or would have to pay higher taxes thanks to the bailout transfer

tatupu70 says

The rest of your paragraph is just more garbage.

Care to elaborate?
Do you not believe that people in the 50's lived happy lives on much lower nominal income than today because the purchasing power of the dollar was higher?
Or do you want to dispute that FED policies are geared towards making big lenders whole in a monetary crunch?

tatupu70 says

The free market is not perfect. Regulation is designed to account for externalities that the free market will ignore.

Why the passive voice? Why don't you tell us "designed" by who? Would that be some very imperfect men who have their own self-interest? Of course market price is not perfect at any given moment. In fact if market price were perfect, there wouldn't be a market at all as people would stop trading!

Yes, every trade involves at least two people who do not agree on the relative value of two items. One thinks Apple is worth more (to himself) than Orange is, and the other Orange is worth more (to himself) than Apple is, therefore they can trade. If both agree that Apples are always worth more than Orange, there wouldn't be a one-to-one trade at all. So imperfection is the reason why market exits. Market exists as a result of individuals voting with their own wallet each attempting to take advantage/correct market price imperfection. So where does that leave your specially privileged "regulator" with his own prejudices and self-interest? Why should he have any more privilege than the rest of the market participants?

tatupu70 says

I don't agree with that. Money printing adjust noiminal prices, but the relationship between input and output shouldn't change. Inflation is very easily accounted for in business and capital models.

That's just more ridiculous Magical Average Thinking. If the Fed prints $1B to buy my paper weight as a way of injecting money into the economy, try to tell me the relative purchasing power between you and me would not change! With that $1Billion in my pocket, I can outbid you on everything you want to buy! Newly created money enter the economy at specific points. Those who get the money first reap the benefit, because the price hasn't gone up yet, at the expense of those who get the money later and have to cope with the result of risen prices.

Money and price are not some magical average, but instruments for information transmission. That instrument/device conveys both the information for new discovery from obscure labs (lower prices propagating from there as the inventor can buy input factors to make his new widget to do the work of existing widgets that cost more) and the information for shortage (as higher prices propagate from disaster zones drawing goods towards it as replacement). Fiat money printing is essentially simulating disaster, and it is a disaster. The logic is clearly illustrated when Krugman repeatedly claim that a war would be his Keynesian solution to a recession.

KarlRoveIsScum says

"With all the money the FED brings into existence it only ever PRINTS ABOUT 2%"

GET A GRIP PEOPLE

1. That 2% is the basis of enormous leverage on top of it. When you have the FED as your back stopper, you can leverage 50:1 or even 500:1.

2. The natural productivity increase rate in an economy (that does not have other more advanced economy to copy) is only 2-4%. The FED printing 2% has the effect of harvesting the bulk of productivity gain (hence individual living standard) to itself and its friends. That's precisely why in the 40 years since the Federal Reserve Note was entirely de-linked from Gold, the working class in America has witnessed their own living standards stall while those connected to the FED have beome extremely wealthy. That's the fundamental source of wealth disparity in this country.

Reality says

Do you not believe that people in the 50's lived happy lives on much lower
nominal income than today because the purchasing power of the dollar was
higher?

No, I don't believe that's the case. Real wages are significantly higher now than in the 1950s. Productivity advances are huge.

Reality says

Why the passive voice? Why don't you tell us "designed" by who? Would that be
some very imperfect men who have their own self-interest? Of course market price
is not perfect at any given moment

Well, obviously the regulations have been designed and put into law over hundreds of years by many, many people. I think it's safe to say all men are imperfect, but I certainly wouldn't assume they were put in out of self-interest. FDA, OSHA, EPA--those were put in out of self-interest??

Reality says

So where does that leave your specially privileged "regulator" with his own
prejudices and self-interest? Why should he have any more privilege than the
rest of the market participants?

He shouldn't. Your example is completely off topic. The regulator doesn't promote apples over oranges.

Reality says

That's just more ridiculous Magical average thinking. If the Fed prints $1B to
buy my paper weight as a way of injecting money into the economy, try to tell me
the relative purchasing power between you and me would not change! With that
$1Billion in my pocket

The Fed doesn't pay $1B for a paper weight either.

tatupu70 says

No, I don't believe that's the case. Real wages are significantly higher now than in the 1950s. Productivity advances are huge.

But not nearly as much as the nominal wages would lead one to believe. The period from 50's through 1970 did witness real wage increase for the working class. However, there has been practically no net increase in real wages for the working class in the 40 years since the early 1970's, despite the productivity gains.

tatupu70 says

Well, obviously the regulations have been designed and put into law over hundreds of years by many, many people. I think it's safe to say all men are imperfect, but I certainly wouldn't assume they were put in out of self-interest. FDA, OSHA, EPA--those were put in out of self-interest??

Of course they were and continue to be. FDA was a classic example of patent drug makers trying to stamp out street competition.

tatupu70 says

He shouldn't. Your example is completely off topic. The regulator doesn't promote apples over oranges.

Bravo! If you agree that the regulator shouldn't have privileges in the market place, then you agree that the regulations that give the regulator privileges should be abolished. That's all regulations are: spelling out the privileges of the regulators in over-riding the wishes of other market participants. For example, the FDA promotes drug makers that have the money to pay for certification process over inexpensive remedies that can not afford the extremely expensive certification process, over-riding the wishes of doctors and consumers who prefer the latter solution on pain of massive fines and jail terms.

tatupu70 says

The Fed doesn't pay $1B for a paper weight either.

The defaulted bad debts that it does buy is worth even less than paper weight. The point is that whatever the FED buys, it has to over-pay; otherwise the seller wouldn't sell to the FED. That puts money in the pocket of the seller. Obviously, you and I do not qualify when the FED is handing out money in exchange for worthless "assets."

Reality says

But not nearly as much as the nominal wages would lead one to believe. The
period from 50's through 1970 did witness real wage increase for the working
class. However, there has been practically no net increase in real wages for the
working class in the 40 years since the early 1970's, despite the productivity
gains.

lol, so now living in the 50's isn't actually better after all. But, you're right that the top 1% has been capturing all the productivity gains in the last 20 years. Here's my question for you: if the Federal Reserve is to blame, why did the top 1% only start getting all the gains in the last 20 years??? You can't answer that because your theory is completely wrong.

Reality says

Of course they were and continue to be. FDA was a classic example of patent
drug makers trying to stamp out street competition.

Really? And here I thought the FDA made sure I didn't die from eating contaminated food. If a drugmaker has a patent, why does it need the FDA to stop competition?

Reality says

Bravo! If you agree that the regulator shouldn't have privileges in the
market place, then you agree that the regulations that give the regulator
privileges should be abolished. That's all regulations are: spelling out the
privileges of the regulators in over-riding the wishes of other market
participants. For example, the FDA promotes drug makers that have the money to
pay for certification process over inexpensive remedies that can not afford the
extremely expensive certification process, over-riding the wishes of doctors and
consumers who prefer the latter solution on pain of massive fines and jail
terms.

Poor logic. I see this a lot. Difficult problems seldom have perfect solutions. Sure--regulations have some drawbacks, but I think the vast majority of people would gladly pay a little extra for products or services to ensure their safety. As long as a regulation has a net positive effect, I say keep it. Even if it means that there might be someone, somewhere, that is inconvenienced by it.

Reality says

The point is that whatever the FED buys, it has to over-pay; otherwise the
seller wouldn't sell to the FED. That puts money in the pocket of the seller.
Obviously, you and I do not qualify when the FED is handing out money in
exchange for worthless "assets."

Do you think the Federal Reserve is in the habit of buying worthless assets? Where did you get that idea?