Money Supply – Exploding Inflation

[Arraya]

[quote=pri_dk][quote=markmax33][quote=pri_dk][quote=markmax33]We have empirical data that shows […][/quote]

Real Austrian economists don’t use empirical data.[/quote]

Okay explain that one please. I’m dying to hear it.[/quote]

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

Methodology is where Austrian economists differ most significantly from other schools of economic thought. Mainstream schools such as Keynesians and Monetarists adopt empirical, mathematical, and statistical methods, and focus on induction to construct and test theories. Austrian economists reject empirical statistical methods […]

You got a long way to go, my friend.

Perhaps you should start your journey by asking your scientist parents what falsifiable means.[/quote]

In Austrians defense – they don’t like the econometrics that mainstream economists use. Which they are correct, IMO. Econometrics is monetarists way of trying to make economics more science-y.

This quote from an anti-capitalist that, I believe, sums up how Austrians feel abut econometrics

Economics is largely a self-fulfilling psychology. It effectively constructs a model of behaviour, to a model for behaviour; whereby such models educate us to think how we’re ‘supposed’ to think. As a result, this pseudo-science has maintained a heavy reliance upon seeking numerical legitimacy and mathematical reassurance for justifying assumptions of rationality.

[Arraya]

[quote=pri_dk]Down with capitalism!

– Sent from my iPhone[/quote]

Hmmm.. we could make an Iphone without capitalism – though it would be pretty hard without science. The (purely subjective and human contrived) rules of money have nothing in common with the rules of energy and matter.

[Arraya]

[quote=KSMountain][quote=KSMountain][quote=Arraya]We don’t NEED money to cast an arm or make a computer – these are technical processes.[/quote]
A new chip plant costs about $2 Billion. Takes many years to build, has a lot of real estate, power, and specialized gas needs. You need a fully intact supply chain, financial system, and legal infrastructure to make a microchip.

Hope you don’t spill coffee on your computer…[/quote]
Make that $5B.

http://www.businessweek.com/news/2011-02-18/intel-plans-to-build-5-billion-chip-plant-in-arizona.html

You know what it takes to make a computer? Capital. And capitalists. Sorry.[/quote]

Again, the purely subjective price point has nothing to do with the physical resources and- labor/knowledge in building a chip plant. Now, it is supposed to represent the aggregate “value” of those things measured in our currency de jour, but, it is not those things. It’s a concept.

[Anonymous]

[quote=Arraya]Hmmm.. we could make an Iphone without capitalism […][/quote]

Although technically true, I don’t think that is terribly interesting.

The question is not whether we could do it, the question is whether we would have done it.

Without money, we would still be arguing about how many fish you should give me for my buckskin.

[markmax33]

[quote=Arraya][quote=pri_dk][quote=markmax33][quote=pri_dk][quote=markmax33]We have empirical data that shows […][/quote]

Real Austrian economists don’t use empirical data.[/quote]

Okay explain that one please. I’m dying to hear it.[/quote]

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

Methodology is where Austrian economists differ most significantly from other schools of economic thought. Mainstream schools such as Keynesians and Monetarists adopt empirical, mathematical, and statistical methods, and focus on induction to construct and test theories. Austrian economists reject empirical statistical methods […]

You got a long way to go, my friend.

Perhaps you should start your journey by asking your scientist parents what falsifiable means.[/quote]

In Austrians defense – they don’t like the econometrics that mainstream economists use. Which they are correct, IMO. Econometrics is monetarists way of trying to make economics more science-y.

This quote from an anti-capitalist that, I believe, sums up how Austrians feel abut econometrics

Economics is largely a self-fulfilling psychology. It effectively constructs a model of behaviour, to a model for behaviour; whereby such models educate us to think how we’re ‘supposed’ to think. As a result, this pseudo-science has maintained a heavy reliance upon seeking numerical legitimacy and mathematical reassurance for justifying assumptions of rationality.

[/quote]

I think Austrians use data in a different way. They read history and looks at trends through history to make conclusions. There have been thousands of governments and currencies in the history of man-kind and you can pull infinite empirical data from that. The data is much different than the other Keynes data, but also MUCH more accurate. They use more accurate empirical data than the rest.

[Arraya]

Science is a process of formulating models that predict outcomes in a natural system under certain conditions, and then testing them to see if the future predictions agree. However, the goal is to find how the model is inadequately representing the natural system. When the model is refuted, it is adjusted to form a new model from what is learned about the system. Since there is an underlying system that is being approximated by the models, there is an “objective reality” (exists independently of human conceptualization) to be described by conceptual models. The models evolve representations of the relationships and features that are defined by the system. Models are useful to humans. Models are respected when they better reflect the nature of the system.

Economics is an artifact of human imagination and all human conceptualization, and the agreement among certain humans who “play the games” together — thereby it is a social technology. There is no underlying physical reality other than what is identified by the players to be components. Nevertheless, the economic properties are determined by and limited only by the beliefs of the “players.” To build economic models one must assume certain features, and the models become part of the generators of the results. Since they are not inherently tied to the physical and biological realities(no physical referent), they may fail arbitrarily as the physical and biological world view of humans change — or as people believe the physical and biological world exists.

Economics in large part reflects human belief systems. Modern economics does not exist if we collectively don’t believe it. You can’t say the same about thermodynamics.

[markmax33]

[quote=pri_dk][quote=Arraya]Hmmm.. we could make an Iphone without capitalism […][/quote]

Although technically true, I don’t think that is terribly interesting.

The question is not whether we could do it, the question is whether we would have done it.

Without money, we would still be arguing about how many fish you should give me for my buckskin.[/quote]

We don’t have capitalism! You have been duped! It’s a rigged system that leans much further toward socialism/corporatism than capitalism.

[bubba99]

I was also expecting a period of hyper-inflation because of the rate that the FED was increasing their balance sheet. But from this graph borrowed from shadowstats.com, we can see that even with the additions, we are still below peak levels for M2 and M3. M1 is growing, but . . .

http://www.shadowstats.com/imgs/sgs-m3.gif?hl=ad&t=1321044430

[Arraya]

[quote=markmax33]

We don’t have capitalism! You have been duped! It’s a rigged system that leans much further toward socialism/corporatism than capitalism.[/quote]

Right, we never have and never will according to your definitions. It will always be something else.

[SK in CV]

[quote=markmax33]We don’t have capitalism! You have been duped! It’s a rigged system that leans much further toward socialism/corporatism than capitalism.[/quote]

Do you know what socialism is?

Just asking.

[Anonymous]

[quote=markmax33]There have been thousands of governments and currencies in the history of man-kind […][/quote]

I find it hard to work with empirical data when it keeps changing by orders of magnitude.

[Arraya]

[quote=markmax33]

I think Austrians use data in a different way. They read history and looks at trends through history to make conclusions. There have been thousands of governments and currencies in the history of man-kind and you can pull infinite empirical data from that. The data is much different than the other Keynes data, but also MUCH more accurate. They use more accurate empirical data than the rest.[/quote]

Dude, you don’t even understand Austrian economics and their complaints with monetarists and modern day economic modeling. You’re just spouting laissez-faire talking points – which is not Austrian economics, though, Austrian economists tend to be laissez fair as well.

[KSMountain]

[quote=Arraya]Science is a process of formulating models that predict outcomes in a natural system under certain conditions, and then testing them to see if the future predictions agree. However, the goal is to find how the model is inadequately representing the natural system. When the model is refuted, it is adjusted to form a new model from what is learned about the system. Since there is an underlying system that is being approximated by the models, there is an “objective reality” (exists independently of human conceptualization) to be described by conceptual models. The models evolve representations of the relationships and features that are defined by the system. Models are useful to humans. Models are respected when they better reflect the nature of the system.

Economics is an artifact of human imagination and all human conceptualization, and the agreement among certain humans who “play the games” together — thereby it is a social technology. There is no underlying physical reality other than what is identified by the players to be components. Nevertheless, the economic properties are determined by and limited only by the beliefs of the “players.” To build economic models one must assume certain features, and the models become part of the generators of the results. Since they are not inherently tied to the physical and biological realities(no physical referent), they may fail arbitrarily as the physical and biological world view of humans change — or as people believe the physical and biological world exists.

Economics in large part reflects human belief systems. Modern economics does not exist if we collectively don’t believe it. You can’t say the same about thermodynamics.[/quote]
I liked this post a lot.

[KSMountain]

[quote=Arraya][quote=KSMountain]Arraya,

If you got your global economic collapse, would I still be able to fly in a jet airplane to Europe? Having some nice wine available on the flight would be nice too.

If not – count me out![/quote]

Whether society goes down over several decades of decay punctuated by interment crises or a few successive catastrophic financial collapses within a few years – it’s going down. We are going to have to reorganize based on new rules or have a severely and increasingly dysfunctional society.[/quote]
So what’s your answer to my question?

I’m interested in your answer.

[briansd1]

[quote=KSMountain]
I liked this post a lot.[/quote]

Me too.

As I said before, I love Arraya’s idea of a science based system (as opposed to money) of allocating resources. I just can’t figure out how it would work.

[Author]

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