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Inflation vs Deflation

lewis20
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5/31/2011 6:22:35 PM
Posted: 5 years ago
Why is Inflation preferable to deflation?
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LaissezFaire
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5/31/2011 6:23:55 PM
Posted: 5 years ago
It isn't.
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Ore_Ele
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5/31/2011 6:27:48 PM
Posted: 5 years ago
Though, really, it depends on your personal situation. Inflation, if you have a lot of cash, is bad. Inflation, if you have a lot of non-cash assets, is okay. Inflation, if you have a lot of debt, is good (though you still have debt, so you're still screwed).
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lewis20
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5/31/2011 6:31:35 PM
Posted: 5 years ago
At 5/31/2011 6:27:48 PM, OreEle wrote:
Though, really, it depends on your personal situation. Inflation, if you have a lot of cash, is bad. Inflation, if you have a lot of non-cash assets, is okay. Inflation, if you have a lot of debt, is good (though you still have debt, so you're still screwed).

I mean it's all relative, if you're in debt you're paying an interest rate to counter any benefit inflation could be.
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
askbob
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5/31/2011 9:09:37 PM
Posted: 5 years ago
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.
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lewis20
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5/31/2011 9:14:21 PM
Posted: 5 years ago
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
askbob
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5/31/2011 9:31:22 PM
Posted: 5 years ago
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct
Me -Phil left the site in my charge. I have a recorded phone conversation to prove it.
kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
lewis20
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5/31/2011 9:40:42 PM
Posted: 5 years ago
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
darkkermit
Posts: 11,204
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5/31/2011 10:00:26 PM
Posted: 5 years ago
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect. Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.
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Cody_Franklin
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5/31/2011 10:05:56 PM
Posted: 5 years ago
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

It's a fun cycle, isn't it? Putting in a minimum wage so that people can "get by under those greedy employers", then inflating so that their wage is devalued anyway, then having to raise the minimum wage to cope with increases in the cost of living and lower wage value...
Cody_Franklin
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5/31/2011 10:09:56 PM
Posted: 5 years ago
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect.

Why would you want to curb the effect? If a firm is losing customers, it's doing something wrong. In other words, all you're doing by inflating is propping up an unhealthy firm so that workers can stay employed. That's a horrific idea, unless you're going to legally combine all of the companies under a huge metabusiness and force all consumers to buy a certain amount from it every month so that everyone remains happy, productive, and employed. :P

Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

You can't just say "we should stimulate spending" as if that's a coherent economic philosophy. Maybe it's just me, but those kinds of policies fail at making economies better.
lewis20
Posts: 5,093
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5/31/2011 10:13:15 PM
Posted: 5 years ago
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Ya I don't really buy any of that, no offense. You can't say firing workers might slightly improve motivation nor that lower wages will necessarily have an effect on morale and productivity.
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
darkkermit
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5/31/2011 10:19:25 PM
Posted: 5 years ago
At 5/31/2011 10:09:56 PM, Cody_Franklin wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect.

Why would you want to curb the effect? If a firm is losing customers, it's doing something wrong. In other words, all you're doing by inflating is propping up an unhealthy firm so that workers can stay employed. That's a horrific idea, unless you're going to legally combine all of the companies under a huge metabusiness and force all consumers to buy a certain amount from it every month so that everyone remains happy, productive, and employed. :P

Not if all firms are in a slump. The solution stimulates the economy and reduces unemployement.

Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

You can't just say "we should stimulate spending" as if that's a coherent economic philosophy. Maybe it's just me, but those kinds of policies fail at making economies better.

If you have a fixed money supply, it encourages saving, since money now is going to be worth MORE in the future. However, if everyone does this, then nobody is going to spend money. Thus this is the main problem with a fixed money supply (e.g. gold) that does not grow with economic growth.

The Great Depression was caused due to a small money supply. Most economist know this, including Milton Friedman.
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darkkermit
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5/31/2011 10:22:57 PM
Posted: 5 years ago
At 5/31/2011 10:13:15 PM, lewis20 wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Ya I don't really buy any of that, no offense. You can't say firing workers might slightly improve motivation nor that lower wages will necessarily have an effect on morale and productivity.

Would citations help:
http://cowles.econ.yale.edu...

Perhaps you can interview some employers who lay off workers and you can get some feedback.
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lewis20
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5/31/2011 10:30:24 PM
Posted: 5 years ago
At 5/31/2011 10:22:57 PM, darkkermit wrote:
At 5/31/2011 10:13:15 PM, lewis20 wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Ya I don't really buy any of that, no offense. You can't say firing workers might slightly improve motivation nor that lower wages will necessarily have an effect on morale and productivity.

Would citations help:
http://cowles.econ.yale.edu...

Perhaps you can interview some employers who lay off workers and you can get some feedback.

Oh a Yale economist backs you up, I take back my skepticism.
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
darkkermit
Posts: 11,204
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5/31/2011 10:31:58 PM
Posted: 5 years ago
At 5/31/2011 10:30:24 PM, lewis20 wrote:
At 5/31/2011 10:22:57 PM, darkkermit wrote:
At 5/31/2011 10:13:15 PM, lewis20 wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Ya I don't really buy any of that, no offense. You can't say firing workers might slightly improve motivation nor that lower wages will necessarily have an effect on morale and productivity.

Would citations help:
http://cowles.econ.yale.edu...

Perhaps you can interview some employers who lay off workers and you can get some feedback.

Oh a Yale economist backs you up, I take back my skepticism.

Can't tell if sarcasm.
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Cody_Franklin
Posts: 9,483
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5/31/2011 10:37:02 PM
Posted: 5 years ago
At 5/31/2011 10:19:25 PM, darkkermit wrote:
At 5/31/2011 10:09:56 PM, Cody_Franklin wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect.

Why would you want to curb the effect? If a firm is losing customers, it's doing something wrong. In other words, all you're doing by inflating is propping up an unhealthy firm so that workers can stay employed. That's a horrific idea, unless you're going to legally combine all of the companies under a huge metabusiness and force all consumers to buy a certain amount from it every month so that everyone remains happy, productive, and employed. :P

Not if all firms are in a slump. The solution stimulates the economy and reduces unemployement.

All firms aren't in a slump. That's just an assumption that interventionists make to justify the claim that it doesn't matter where cash flow goes. Stimulating housing didn't fix the economy. Neither did stimulating the financial industry by deregulating without removing government safety nets did to our financial system.

Furthermore, creating jobs =/= creating prosperity. If we drafted everybody into the military or into a series of hole-digging crews, we'd have full employment, and nothing to show for it.

Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

You can't just say "we should stimulate spending" as if that's a coherent economic philosophy. Maybe it's just me, but those kinds of policies fail at making economies better.

If you have a fixed money supply, it encourages saving, since money now is going to be worth MORE in the future. However, if everyone does this, then nobody is going to spend money. Thus this is the main problem with a fixed money supply (e.g. gold) that does not grow with economic growth.

http://mises.org...

The Great Depression was caused due to a small money supply. Most economist know this, including Milton Friedman.

Really? Because I was under the impression that expansionary money policy, the explosion of a dangerous bubble, and interventions a la deficit spending (to "stimulate") and price politicking made the depression so bad.
askbob
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5/31/2011 10:46:13 PM
Posted: 5 years ago
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect. Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

you're a keynesian?
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Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
askbob
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5/31/2011 10:49:27 PM
Posted: 5 years ago
At 5/31/2011 10:09:56 PM, Cody_Franklin wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect.

Why would you want to curb the effect? If a firm is losing customers, it's doing something wrong.

You're talking micro-econ, we're talking macro-econ. Economy is going through a recessionary cycle and all firms have to lay off workers.

Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

You can't just say "we should stimulate spending" as if that's a coherent economic philosophy. Maybe it's just me, but those kinds of policies fail at making economies better.

It's coherent when the bulk of your economy relies on consumer spending. Consumer spending relies upon those consumers being employed and having paychecks.
Me -Phil left the site in my charge. I have a recorded phone conversation to prove it.
kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
askbob
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5/31/2011 10:54:21 PM
Posted: 5 years ago
At 5/31/2011 10:13:15 PM, lewis20 wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Ya I don't really buy any of that, no offense. You can't say firing workers might slightly improve motivation nor that lower wages will necessarily have an effect on morale and productivity.

So you will work just as hard no matter if there are plenty of jobs in your field or if there are no jobs in your fields and people are actively losing their jobs?

Doubt it.

It's called supply and demand or production with wages naturally fluctuating. However lowering everyone's wages makes the person think that they have less money. Inflation fools people into believing they have the same amount of money that they always have had so their saving/spending habits do not change. The alternative to lowering wages manually or through inflation is firing someone. Someone who is unemployed will not have the same spending habits that an employed person will.
Me -Phil left the site in my charge. I have a recorded phone conversation to prove it.
kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
Cody_Franklin
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5/31/2011 10:54:58 PM
Posted: 5 years ago
At 5/31/2011 10:49:27 PM, askbob wrote:
At 5/31/2011 10:09:56 PM, Cody_Franklin wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect.

Why would you want to curb the effect? If a firm is losing customers, it's doing something wrong.

You're talking micro-econ, we're talking macro-econ. Economy is going through a recessionary cycle and all firms have to lay off workers.

The macro doesn't tell the whole story. All you see is that some employment sectrs are in a rut, and assume that we need to pump money into every industry (or whatever industry, really, since you're indiscriminately increasing the money supply). In other words, we're back to the assumption that all firms are somehow suffering. Since Bob Murphy is a much better economist than I am, though:

http://mises.org...
http://mises.org...

Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

You can't just say "we should stimulate spending" as if that's a coherent economic philosophy. Maybe it's just me, but those kinds of policies fail at making economies better.

It's coherent when the bulk of your economy relies on consumer spending. Consumer spending relies upon those consumers being employed and having paychecks.

So, the fact that propping up demand usually just creates redundancy and failure doesn't change your worldview that "spending is good gotta get more"?
askbob
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5/31/2011 11:07:01 PM
Posted: 5 years ago
At 5/31/2011 10:37:02 PM, Cody_Franklin wrote:
All firms aren't in a slump. That's just an assumption that interventionists make to justify the claim that it doesn't matter where cash flow goes.

Google the S&P 500. How many firms do you need to see? There are indexes that are in the thousands. Find 100 companies that flourished in this past recession.

Furthermore, creating jobs =/= creating prosperity. If we drafted everybody into the military or into a series of hole-digging crews, we'd have full employment, and nothing to show for it.

Except those hole-digging crews would receive a salary on credit from other governments at a relatively low rate (2 or 3% barely above inflation and even better after the eurozone falling apart) Those hole diggers would then want to spend their money in a way that maximizes their utility. Those workers would then demand other goods which would provide jobs that are more profitable than the current ditch digging jobs they have. Those workers would then spend more money. Which would create more profitable jobs due to an increase in utility. Workers would also invest some money on the side into financial intermediaries which would invest that money in projects and technologies that create prosperity. Eventually it would be profitable for all ditch diggers to get more profitable jobs. These increased salaries would yield higher income tax benefits. The initial principal compounded at 2% would be paid off and the workers would be in better straights than if they had received no assistance and died in the streets while other employed workers saved all of their money for fear of the same thing happening to them which would further decrease the money supply as it did in the great depression as savings did not translate to investment because consumers did not trust the financial intermediaries.

Really? Because I was under the impression that expansionary money policy, the explosion of a dangerous bubble

And I suppose you think the current recession was caused by the government?
Me -Phil left the site in my charge. I have a recorded phone conversation to prove it.
kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
Reasoning
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5/31/2011 11:08:52 PM
Posted: 5 years ago
At 5/31/2011 10:05:56 PM, Cody_Franklin wrote:
It's a fun cycle, isn't it? Putting in a minimum wage so that people can "get by under those greedy employers", then inflating so that their wage is devalued anyway, then having to raise the minimum wage to cope with increases in the cost of living and lower wage value...

Workers f@cking hate pay cuts. It does great psychological damage and hurts morale and hence production. Inflation lets you pay them less in real terms but have to actually cut their wages in nominal terms.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
askbob
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5/31/2011 11:10:38 PM
Posted: 5 years ago
At 5/31/2011 10:54:58 PM, Cody_Franklin wrote:
The macro doesn't tell the whole story.
the hell it doesn't

All you see is that some employment sectrs are in a rut
Don't be stupid enough to think that one sector functions independent of another sector

So, the fact that propping up demand usually just creates redundancy and failure doesn't change your worldview that "spending is good gotta get more"?

Give me some good examples of how QE2 is sowing the seeds for the double dip recession which was scheduled to occur a year and a half ago.
Me -Phil left the site in my charge. I have a recorded phone conversation to prove it.
kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
darkkermit
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5/31/2011 11:11:24 PM
Posted: 5 years ago
At 5/31/2011 10:37:02 PM, Cody_Franklin wrote:
At 5/31/2011 10:19:25 PM, darkkermit wrote:
At 5/31/2011 10:09:56 PM, Cody_Franklin wrote:
At 5/31/2011 10:00:26 PM, darkkermit wrote:
At 5/31/2011 9:40:42 PM, lewis20 wrote:
At 5/31/2011 9:31:22 PM, askbob wrote:
At 5/31/2011 9:14:21 PM, lewis20 wrote:
At 5/31/2011 9:09:37 PM, askbob wrote:
Inflation is preferable because it decreases unemployment and lessens recessions due to sticky wages.

Inflation in itself decreases unemployment?

correct

How does that work.
Everyones real value in wages decrease so there is more money for more employment?

Wages are sticky. If a firm is losing consumers, it can either decrease the amount of workers or lower their wages in order to make a profit. If you lower the wages, this tends to decrease worker morale and productivity. If you fire workers, workers might be slightly more motivated to work since they don't want to get fired.

Inflataion can curb this effect.

Why would you want to curb the effect? If a firm is losing customers, it's doing something wrong. In other words, all you're doing by inflating is propping up an unhealthy firm so that workers can stay employed. That's a horrific idea, unless you're going to legally combine all of the companies under a huge metabusiness and force all consumers to buy a certain amount from it every month so that everyone remains happy, productive, and employed. :P

Not if all firms are in a slump. The solution stimulates the economy and reduces unemployement.

All firms aren't in a slump. That's just an assumption that interventionists make to justify the claim that it doesn't matter where cash flow goes. Stimulating housing didn't fix the economy. Neither did stimulating the financial industry by deregulating without removing government safety nets did to our financial system.

Strawman. I never said that I believe that I don't think it matters where cash flow goes nor did I believe stimulating housing can fix the economy. I consider myself more of a monetarist then a Keynesian.
Recessions by definition, occur if most firms are in a slump.

Furthermore, creating jobs =/= creating prosperity. If we drafted everybody into the military or into a series of hole-digging crews, we'd have full employment, and nothing to show for it.

Again, I never stated that. I don't support government spending to create jobs. However, I don't see the problem with increasing the monetary supply in order to increase employment in industries that are designed to create profits. It's not really about changing . It's about reducing the effects of sticky wages. Sure, eventually wages will fall and employment would increase. However, you then have a time lag. Worse, since in a recession, more people will be saved rather than spend, due to people's fears, decreasing money velocity, and sticky wages would increase unemployment further. It only exacerbates the recession.

Inflation also discourages saving and encourages spending. The Great Depression was caused due to a low money supply.

You can't just say "we should stimulate spending" as if that's a coherent economic philosophy. Maybe it's just me, but those kinds of policies fail at making economies better.

Since your arguments above are from the Keynes vs. Hayek video. Allow me:

Savings is destruction that's the paradox of thrift. Don't put money in the bank or that growth with never lift. Business is tipping by the animal spirits. The bull and bear and their is reasons to fear it.

Recessions and panics existed quite frequently even before the Fed existed.


If you have a fixed money supply, it encourages saving, since money now is going to be worth MORE in the future. However, if everyone does this, then nobody is going to spend money. Thus this is the main problem with a fixed money supply (e.g. gold) that does not grow with economic growth.

http://mises.org...

I realize the monetary equation:
Money Velocity*Money Supply= Price Index*Gross Domestic Production

I suppose if you have a fast money supply you can keep gross domestic production, and the price index very high. However, it doesn't seem practical or likely. Money velocity is unpredictable, and even decrease sif people are holding on to money for too long. That's why increasing the money supply can be beneficial.

Let's say that the money supply decreased so that there was only $5 in the USA. Do you think prices could increase just by increasing money velocity.

The Great Depression was caused due to a small money supply. Most economist know this, including Milton Friedman.

Really? Because I was under the impression that expansionary money policy, the explosion of a dangerous bubble, and interventions a la deficit spending (to "stimulate") and price politicking made the depression so bad.

I was never in favor of deficit spending.
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askbob
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5/31/2011 11:12:44 PM
Posted: 5 years ago
At 5/31/2011 11:08:52 PM, Reasoning wrote:
At 5/31/2011 10:05:56 PM, Cody_Franklin wrote:
It's a fun cycle, isn't it? Putting in a minimum wage so that people can "get by under those greedy employers", then inflating so that their wage is devalued anyway, then having to raise the minimum wage to cope with increases in the cost of living and lower wage value...

Workers f@cking hate pay cuts. It does great psychological damage and hurts morale and hence production. Inflation lets you pay them less in real terms but have to actually cut their wages in nominal terms.

This. Most individuals don't notice inflation. And it's done in ridiculously tricky ways with a slice of cheese going off the double cheeseburger or having a box include a few grams less of serial or having a bottle change into a fancier design which is really a few fl. oz smaller. People don't notice 10 cents increasing on cheerios.
Me -Phil left the site in my charge. I have a recorded phone conversation to prove it.
kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
Me -haha you apparently don't know my history
Kohai - Maybe not, but that doesn't matter! You shoukd still listen to your community and quit being a tyrrant!
Me - i was being completely sarcastic
Kohai - then u misrepresented yourself by impersonating the owner—a violation of the tos
LaissezFaire
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5/31/2011 11:14:00 PM
Posted: 5 years ago
You know, askbob, it seems to me that with all this posting in this and other threads, you should've had time to finish your round of our debate.
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: At 6/22/2011 6:57:23 PM, el-badgero wrote:
: i didn't like [Obama]. he was the only black dude in moneygall yet he claimed to be home. obvious liar is obvious liar. i bet him and bin laden are bumfvcking right now.
Reasoning
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5/31/2011 11:14:25 PM
Posted: 5 years ago
At 5/31/2011 11:10:38 PM, askbob wrote:
Give me some good examples of how QE2 is sowing the seeds for the double dip recession which was scheduled to occur a year and a half ago.

Alright. The business cycle is caused by malinvestment. In order to end a recession, the malinvestment must be liquidated. QE2 just pumps in more money to keep the prices inflated which only prolongs the agony and likely leads to further malinvestment.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran