debate thread

[Copernicus]

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My question would be, why is artificial inflation necessary for anything other than being able to "afford" excess spending? It seems it would be a whole lot simpler for everyone if the dollar was worth the same amount for a long time.

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You are introducing a value judgement with the word "artificial". What is "artificial" inflation vs "real" inflation?

I think once we get passed that the ultimate answer to what youre really asking is that moderate wage and price escalation provides a needed buffer against deflation.

[DcifrThs]

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Paul made a comment that today's dollar is only worth 4 cents when compared to 1913(?) dollars. What context was this in?

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As a result, the Federal Reserve Note (US dollar) has lost 96% of its purchasing power since 1913.
Source: U.S. Dept, of Labor, Bureau of Labor Statistics, CPI

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Link?



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it's from libertydollar.org and it is inflation.

i don't see a huge problem in using it as a measure of purchasing power (of the basket of goods that headline CPI is composed of).

Barron

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It depends on how one interprets "purchasing power". The casual listener/reader would react "ZOMG, I can only buy 4% of what I could in 1913, what a disaster".

Of course that is only a portion of the picture. The real question is what does 1 hour (or one month or one year) of my labor buy. As you noted in another thread, you can increase the money supply by printing double the money, but if prices exactly double, and wages exactly double, there is no net impact (lets not get into a tax rate discussion, they can be adjusted too). Yet this kind of "purchasing power" graph would show a decline in purchasing power of 50%, simply because prices doubled.

It is a deceptive at best, meaningless at worst, graph and statement by RP.

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OK, now i see what you meant.

then yes in this case it is misrepresenting the facts since the real graph of purchasing power would be wage/income growth vs. inflation (i.e. real wage/income growth).

i think that would likely show that we have more purchasing power today than we did back then. this is likely due to increases in productivity from technological advances.

so i'd guess that 1 hrs wage back then would buy less than 1 hrs wage today.

Barron

[Scary_Tiger]

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My question would be, why is artificial inflation necessary for anything other than being able to "afford" excess spending? It seems it would be a whole lot simpler for everyone if the dollar was worth the same amount for a long time.

[/ QUOTE ]

You are introducing a value judgement with the word "artificial". What is "artificial" inflation vs "real" inflation?

I think once we get passed that the ultimate answer to what youre really asking is that moderate wage and price escalation provides a needed buffer against deflation.

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You consider what my grandfather (1920-) has experienced in his lifetime moderate wage and price escalation? Or do you think future bureaucrats will manage the dollar better?

[reup]

Does anyone know where the video of last nights debate can be found, fox doesn't seem to be hosting it on their website...

[volkin]

You are making a couple of huge assumptions when saying that doubling the money supply will have no net effect on the economy. Specifically,
1. Everyone in the economy knows what the future rate of inflation will be and what effect it will have on the economy.
2. When the money is introduced into the economy, it will be introduced in such a way that it will have a neutral effect on people's income/wealth.

If these assumptions don't hold than inflation, meaning increasing the money supply, will act as a way to transfer wealth which is an impact on the economy.

[pvn]

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but if prices exactly double, and wages exactly double

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But what about for people that want to retire?
<font color="red">In a real life scenario the change in prices over their lifetime is limited by time, and their investments grow with an inflation adjusted rate of return. their Social Security benefits are also adjusted. The only real and meaningful decline in their standard of living comes from private pension plans that may not be inflation adjusted.</font>

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LOL. You say that like uttering the magical incantation "inflation adjusted" makes all the problem go a way. Like there's a checkbox on your retirement fund:

Do you want to adjust for inflation?
[ ] Yes
[ ] No

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<font color="red">Thats why retirement is a "three legged stool" and they need to anticipate the decline in that portion of their retirement income by saving more </font>

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EXACTLY! You have to save more because someone is DEBASING YOUR CURRENCY.

Let's change the scenario a bit.

Let's say I remove 10% of the contents of your retirement fund at the end of every year.

"Hey, this isn't a problem if you remember to adjust for shrinkage!"

"This is why you have to anticipate the decline by saving more!"

Voila, we've solved the problem!!!


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<font color="red">no, it doesnt necessarily make it a poor idea. Again it is REAL purchasing power, not nominal dollar values, that is critical to an investment decision. As long as returns on the investment exceed the increase in prices by an acceptable real rate of return, nominal dollars are meaningless. </font>

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Framing it like this makes it sound as if the increase in purchasing power were somehow due to the decreased dollar value. But one isn't dependent on the other, so you can't use the increase in purchasing power to excuse the behavior that led to the decrease in dollar value.

PS: learn how to reply.

[pvn]

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i think that would likely show that we have more purchasing power today than we did back then. this is likely due to increases in productivity from technological advances.

so i'd guess that 1 hrs wage back then would buy less than 1 hrs wage today.

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Sure. The standard of living is higher today. Even "poor" people in the US have air conditioning and automobiles and ipods.

That's a red herring, though.

[manbearpig]

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My question would be, why is artificial inflation necessary for anything other than being able to "afford" excess spending? It seems it would be a whole lot simpler for everyone if the dollar was worth the same amount for a long time.

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You are introducing a value judgement with the word "artificial". What is "artificial" inflation vs "real" inflation?

I think once we get passed that the ultimate answer to what youre really asking is that moderate wage and price escalation provides a needed buffer against deflation.

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Well, by artifical I meant by increasing the money supply by printing money.

I guess I don't understand how wages/prices being stable is going to lead to deflation, or even why that would be bad.

Also, shouldn't their be a global aspect to this? If all of sudden there is more of our money floating around it sure seems like that would hurt our ability to buy things not made in the U.S.

[Bedreviter]

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Yes, because the American people are obviously supporting Ron Paul...

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Are you suggesting illegal immigrants are voting in our text polls and boosting Paul?

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Im suggesting that the text polls are not representative for the American people (or the ones that will vote in the Republican primaries). Im suggesting that Ron Paul has supporters that are much more likely to vote in these things, and also more likely to say "ZOMG, Ron Paul is Superman and totally awesome and can kick your favorite candidates ass". I suggest that most of the people watching the debates are people less likely to care about voting in a text poll, and that most of them watch the debates to be informed about the issues and candidates to get more information on who they will support, and not so much to say "thats awesome" every time 1 particular candidate open his mouth. Im suggesting that the majority watch to be informed, not to watch it as a football-game where you root foreverything your favorite does and boo all the opponents.

[DcifrThs]

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i think that would likely show that we have more purchasing power today than we did back then. this is likely due to increases in productivity from technological advances.

so i'd guess that 1 hrs wage back then would buy less than 1 hrs wage today.

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Sure. The standard of living is higher today. Even "poor" people in the US have air conditioning and automobiles and ipods.

That's a red herring, though.

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it is what it is but the initial point i was responding to then was a far worse mis-characterization.

stating it like "$1 buys only 4% of what it did 77 years ago" reeks far more than laying out the real wage growth as i did.

the reality of the situation is that not only have living standards improved (due to the technological change of literally what you can buy for certain prices etc.) but the relative ability to purchase the basics have improved. i.e. a basket in 1930 dollars purchase lets say a loaf of bread or whatever and it took X units of labor to get that basket. now, it takes less than X units of labor to purchase that same basket (what i would conjecture based on the data i've seen).

so i don't know why either of those statements would exactly be a "red herring" (i.e. something to throw off the point of the argument if i understand what a red herring is...)

Barron