patrick.net

Bubbabear says

Well from what I've been reading, the mobsters have absolutey nothing to do with this mild recession we've been experiencing by forcing us to eat our own seed corn

Here is another article that supports that point of view, He is saying that the only thing that has supported the graphs on GDP is inflation caused by ZIRP. And that the BLS is cooking the books big time

http://davidstockmanscontracorner.com/part-1-the-zirp-economy-unmasked-zero-growth-in-private-labor-hours-since-1998/?utm_source=wysija&utm_medium=email&utm_campaign=Mailing+List+AM+Wednesday

Yes, my links get deleted by Torahvich, but get ready, this is like a socialist in training move.

If we as a country keep going this way we will be devolving back to a worse than Napoleonic state.

Heraclitusstudent says

At the equilibrium, it is always even

If you continue to print money, it never reaches equilibrium. In addition, it always benefits those who has the first access to the newly minted money. They can buy assets with cheaper prices.

corntrollio says

Any time someone's trying to base something on poorly written and poorly argued op-eds instead of thinking for yourself, you know it's going to suck. A lot of commenters here aren't really capable of doing more than parroting talking points and can't think critically. I dispatched one the other day.

You are flattering yourself, megalomania I believe they call it.

gsr says

Heraclitusstudent says

At the equilibrium, it is always even

If you continue to print money, it never reaches equilibrium. In addition, it always benefits those who has the first access to the newly minted money.

You are exactly right.
The fed creates a permanent disequilibrium and the rich benefit disproportionally. You can see the fed actions as aimed to create ever increasing leverage, or to constantly give more money to the rich. And as such they totally don't make sense.

To bad indigenous is not smart enough to make such pointed remarks.

However it still doesn't mean that all money printing is bad, contrary to the starting point of this thread.

I have argued many times that the fed could simply send a check - for the same value - to every taxpayer every month to maintain stable prices. This way they could let banks fail and housing collapse, with no resulting deflation, and without picking winners or losers.
And they would likely have had to print a lot less that way.

The truth is there are too many interests involved in the printing of money and too many smart ways to give money indirectly to people. Everything you read in a newspaper is rarely the result of idealistic decisions, and almost always the result of conflicts between players in positions of power.

Heraclitusstudent says

To bad indigenous is not smart enough to make such pointed remarks.

I have made that point many time for a long time dumb ass.

Your Keynesian ideology keeps you blind.

indigenous says

Your Keynesian ideology keeps you blind.

/?p=1237900

Heraclitusstudent says

However it still doesn't mean that all money printing is bad, contrary to the starting point of this thread.

I disagree. The central planning of printing and distribution of money is neither efficient nor moral. It always helps well connected ones, or the ones whose votes matter. In fact, it rewards bad behavior, and hence results in further malinvestments.

gsr says

The central planning of printing and distribution of money is neither efficient nor moral.

A collapse of the money supply would be extremely inefficient and also immoral, since it forces people to repay debts with money worth more than it was.

I just described how the fed could send a check of the same value to every taxpayer.
Assuming this is used to maintain the supply of money constant, explain how this would be "inefficient" or not "moral".

Heraclitusstudent says

I just described how the fed could send a check of the same value to every taxpayer.

Assuming this is used to maintain the supply of money constant, explain how this would be "inefficient" or not "moral".

Bad idea, your premise is that you can fix meddling with more meddling.You are not that smart and neither is ben or janet.

It would not work because finding the market price is not a top down activity. It requires billions of decisions at the consumer level.

Read the link by Bubbabear it explains how putting more money into the system encourages people to spend and not save. This has been going on since the late 70's. For production to occur you must have investment from savings. This is defined as deferred consumption. This indicates when a business should invest as an excess of savings creates a lower interest rate in the market place. This does not occur when the FED controls the interest rates.

As the article indicates everyone trades real goods for real goods and use money as a way of making the exchange. E.G. if I am selling machinery and you are selling manure I would assign a value to the machinery based off of market demand and you the same. We would then use money for the trade.

But the process gets skewed with excess money gets pushed into the system, not just by inflation. But also by skewing the purchase preferences and by skewing when the consumer wants the product. In short we are eating our seed corn by not saving.

Good article that I'm sure you will not read:

http://www.realforecasts.com/are-we-eating-our-seed-corn/

indigenous says

It would not work because finding the market price is not a top down activity. It requires billions of decisions at the consumer level.

Your premise is that a currency is part of a market. It is not. Transactions can be cleared in any currency, and that shows the currency is an external factor. If the currency used fluctuates wildly, this is not part of the market, it is an exogenous disruption of the market.

You think everything is meddling. The fractional banking system is unstable by nature and this has nothing to do with gov intervention. And in a large crisis, it can cause large fluctuation of a currency value thereby disrupting markets.

indigenous says

Read the link by Bubbabear it explains how putting more money into the system encourages people to spend and not save.

That's not what I'm talking about. If you print money only to prevent deflation, you don't encourage people to spend. You just prevent them from gaining undue benefits from storing cash in a mattress.

Heraclitusstudent says

If you print money only to prevent deflation

That implies that there would be job losses if money was not printed. Where's the evidence that this would happen? It seems to me to be like scare tactics with red scare back in 1950s and terrorists using dirty bombs in early 2000s. All hype, no substance.

dublin hillz says

That implies that there would be job losses if money was not printed. Where's the evidence that this would happen? It seems to me to be like scare tactics with red scare back in 1950s and terrorists using dirty bombs in early 2000s. All hype, no substance.

There was NO inflation previous to the FED in 1913. You could bury a dollar in 1776, and dig it up in 1912 and it would still buy a dollar's worth of stuff. Inflation is manipulation by the FED.

You INFER that there would be job losses, but that is just your ignorance. Inflation is not necessary to the economy at all.

dublin hillz says

That implies that there would be job losses if money was not printed. Where's the evidence that this would happen?

In an economy like the US today, with the stock of debt that exists, deflation would cause a death spiral leading to the collapse of the financial system worldwide. This would not be a market clearing event, it would be a total destruction event.

If you think this can happen without unemployment, you're a dreamer.

Heraclitusstudent says

In an economy like the US today, with the stock of debt that exists, deflation would cause a death spiral leading to the collapse of the financial system worldwide. This would not be a market clearing event, it would be a total destruction event.

Why is that?

indigenous says

There is nothing wrong with deflation in fact quite the opposite.

If you mean in the US like it was before the fed, there is still something clearly wrong with deflation.

With a fixed money supply, in a society where productivity is increasing, and the population is growing, one could benefit from just storing money. Not investing it. Not taking risks. Not working. Just storing money.

Clearly this is immoral and a very bad incentive to have in a market based society.

indigenous says

Why is that?

Fractional reserve banking.

Heraclitusstudent says

If you mean in the US like it was before the fed, there is still something clearly wrong with deflation.

What?

Heraclitusstudent says

With a fixed money supply, in a society where productivity is increasing, and the population is growing, one could benefit from just storing money.

By definition investment is deferred consumption. So what. The fact is that deflation occurred in 2010 or so because of a shrinking credit market.

Why couldn't money just become more valuable?

indigenous says

By definition investment is deferred consumption. So what.

Storing money is not investment.

There was no deflation in 2008-2010. Just a slowdown of money growth. And we saw the results.
http://research.stlouisfed.org/fred2/series/WM2NS

Heraclitusstudent says

Storing money is not investment.

Why not?

Heraclitusstudent says

There was no deflation in 2008-2010.

Then explain my graph?

Heraclitusstudent says

deflation would cause a death spiral leading to the collapse of the financial
system worldwide

The solution to that would be implementing significant punishments on the so called strategic defaulters.

dublin hillz says

The solution to that would be implementing significant punishments on the so called strategic defaulters.

bad idea

indigenous says

Heraclitusstudent says

Storing money is not investment.

Why not?

Heraclitusstudent says

There was no deflation in 2008-2010.

Then explain my graph?

It seems your problem is you don't understand what an investment is.
And also what the difference between debt and money supply is.

dublin hillz says

The solution to that would be implementing significant punishments on the so called strategic defaulters.

This has nothing to do with strategic defaulters.

indigenous says

If someone is holding money most of them would put the money in a savings account. That money would then be invested by the bank. Even if they put it in a mattress anticipating growth in the value of money that is arbitrage.

That's the point. You don't even need to put it in a bank. You can just store in a mattress and still earn an interest. Why put it in a bank?

Deflation reallocates value in a way that is totally disconnected from value creation. As such it is as evil as inflation.

indigenous says

Any economist considers credit to be a part of the money supply.

Your graph shows a decrease in debt. Not all forms of debts are considered money. No more than stocks are considered money. Just because you hold a paper in exchange for your money doesn't mean you consider this paper "money".

In any case what is your point? There was a deflationary crisis in 2008 if no actual deflation. We saw financial institutions fail. We saw more of them close to failing. We saw the mass economic disruption. We saw the unemployment. All this would have been worse with actual deflation.

Heraclitusstudent says

Deflation reallocates value in a way that is totally disconnected from value creation. As such it is as evil as inflation.

Actually just the opposite value is value, money is the price.

Heraclitusstudent says

Your graph shows a decrease in debt. Not all forms of debts are considered money. No more than stocks are considered money. Just because you hold a paper in exchange for your money doesn't mean you consider this paper "money".

Not true for reasons I explained.

Heraclitusstudent says

In any case what is your point?

The point is that we had deflation and the world did not come to an end.

indigenous says

Actually just the opposite value is value, money is the price.

That's meaningless and doesn't address what I said.

indigenous says

The point is that we had deflation and the world did not come to an end.

Seriously? Were you there in 2008? Credit froze. Bank lending disappeared. The financial system WAS in a state of collapse. Were it not for the extraordinary measures that were taken to stabilize it, the entire thing would go kaboom. And even then we saw the results.

So again, in a context where these measures were taken, what is your point?

Start by studying the control theory, and basic differential equations.

indigenous says

If that were so why the fuck does the store accept your credit card?

This is such a stunning misunderstanding of why some loans are counted as money...

Heraclitusstudent says

That's meaningless and doesn't address what I said.

Bullshit, read the article...

Heraclitusstudent says

Seriously? Were you there in 2008? Credit froze. Bank lending disappeared. The financial system WAS in a state of collapse.

Look at the graph

Heraclitusstudent says

Were it not for the extraordinary measures that were taken to stabilize it, the entire thing would go kaboom. And even then we saw the results.

That is the Kool Aid that mutts like you have taken hook line and sinker

Heraclitusstudent says

Start by studying the control theory, and basic differential equations.

FUCK YOU, you Assume that you know something and that I don't. READ THE ARTICLE ASSHOLE.

Heraclitusstudent says

This is such a stunning misunderstanding of why some loans are counted as money...

I agree you must be stunned to say what you say.

indigenous says

Bullshit, read the article...

indigenous says

READ THE ARTICLE ASSHOLE.

Hey don't blame me if you are unable to explain a point.

indigenous says

Heraclitusstudent says

Storing money is not investment.

Why not?

Lets assume that population doubles in one's lifetime, from age 20-80. A dollar earned and stored in the ground for one years labor at age 20 could be exchanged for 2 years labor at age 80.

Why should my father be able to exchange 1 year of his labor for 2 years of my son's labor, assuming they do the exact same labor?

Not to mention productivity gains...

Heraclitusstudent says

Hey don't blame me if you are unable to explain a point.

Point well taken never argue with idiots...

indigenous says

Point well taken never argue with idiots...

Today we have established that:
1 - you don't understand what the money supply is made of,
2 - you don't know what an investment is,
3 - and you think a crisis that was forcefully stopped is proof that there was no crisis.

I think indeed we can stop the discussion here.

Heraclitusstudent says

dublin hillz says

The solution to that would be implementing significant punishments on the so called strategic defaulters.

This has nothing to do with strategic defaulters.

Why would the financial system be in peril if people honored their obligation to pay back the debts which in hindsight turned out to be linked to overvalued assets at a specific point in time?

Heraclitusstudent says

Assuming this is used to maintain the supply of money constant, explain how this would be "inefficient" or not "moral".

Like I said, it rewards debtors over savers. People who gambled and took big loans get rewarded for the gamble.
This is the purpose of inflation. Inflation rewards debtors at the expense of savers.

Heraclitusstudent says

Seriously? Were you there in 2008? Credit froze. Bank lending disappeared. The financial system WAS in a state of collapse. Were it not for the extraordinary measures that were taken to stabilize it, the entire thing would go kaboom. And even then we saw the results.

The people will say we just kicked can down the road, and postponed the inevitable. Sooner or later, people will realize whether it was a bad decision or not.

Of course, the banking system *seems* fine now, at the expense of other productive sector.

Tell me, do you ever think if we can get out of 0% interest rate or QE?

Watch this video:
http://youtu.be/fKviBNo76iI

gsr says

Like I said, it rewards debtors over savers. People who gambled and took big loans get rewarded for the gamble.

This is the purpose of inflation. Inflation rewards debtors at the expense of savers.

Debtors are also know as "investors." Productivity growth, innovation, and resource maximization are born of investment.

control point says

Debtors are also know as "investors." Productivity growth, innovation, and resource maximization are born of investment.

Then they should be rewarded by the market for taking those risks. The reward should not guaranteed by the government.

If we don't have the natural balance between risk and reward, we get into something like what had happened in 1929 and 2008.

gsr says

The reward should not guaranteed by the government.

The fact that people with those liar/stated income/hardly any money down loans were allowed to do their part to drive up real estate to its asinine valuations from 2004-2007 only to strategically default when they could not refi and market started to tank is what almost lead us to a collapse. And of course their collaborators the wall st firms that sold BS securities to worldwide investors went unpunished. I think this caused more image issues to united states than iraq war and abu graib. When someone does something like this their trustworthiness and credibility is shot.