Money Supply – Exploding Inflation

[Anonymous]

[quote]Economics in large part reflects human belief systems. Modern economics does not exist if we collectively don’t believe it.[/quote]

I’m not sure what you mean when making the distinction of “modern” economics, but anyway:

Economics is simply the study of human choices.

(It’s not about money at all, but it turns out that most of our behavior is driven by our want of resources…)

We can stop being interested or even “believing” that we know something about human behavior, but humans will continue to make choices.

And humans will continue to base their choices on their observation about the behavior of others…

So it is a bit paradoxical, and it has the quality of “you can’t really observe it without disturbing it” – but economics, practiced properly, should look more like science than religion.

Not everybody gets it though.

[Anonymous]

[quote=briansd1]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.[/quote]

There was an episode of the Simpsons where the “smart” people took over the government.

Good case study.

[briansd1]

[quote=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.[/quote]

If we don’t have real capitalism and the banks are not part of the market, do we really want to privatize Social Security? What’s Ron Paul’s position on this?

[Arraya]

pri – when I say “modern economics”, I mean neoclassical. Which would be market theorists since the early 1800 century. Early capitalism(classical economics) was called the study of the “political economy” or “liberalism”.

[briansd1]

[quote=KSMountain]So what’s your answer to my question?

I’m interested in your answer.[/quote]

I also love jet travel and I’m preparing to fly to the East Coast tomorrow.

Maybe I’m wrong, but I think that Arraya wants to do away with a system that encourages the wasteful use of earth’s resources. Jet travel would be one of those wasteful things until we discover a new technology to fly planes without using oil and creating polution.

Many the economic activities we perform, we do just because we can. They are not science-based in that they don’t take into account the costs of depleting our resources and poluting our environment.

The new definition of standard of living would not be based on what we consume, or the cars we drive, or the houses we live in, but on our “quality” of life and the social connections we make. Not possible, IMO.

[Arraya]

[quote=KSMountain]
So what’s your answer to my question?

I’m interested in your answer.[/quote]

I assume you mean in arraya’s ideal post-capitalist collapse world?

I’m not sure. We certainly have to think about the material demands of long distance travel and transport. Though, you certainly would have much more time to travel;)

We ship fish from Canada to China to be cleaned – then back to the US to be consumed. For some reason, economic sense is at odds with the real world.

But, the short answer is, no, money demand and power would be no more.

[briansd1]

Arraya, maybe the nation-state needs to be abolished along with capitalism.

In a post collapse world, people should be allowed to freely move anywhere in the world. If the people who clean the fish could move to where they can catch the fish then we wouldn’t have wasted resources.

There is a lot we could do to create a more humanitarian world. Capital and the desire to claim resources for ourselves causes us to act in inhuman ways.

It is a paradox. Money based economics is often at odds with nature and humanity.

[KSMountain]

[quote=Arraya][quote=KSMountain]
So what’s your answer to my question?

I’m interested in your answer.[/quote]

I assume you mean in arraya’s ideal post-capitalist collapse world?

I’m not sure. We certainly have to think about the material demands of long distance travel and transport. Though, you certainly would have much more time to travel;)

We ship fish from Canada to China to be cleaned – then back to the US to be consumed. For some reason, economic sense is at odds with the real world.

But, the short answer is, no, money demand and power would be no more.[/quote]

Yeah I just don’t know Arraya. I guess I can easily see collapse somewhere out there – why not – it’s happened many times before.

On the other hand, haven’t there always been “elites”? Was there ever a time when there wasn’t inequitable distribution of wealth?

Even in the USSR you had the party members, the politburo, dachas, and highway lanes reserved for the elites.

Perhaps even in caveman days there was a guy who figured out how to attach a spearhead more securely to his spear, and was more successful hunting, and then got all the chicks. And the other cavemen were likely grunting in jealousy.

I am in rare agreement with Brian here. You get your “wish”, things go to crap for 10-15 years – then what? How do you know you don’t end up with something even more inequitable? Might that even be the *most likely* outcome?

Like the song says:
“You say you want a revolution, well, you know
We’d all love to see the plan”

[Arraya]

[quote=briansd1]Arraya, maybe the nation-state needs to be abolished along with capitalism.

[/quote]

Karl Polyani showed in his magnum opus, The Great Transformation(which is still famous book in the social sciences even though it was published in the early 40s) , that the nation state is a capitalist structure. Meaning the nation-state came into existence as a necessity of capitalism.

I think, as I’ve stated before in many ways, that we are at the tail end of global capitalism and starting a transition to a new system much like the industrial revolution was a transition away from feudalism, but in a much shorter time period. I think the dissolution of capitalism and the nation-state is inevitable.

for fun, do a google news search on any given day of “police clash with protesters”. The size and frequency of protesting and rioting has been increasing steadily since 2008(ok I have problems, I monitor global unrest with google;).

.

[markmax33]

[quote=briansd1][quote=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.[/quote]

If we don’t have real capitalism and the banks are not part of the market, do we really want to privatize Social Security? What’s Ron Paul’s position on this?[/quote]

Ron Paul’s position on social security:

1. The social security funds are bankrupt. That is a fact. Something must change.

2. We promised the older generation social security and they are dependent on it. It has been their expectation to get their checks and they should get them. On the course we’re on we will not meet the financial obligation to the seniors and the whole system will be wiped out.

3. Young people are upset because they see the horrible return on investment on social security and should be allowed to opt-out. There is no provision for social security in Article 1 section 8 of the constitution and no amendment was ever passed authorizing it. I would rather take the 8% or whatever and invest it in the stock market myself personally and be personally liable for the money.

4. To fund the deficit Ron Paul would bring the troops home from 900 bases in 130+ countries. We are spending close to a trillion dollars on war per year. The money would come out of the general fund of tax collection until social security was stable again.
Opting out would essentially allow the free market to decide and allow the people that want to stay in social security to stay. I believe ALL of the young people would bail on social security and it would end voluntarily. The return rate is tremendously negative.

I can’t think of a better idea than this one even if I tried. Can you? Obama isn’t addressing and neither are the republicans. Shame on them, they are going to leave the seniors broke!

I would personally buy gold because we don’t have a free market and we are destroying the dollar. Buying land and other resources are probably a good idea too.

Remember when Ron Paul/Rand Paul or a libertarian does get elected, remember in 5 years we jumped from 0% of the vote to 20% of the vote, we’ll be there soon, that person will fix the federal reserve and probably legalize competing currencies inside of the country as I described below. At least legalize gold as a currency as the constitution intended! How could that be so bad? We can have gold and dollars at the same time. It would not have a crazy affect on the markets either! I suspect everyone would slowly convert over to a gold backed currency, but it’s hard to tell.

[urbanrealtor]

MARKMAX:

SO…

Lets see:

monetary base in 2004 was about 800b and pop was about 283m so that gives us a ratio of about 2827 dollars per person.

In 2011 the monetary base was about 2800b and population was about 303M. That gives us a ratio of about 9241 dollars per person.

So that is a ratio increase of 3.3x.
Yet, strangely, milk does not cost $10 a gallon.
Nor does gas.

Inflation is strictly defined as a change in nominal effective demand. Our demand has not nominally changed all that much because while there are more dollar bills in existence, purchasing power in the aggregate (in other words, our economy) has not increased significantly.

Nor has there been some great cost push to drive it up suddenly like in the 1970s with oil.

The reason is that much of the nominal (and real) economic growth prior to 2008 was predicated on leverage.

Then there was a grand deleveraging event and tripling the money base hardly moved prices.

Most of that M1 increase went to cover losses and shore up balance sheets at banks.

Pallets of money were not newly lent (at least not to end user producers and consumers) and prices did not shoot up.

That may happen in the future but history does not bode well for ultra-daring risk (mis-)management in the short to medium term.

Banks are not smart but they can stay scared for a long time.

Unlike Rich, I think that fear (along with the scary, scary “GOV” intervention) will keep inflation well below 10% for the next 5 years at least.

I guess we’ll see.

Here’s a fun bet.
I bet you 100 dollars that the CPI stays below 60% between now and 2016.

Hey if I lose the dollars will be worth $40 in today’s funds.

If I win…..well AWESOME!

[Arraya]

[quote=KSMountain]

Yeah I just don’t know Arraya. I guess I can easily see collapse somewhere out there – why not – it’s happened many times before.[/quote]

Indeed. History is littered with failed econo-politico-cultural systems. There are three main scholars that have studied why societies fail and we have all the symptoms. It boils down to not being able to adapt to new problems in a rational manner.

[quote=KSMountain]On the other hand, haven’t there always been “elites”? Was there ever a time when there wasn’t inequitable distribution of wealth?[/quote]

More or less since early and pre-civilization. Hunter-gatherers pretty much had equal access to resources and a very informal hierarchies. Pre-Sumer civilization was egalitarian-ish, worshipped female deities. They were eventually taken over by a male deity, hierarchical waring culture like 7-9000 year ago.

[quote=KSMountain]Even in the USSR you had the party members, the politburo, dachas, and highway lanes reserved for the elites.[/quote]
No doubt- they had an elite.

[quote=KSMountain]Perhaps even in caveman days there was a guy who figured out how to attach a spearhead more securely to his spear, and was more successful hunting, and then got all the chicks. And the other cavemen were likely grunting in jealousy.[/quote]

Yes, guys that were good hunters did well with the ladies. But in tribes everybody’s needs were taken care of – nature permitting. Having a massive resource disparity would have been considered socially disruptive and rude.

[quote=KSMountain]I am in rare agreement with Brian here. You get your “wish”, things go to crap for 10-15 years – then what? How do you know you don’t end up with something even more inequitable? Might that even be the *most likely* outcome?[/quote]

A better system surely is not inevitable, but it is possible. There is also very bleak possibilities as well, if we don’t watch ourselves. What is inevitable, though, is growing “wealth” disparity and disenfranchisement. It’s systemic

[urbanrealtor]

IMHO discussion of an apocalypse without zombies is just a waste of pixels.

[markmax33]

[quote=urbanrealtor]MARKMAX:

SO…

Lets see:

monetary base in 2004 was about 800b and pop was about 283m so that gives us a ratio of about 2827 dollars per person.

In 2011 the monetary base was about 2800b and population was about 303M. That gives us a ratio of about 9241 dollars per person.

So that is a ratio increase of 3.3x.
Yet, strangely, milk does not cost $10 a gallon.
Nor does gas.
[/quote]

Again I have been trying to tell you to read the history books. inflation does not historically occur instantaneously. Look at the hundreds of other currencies and study how they failed. There a lag and it takes a while to saturate the market with new money. When it hits, it is painful. Please go read!

[quote=urbanrealtor]
Inflation is strictly defined as a change in nominal effective demand. Our demand has not nominally changed all that much because while there are more dollar bills in existence, purchasing power in the aggregate (in other words, our economy) has not increased significantly.
[/quote]

Inflation is purely the printing of money. This same argument is what people used during all of the currency failures in history. Please go read! This is flawed logic!

[quote=urbanrealtor]
Nor has there been some great cost push to drive it up suddenly like in the 1970s with oil.
[/quote]

Well if they changed the CPI index from the 1970s, have you looked at that CPI index? Have you seen the 10%+ inflation in healthcare, fuel, etc? Those are facts that hit your bottom line sir.

[quote=urbanrealtor]
The reason is that much of the nominal (and real) economic growth prior to 2008 was predicated on leverage.

Then there was a grand deleveraging event and tripling the money base hardly moved prices.
[/quote]

History hasn’t shown this. History shows that overprinting leads to a lack of confidence in the fiat currency and the value starts sliding quickly.

[quote=urbanrealtor]
Most of that M1 increase went to cover losses and shore up balance sheets at banks.

Pallets of money were not newly lent (at least not to end user producers and consumers) and prices did not shoot up.
[/quote]

Malinvestment in the trickles down through the system no matter where it is injected. I don’t see how this means anything when evaluating the history currencies.

[quote=urbanrealtor]
That may happen in the future but history does not bode well for ultra-daring risk (mis-)management in the short to medium term.

Banks are not smart but they can stay scared for a long time.

Unlike Rich, I think that fear (along with the scary, scary “GOV” intervention) will keep inflation well below 10% for the next 5 years at least.
[/quote]

Your guess is as good as mine. No real economist would predict when something would occur, just that there is a huge inbalance. There are too many things that could happen over night. The ponzi scheme will come to an end.

[quote=urbanrealtor]
I guess we’ll see.

Here’s a fun bet.
I bet you 100 dollars that the CPI stays below 60% between now and 2016.
[/quote]

60% inflation compound on the old/real CPI, or the “cpi”?

lololololol!!

[quote=urbanrealtor]
Hey if I lose the dollars will be worth $40 in today’s funds.

If I win…..well AWESOME![/quote]

No we will all lose if I win. We will lose massively. We lose if you win, it’s just a matter of when.

[markmax33]

[quote=urbanrealtor]IMHO discussion of an apocalypse without zombies is just a waste of pixels.[/quote]

it’s not an Apocalypse when there is a candidate that can fix the issue. You should be voting for Ron Paul.

[Author]

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