Inflation and Deflation of Price and Money Supply - page 60.

deisik

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Quote from: Lloydie on January 15, 2014, 07:54:20 AM

Quote from: deisik on January 15, 2014, 07:08:13 AM

Quote from: Lloydie on January 14, 2014, 08:21:18 PM

In Maths the above statement = fail
In Chem the above statement = fail
In Physics the above statement = fail
In Computer Science the above statement = fail
Even in sociology the above statement = fail

Economics is littered with examples of "formulas that don't correspond well to actual data". Then economists run a massive economic experiment called Quantitative Easing with these formulas...

It is hard to impossible to gauge human behavior (which is what economics is primarily concerned about) with strict mathematics. Also, wrong premises will lead to wrong conclusions which would not correlate with empirical data. I don't see how economics is different in this aspect from any other empirical science that operates with and checks its models against empirical evidence...

Then it is not a mathematical formula is it? It is a very flawed approximation of reality that should not be used to run a massive experiment. Economics should be frank about this but it is not.

That's the whole problem: economics ignores the empirical evidence to achieve political outcomes. It's bamboozle with BS all the way.

It is still a mathematical equation

But now it seems I see your point. And you're blaming the wrong party here. Economics is a science, and as a science all scientific methods (techniques for investigating things, acquiring new and correcting prior knowledge) are fully applicable to it. As far as I know Fisher's formula has never been considered as an ultimate truth in itself, but only as a very rough approximation to real life economical phenomena...

It is surely not economics that you refer to here when saying that it ignores the empirical evidence to achieve political outcomes

Lloydie

full member

Activity: 140

Merit: 100

Quote from: deisik on January 15, 2014, 07:08:13 AM

Quote from: Lloydie on January 14, 2014, 08:21:18 PM

Quote from: deisik on January 14, 2014, 12:41:28 PM

The meaning is that the results you get by using a formula don't correspond well to actual data. Usually it means that you chose the wrong formula or the formula has some limitations. What is oxymoronic in that?

In short, stop trolling...

In Maths the above statement = fail
In Chem the above statement = fail
In Physics the above statement = fail
In Computer Science the above statement = fail
Even in sociology the above statement = fail

Economics is littered with examples of "formulas that don't correspond well to actual data". Then economists run a massive economic experiment called Quantitative Easing with these formulas...

It is hard to impossible to gauge human behavior (which is what economics is primarily concerned about) with strict mathematics. Also, wrong premises will lead to wrong conclusions which would not correlate with empirical data. I don't see how economics is different in this aspect from any other empirical science that operates with and checks its models against empirical evidence...

Then it is not a mathematical formula is it? It is a very flawed approximation of reality that should not be used to run a massive experiment. Economics should be frank about this but it is not.

That's the whole problem: economics ignores the empirical evidence to achieve political outcomes. It's bamboozle with BS all the way.

deisik

legendary

Activity: 3430

Merit: 1280

English ⬄ Russian Translation Services

Quote from: Lloydie on January 14, 2014, 08:21:18 PM

Quote from: deisik on January 14, 2014, 12:41:28 PM

The meaning is that the results you get by using a formula don't correspond well to actual data. Usually it means that you chose the wrong formula or the formula has some limitations. What is oxymoronic in that?

In short, stop trolling...

In Maths the above statement = fail
In Chem the above statement = fail
In Physics the above statement = fail
In Computer Science the above statement = fail
Even in sociology the above statement = fail

Economics is littered with examples of "formulas that don't correspond well to actual data". Then economists run a massive economic experiment called Quantitative Easing with these formulas...

It is hard to impossible to gauge human behavior (which is what economics is primarily concerned about) with strict mathematics. Also, wrong premises will lead to wrong conclusions which would not correlate with empirical data. I don't see how economics is different in this aspect from any other empirical science that operates with and checks its models against empirical evidence...

benzone

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Activity: 22

Merit: 0

Quote from: The One on January 14, 2014, 10:46:28 PM

..
There is no objective way to measure something that is subjective. Any growth caused by inflation are false growth.

Two mistakes in your reasoning:
1. It is the other way around; when an economy has by itself a business opportunity to grow, but the money supply doesn't get increased accordingly, this growth will be at least partially hampered.
2. If the prices don't grow, there is no inflation. Please read any definition of inflation you can find apart from the first post in this thread.

The One

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Activity: 924

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Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship.

Equation of exchange (most popular form): M*V = P*Q

M - money supply (mass of money in circ.)
V - velocity
P - price level
Q - productivity or quantity of product (goods, services)

So if you have a growing economy (Q is rising) and there is no change in the way you do business i.e. trade (V doesn't change) you need to increase the money supply to support this growth. Most prices are downward rigid and this is the only way to make it work. If Q and M are in proportion there is no inflation, just healthy growth supported by growing money supply.

This is all pretty elementary, no differences in opinions between economic theories etc.

There is no objective way to measure something that is subjective. Any growth caused by inflation are false growth.

The One

legendary

Activity: 924

Merit: 1000

Quote from: deisik on January 14, 2014, 03:59:19 AM

Quote from: benzone on January 14, 2014, 02:31:59 AM

We need to go to the start of this thread. The idea of dividing price inflation and money supply inflation makes no sense. According to all major sources, these two categories are just cause and effect of inflation. CPI is the most basic measure of inflation worldwide.

What are your 10-20% supposed to mean and where did you get this data?

This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

Oh dear.

The One

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Activity: 924

Merit: 1000

Quote from: benzone on January 14, 2014, 02:31:59 AM

Quote from: The One on January 13, 2014, 11:12:52 PM

...
What did you meant by inflation in EU is very low?.....you call inflation running at 10% to 20% very low. I think you were referring to CPI which IS not inflation. Companies can borrow from the bank via people's savings. Look at China and S. Korea.

We need to go to the start of this thread. The idea of dividing price inflation and money supply inflation makes no sense. According to all major sources, these two categories are just cause and effect of inflation. CPI is the most basic measure of inflation worldwide.

What are your 10-20% supposed to mean and where did you get this data?

As for China; i wouldn't refer to it as an example of a place where people i.e. workers have a good and fair life, it is in fact quite the opposite. See Foxconn...?

When you have inflation, the prices for all goods and services do not go up straight away, hence price inflation would generally be lower than inflation. Food take months to grow and any increases in price would take months to kick in.

Understand Mises and Rothbard and you will understand better.

What are your 10-20% supposed to mean and where did you get this data? You will need to see the m1 to m4 money supply data to work it out and use the Austrian formulae.

Lloydie

full member

Activity: 140

Merit: 100

Quote from: deisik on January 14, 2014, 12:41:28 PM

The meaning is that the results you get by using a formula don't correspond well to actual data. Usually it means that you chose the wrong formula or the formula has some limitations. What is oxymoronic in that?

In short, stop trolling...

In Maths the above statement = fail
In Chem the above statement = fail
In Physics the above statement = fail
In Computer Science the above statement = fail
Even in sociology the above statement = fail

Economics is littered with examples of "formulas that don't correspond well to actual data". Then economists run a massive economic experiment called Quantitative Easing with these formulas...

I can't really believe anyone can be so stupid. Yellen was afterall cum laude of her year. I really think these people get pressured/corrupted by the system the higher they are promoted. Would you believe Greenspan's Phd thesis in 1977 forecasted the collapse of the housing bubble? http://www.webcitation.org/6DKm7EZfn

Quote

Writes Greenspan: "There is no perpetual motion machine which generates an ever-rising path for the prices of homes."

This implies he knowingly inflated the housing bubble and then goes on to deny that asset bubbles can be identified when they occur. Greenspan says: bubbles can only be identified after they have burst. How convenient!

This is precisely why I'm one hundred percent behind an incorruptible mathematical algorithm to replace human central banks. Absolute power, corrupts absolutely.

This is also what gives Bitcoin value over the other 194 currencies.

bambou

sr. member

Activity: 346

Merit: 250

@ Lloydie: i think he just doesnt know what he is talking about. he trolled over coupled other threads so dont bother.

Lloydie

full member

Activity: 140

Merit: 100

Quote from: deisik on January 14, 2014, 12:41:28 PM

Quote from: Lloydie on January 14, 2014, 12:31:45 PM

Quote from: deisik on January 14, 2014, 12:24:53 PM

Quote from: Lloydie on January 14, 2014, 12:14:30 PM

Quote from: deisik on January 14, 2014, 06:54:47 AM

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship

Right, but we should always keep in mind that there are at least two more independent factors (since Fisher's equation isn't perfect either as it may just not work) that can and do override the money supply factor in this cause-and-effect relation...

Wow, bamboozle me with BS why don't you? What? You mean an economic formula called Fisher's equation is not perfect? Unbelievable! Imagine that, an imperfect economic equation that may not work.

When I said Fisher's equation is not perfect (and yes, you read me correctly) I meant it doesn't always hold true. As with most formulas (and this is especially true for economic ones), in practice they don't always work as mathematics put in them dictates. Regarding this one, increasing money supply doesn't necessarily lead to price inflation (even if other factors are constant) as happens, for example, in a liquidity trap...

That there upsets me no end. A mathematical formula that doesn't work is an oxymoron.

The real questions to be asking is, should we be printing boat loads of money when the formula doesn't work? Is it right to suppress long term interest rates and hurt the savers/retirees/prudent people? How did we end up in a liquidity trap? Can we still deny it is the debt?

I really can't wait for bitcoin to takeover the world. There will be no more of such inane debates.

The meaning is that the results you get by using a formula don't correspond well to actual data. Usually it means that you chose the wrong formula or the formula has some limitations. What is oxymoronic in that?

In short, stop trolling...

Only an economist can make that statement and not feel embarrassed. Economists are trolls by definition, IMHO. They just don't know it.

deisik

legendary

Activity: 3430

Merit: 1280

English ⬄ Russian Translation Services

Quote from: Lloydie on January 14, 2014, 12:31:45 PM

Quote from: deisik on January 14, 2014, 12:24:53 PM

Quote from: Lloydie on January 14, 2014, 12:14:30 PM

Quote from: deisik on January 14, 2014, 06:54:47 AM

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship

Right, but we should always keep in mind that there are at least two more independent factors (since Fisher's equation isn't perfect either as it may just not work) that can and do override the money supply factor in this cause-and-effect relation...

Wow, bamboozle me with BS why don't you? What? You mean an economic formula called Fisher's equation is not perfect? Unbelievable! Imagine that, an imperfect economic equation that may not work.

When I said Fisher's equation is not perfect (and yes, you read me correctly) I meant it doesn't always hold true. As with most formulas (and this is especially true for economic ones), in practice they don't always work as mathematics put in them dictates. Regarding this one, increasing money supply doesn't necessarily lead to price inflation (even if other factors are constant) as happens, for example, in a liquidity trap...

That there upsets me no end. A mathematical formula that doesn't work is an oxymoron.

The real questions to be asking is, should we be printing boat loads of money when the formula doesn't work? Is it right to suppress long term interest rates and hurt the savers/retirees/prudent people? How did we end up in a liquidity trap? Can we still deny it is the debt?

I really can't wait for bitcoin to takeover the world. There will be no more of such inane debates.

The meaning is that the results you get by using a formula don't correspond well to actual data. Usually it means that you chose the wrong formula or the formula has some limitations. What is oxymoronic in that?

In short, stop trolling...

Lloydie

full member

Activity: 140

Merit: 100

Quote from: deisik on January 14, 2014, 12:24:53 PM

Quote from: Lloydie on January 14, 2014, 12:14:30 PM

Quote from: deisik on January 14, 2014, 06:54:47 AM

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship

Right, but we should always keep in mind that there are at least two more independent factors (since Fisher's equation isn't perfect either as it may just not work) that can and do override the money supply factor in this cause-and-effect relation...

Wow, bamboozle me with BS why don't you? What? You mean an economic formula called Fisher's equation is not perfect? Unbelievable! Imagine that, an imperfect economic equation that may not work.

When I said Fisher's equation is not perfect (and yes, you read me correctly) I meant it doesn't always hold true. As with most formulas (and this is especially true for economic ones), in practice they don't always work as mathematics put in them dictates. Regarding this one, increasing money supply doesn't necessarily lead to price inflation (even if other factors are constant) as happens, for example, in a liquidity trap...

That there upsets me no end. A mathematical formula that doesn't work is an oxymoron.

The real questions to be asking is, should we be printing boat loads of money when the formula doesn't work? Is it right to suppress long term interest rates and hurt the savers/retirees/prudent people? How did we end up in a liquidity trap? Can we still deny it is the debt?

I really can't wait for bitcoin to takeover the world. There will be no more of such inane debates.

deisik

legendary

Activity: 3430

Merit: 1280

English ⬄ Russian Translation Services

Quote from: Lloydie on January 14, 2014, 12:14:30 PM

Quote from: deisik on January 14, 2014, 06:54:47 AM

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship

Right, but we should always keep in mind that there are at least two more independent factors (since Fisher's equation isn't perfect either as it may just not work) that can and do override the money supply factor in this cause-and-effect relation...

Wow, bamboozle me with BS why don't you? What? You mean an economic formula called Fisher's equation is not perfect? Unbelievable! Imagine that, an imperfect economic equation that may not work.

When I said Fisher's equation is not perfect (and yes, you read me correctly) I meant it doesn't always hold true. As with most formulas (and this is especially true for economic ones), in practice they don't always work as mathematics put in them dictates. Regarding this one, increasing money supply doesn't necessarily lead to price inflation (even if other factors are constant) as happens, for example, in a liquidity trap...

Lloydie

full member

Activity: 140

Merit: 100

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship.

Equation of exchange (most popular form): M*V = P*Q

M - money supply (mass of money in circ.)
V - velocity
P - price level
Q - productivity or quantity of product (goods, services)

So if you have a growing economy (Q is rising) and there is no change in the way you do business i.e. trade (V doesn't change) you need to increase the money supply to support this growth. Most prices are downward rigid and this is the only way to make it work. If Q and M are in proportion there is no inflation, just healthy growth supported by growing money supply.

This is all pretty elementary, no differences in opinions between economic theories etc.

The above is a BS equation as since the ZLB, the Fed has added to money supply but velocity has fallen to 1965 levels. And get this, the Fed can't explain why!!!

Yes my friends, QE/money printing is one huge EXPERIMENT that no one truly understands. But I have a pretty good idea it's not going to end well.

Honestly, we should get these fucking useless equations out of here.

Just because Q is increasing doesn't mean the economy is growing. It could simply be asset price inflation and speculative activity creating the false impression of economic growth. You are assuming V doesn't change when it has fallen to decade lows? WTF?

As the money supply has increased V has fallen commensurately. Bet you can't find that one in your neo classical text books.

This is the only way to make it work?!? Heads up fellas, it's not working. Period.

For everything else there is Bitcoin.

Lloydie

full member

Activity: 140

Merit: 100

Quote from: deisik on January 14, 2014, 06:54:47 AM

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship

Right, but we should always keep in mind that there are at least two more independent factors (since Fisher's equation isn't perfect either as it may just not work) that can and do override the money supply factor in this cause-and-effect relation...

Wow, bamboozle me with BS why don't you? What? You mean an economic formula called Fisher's equation is not perfect? Unbelievable! Imagine that, an imperfect economic equation that may not work.

Relax guys. With bitcoin, we won't have to worry about the money supply. It's fixed. Nothing anyone can do about that as the protocol was set from day one in case you didn't notice. So think about getting real jobs.

Btw, I noticed Okun's law is breaking down too. Something to do with the ZLB. Seems like they had to do more QE but now they are scared of the cost benefits trade off. So they are going to give forward guidance, except the vice chair of the fed doesn't believe in it and he used to be the teacher of them all including yellen. And if the participation rate was held constant, unemployment did not improve. So why did they print $4 trillion again? Uh-oh, I believe you guys have no fucking clue what's going on.

deisik

legendary

Activity: 3430

Merit: 1280

English ⬄ Russian Translation Services

Quote from: benzone on January 14, 2014, 06:43:58 AM

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship

Right, but we should always keep in mind that there are at least two more independent factors (since Fisher's equation isn't perfect either as it may just not work) that can and do override the money supply factor in this cause-and-effect relation...

benzone

newbie

Activity: 22

Merit: 0

Quote from: deisik on January 14, 2014, 03:59:19 AM

....
This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

I didn't say that money supply is the only variable in the equation of exchange. But we need to respect the economic terms for what they are and not mix different categories even if they are in a cause and effect relationship.

Equation of exchange (most popular form): M*V = P*Q

M - money supply (mass of money in circ.)
V - velocity
P - price level
Q - productivity or quantity of product (goods, services)

So if you have a growing economy (Q is rising) and there is no change in the way you do business i.e. trade (V doesn't change) you need to increase the money supply to support this growth. Most prices are downward rigid and this is the only way to make it work. If Q and M are in proportion there is no inflation, just healthy growth supported by growing money supply.

This is all pretty elementary, no differences in opinions between economic theories etc.

deisik

legendary

Activity: 3430

Merit: 1280

English ⬄ Russian Translation Services

Quote from: benzone on January 14, 2014, 02:31:59 AM

We need to go to the start of this thread. The idea of dividing price inflation and money supply inflation makes no sense. According to all major sources, these two categories are just cause and effect of inflation. CPI is the most basic measure of inflation worldwide.

What are your 10-20% supposed to mean and where did you get this data?

This is oversimplification. Inflation (as price increase) also depends on money velocity and productivity. I am also curious about the source of the data...

PolkRB

newbie

Activity: 42

Merit: 0

This video somewhere in the middle explains how deflation can work out just fine. It helped me to understand it much better:
https://www.youtube.com/watch?v=JP9-lAYngi4

benzone

newbie

Activity: 22

Merit: 0

Quote from: The One on January 13, 2014, 11:12:52 PM

...
What did you meant by inflation in EU is very low?.....you call inflation running at 10% to 20% very low. I think you were referring to CPI which IS not inflation. Companies can borrow from the bank via people's savings. Look at China and S. Korea.

We need to go to the start of this thread. The idea of dividing price inflation and money supply inflation makes no sense. According to all major sources, these two categories are just cause and effect of inflation. CPI is the most basic measure of inflation worldwide.

What are your 10-20% supposed to mean and where did you get this data?

As for China; i wouldn't refer to it as an example of a place where people i.e. workers have a good and fair life, it is in fact quite the opposite. See Foxconn...?

Topic: Inflation and Deflation of Price and Money Supply - page 60. (Read 1273255 times)