beowulf 1 #26 August 25, 2012 Whether money is electronic or physical increasing the monetary base has the same effect of devaluation. It doesn't matter if you lower the gold content of a coin or do QE it in the end is the same problem. The difference with a gold standard is that it's harder for the gov to inflate. Inflation hurts the middle and lower classes the most because they are less able to invest to protect their purchasing power. Quote Share this post Link to post Share on other sites
beowulf 1 #27 August 25, 2012 The problem with a fiat currency is its continuous issuance of credit to keep going. It always leads to an over issuance of credit and continual devaluation of the currency. The dollar will never trend upward in value. At some point it will reach a value of essentially 0. Quote Share this post Link to post Share on other sites
nanook 1 #28 August 26, 2012 QuoteThe problem with a fiat currency is its continuous issuance of credit to keep going. It always leads to an over issuance of credit and continual devaluation of the currency. The dollar will never trend upward in value. At some point it will reach a value of essentially 0. Sounds like a Govt handling problem, not a syle of money problem. Besides, why would you want the dollar to trend upward? Isn't stability what one wants with Gold? Upward can be bad too. But gold is not perfect either. Even if you can "peg" its value, historically, purchase parity was used around its inflexibily therefore the economic system was still able to be manipulated. So the whole argument of "value" are moot points when it comes to "which money system is better" The problems with gold are: It doesn't allow economic capacity to grow because the money supply can't grow with it (this isn't the 1800's). High short-run price voltality, and in the case of deflation, borrowers have a new worry as their debts increase in value while their pay decreases. . .ect. A steady flow of mild inflation is more desirable than a fear of deflation one expects when the money is at null activity from inflation or deflation_____________________________ "The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln Quote Share this post Link to post Share on other sites
ShcShc11 0 #29 August 26, 2012 QuoteWhether money is electronic or physical increasing the monetary base has the same effect of devaluation. It doesn't matter if you lower the gold content of a coin or do QE it in the end is the same problem. The difference with a gold standard is that it's harder for the gov to inflate. Inflation hurts the middle and lower classes the most because they are less able to invest to protect their purchasing power. The point for QE is to have more money supply in the economy. Let's say you have 2 tickets for babysitting and I have 2 tickets too. You use your 2 tickets and I go on to babysit twice for you. I now have 4 tickets. I am keeping the 4 tickets for a "rainy day" (aka SAVING). What happens to our economy? My motivation to keep them is higher than to spend them. We are now in a recession and other people who would want to get these tickets are not getting any. That is unless someone (the central bank) issues more of these. QE makes the economy rolling (and by extension the middle and lower class). Inflation inflates DEBT as well (which helps the lower and middle class). Cheers! Shc Quote Share this post Link to post Share on other sites
beowulf 1 #30 August 26, 2012 Gold isn't perfect. I never claimed that. There are advantages to having a gold standard. Attempting to manipulate the economy by trying to 'peg' it's value doesn't work and I don't think is a desirable thing to do. It's not a moot point. The whole point of having a gold standard is to reduce the ability of the Gov to increase the money supply and try to control interest rates. Under a gold standard the value of gold was fairly stable over time. I don't consider a fiat currency to be stable when it is constantly devaluing. Deflation is not always a bad think. Price deflation of goods is often a good thing like the drop in computer prices. I think inflation is much much worse. I think the Gov is currently under estimating inflation and soon we will see much more noticably higher inflation. The Fed is currently pay interest on bank reserves to try and control inflation. I don't think that will work for very long. Quote Share this post Link to post Share on other sites
beowulf 1 #31 August 26, 2012 QuoteQuoteWhether money is electronic or physical increasing the monetary base has the same effect of devaluation. It doesn't matter if you lower the gold content of a coin or do QE it in the end is the same problem. The difference with a gold standard is that it's harder for the gov to inflate. Inflation hurts the middle and lower classes the most because they are less able to invest to protect their purchasing power. The point for QE is to have more money supply in the economy. Let's say you have 2 tickets for babysitting and I have 2 tickets too. You use your 2 tickets and I go on to babysit twice for you. I now have 4 tickets. I am keeping the 4 tickets for a "rainy day" (aka SAVING). What happens to our economy? My motivation to keep them is higher than to spend them. We are now in a recession and other people who would want to get these tickets are not getting any. That is unless someone (the central bank) issues more of these. QE makes the economy rolling (and by extension the middle and lower class). Inflation inflates DEBT as well (which helps the lower and middle class). Cheers! Shc I understand why they did the QE's and Operation Twist. I don't think they worked at all and QE 3 is not going to have the desired effect and will just make things worse. I don't think inflation helps the middle and lower classes much at all if any. I think it hurts them a lot. The decreased purchasing power is why it hurts them more. Food and other necessities become more expensive. Savings is not a bad thing as you seem to think per Keynesian economics. I think the Austrian economic view of savings makes much more sense. Look it up as I really don't have the time to try and write it out here for you. Quote Share this post Link to post Share on other sites
kallend 1,623 #32 August 26, 2012 Quote I don't think inflation helps the middle and lower classes much at all if any. I think it hurts them a lot. Helped me a lot when I had a big mortgage.... The only sure way to survive a canopy collision is not to have one. Quote Share this post Link to post Share on other sites
StreetScooby 5 #33 August 26, 2012 Quote Let's say you have 2 tickets for babysitting and I have 2 tickets too. You use your 2 tickets and I go on to babysit twice for you. I now have 4 tickets. And those four tickets will always be worth four babysitting transactions between you and the other market participant. The government will never be able to effect that exchange rate, and that's a good thing in this instance. Quote I am keeping the 4 tickets for a "rainy day" (aka SAVING). What happens to our economy? My motivation to keep them is higher than to spend them. We are now in a recession and other people who would want to get these tickets are not getting any. Why aren't those other people getting baby sitting tickets? Could it be they haven't worked for them, i.e., earned them? Why haven't they earned them? Are there not enough baby sitting market transactions out there? Are those people not willing to apply themselves here? Or, is the government keeping those transactions from happening? Whatever the case, if I was actively involved in earning babysitting tickets, I certainly would not want the government printing and giving them to others who hadn't applied the same level of effort as myself.We are all engines of karma Quote Share this post Link to post Share on other sites
StreetScooby 5 #34 August 26, 2012 Quote I understand why they did the QE's and Operation Twist. I don't think they worked at all and QE 3 is not going to have the desired effect and will just make things worse. If you continue to disagree with people on this, they'll just call you stupid, but I'm sure you already know this. BTW, I agree with your statement. Quote I don't think inflation helps the middle and lower classes much at all if any. I think it hurts them a lot. The decreased purchasing power is why it hurts them more. Food and other necessities become more expensive. Plus, people living on fixed incomes get hit. Only Keynesians think this way, and it's simply not working. That way of thinking has dug an enormous hole, and now we're being told the only way to get out of the hole is to keep digging. It simply defies common sense. But, no, they'll just say we don't understand. It's to the point where it's ridiculous. Quote Savings is not a bad thing as you seem to think per Keynesian economics. I think the Austrian economic view of savings makes much more sense. Look it up as I really don't have the time to try and write it out here for you. Yes, ShcShc11 is a consummate Keynesian. I think his posts are well informed in that regard, and well thought out. I always take the time to read them, and peruse the links he shares. And a lot of the time, I learn something. I love it when that happens. I bought both Keynes' General Theory of Unemployment, and Hayek's The Road to Serfdom. The introduction to Keynes' book is tremendous. But the book itself assumes out the door you are well versed in Classical Economics. Simply put, it is not a beginners text. Keynes is extraordinarily meticulous with his language, and I can see where people can get completely wrapped up in its beauty. I found Hayak much more difficult to read. At times, it was impenetrable. Bottom line, Keynes focuses much of his attention on consumer spending, and the government's relation to it. Hayek, on the other hand, uses the phrase "intermediate means of production" a lot. Now, just what does that mean? His focus is on the supply chain, and companies are explicitly accounted for in his thinking. What current Keynesian thinking fails to explicitly account for is that consumers must have jobs in order to spend. As such, corporations need to be explicitly considered. I read an internal Fed paper justifying the QEs recently, that was simply rife with Keynesian thinking. Their conclusion was - we need to manage expectations. Literally, that was the best they could do. It was entirely focused on "consumer spending", in vocabulary and thinking. No where, and I mean no where, did they explicitly discuss the needs for corporations in that paper. Do they actually think the utility function for a housewife is any where near the same as the utility function for a corporation? Sure, in an appendix describing the math there was a brief section where a company was approximated as a consumer. That was the extent of their thinking. I was appalled. You hear Obama and his minions constantly throw numbers out about Romney/Ryan that are firmly grounded in a static analysis, i.e., the economy won't grow. Why is that? Because they don't know how to do a dynamic analysis. Taxes actually DO NOT MATTER, when you're doing a STATIC ANALYSIS. Modern day Keynesian economists running our government don't think you need to do a dynamic analysis. Considering most of them have never had real jobs, I'm not surprised they don't make the effort. Bottom line, I see Keynesian thinking as being in left field. It's a beautiful philosophy, where you can draw conclusions... that simply don't work in the world today. And when it doesn't work, their reply is - well, if you had just done more of it, it would have worked. Baloney.We are all engines of karma Quote Share this post Link to post Share on other sites
billvon 2,396 #35 August 26, 2012 >The only real "value" of gold is it doesn't corrode. An ounce today will be an ounce a >thousand years from now, but that doesn't mean it's actually "worth" anything. Agreed - but by that sense neither is money. It's just paper (or electrons.) However, since gold is limited in amount, it serves as a good basis for a currency; it is not easy to fabricate. Quote Share this post Link to post Share on other sites
billvon 2,396 #36 August 26, 2012 >But value in the economy is not so limited. Why should you putting in a productive >week at work not add any value to the economy? ?? It does. But people work for paper money today; the fact that they do not manufacture paper does not mean they do not add value to the economy. Quote Share this post Link to post Share on other sites
StreetScooby 5 #37 August 26, 2012 Quote Quite sad they've stooped this low in economics. BTW, they're just going to have a commission to look into it. They are far from making a decision to go that route. I doubt they'll take it. I do expect the commission to table relevant topics, and thus focus said issues for further debate.We are all engines of karma Quote Share this post Link to post Share on other sites
beowulf 1 #38 August 26, 2012 Inflation helped your debt at the expense of those that are less able to deal with decrease of the purchasing power of the dollar. Btw I am in Chicago today going to sit in the rain and watch the cubs play. Will be in IL till Sunday. Quote Share this post Link to post Share on other sites
beowulf 1 #39 August 26, 2012 It wouldn't be the first time I have been called stupid! Quote Share this post Link to post Share on other sites
beowulf 1 #40 August 26, 2012 QuoteBottom line, I see Keynesian thinking as being in left field. It's a beautiful philosophy, where you can draw conclusions... that simply don't work in the world today. And when it doesn't work, their reply is - well, if you had just done more of it, it would have worked. Baloney. I am in agreement with you on this. Quote Share this post Link to post Share on other sites
kallend 1,623 #41 August 26, 2012 QuoteInflation helped your debt at the expense of those that are less able to deal with decrease of the purchasing power of the dollar. . Indeed, but there were an enormous number of middle class "baby boomers" in exactly the same state I was in. Inflation helped a very very large number of the boomers. People on fixed incomes did lose out unless they had assets that grew faster than the inflation rate (like my house did).... The only sure way to survive a canopy collision is not to have one. Quote Share this post Link to post Share on other sites
beowulf 1 #42 August 26, 2012 It seems to me that the baby boomers benefited from the housing bubble if they sold before it burst, not so much now or if they took out a housing equity loan and are under water. You can always find someone who is benefiting from inflation. But I think the long term results are over all negative. So much for seeing the cubs play, heading back to my dads house. Quote Share this post Link to post Share on other sites
ShcShc11 0 #43 August 27, 2012 Quote Quote Quote Whether money is electronic or physical increasing the monetary base has the same effect of devaluation. It doesn't matter if you lower the gold content of a coin or do QE it in the end is the same problem. The difference with a gold standard is that it's harder for the gov to inflate. Inflation hurts the middle and lower classes the most because they are less able to invest to protect their purchasing power. The point for QE is to have more money supply in the economy. Let's say you have 2 tickets for babysitting and I have 2 tickets too. You use your 2 tickets and I go on to babysit twice for you. I now have 4 tickets. I am keeping the 4 tickets for a "rainy day" (aka SAVING). What happens to our economy? My motivation to keep them is higher than to spend them. We are now in a recession and other people who would want to get these tickets are not getting any. That is unless someone (the central bank) issues more of these. QE makes the economy rolling (and by extension the middle and lower class). Inflation inflates DEBT as well (which helps the lower and middle class). Cheers! Shc I understand why they did the QE's and Operation Twist. I don't think they worked at all and QE 3 is not going to have the desired effect and will just make things worse. I don't think inflation helps the middle and lower classes much at all if any. I think it hurts them a lot. The decreased purchasing power is why it hurts them more. Food and other necessities become more expensive. Savings is not a bad thing as you seem to think per Keynesian economics. I think the Austrian economic view of savings makes much more sense. Look it up as I really don't have the time to try and write it out here for you. "I don't think inflation helps the middle and lower classes much at all if any. I think it hurts them a lot.'' Whether it helps them or not is not an opinion. Its a fact that inflation helps them with debt-erosion and it is also the reason why deflation is catastrophic. Deflation essentially makes debt harder to pay by extension. And I do know everything about Austrian economics. They have been wrong very often since the 2008 crisis... (''very often'' in polite wordings). Look at the 10 years bond and fact-check with what they predicted under their models in 2009. Same with the inflation. Their theories don't work. Cheers and good day Shc Quote Share this post Link to post Share on other sites
StreetScooby 5 #44 August 27, 2012 Quote And I do know everything about Austrian economics. Do you consider yourself a Keynesian?We are all engines of karma Quote Share this post Link to post Share on other sites
ShcShc11 0 #45 August 27, 2012 QuoteQuote And I do know everything about Austrian economics. Do you consider yourself a Keynesian? Not necessarily. I never truly liked black&white labels... (kind of like are you a "Christian" or "Atheist"). My views tend to be "Keynesian" mainly because of the economic situations caused by the 2008 events. Milton Friedman (the father of Reagan's economics) said: "If monetary policy is insufficient, then the federal spending has to reign in". Mr. Friedman is in no way seen as a "Keynesian", my views are essentially the same as his in the circumstances we are currently in. Its very clear that interest rates can't be further lowered in the U.S (bc Interest Rates can't be in the negative) so we don't really have any choice but to spend in order to "compensate" the interest rates. But people simply tend to mix up subjects like: "Are gov spending spent efficiently?" or worse "all gov spending is evil". Irrelevant subjects bc the gov has no other choice. If the Fed could lower another 3% int rate, free to use QE and depreciate the currency then gov spending is unnecessary (and I would stop advocating it). -> Canada in the 1990s are a good example of this success. They've cut spending, but they wholly compensated it with monetary policy and depreciated currency (0.6$ CND = 1$ U.S back in 1995) now in 2012, its (1$ CND = 1$ U.S). The U.S don't have these options Cheers! Shc Quote Share this post Link to post Share on other sites
StreetScooby 5 #46 August 27, 2012 Quote Not necessarily. I never truly liked black&white labels... (kind of like are you a "Christian" or "Atheist"). My views tend to be "Keynesian" mainly because of the economic situations caused by the 2008 events. Milton Friedman (the father of Reagan's economics) said: "If monetary policy is insufficient, then the federal spending has to reign in". Mr. Friedman is in no way seen as a "Keynesian", my views are essentially the same as his in the circumstances we are currently in. Thanks for sharing that. Quote ...so we don't really have any choice but to spend in order to "compensate" the interest rates. I forget the name of the condition, but it's one where you keep spending and it doesn't make any difference (liquidity trap?). If that's the case, why keep spending? Where's the limit to the spending? Quote Irrelevant subjects bc the gov has no other choice. Sure this govt has a choice. They could change their policies and allow people to get back to work. The Obama administration has shut down oil exploration. My uncle, who has worked for 30 years in the gulf, hasn't worked in over a year. A good friend of mine is head of Gulf operations for a major oil company. They haven't had a license issued to them in a long time. Revenue from oil explorations (license, fees, taxes) used to be the 2nd highest revenue stream to the government.We are all engines of karma Quote Share this post Link to post Share on other sites
billvon 2,396 #47 August 27, 2012 > The Obama administration has shut down oil exploration. =============== Mar 28, 2012 1:11pm Obama OKs Oil Exploration Along Atlantic Coast The Obama administration today endorsed new oil and gas exploration along the Atlantic Coast, setting the stage for possible future drilling lease sales. The announcement by the Interior Department sets into motion what will be at least a five year environmental survey to determine whether and where oil production might occur. =============== > My uncle, who has worked for 30 years in the gulf, hasn't worked in over a year. =============== Drilling into Big Oil's big job claims April 25, 2012 The oil industry said it created one out of every ten new U.S. jobs in 2011, but it's direct hiring was less than that. So the industry is trying to focus people on a different story -- that it is a big jobs producer, worthy of its tax breaks and public appreciation in this time of still high unemployment. This week, the industry went on the offensive, saying that one in ten of the new jobs created in America in 2011 were oil jobs. . . . The oil industry was one of the few recession-proof sectors, piling up $290 billion in profits over the last four years, according to Thomson Reuters. =============== Booming Oil Industry Struggles To Fill Jobs May 9, 2012 The oil industry can't find enough new workers to replace an aging workforce. Recruiters are busy finding a new generation of workers and training programs have sprung up to prepare them. Some young people are signing on for jobs that promise good pay — but there are still a lot of positions to fill. =============== Quote Share this post Link to post Share on other sites
StreetScooby 5 #48 August 27, 2012 I shared what was shared by me, from friends and relatives that have been in the business all of their lives. Don't know where you got your stories, or worse, where the authors got their stories.We are all engines of karma Quote Share this post Link to post Share on other sites
quade 3 #49 August 27, 2012 Yeah, but, you know...truthiness.quade - The World's Most Boring Skydiver Quote Share this post Link to post Share on other sites
StreetScooby 5 #50 August 27, 2012 Quote Yeah, but, you know...truthiness. Are you saying these folks lied to me?We are all engines of karma Quote Share this post Link to post Share on other sites