patrick.net

Call it Crazy says

You have zero control over that, but like I said, go put on your big boy pants, take the plunge, start a business, and you take take care of every employee in the business..

Actually, I do have control. I can vote for people that understand the economy and will make proper policy decisions. I can try to educate folks like you that are either too slow or too easily brainwashed by propaganda to vote for their own self interests. Both of those will do much, much more than opening my own business. We need to change the rules.

Call it Crazy says

I think you're lying, otherwise you wouldn't continually bring up the subject.

Bring up what subject? Inequality? Given that it's the core issue affecting the US economy right now, it seems appropriate to discuss on a forum discussing economics.

Buffet and Gates bring up inequality all the time too. Are they lying?

I needed some good news and I got it.

Rent increase is only $7 more per month for 12 month lease.

I'm safe (relatively) for another year..

Call it Crazy says

Do you REALLY think that? Did the people YOU voted for in the last two elections make the proper policy decisions?

Yep--it happened in the 1930s and it can happen again. If folks like you would ever wake up.

Call it Crazy says

STOP the "discussion" and START some "action".... See, that's the problem with your team... All you spew is diarrhea instead of stepping up and making it happen. Talk is cheap, put some effort into action, otherwise you just remain a whiner!

Opening one successful business won't fix the problems. It has to be done from Washington--changing and passing new changes.

I'm more impressed by bitcoin now that it's being demanded in extortion payments:

https://www.neustar.biz/blog/ddos-extortion-and-bitcoin

The Wogster is a whole herd of irrelevance....

It seems to me that going back on the gold standard would fix the whole enchilada. Not without any pain but it would fix all of the intentional devaluing monkey business, it would fix the inflation monkey business, it would fix the inequality monkey business, it would fix the offshoring money business, it would fix the low interest monkey business, it would fix the savers dilemma monkey business, the low investment in small caps/small business monkey business, it would fix the Fed pulling the interest rate out of their ass monkey business, it would fix the stock buy back monkey business, it would fix the RE bubble monkey business, it would fix the stock market bubble monkey business, it would fix the should I invest in a company with good potential for it's own sake v what is the Fed going to do's sake, it would fix the malinvestment monkey business, it would fix the we need a war monkey business, it would handcuff LBJ and most of his monkey business, it would handcuff Reagan and most of his monkey business, it would handcuff FDR and most of his monkey business.

Hmm maybe we should have a gold standard?

As long as we are indulging in music I prefer this:

Album: Swiss Movement
I love the lie and lie the love
A-Hangin' on, with push and shove
Possession is the motivation
that is hangin' up the God-damn nation
Looks like we always end up in a rut (everybody now!)
Tryin' to make it real — compared to what? C'mon baby!

Slaughterhouse is killin' hogs
Twisted children killin' frogs
Poor dumb rednecks rollin' logs
Tired old lady kissin' dogs
I hate the human, love that stinking mutt (I can't use it!)
Try to make it real — compared to what? C'mon baby now!

The President, he's got his war
Folks don't know just what it's for
Nobody gives us rhyme or reason
Have one doubt, they call it treason
We're chicken-feathers, all without one nut. God damn it!
Tryin' to make it real — compared to what? (Sock it to me)

Church on Sunday, sleep and nod
Tryin' to duck the wrath of God
Preacher's fillin' us with fright
They all tryin' to teach us what they think is right
They really got to be some kind of nut (I can't use it!)
Tryin' to make it real — compared to what?

Where's that bee and where's that honey?
Where's my God and where's my money?
Unreal values, crass distortion
Unwed mothers need abortion
Kind of brings to mind ol' young King Tut (He did it now)
Tried to make it real — compared to what?!

https://www.youtube.com/watch?t=491&v=4qNJfVXxrQU

indigenous says

Hmm maybe we should have a gold standard?

Every thing on your list happened for thousands of years while on a gold standard. Why would it be different this time? If a government wants play games the gold standard is no restriction at all. Never has been.

It would fix the problem of devaluation, inflation (save the governments shaving their currency), inequality (which is a byproduct of inflation), it would fix the offshoring because mercantilism would not be an option as the exchange rate is decided by the market, the interest rate would have to be fixed by getting rid of the Fed but it certainly would handcuff their money printing, also there would be no need for a reserve currency, the bubble would not be crazy like they are now as they could not be fueled by inflation, since the Fed would be handcuffed investment would be about meritocracy, it would severely handcuff war as inflation would be handcuffed.

Yup the gold standard would fix a whole bunch of stuff.

Reality says

The breakdown of Bretton-Woods and turning the USD into pure fiat money led directly to:

1. immediate massive inflation in the 1970's;

2. as the banksters controlled inflation and deflation, they massively benefited the big banks themselves at the expense of the rest of the economy; financial industry profit rose from around 10% of total corporate profit back then to nearly half of total corporate profit in recent cycle peaks.

3. exacerbate wealth inequality as personal connections with the banksters make CEO's far more valuable than workers

You're still posting this nonsense?

1. Banks are more profitable because of deregulation. Why do you think they have to spend so much on lobbying?

2. Each time you come up with a different reason for increasing wealth disparity, they get more and more ridiculous. Please give me an real life example of how a CEO's connections to bankers is worth tens of millions/year.

indigenous says

It would fix the problem of devaluation, inflation (save the governments shaving their currency), inequality (which is a byproduct of inflation), it would fix the offshoring because mercantilism would not be an option as the exchange rate is decided by the market, the interest rate would have to be fixed by getting rid of the Fed but it certainly would handcuff their money printing, also there would be no need for a reserve currency, the bubble would not be crazy like they are now as they could not be fueled by inflation, since the Fed would be handcuffed investment would be about meritocracy, it would severely handcuff war as inflation would be handcuffed.

Yup the gold standard would fix a whole bunch of stuff.

Inequality is not a byproduct of inflation. This should be obvious as inflation has been at very low levels for decades while inequality has been increasing. btw--what's the problem with 2% inflation, anyway? Gold standard would make offshoring worse--fyi, the exchange rate is already determined by the market. As are interest rates. Bubbles, by definition, are not rational, and can happen under strict or loose monetary controls.

Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.

There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.

Disagree..

indigenous says

Disagree..

Oh, well then. Hold the fort. You disagree?? I guess that settles that.

tatupu70 says

Inequality is not a byproduct of inflation. This should be obvious as inflation has been at very low levels for decades while inequality has been increasing.

Not so look at RE and the Stock Market

tatupu70 says

btw--what's the problem with 2% inflation, anyway?

Compounding interest to the point that the dollar is worth 4 cents in 1913 money. Now you will say that wages adjust, but not instantly or in the case we have today of not for 6 years. This is very regressive.

tatupu70 says

Gold standard would make offshoring worse--fyi, the exchange rate is already determined by the market.

Not so it is determined by central banks

tatupu70 says

As are interest rates.

Also central banks

tatupu70 says

ubbles, by definition, are not rational, and can happen under strict or loose monetary controls.

And they always follow loose monetary policy.

tatupu70 says

Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.

Deflation increases the value of ones wages

tatupu70 says

There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.

It is the ONLY real solution

Muttley no matter how many times I say it you still hold up your stupid graphs and claim they show what ever you pull out of your ass.

The basic problem once again is that you are trying to apply the empirical method to something that does not lend itself to the scientific method.

IOWs graphs do not show context.

indigenous says

We have had 4 trillion injected into the economy over the last 6 years, yet the velocity of money is at all time lows. Greenspan made a lot of money available for housing starting in 2000 and it didn't show up/ cause a problem until 2007

The housing bubble was caused by deregulation and outright fraud. Not low interest rates.indigenous says

tatupu70 says

Inequality is not a byproduct of inflation. This should be obvious as inflation has been at very low levels for decades while inequality has been increasing.

Not so look at RE and the Stock Market

I don't know of any measure of inflation that includes assets. Regardless, stock market gains reflect increasing profits and cash flow at corporations. RE reflects a lack of supply.

indigenous says

tatupu70 says

Gold standard would make offshoring worse--fyi, the exchange rate is already determined by the market.

Not so it is determined by central banks

If you don't know basic facts, you really shouldn't post here. You're never heard of the Forex market?

https://en.wikipedia.org/wiki/Foreign_exchange_market

indigenous says

tatupu70 says

As are interest rates.

Also central banks

Wrong again. Seriously--this is very basic stuff. The fact that you have no clue about fundamental economic activity should be eye-opening for you.

https://en.wikipedia.org/wiki/Libor

indigenous says

tatupu70 says

ubbles, by definition, are not rational, and can happen under strict or loose monetary controls.

And they always follow loose monetary policy

Really? Can you support this thesis?

indigenous says

tatupu70 says

Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.

Deflation increases the value of ones wages

Assuming your wages stay the same. Which would most likely NOT be the case. Real wages tend to perform better under low inflation than under deflation historically.

indigenous says

tatupu70 says

There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.

It is the ONLY real solution

Except it failed every time it's been tried.

Call it Crazy says

tatupu70 says

I don't know

That's just another day here at Patnet with you!

Do you ever post anything useful?

tatupu70 says

The housing bubble was caused by deregulation and outright fraud. Not low interest rates.

Another example of the empirical method.

tatupu70 says

I don't know of any measure of inflation that includes assets. Regardless, stock market gains reflect increasing profits and cash flow at corporations. RE reflects a lack of supply.

Telling...

tatupu70 says

If you don't know basic facts, you really shouldn't post here. You're never heard of the Forex market?

Back at ya

tatupu70 says

Wrong again. Seriously--this is very basic stuff. The fact that you have no clue about fundamental economic activity should be eye-opening for you.

Wow

tatupu70 says

Assuming your wages stay the same. Which would most likely NOT be the case. Real wages tend to perform better under low inflation than under deflation historically.

As in today's dollar will buy 4 cents in 1912 goods?

indigenous says

As in today's dollar will buy 4 cents in 1912 goods?

Yep, and productivity gains have allowed today's wages and salaries to substantially outgain inflation.

Inflation is a distraction. If productivity is increasing, the economy is fine. Like I said previously--real wages seem to do better under low to moderate inflation then under deflation.

tatupu70 says

Reality says

The breakdown of Bretton-Woods and turning the USD into pure fiat money led directly to:

1. immediate massive inflation in the 1970's;

2. as the banksters controlled inflation and deflation, they massively benefited the big banks themselves at the expense of the rest of the economy; financial industry profit rose from around 10% of total corporate profit back then to nearly half of total corporate profit in recent cycle peaks.

3. exacerbate wealth inequality as personal connections with the banksters make CEO's far more valuable than workers

You're still posting this nonsense?

No. They are facts, unlike your nonsense.

tatupu70 says

1. Banks are more profitable because of deregulation.

Really? Has the airline industry become massively more profitable after deregulation? Has Uber undermining taxi regulations led to massive profit increase in the taxi industry? What counter-factual planet do you live on? Deregulation does not automatically lead to higher profitability in any industry. It is the heads they win, tail everyone else lose system unique to the financial industry under fiat money system that makes uncontrolled gambling highly profitable. Otherwise, deregulation would just lead to more fierce competition (i.e. reducing profitability for the industry, just like the airline industry after deregulation) and more chances for the banksters either go bankrupt or unable to collect winnings from bankrupt counter-parties, unlike their ability to collect fake winnings from the taxpayers under the fiat money system.

Why do you think they have to spend so much on lobbying?

Because the banking industry is one of the most regulated industries, therefore influencing regulatory details and how regulations are carried out is a big stakes game.

2. Each time you come up with a different reason for increasing wealth disparity, they get more and more ridiculous.

This is not the first time, or even the second time, that I pointed out the fiat money system is a leading force increasing wealth disparity. So your fake surprise is not convincing.

Please give me an real life example of how a CEO's connections to bankers is worth tens of millions/year.

Are you really that dumb as not to recognize the importance of business connections? and how business connections veer into a grey area when it is connections to regulators? Do you really need an explanation on the difference between Goldman Sachs boss vs. the bosses of Lehman and Bear Sterns? Goldman Sachs was the pioneer in encouraging its alums into key government positions; one of the methods it pioneered was rapid vesting of unvested shares and options often worth tens of millions if the person takes a government position (presumably will subsequently make policy choices beneficial to Goldman Sachs). Here are a couple lists of some Goldman alums:

http://www.forbes.com/2007/01/10/treasury-governor-global-business-cz_nw_0111goldman_slide.html

https://prof77.wordpress.com/politics/an-updated-list-of-goldman-sachs-ties-to-the-obama-government-including-elena-kagan/

tatupu70 says

I don't know of any measure of inflation that includes assets.

That's because you are clueless. Asset inflation is very real, and one of the primary drivers behind wealth disparity. The have's have more assets, whereas the have-not's don't have enough exposure to assets. When the artificially low interest rate drives up asset inflation, it disproportionately benefit the have's at the expense of the have-not-and-waiting-to-buy. As a patnet reader, you should be familiar with this, unless you are truly clueless or just a paid shill.

Regardless, stock market gains reflect increasing profits and cash flow at corporations. RE reflects a lack of supply.

Either utter nonsense or pointless distraction. Both stock prices and RE prices are heavily influenced by the interest rate when calculating the present cash value of a future stream of cash flow.

tatupu70 says

Inequality is not a byproduct of inflation.

Inequality is fundamentally a natural human condition: human beings would never have evolved if our female ancestors were non-discriminating and faced men that were all exact equals. However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.

This should be obvious as inflation has been at very low levels for decades while inequality has been increasing.

The real inflation rate, when taken into account asset inflation, has not been "very low." The asset inflation caused by the artificially low interest rate imposed by the FED is exacerbating the inequality.

btw--what's the problem with 2% inflation, anyway?

Are you trying to copy Milton Friedman? He advocated abolishing humans from running the central bank, and let computers keep money supply growth rate at 2% constantly. That has not been the world that we live in. The FED officials have been causing fluctuating inflation rate, not a constant 2%.

Gold standard would make offshoring worse--

Why? Gold standard would slowed down unbalanced trade simply due to depletion of gold on one side of a trade partnership.

fyi, the exchange rate is already determined by the market. As are interest rates.

A fiat currency is not a naturally occurring phenomenon. Exchange rates and interest rates are determined/influenced by how much the central banks are printing the particular fiat currency.

Bubbles, by definition, are not rational, and can happen under strict or loose monetary controls.

Almost all financial bubbles took place under a loose money regime, where money and credits were rapidly created to excess.

Unemployment would rise. Living conditions would be worse. Productivity gains would be reduced.

Why? Do you not understand that employment, living conditions and productivity gains are all results of trade? (reference The Wealth of Nations if you want to quibble about this point). Why do you think a sound money would inhibit trade whereas a debasing money would facilitate trade?

There is a reason why every country has abandoned the gold standard. It's simply a poorer solution.

Every ruling clique has abandoned the gold standard because fiat money is a handy tool for expropriating the working and productive man. If the ruling class can get away with tyranny, it of course would, including monetary tyranny. Sound money is simply a check on the tyranny by the ruling class.

Reality says

However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.

Reality says

Every ruling clique has abandoned the gold standard because fiat money is a handy tool for expropriating the working and productive man. If the ruling class can get away with tyranny, it of course would, including monetary tyranny. Sound money is simply a check on the tyranny by the ruling class.

Yep.

Reality says

Has the airline industry become massively more profitable after deregulation?

Not sure how that's relevant as we're talking about the banking industry. I hope you don't think all regulation is the same--that is pretty small minded. Deregulation didn't lead to more competition in banking, it led to less. Removing Glass Steagall led to massive mergers and less competition. Which led to higher profits and a lot of fraud.

Reality says

This is not the first time, or even the second time, that I pointed out the fiat money system is a leading force increasing wealth disparity. So your fake surprise is not convincing.

But each time you give a slightly different take on it. This time it's access to bankers. .

Reality says

Are you really that dumb as not to recognize the importance of business connections?

Business connections sure. But, business connections are important under any monetary scheme. And that's not what you said. Further, you didn't answer my questions. Give me a concrete example of how access to bankers makes a CEO worth millions more than a guy without inside access to the bankers. Not how Goldman Sachs gets its employees government jobs--that's an entirely different discussion.

Reality says

tatupu70 says

I don't know of any measure of inflation that includes assets.

That's because you are clueless. Asset inflation is very real, and one of the primary drivers behind wealth disparity. The have's have more assets, whereas the have-not's don't have enough exposure to assets. When the artificially low interest rate drives up asset inflation, it disproportionately benefit the have's at the expense of the have-not-and-waiting-to-buy. As a patnet reader, you should be familiar with this, unless you are truly clueless or just a paid shill.

You're hilarious. I didn't say that assets never go up in value, idiot. I said there are no measures of inflation that include assets.

Assets rising in value is a symptom of wealth disparity--not a cause. As a pat.net reader, I am familiar with your nonsense about artificially low interest rates. Low rates are another symptom of high wealth disparity, not because of the Federal Reserve.

Reality says

Inequality is fundamentally a natural human condition: human beings would never have evolved if our female ancestors were non-discriminating and faced men that were all exact equals. However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.

Thanks for the history lesson. Nobody is arguing for complete equality. The second sentence is more of your usual BS. Inflation is a distraction.

Reality says

The real inflation rate, when taken into account asset inflation, has not been "very low." The asset inflation caused by the artificially low interest rate imposed by the FED is exacerbating the inequality.

There is no "real" inflation rate that includes assets. Assets have been rising because of high wealth disparity--it's not the cause.

Reality says

Are you trying to copy Milton Friedman? He advocated abolishing humans from running the central bank, and let computers keep money supply growth rate at 2% constantly. That has not been the world that we live in. The FED officials have been causing fluctuating inflation rate, not a constant 2%.

Huh? Just asking the "inflation is bad" crowd why low to moderate inflation is bad.

Reality says

A fiat currency is not a naturally occurring phenomenon. Exchange rates and interest rates are determined/influenced by how much the central banks are printing the particular fiat currency.

No kidding. Your buddy indigenous claimed that the central banks sets the exchange rate. Which is obviously incorrect.

Wow!

You guys doing gotcha! and proving each other wrong.

Ceptin one side is doing all the proving...

indigenous says

As in today's dollar will buy 4 cents in 1912 goods?

and the average daily wage of $1.33 in 1912 will buy how much goods in 2015? Average wages across all industries were 400 a year in 1900 and 39000 a year 2010. On a six days a week the average daily wage was 1.33 in 1900. A pound of butter was .25 so you could buy 5 lbs of butter with a days wage. On a 5 day work week in 2010 the daily wage is 156.00. Butter is say 4.00 in 2010 and that's generous. So an average worker in 2010 could buy 40 lbs of butter with a days wage. These number hold for pretty much any food staple. Want to look at manufactured goods? Price of a bicycle in 1900 was16.00 or 12 days wages. Today a good bike is $300 or 2 days wages.

Yea, life was grand 100 years ago with that gold standard thing going on. It's really too bad you don't understand that money in and of itself has no meaning, it's only value is to represent goods and services.

tatupu70 says

That's because you are clueless. Asset inflation is very real, and one of the primary drivers behind wealth disparity. The have's have more assets, whereas the have-not's don't have enough exposure to assets. When the artificially low interest rate drives up asset inflation, it disproportionately benefit the have's at the expense of the have-not-and-waiting-to-buy. As a patnet reader, you should be familiar with this, unless you are truly clueless or just a paid shill.

You're hilarious. I didn't say that assets never go up in value, idiot. I said there are no measures of inflation that include assets.

You are only proving the fallacy in your school of economics in defining inflation as survey price of a bureaucratically chosen sampling of consumer goods.

Asset price inflation is very well reflected when inflation is defined by money supply.

Asset price inflation not being included in "government price inflation" led directly to the 1920's bubble as the FED was not seeing the monetary inflation when it focused on consumer price inflation while willfully ignored asset price inflation that brought a windfall to the wealthy. The result of continuous FED stimulation was the crash that led to the Great Depression. Focusing on consumer price inflation alone while ignoring asset price inflation makes the FED bureaucratic monopoly on money all the more susceptible to bubbles and busts . . . perhaps by design! Bubbles and busts are highly profitable to the insiders who can take profit from bubble then short the bubble and have the government forcing taxpayers to pay up for what the counter-party would be unable to pay. Both the bubble and bust are highly profitable to insiders like Goldman Sachs.

Assets rising in value is a symptom of wealth disparity--not a cause. As a pat.net reader, I am familiar with your nonsense about artificially low interest rates. Low rates are another symptom of high wealth disparity, not because of the Federal Reserve.

Of course asset price inflation is highly beneficial to the have's. Federal Reserve is in the business of suppressing interest rates; in fact, its primary business! Low rates enable governments to borrow more in the name of the taxpayers and give the proceeds from the borrowing to insiders via government contracts and "bailouts," further exacerbating wealth disparity. Low rates also enable the insiders to gamble at higher leverage at lower interest rate.

Reality says

You are only proving the fallacy in your school of economics in defining inflation as survey price of a bureaucratically chosen sampling of consumer goods.

Nope--the purpose of CPI and other inflation definitions is to gauge the impact of rising prices. If my Van Gogh painting goes up in value by $10K, it has zero impact on my weekly expenses. Same with my stock portfolio. Even if the price of the Van Gogh is going up due to money supply, restricting money isn't the answer. Redistributing wealth is.

Reality says

Asset price inflation not being included in "government price inflation" led directly to the 1920's bubble as the FED was not seeing the monetary inflation when it focused on consumer price inflation while willfully ignored asset price inflation that brought a windfall to the wealthy.

Hardly. The problem was inequality-just like now.

Reality says

Of course asset price inflation is highly beneficial to the have's. Federal Reserve is in the business of suppressing interest rates; in fact, its primary business! Low rates enable governments to borrow more in the name of the taxpayers and give the proceeds from the borrowing to insiders via government contracts and "bailouts," further exacerbating wealth disparity. Low rates also enable the insiders to gamble at higher leverage at lower interest rate.

The Federal Reserve is in the process of monitoring money supply to create conditions of full employment and low inflation. It only appears that they want low rates now because of the wealth inequality. The economy can hardly function so all they can do to keep it out of recession/depression is to keep a loose monetary policy. The rest of your post is nonsense. Low rates allow everyone to "gamble" at market rates. Bailouts are irrelevant and have nothing to do with the discussion at hand.

tatupu70 says

Inequality is fundamentally a natural human condition: human beings would never have evolved if our female ancestors were non-discriminating and faced men that were all exact equals. However, inflation managed by government officials exacerbates inequality and renders economic advantage to degenerate political cronies.

Thanks for the history lesson. Nobody is arguing for complete equality. The second sentence is more of your usual BS. Inflation is a distraction.

Inflation is a process whereby those who get the new money first reap the benefit of spending new money against old prices, at the expense of those who get the money later who have to spend against new higher prices before the new money arrives in their hands. It's a flow scam benefiting the cronies at the expense of the rest of the society.

tatupu70 says

The real inflation rate, when taken into account asset inflation, has not been "very low." The asset inflation caused by the artificially low interest rate imposed by the FED is exacerbating the inequality.

There is no "real" inflation rate that includes assets. Assets have been rising because of high wealth disparity--it's not the cause.

Your definition of "inflation" by focusing on consumer price alone has led to wrong monetary policies numerous times, because consumer price inflation is not the complete picture on inflation. People can put new money towards anything they want. In order to see the whole picture, you have to count asset price inflation along with consumer price inflation and producer price inflation (for intermediate goods).

Asset rising is not caused by wealth disparity but caused by decreasing interest rate: lower interest rate makes the present value of a future cash stream higher. It's just like a 10year coupon bond would be worth more at present if interest rate is higher; the coupon bond still pays out the exact same amount of coupon at each period, there is no increase or change in future wealth created. However, when the interest rate is lower, the present cash value is higher. Fairly simple math and accounting, none of which you seem to understand.

tatupu70 says

Are you trying to copy Milton Friedman? He advocated abolishing humans from running the central bank, and let computers keep money supply growth rate at 2% constantly. That has not been the world that we live in. The FED officials have been causing fluctuating inflation rate, not a constant 2%.

Huh? Just asking the "inflation is bad" crowd why low to moderate inflation is bad.

"Low to moderate inflation" is subjective. Government officials managing and creating inflation is what makes inflation bad: because government officials are human beings too, and they have friends and families who can benefit from the new money at the expense of the rest of the society who receive the new money later. Inflation created by government is not exactly carried out by burying random jars of cash to be discovered, like John Maynard Keynes suggested. In fact, mineral gold under gold standard is actually somewhat like the randomly buried jars of cash recommended by Keynes. LOL!

tatupu70 says

A fiat currency is not a naturally occurring phenomenon. Exchange rates and interest rates are determined/influenced by how much the central banks are printing the particular fiat currency.

No kidding. Your buddy indigenous claimed that the central banks sets the exchange rate. Which is obviously incorrect.

Many (most) central banks have "target rates" for both exchange rates and interest rates: they approximate/achieve those targets by pulling on the levers of money creation.

tatupu70 says

You are only proving the fallacy in your school of economics in defining inflation as survey price of a bureaucratically chosen sampling of consumer goods.

Nope--the purpose of CPI and other inflation definitions is to gauge the impact of rising prices. If my Van Gogh painting goes up in value by $10K, it has zero impact on my weekly expenses. Same with my stock portfolio. Even if the price of the Van Gogh is going up due to money supply, restricting money isn't the answer. Redistributing wealth is.

Utter nonsense. You are repeating the exact same mistake that the FED made in the 1920's, and again in the 1990's: the FED focused on consumer price inflation and allegedly not seeing any, therefore allowed for all sorts of stimulative monetary policies despite obvious rising asset prices, eventually leading to massive bubble and crash!

The purpose of measuring inflation is to estimate money supply conditions in the economy, because money supply is what the central bankers have influence/control over. The idea that CPI is the full picture for inflation has repeatedly proven to be wrong, repeatedly leading to disasterous monetary policies, that massively enrich the wealth and then plunge the whole economy into depression to be paid for by the rest of the society. Perhaps, that is precisely the purpose of wannabe central planners using CPI as stand-in for real inflation!

Reality says

Inflation is a process whereby those who get the new money first reap the benefit of spending new money against old prices, at the expense of those who get the money later who have to spend against new higher prices before the new money arrives in their hands. It's a flow scam benefiting the cronies at the expense of the rest of the society.

Bullshit. Please explain to me how anyone "gets the new money first" How does that process work? Is there a line at the Federal Reserve where I can go to get the new money? Or do you have to work at Goldman Sachs to get in that line?

Reality says

Asset rising is not caused by wealth disparity but caused by decreasing interest rate: lower interest rate makes the present value of a future cash stream higher. It's just like a 10year coupon bond would be worth more at present if interest rate is higher; the coupon bond still pays out the exact same amount of coupon at each period, there is no increase or change in future wealth created. However, when the interest rate is lower, the present cash value is higher. Fairly simple math and accounting, none of which you seem to understand.

Nope--the main cause is wealth disparity. Rich save a much higher percentage of their marginal increase than do the poor. So, as wealth disparity increases, assets get bid up as money goes from the poor and middle class (who would spend it) to the 1% (who invest it). You're right that low rates will naturally cause the present value of any future stream of cash to increase, but it's a small effect compared to the effect of increasing wealth disparity. Further, the low rates are also caused by inequality-so it's the root cause in both cases.

Reality says

Government officials managing and creating inflation is what makes inflation bad: because government officials are human beings too, and they have friends and families who can benefit from the new money at the expense of the rest of the society who receive the new money later.

Again--Bullshit.

Reality says

Many (most) central banks have "target rates" for both exchange rates and interest rates: they approximate/achieve those targets by pulling on the levers of money creation.

Again--so what? They don't set exchange rates. They are set by a market. I can't believe you are arguing this.

tatupu70 says

The Federal Reserve is in the process of monitoring money supply to create conditions of full employment and low inflation. It only appears that they want low rates now because of the wealth inequality. The economy can hardly function so all they can do to keep it out of recession/depression is to keep a loose monetary policy. The rest of your post is nonsense. Low rates allow everyone to "gamble" at market rates. Bailouts are irrelevant and have nothing to do with the discussion at hand.

The economy can barely function precisely because the FED price-control on money. If the government tries to price-control on bread, flour and other food, the result would be shortage of food and mass starvation, just like happened in numerous countries throughout history.

Why are they trying to price-control money? Because the government itself severely in debt, and because the big banks are heavily in debt. The extremely low short-term interest rate enabled the big insider banks to borrow at next to nothing to service existing debts.

That price-control on money is precisely why we have repeated misallocation of capital in recent decades. Low rates do not allow everyone to gamble at market rates: you try borrowing at 0.25%! In a free market place, there would be very little reason why a bank with massive bad debts should have been able to borrow at rates much lower than what you or I can borrow with our pristine credit. Yet, those functionally bankrupt banks being able to borrow at extremely favorable rates was precisely what happened.

tatupu70 says

Inflation is a process whereby those who get the new money first reap the benefit of spending new money against old prices, at the expense of those who get the money later who have to spend against new higher prices before the new money arrives in their hands. It's a flow scam benefiting the cronies at the expense of the rest of the society.

Bullshit. Please explain to me how anyone "gets the new money first" How does that process work? Is there a line at the Federal Reserve where I can go to get the new money? Or do you have to work at Goldman Sachs to get in that line?

Instead of throwing around content-free epithets, you should really learn how inflation works in the real economy: inflation does not hit all prices at all locations at the same time. When the government borrows a new $1T into existence, it spends the money on government contractors and government employees first. Those first recipients of new money get to spend the new money against old lower prices before prices are bid up. The new money gets into other people's hands after bidding up prices. Those who get the money later would see the prices rise first before the new money arrives in their pockets. That's why prices are so much higher in DC, NYC and SF (all places where newly created money arrive first) than the fly-over country.

tatupu70 says

Nope--the main cause is wealth disparity. Rich save a much higher percentage of their marginal increase than do the poor. So, as wealth disparity increases, assets get bid up as money goes from the poor and middle class (who would spend it) to the 1% (who invest it). You're right that low rates will naturally cause the present value of any future stream of cash to increase, but it's a small effect compared to the effect of increasing wealth disparity. Further, the low rates are also caused by inequality-so it's the root cause in both cases.

You have the cause and effect entirely backwards. Assets get bid up because of new money creation. Without new money creation, even the rich would have to sell a different asset in order to buy an asset. Because, obviously, even you realize the rich do not get rich by letting existing money sit idle collecting next to no interest. Leverage and new money creation are what bid up asset prices in general. Low rates obviously facillitate leverage and new money creation: to the benefit of the have's.

Reality says

Instead of throwing around content-free epithets, you should really learn how inflation works in the real economy: inflation does not hit all prices at all locations at the same time. When the government borrows a new $1T into existence, it spends the money on government contractors and government employees first. Those first recipients of new money get to spend the new money against old lower prices before prices are bid up. The new money gets into other people's hands after bidding up prices. Those who get the money later would see the prices rise first before the new money arrives in their pockets. That's why prices are so much higher in DC, NYC and SF (all places where newly created money arrive first) than the fly-over country.

No, the epithet was well placed. And the post had the content needed to show your errors. The government spends X. How do you determine which of that X is the "new" money. Welfare spending went up--so the welfare recipients are getting the "new" money? They're bidding up the stock prices?

This whole theory of yours is ridiculous anyway because you're talking about fiscal spending which the Federal Reserve has ZERO control over. Are you now saying it isn't the Fed causing the inflation?

Government contractors are in NYC and SF? Really? Please tell me more.

Bullshit. Please explain to me how anyone "gets the new money first" How does that process work?

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I'm interested to hear how you think that money (currency) enters the system.