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How dose the law hinder economic activity?

komodo
Posts: 5
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11/22/2011 1:52:26 PM
Posted: 5 years ago
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)
Willoweed
Posts: 150
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11/22/2011 2:54:43 PM
Posted: 5 years ago
Well for example in Zimbabwe the government passed a law confiscating all farm land and just gave it away to non-farmers, this resulted in their farm output tanking.
komodo
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11/22/2011 3:07:55 PM
Posted: 5 years ago
At 11/22/2011 2:54:43 PM, Willoweed wrote:
Well for example in Zimbabwe the government passed a law confiscating all farm land and just gave it away to non-farmers, this resulted in their farm output tanking.

That's a great example would you happen to know when this legislation was made and the circumstances surrounding it? :)
sadolite
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11/25/2011 3:12:16 PM
Posted: 5 years ago
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
darkkermit
Posts: 11,204
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11/25/2011 4:17:06 PM
Posted: 5 years ago
At 11/25/2011 3:12:16 PM, sadolite wrote:
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.

It's stupid to base it on the value of the dollar since what's important is one's purchasing power, not the value of the dollar.
Open borders debate:
http://www.debate.org...
sadolite
Posts: 8,837
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11/26/2011 7:06:05 AM
Posted: 5 years ago
At 11/25/2011 4:17:06 PM, darkkermit wrote:
At 11/25/2011 3:12:16 PM, sadolite wrote:
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.

It's stupid to base it on the value of the dollar since what's important is one's purchasing power, not the value of the dollar.

Um, As the value of the "dollar" becomes ever closer to being nothing and the only thing you can use to purchase anything is the "dollar" then your purchasing power is ............................................
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
Willoweed
Posts: 150
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11/26/2011 11:33:08 AM
Posted: 5 years ago
At 11/25/2011 3:12:16 PM, sadolite wrote:
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.

During the Great depression the sooner a country went off the gold standard the sooner their country returned to growth.
If you want to see what would happen with a Gold standard look at what is happening in Greece and italy. Anyone who thinks a gold standard is a good thing is compeltly ignorant.
Willoweed
Posts: 150
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11/26/2011 11:34:11 AM
Posted: 5 years ago
At 11/26/2011 7:06:05 AM, sadolite wrote:
At 11/25/2011 4:17:06 PM, darkkermit wrote:
At 11/25/2011 3:12:16 PM, sadolite wrote:
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.

It's stupid to base it on the value of the dollar since what's important is one's purchasing power, not the value of the dollar.

Um, As the value of the "dollar" becomes ever closer to being nothing and the only thing you can use to purchase anything is the "dollar" then your purchasing power is ............................................

Since when did the dollar becoewm worth nothign? You are a idiot
darkkermit
Posts: 11,204
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11/26/2011 11:43:27 AM
Posted: 5 years ago
At 11/26/2011 7:06:05 AM, sadolite wrote:
At 11/25/2011 4:17:06 PM, darkkermit wrote:
At 11/25/2011 3:12:16 PM, sadolite wrote:
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.

It's stupid to base it on the value of the dollar since what's important is one's purchasing power, not the value of the dollar.

Um, As the value of the "dollar" becomes ever closer to being nothing and the only thing you can use to purchase anything is the "dollar" then your purchasing power is ............................................

Except If there are more dollars in circulation, the more money you will likely have, even If the value decreases. Over the long run, money is neutral. What's important is the amount of goods and services in an economy.
And since when is the value of the dollar nothing?
Open borders debate:
http://www.debate.org...
sadolite
Posts: 8,837
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11/26/2011 3:26:14 PM
Posted: 5 years ago
At 11/26/2011 11:43:27 AM, darkkermit wrote:
At 11/26/2011 7:06:05 AM, sadolite wrote:
At 11/25/2011 4:17:06 PM, darkkermit wrote:
At 11/25/2011 3:12:16 PM, sadolite wrote:
At 11/22/2011 1:52:26 PM, komodo wrote:
One can argue that laws provides security that ensures just distribution, which in turn encourages economic investment but how do laws hinder economic activity? Any help would be appreciated :)

How about when The US govt passed a law banning gold as currency and created the Federal Reserve allowing the federal govt to spend the the country into oblivion. Decimating the value of currency by 94% in 40 years there by reducing every man woman and child's buying power with worthless currency.

It's stupid to base it on the value of the dollar since what's important is one's purchasing power, not the value of the dollar.

Um, As the value of the "dollar" becomes ever closer to being nothing and the only thing you can use to purchase anything is the "dollar" then your purchasing power is ............................................

Except If there are more dollars in circulation, the more money you will likely have, even If the value decreases. Over the long run, money is neutral. What's important is the amount of goods and services in an economy.
And since when is the value of the dollar nothing?

The value of the dollar post Federal Reserve dollar has always been 0. It is worthless, it's value is artificial. It is backed by nothing. No one would give you a silver dime for a post Federal Reserve dollar. The value of gold and silver never changes only the value of currency changes. When the Federal Reserve manipulates interests rates combined with printing more and more worthless dollars your buying power plummets. The federal Reserve Dollar dollar I saved 40 years ago is worth 6 cents. The Federal Reserve decimates savings which in turn decimates investment which in turn decimates the economy. America is now the Wiemar Republic. The Federal Reserve has allowed Congress to barrow so much money and sell so much debt it can never be paid back. The next great depression will force all of our debtors to call their loans due and payable when this happens. And when this happens Hyper inflation will insue decimating the economy. This happens every 40 to 60 years. No country that has taken it's currency off the gold standard has had it's currency hold it's value for more than 50 years. We are now in' I think our 44Th year of being off the gold standard and the value of the Federal Reserve dollar compared to a pre reseve dollar is 6 cents. 6 more cents and 6 more years and that will be the end of the US dollar. Current debt of the nation not including internal unfunded liabilities is 15 trillion dollars add in unfunded liabilities, closer to 200 trillion. America will default on all of it's loans and no one on this earth will accept a US Federal Reserve note as payment for anything but we will be forced to use it as currency to pay debt as the govt has banned using anything else but Federal Reserve issued notes as payment of debt.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
Wnope
Posts: 6,924
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11/26/2011 3:56:49 PM
Posted: 5 years ago
At 11/25/2011 12:20:41 PM, komodo wrote:
At 11/25/2011 1:10:54 AM, Wnope wrote:
http://en.wikipedia.org...

Thanks for the link very useful :)

A few more topics where you'll find mounds of ways government can screw up-

Nearly anything to do with Trade barriers http://en.wikipedia.org...

Also, any time the government violates the following principle you get some form of disaster: http://en.wikipedia.org...

It's why many Latin American countries crashed in the late 20th century (check out the Preso Crisis of the 90s) and why the EU is basically doomed.
darkkermit
Posts: 11,204
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11/26/2011 6:14:25 PM
Posted: 5 years ago
At 11/26/2011 3:26:14 PM, sadolite wrote:

The value of the dollar post Federal Reserve dollar has always been 0.
It is worthless, it's value is artificial.

All value is subjective. If money can be used to buy goods and services, it has value.

It is backed by nothing. No one would give you a silver dime for a post Federal Reserve dollar. The value of gold and silver never changes only the value of currency changes.

False that the value of gold and silver never changes:
http://www.econbrowser.com...

When the Federal Reserve manipulates interests rates combined with printing more and more worthless dollars your buying power plummets. The federal Reserve Dollar dollar I saved 40 years ago is worth 6 cents.

And you didn't bother to put the money in investments or at least a CD!?

The Federal Reserve decimates savings which in turn decimates investment which in turn decimates the economy.

In that case, nobody would be using thedollar as their reserve. Bout most nations do.

America is now the Wiemar Republic.

Except the US dollar has one of the lowest levels of inflation:
http://www.econbrowser.com...

The Federal Reserve has allowed Congress to barrow so much money and sell so much debt it can never be paid back.

The debt is based more on congresses fiscal irresponsibility created by progressiveness and those who believe they can get something for nothing. Other nations have central banks and low debt.

The next great depression will force all of our debtors to call their loans due and payable when this happens. And when this happens Hyper inflation will insue decimating the economy. This happens every 40 to 60 years. No country that has taken it's currency off the gold standard has had it's currency hold it's value for more than 50 years.

False again:
http://fauxcapitalist.com...

We are now in' I think our 44Th year of being off the gold standard and the value of the Federal Reserve dollar compared to a pre reseve dollar is 6 cents. 6 more cents and 6 more years and that will be the end of the US dollar.

Except that the value of the dollar has more or less decreasing exponentially. Only as e^(-infinity) does it approach zero.

Current debt of the nation not including internal unfunded liabilities is 15 trillion dollars add in unfunded liabilities, closer to 200 trillion. America will default on all of it's loans and no one on this earth will accept a US Federal Reserve note as payment for anything but we will be forced to use it as currency to pay debt as the govt has banned using anything else but Federal Reserve issued notes as payment of debt.

It will default depending on how our politicians treat the debt problem. I agree its a problem, but whether we default or not is political based, not the FEDs fault. The US has been on a path of savings until the 70s, even though the FED already existed:
http://upload.wikimedia.org...
Open borders debate:
http://www.debate.org...
sadolite
Posts: 8,837
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11/26/2011 9:09:55 PM
Posted: 5 years ago
At 11/26/2011 6:14:25 PM, darkkermit wrote:
At 11/26/2011 3:26:14 PM, sadolite wrote:

The value of the dollar post Federal Reserve dollar has always been 0.
It is worthless, it's value is artificial.

All value is subjective. If money can be used to buy goods and services, it has value.

It is backed by nothing. No one would give you a silver dime for a post Federal Reserve dollar. The value of gold and silver never changes only the value of currency changes.

False that the value of gold and silver never changes:
http://www.econbrowser.com...

When the Federal Reserve manipulates interests rates combined with printing more and more worthless dollars your buying power plummets. The federal Reserve Dollar dollar I saved 40 years ago is worth 6 cents.

And you didn't bother to put the money in investments or at least a CD!?


The Federal Reserve decimates savings which in turn decimates investment which in turn decimates the economy.

In that case, nobody would be using thedollar as their reserve. Bout most nations do.

America is now the Wiemar Republic.

Except the US dollar has one of the lowest levels of inflation:
http://www.econbrowser.com...

The Federal Reserve has allowed Congress to barrow so much money and sell so much debt it can never be paid back.

The debt is based more on congresses fiscal irresponsibility created by progressiveness and those who believe they can get something for nothing. Other nations have central banks and low debt.

The next great depression will force all of our debtors to call their loans due and payable when this happens. And when this happens Hyper inflation will insue decimating the economy. This happens every 40 to 60 years. No country that has taken it's currency off the gold standard has had it's currency hold it's value for more than 50 years.

False again:
http://fauxcapitalist.com...

We are now in' I think our 44Th year of being off the gold standard and the value of the Federal Reserve dollar compared to a pre reseve dollar is 6 cents. 6 more cents and 6 more years and that will be the end of the US dollar.

Except that the value of the dollar has more or less decreasing exponentially. Only as e^(-infinity) does it approach zero.

Current debt of the nation not including internal unfunded liabilities is 15 trillion dollars add in unfunded liabilities, closer to 200 trillion. America will default on all of it's loans and no one on this earth will accept a US Federal Reserve note as payment for anything but we will be forced to use it as currency to pay debt as the govt has banned using anything else but Federal Reserve issued notes as payment of debt.

It will default depending on how our politicians treat the debt problem. I agree its a problem, but whether we default or not is political based, not the FEDs fault. The US has been on a path of savings until the 70s, even though the FED already existed:
http://upload.wikimedia.org...

I take back everything. The dollar is strong and has value. Sorry I mentioned it You are right and I am wrong. America has nothing to worry about. And all that money I saved 20 30 and 40 years ago has the same buying power as it ever did. I didn't realize that just printing more and more money without creating any wealth was the solution. I stand corrected. Who would of thought money really does grow on trees. You just print more and problem solved. Nothing needs to be created to justify an increase in currency. Wow and all this time I thought the money supply was based on the creation of new wealth.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
sadolite
Posts: 8,837
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11/26/2011 9:22:17 PM
Posted: 5 years ago
So essentialy the Fed can print as many dollars as there is stars in the universe, there by alwoing the govt to barrow the same amount for all enternity. And it will have no effect on my purchasing power even if my wages don't increse and business production and the economy doesn't expand and no wealth is created.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
DevinKing
Posts: 206
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11/26/2011 10:29:19 PM
Posted: 5 years ago
At 11/26/2011 9:09:55 PM, sadolite wrote:
I take back everything. The dollar is strong and has value. Sorry I mentioned it You are right and I am wrong. America has nothing to worry about. And all that money I saved 20 30 and 40 years ago has the same buying power as it ever did. I didn't realize that just printing more and more money without creating any wealth was the solution.

--The U.S. creates roughly $14 trillion worth of new wealth every year.

I stand corrected. Who would of thought money really does grow on trees. You just print more and problem solved. Nothing needs to be created to justify an increase in currency. Wow and all this time I thought the money supply was based on the creation of new wealth.

--You are right about the money supply being linked to the creation of new wealth. But as I pointed out, we do create wealth.. so.. yeah. Where do you get your information?
After demonstrating his existence with complete certainty with the proposition "I think, therefore I am", Descartes walks into a bar, sitting next to a gorgeous priest. The priest asks Descartes, "Would you like a drink?" Descartes responds, "I think not," and then proceeds to vanish in a puff of illogic.
darkkermit
Posts: 11,204
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11/26/2011 11:11:00 PM
Posted: 5 years ago
At 11/26/2011 9:22:17 PM, sadolite wrote:
So essentialy the Fed can print as many dollars as there is stars in the universe, there by alwoing the govt to barrow the same amount for all enternity. And it will have no effect on my purchasing power even if my wages don't increse and business production and the economy doesn't expand and no wealth is created.

It's amazing how much of a strawman that is. Currently the US has low levels of inflation. If inflation gets out of control then the FED can contract the money supply as well.

If you use a gold standard, then you get deflation, since there is not enough gold to keep up with economic growth:

(change in prices)/Prices = (change in money supply)/money + (velocity of money)/money - (change in GDP)/GDP

Deflation is much worse then inflation. Plus If you use the gold standard, then your wasting resources on digging for gold when they could be used for more productive ventures.

Yes, deflation causes problems. It was the cause of the Great Depresison:
Open borders debate:
http://www.debate.org...
sadolite
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11/27/2011 8:07:20 AM
Posted: 5 years ago
At 11/26/2011 10:29:19 PM, DevinKing wrote:
At 11/26/2011 9:09:55 PM, sadolite wrote:
I take back everything. The dollar is strong and has value. Sorry I mentioned it You are right and I am wrong. America has nothing to worry about. And all that money I saved 20 30 and 40 years ago has the same buying power as it ever did. I didn't realize that just printing more and more money without creating any wealth was the solution.

--The U.S. creates roughly $14 trillion worth of new wealth every year.

I stand corrected. Who would of thought money really does grow on trees. You just print more and problem solved. Nothing needs to be created to justify an increase in currency. Wow and all this time I thought the money supply was based on the creation of new wealth.

--You are right about the money supply being linked to the creation of new wealth. But as I pointed out, we do create wealth.. so.. yeah. Where do you get your information?

You no longer have to expain anything to me. The US created 14 trillion in "New" wealth last year. You are right I am wrong. Everthing is going as planned and as it should.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
DevinKing
Posts: 206
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11/27/2011 4:41:55 PM
Posted: 5 years ago
At 11/27/2011 8:07:20 AM, sadolite wrote:
At 11/26/2011 10:29:19 PM, DevinKing wrote:
At 11/26/2011 9:09:55 PM, sadolite wrote:
I take back everything. The dollar is strong and has value. Sorry I mentioned it You are right and I am wrong. America has nothing to worry about. And all that money I saved 20 30 and 40 years ago has the same buying power as it ever did. I didn't realize that just printing more and more money without creating any wealth was the solution.

--The U.S. creates roughly $14 trillion worth of new wealth every year.

I stand corrected. Who would of thought money really does grow on trees. You just print more and problem solved. Nothing needs to be created to justify an increase in currency. Wow and all this time I thought the money supply was based on the creation of new wealth.

--You are right about the money supply being linked to the creation of new wealth. But as I pointed out, we do create wealth.. so.. yeah. Where do you get your information?


You no longer have to expain anything to me. The US created 14 trillion in "New" wealth last year. You are right I am wrong. Everthing is going as planned and as it should.

--Drop the sarcasm. It doesn't suit you. Also, you are wrong here again. Not everything is going as planned (note the current recession).
After demonstrating his existence with complete certainty with the proposition "I think, therefore I am", Descartes walks into a bar, sitting next to a gorgeous priest. The priest asks Descartes, "Would you like a drink?" Descartes responds, "I think not," and then proceeds to vanish in a puff of illogic.
mongoose
Posts: 3,500
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11/27/2011 5:03:58 PM
Posted: 5 years ago
At 11/26/2011 11:11:00 PM, darkkermit wrote:
At 11/26/2011 9:22:17 PM, sadolite wrote:
So essentialy the Fed can print as many dollars as there is stars in the universe, there by alwoing the govt to barrow the same amount for all enternity. And it will have no effect on my purchasing power even if my wages don't increse and business production and the economy doesn't expand and no wealth is created.

It's amazing how much of a strawman that is. Currently the US has low levels of inflation. If inflation gets out of control then the FED can contract the money supply as well.

If you use a gold standard, then you get deflation, since there is not enough gold to keep up with economic growth:

(change in prices)/Prices = (change in money supply)/money + (velocity of money)/money - (change in GDP)/GDP

Deflation is much worse then inflation. Plus If you use the gold standard, then your wasting resources on digging for gold when they could be used for more productive ventures.

Yes, deflation causes problems. It was the cause of the Great Depresison:



Friedman stated that if inflation was a constant 10%, then the economy could adjust to it fairly easily and not have great harm. If there were no changes in the money supply, deflation would be as constant as humanly possible, and the economy could easily adapt. It would also avert many of the things the government tends to do, like print money to pay itself.
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
mongoose
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11/27/2011 5:36:41 PM
Posted: 5 years ago
Laws hinder economic activity by requiring licenses to perform certain occupations, thus creating a shortage and increasing prices, lowering efficiency. Government also makes nonsensical regulations that keep people from doing things that are better. Businesses have to spend a lot of time just making sure that they aren't breaking a law or filling out the paperwork.
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
sadolite
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11/27/2011 6:24:24 PM
Posted: 5 years ago
First people want to argue their side and then when you say they are right and you are wrong, then your being sarcastic. Someones wrong if neither is on the same page, so it must be me. He posted finacial expert sources.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
darkkermit
Posts: 11,204
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11/27/2011 7:18:02 PM
Posted: 5 years ago
At 11/27/2011 5:03:58 PM, mongoose wrote:
At 11/26/2011 11:11:00 PM, darkkermit wrote:
At 11/26/2011 9:22:17 PM, sadolite wrote:
So essentialy the Fed can print as many dollars as there is stars in the universe, there by alwoing the govt to barrow the same amount for all enternity. And it will have no effect on my purchasing power even if my wages don't increse and business production and the economy doesn't expand and no wealth is created.

It's amazing how much of a strawman that is. Currently the US has low levels of inflation. If inflation gets out of control then the FED can contract the money supply as well.

If you use a gold standard, then you get deflation, since there is not enough gold to keep up with economic growth:

(change in prices)/Prices = (change in money supply)/money + (velocity of money)/money - (change in GDP)/GDP

Deflation is much worse then inflation. Plus If you use the gold standard, then your wasting resources on digging for gold when they could be used for more productive ventures.

Yes, deflation causes problems. It was the cause of the Great Depresison:



Friedman stated that if inflation was a constant 10%, then the economy could adjust to it fairly easily and not have great harm. If there were no changes in the money supply, deflation would be as constant as humanly possible, and the economy could easily adapt. It would also avert many of the things the government tends to do, like print money to pay itself.

Prices are sticky upward, not sticky downwards due to money illusion. Also look at your average person who gets themselves into debt and ask yourself If they really think ahead of time whether prices are going down or up in the future. Large corporations can take this accounting into effect, but your average bum on the street isn't.

Also note that a person can pretty much profit off doing absolutely nothing with deflation. The person doesn't even need to invest the money. He/she can just put it behind his/her mattress. This could be the case If a person is very , or nominal interest rates are low (real interest = rate of deflation + nominal rate) It's possible that that the nominal rate could be zero.

Also, note that even Friedman realized that inflation can be beneficial in the short run. The adjustment to deflation will cause a depression.
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mongoose
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11/27/2011 9:31:32 PM
Posted: 5 years ago
At 11/27/2011 7:18:02 PM, darkkermit wrote:
At 11/27/2011 5:03:58 PM, mongoose wrote:
At 11/26/2011 11:11:00 PM, darkkermit wrote:
At 11/26/2011 9:22:17 PM, sadolite wrote:
So essentialy the Fed can print as many dollars as there is stars in the universe, there by alwoing the govt to barrow the same amount for all enternity. And it will have no effect on my purchasing power even if my wages don't increse and business production and the economy doesn't expand and no wealth is created.

It's amazing how much of a strawman that is. Currently the US has low levels of inflation. If inflation gets out of control then the FED can contract the money supply as well.

If you use a gold standard, then you get deflation, since there is not enough gold to keep up with economic growth:

(change in prices)/Prices = (change in money supply)/money + (velocity of money)/money - (change in GDP)/GDP

Deflation is much worse then inflation. Plus If you use the gold standard, then your wasting resources on digging for gold when they could be used for more productive ventures.

Yes, deflation causes problems. It was the cause of the Great Depresison:



Friedman stated that if inflation was a constant 10%, then the economy could adjust to it fairly easily and not have great harm. If there were no changes in the money supply, deflation would be as constant as humanly possible, and the economy could easily adapt. It would also avert many of the things the government tends to do, like print money to pay itself.

Prices are sticky upward, not sticky downwards due to money illusion. Also look at your average person who gets themselves into debt and ask yourself If they really think ahead of time whether prices are going down or up in the future. Large corporations can take this accounting into effect, but your average bum on the street isn't.

If there is near-constant price deflation, then people don't have to adjust too much to it, and people would put more focus into learning it. I don't see how prices are sticky in only one direction. The wiki page doesn't specify that.

Also note that a person can pretty much profit off doing absolutely nothing with deflation. The person doesn't even need to invest the money. He/she can just put it behind his/her mattress. This could be the case If a person is very , or nominal interest rates are low (real interest = rate of deflation + nominal rate) It's possible that that the nominal rate could be zero.

That wouldn't be profit. They'd be earning nothing. Nominal interest is zero when the person doesn't lend the money. It would have to be greater than zero to get people to lend. Investments would be more rational, thus averting business cycles.

Also, note that even Friedman realized that inflation can be beneficial in the short run. The adjustment to deflation will cause a depression.

But the long run detrimental impact of the inflation is worse than the short-term gain.
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
DevinKing
Posts: 206
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11/27/2011 9:58:41 PM
Posted: 5 years ago
At 11/27/2011 9:31:32 PM, mongoose wrote:
But the long run detrimental impact of the inflation is worse than the short-term gain.

--What is this long run detrimental impact? From what I have studied, moderate inflation produces very positive results which include but are not limited to: higher employment, greater business activity, and increased total number of transactions (due to the larger volume of money in circulation).
After demonstrating his existence with complete certainty with the proposition "I think, therefore I am", Descartes walks into a bar, sitting next to a gorgeous priest. The priest asks Descartes, "Would you like a drink?" Descartes responds, "I think not," and then proceeds to vanish in a puff of illogic.
darkkermit
Posts: 11,204
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11/27/2011 10:03:26 PM
Posted: 5 years ago
At 11/27/2011 9:31:32 PM, mongoose wrote:

Prices are sticky upward, not sticky downwards due to money illusion. Also look at your average person who gets themselves into debt and ask yourself If they really think ahead of time whether prices are going down or up in the future. Large corporations can take this accounting into effect, but your average bum on the street isn't.

If there is near-constant price deflation, then people don't have to adjust too much to it, and people would put more focus into learning it. I don't see how prices are sticky in only one direction. The wiki page doesn't specify that.

People are not rational. They are much effected by the money illusion:
http://en.wikipedia.org...

It's sticky in one direction because people are unlikely to take pay cuts due to deflation even If they have a real increase in wages.

Also note that a person can pretty much profit off doing absolutely nothing with deflation. The person doesn't even need to invest the money. He/she can just put it behind his/her mattress. This could be the case If a person is very , or nominal interest rates are low (real interest = rate of deflation + nominal rate) It's possible that that the nominal rate could be zero.
`
That wouldn't be profit. They'd be earning nothing. Nominal interest is zero when the person doesn't lend the money. It would have to be greater than zero to get people to lend. Investments would be more rational, thus averting business cycles.

But it would be risk-less. They're still making a profit due to deflation. My money will be worth more 5 years from now, regardless If I invest it or not.

But the long run detrimental impact of the inflation is worse than the short-term gain.

Why? We've already determined that long-run inflation does nothing.
Open borders debate:
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mongoose
Posts: 3,500
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11/27/2011 10:30:26 PM
Posted: 5 years ago
At 11/27/2011 10:03:26 PM, darkkermit wrote:
At 11/27/2011 9:31:32 PM, mongoose wrote:

Prices are sticky upward, not sticky downwards due to money illusion. Also look at your average person who gets themselves into debt and ask yourself If they really think ahead of time whether prices are going down or up in the future. Large corporations can take this accounting into effect, but your average bum on the street isn't.

If there is near-constant price deflation, then people don't have to adjust too much to it, and people would put more focus into learning it. I don't see how prices are sticky in only one direction. The wiki page doesn't specify that.

People are not rational. They are much effected by the money illusion:
http://en.wikipedia.org...

It's sticky in one direction because people are unlikely to take pay cuts due to deflation even If they have a real increase in wages.

So this gives employers an incentive to make contracts adjusted to price inflation.

Also note that a person can pretty much profit off doing absolutely nothing with deflation. The person doesn't even need to invest the money. He/she can just put it behind his/her mattress. This could be the case If a person is very , or nominal interest rates are low (real interest = rate of deflation + nominal rate) It's possible that that the nominal rate could be zero.
`
That wouldn't be profit. They'd be earning nothing. Nominal interest is zero when the person doesn't lend the money. It would have to be greater than zero to get people to lend. Investments would be more rational, thus averting business cycles.

But it would be risk-less. They're still making a profit due to deflation. My money will be worth more 5 years from now, regardless If I invest it or not.

Therefore, any investments would have to return better than that. Risk isn't necessary for something to be good.

But the long run detrimental impact of the inflation is worse than the short-term gain.

Why? We've already determined that long-run inflation does nothing.

Long-run inflation is still a tax. It decreases the purchasing power of everybody else's money, causes people to pay higher taxes by pushing them to higher income brackets, and allows to government to lower its real debt.
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
mongoose
Posts: 3,500
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11/27/2011 11:08:49 PM
Posted: 5 years ago
One thing that I just cannot accept about increasing the money supply is that the money has to be injected into the system somehow, and I can't see a fair way to do so. Somebody ends up getting free money.
It is odd when one's capacity for compassion is measured not in what he is willing to do by his own time, effort, and property, but what he will force others to do with their own property instead.
Willoweed
Posts: 150
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11/27/2011 11:09:50 PM
Posted: 5 years ago
At 11/27/2011 5:36:41 PM, mongoose wrote:
Laws hinder economic activity by requiring licenses to perform certain occupations, thus creating a shortage and increasing prices, lowering efficiency. Government also makes nonsensical regulations that keep people from doing things that are better. Businesses have to spend a lot of time just making sure that they aren't breaking a law or filling out the paperwork.

Some Licenses requirements are something people want especially in medical care to insure they are performed on by competent people.
An example of a licenses that shouldn't be mandated is barbers licenses (i tihnk flordai still has it)