inflation, deflation, and playing it safe

[john kane]

[ QUOTE ]
Personally I feel that when China and India climb to a high enough level to reject these jobs and produce more skilled work, (like Japan did), Africa will be the next zone to benefit from globalisation.

[/ QUOTE ]

aren't there like billions of poverty stricken people in both india and china. your going to have to wait a very long time for these countries to start rejecting overseas jobs to boost their own economy.

heck, i dont know much, but you still have a huge amount of progress to go in both those countries till you start any sort of noticeable social improvements. heck, sab miller (who sell millers in US for what, $2 a bottle) struggle to sell a bottle of miller for 8 cents to at least 95% of the population id imagine.

[ahnuld]

John, that has really changed in the past 5 years and they can no longer find enough chinese workers willing to work for extremly low wage facotry jobs. This is a sign that their society is progressing.

http://www.sinomedia.net/eurobiz/v20...ntary0609.html

[Mr. Now]

ahnuld,

We are likely to see this happen again also:

http://www.pbs.org/fmc/interviews/friedman.htm
[ QUOTE ]

MILTON FRIEDMAN: We have to distinguish what we mean when we talk about the Great Depression. What you had was that in 1929 the United States was in a boom. It hit a relative high point. And the stock market crashed in October 1929. But that was not the cause of what caused the Great Depression. It was, in my opinion, a very minor element of it. What happened was that from 1929 to 1933 you had a major contraction which, in my opinion, was caused primarily by the failure of the Federal Reserve System, to follow the course of action for which it was set up. It was set up to prevent exactly what happened from 1929 to 1933. But instead of preventing it, they facilitated it.


[/ QUOTE ]


In this interesting interview he talks stagflation also; that is where we are now-- low growth with serious inflation (not price increases per se, but an increase in dollars in circulation; that is, dollar dilution- leading to eventual price increases)

My current belief is that we are seeing a repeat of the period from 1978 to 1982 where the dollar, gold and interest rates are concerned.

[elus2]

[ QUOTE ]
[ QUOTE ]
Why do you assume service level jobs are worse than manufacturing? If anything they are better for us as they tend to pay higher. Service jobs/education is our comparative advantage in the world so it makes sense that we are losing manufacturing and gaining highly skilled employment.

[/ QUOTE ]

A lot of people think that outsourcing is only affecting the manufacturing sector. I think they are wrong. A ton of highly paid service jobs are exported to China and India. I am referring to jobs in the computer, medical, biotech, and financial sectors. PhD's in biotech firms are losing their jobs to someone in India who is getting paid 20 cents on the dollar. Radiology charts are now being sent to India to be read by doctors over there. Citigroup just laid off 17000+ U.S. employees and will go to India to replace them. The list goes on and on. The only way to prevent a massive recession in the USA is if tariffs are slapped on goods and services. If someone in India charges 20 cents on the dollar to read a Radiology chart, then there needs to be a tariff of 80 cents to make up the difference. A lot of people think tariffs will send us into a depression, but they are wrong. Tariffs did not cause the great depression, the Federal Reserve caused it by cutting off the money supply.

[/ QUOTE ]

Economics in one lesson - Tariffs

Why is it better to keep people in overpaid jobs than it is to retrain them and reallocate the labor pool more efficiently?

[Puf2006champ]

http://www.amazon.com/Empire-Debt-Rise-F...3616&sr=8-1

A very well written book. Read it with the assumption that the authors are extreme pessimists.

Pufchamp

[gonebroke2]

[ QUOTE ]
ahnuld,

We are likely to see this happen again also:

http://www.pbs.org/fmc/interviews/friedman.htm
[ QUOTE ]

MILTON FRIEDMAN: We have to distinguish what we mean when we talk about the Great Depression. What you had was that in 1929 the United States was in a boom. It hit a relative high point. And the stock market crashed in October 1929. But that was not the cause of what caused the Great Depression. It was, in my opinion, a very minor element of it. What happened was that from 1929 to 1933 you had a major contraction which, in my opinion, was caused primarily by the failure of the Federal Reserve System, to follow the course of action for which it was set up. It was set up to prevent exactly what happened from 1929 to 1933. But instead of preventing it, they facilitated it.


[/ QUOTE ]


In this interesting interview he talks stagflation also; that is where we are now-- low growth with serious inflation (not price increases per se, but an increase in dollars in circulation; that is, dollar dilution- leading to eventual price increases)

My current belief is that we are seeing a repeat of the period from 1978 to 1982 where the dollar, gold and interest rates are concerned.

[/ QUOTE ]

I agree with you. The entity that is supposed to protect the economy from inflation and deflation is the same entity causing it. I think we are going into a phase of hyperinflation and the only reason the stock market is going up is because of the dilution of the money supply. If they double the money supply and the stock market doubles, what have you gained? I believe the #1 place to be right now is in gold in one shape or another. Either physical bullion or owning gold stocks. Been the best place for the past 5 years and will be the best place for the next 5.

[kimchi]

[ QUOTE ]
Why do you assume service level jobs are worse than manufacturing? If anything they are better for us as they tend to pay higher. Service jobs/education is our comparative advantage in the world so it makes sense that we are losing manufacturing and gaining highly skilled employment.

[/ QUOTE ]

This isn't quite true. Many service jobs that are being created are essentially McJobs which are low paying and produce services that aren't really exportable.

You can't export a haircut.

[jtollison78]

[ QUOTE ]
Food for thought:

http://bigpicture.typepad.com/commen...ion_adjus.html

[/ QUOTE ]

Interesting graph. Do you trust the CPI enough to evaluate the graph at face value?

[kimchi]

[ QUOTE ]
[ QUOTE ]
Food for thought:

http://bigpicture.typepad.com/commen...ion_adjus.html

[/ QUOTE ]

Interesting graph. Do you trust the CPI enough to evaluate the graph at face value?

[/ QUOTE ]

The core CPI is utter nonesense, the headline CPI is approaching a reasonable, albeit underestimated, measure for inflation.

When the US government reports 12-month trailing core CPI levels, I feel as though my intelligence is being abused.

[jtollison78]

My understanding is the same as yours, that dropping the peg should promote inflation. I simply think that maintaining the peg is actually worse for us in the long run because it promotes a hollowing of our industry.