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#21
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Obv. that would be terrible. I was just pointing out that your analogy was weak. As for the GDP, for all its shortfalls, it reflects overall utility reasonably well. In particular, if you look at change in GDP in a single country, you get a fairly good idea of how the economy is doing. [/ QUOTE ] This is true, but attempting to actively stimulate a variable that is reflective of the desired element rather than causal of it is disastrous. For example, assume the quality of a man's clothing is a good indicator of his wealth. Surely anyone will recognize the correlation between fine watches and shirts with a good job and large investments. Let us say that you find a certain man who is not very wealthy, and you want to mentor him into being wealthy. If we are to believe that increasing a correlating variable must make the man better off, we will instruct this fellow to buy silk shirts, rolex watches, armani jackets and gucci shoes, and in so doing ironically bankrupt him. You're doing the exact same thing. With the goal of increasing the GDP, which I don't think you have the audacity to claim has a direct positive causal impact on human life, you can arrive at policies like pointless wars that do nothing but produce harm to society, yet stimulate the GDP. |
#22
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Whatever else can be said about deflation or inflation, a high and unpredictable ammount of either throws the economy into chaos and investments are avoided.
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#23
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k, this thread didnt really go where I wanted it to. I was more interested in this quote
[ QUOTE ] He realized that deflation did not lead to depression, but what it did lead to was a turnover in the social order, as debtors could no longer service their debt at the lower price level, they would go bankrupt. [/ QUOTE ] Does this mean that in a deflationary economy the government cannot endlessly borrow money because their debt continually increases? In an inflationary system the eventual collapse of government is postponed because their debt is continually being devalued? Are there any examples of social orders being overturned? *Paging Borodog* |
#24
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k, this thread didnt really go where I wanted it to. I was more interested in this quote [ QUOTE ] He realized that deflation did not lead to depression, but what it did lead to was a turnover in the social order, as debtors could no longer service their debt at the lower price level, they would go bankrupt. [/ QUOTE ] Does this mean that in a deflationary economy the government cannot endlessly borrow money because their debt continually increases? [/ QUOTE ] I'm not sure I completely understand the question; a government can borrow money as long as someone is dumb enough to buy its bonds. [ QUOTE ] In an inflationary system the eventual collapse of government is postponed because their debt is continually being devalued? [/ QUOTE ] No, that's not really what the point of inflation is, and too much inflation, hyperinflation, will destroy the functions of the money supply (a medium of exchange and as a repositor of value), which will obviously harm the monopolist of the money supply (the government and its incestuous partner, the protected, cartelized banking system). Post-inflation deflation is bad for the established social order because it destroys the inflationary banking system (that caused the problem in the first place) and bankrupts heavily debt-leveraged industrialists and the like. Obviously bankers and industrialists do not like this idea, so it is greatly in their interest to agitate for an inflationary monetary policy (but not too inflationary, for the reasons already cited). Non-inflation related deflation, i.e. the general fall in the price level due to rising productivity, will not harm banks at all, of course, since they will have the deposits on hand to cover the increased demand for money. It will still penalize debtors relative to non-debtors, though. [ QUOTE ] Are there any examples of social orders being overturned? [/ QUOTE ] Oh, certainly. The fall of the Roman Empire, the bankruptcy of industrialists during the Great Depression, the pauperization of much of the landed British aristocracy, etc. [ QUOTE ] *Paging Borodog* [/ QUOTE ] I need a bat symbol for my new avatar. |
#25
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[ QUOTE ] *Paging Borodog* [/ QUOTE ] I need a bat symbol for my new avatar. [/ QUOTE ] ![]() |
#26
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I need a bat symbol for my new avatar. [/ QUOTE ] Iron beat me to it... ![]() |
#27
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Iron's > BCPVP's.
Yours makes him look like an old balding angry fat guy, instead of a virile young a-hole. |
#28
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Iron's > BCPVP's. Yours makes him look like an old balding angry fat guy, instead of a virile young a-hole. [/ QUOTE ] With all your crotchety grouching you should be glad I didn't give him a cane! [img]/images/graemlins/grin.gif[/img] |
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