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Topic: Inflation and Deflation of Price and Money Supply - page 61. (Read 1455603 times)

legendary
Activity: 924
Merit: 1000
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.
legendary
Activity: 924
Merit: 1000
...
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.
full member
Activity: 140
Merit: 100
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.
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.

full member
Activity: 140
Merit: 100
....
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.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
....
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...
full member
Activity: 140
Merit: 100
....
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.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
....
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...
full member
Activity: 140
Merit: 100
....
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.
full member
Activity: 140
Merit: 100
....
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.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
....
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...
newbie
Activity: 22
Merit: 0
....
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.
legendary
Activity: 3514
Merit: 1280
English ⬄ Russian Translation Services
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...
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
newbie
Activity: 22
Merit: 0
...
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...?
legendary
Activity: 924
Merit: 1000
...
No, actually the 1% hold a lot of assets, which are being driven up by the debt based system. Most of the 99% own a tiny amount of assets per person in comparison. They are creditors but not in any meaningful way.

The 99% will never be able to become the 1%. This is the system. It is unfair and it has been in place for the last fifty years.

99% of people you meet liking inflation indicates you are probably working in finance, economics or government. Real people with real jobs hate inflation. Especially the millions of unemployed people in the US and Europe.

...

No.

Inflation in EU is very low, monetary policy is restrictive and EU has significantly higher unemployment than any other major economy. I haven't heard a single unemployed person complain about inflation ever and I've been around a while (Yugoslavia with hyperinflation, Slovenia with own fresh currency and now €). Which 'real' people are you talking about?

You are also neglecting companies, business. They do most of the borrowing. People work in companies. Companies need to take loans (or issue shares) to grow business and offer jobs. If a company stops to borrow money it's usually a seriously bad sign, it means it has no idea, no room to grow and it will be overrun by competitors, people lose jobs.

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.
legendary
Activity: 924
Merit: 1000
Economists are the types of pseudo-intellectuals that create mathematical models, which almost never work in the real world. Anyway, as far as my understanding goes, today we live in a debts-driven-and-debts-stimulating society, where inflation has a soothing effect. Let's say the GDP is €1 trillion, inflation is 2%, debt is €0.6 trillion, which is 60% of GDP,  and economic growth is 0% then next year GDP reads €1.020  trillion and debt is still €0.6 trillion, which has magically become 'only' 58.8% of GDP. Isn't that great ?! No, it isn't, because someone needs to pay the bill, at the end of the line. Debts do exist in the real world, but they are anonymous, transformed, transferred, disguised and encapsulated within the totality of the money-system and this results in an intrinsic value of contemporary conventional currencies; each coin (real or virtual) hides this shared debt proportionally.

Now, wouldn't the world change all that if we gradually change into a debts-discouraging society driven by a deflationary currency like Bitcoin?

You have demonstrated a perfect example why many do not know how to use percentages properly. 60% - 58.8% - looks good, fooled the people, but the actual amount is what more important.

99% of the people i've met thinks inflation (in their mind CPI) is good as it makes the debts appear smaller and it is the creditors who suffer. Creditors are those who have a legal future claim on money. Hence those who lend out money as debt have a claim for that debt to be repaid in the future. What 99% do not understand is that they are also creditors, i.e. those who have insurance policies, pensions, savings.......people have a legal future claim on that money and they also suffer from inflation and not just those who lend the money out.

No, actually the 1% hold a lot of assets, which are being driven up by the debt based system. Most of the 99% own a tiny amount of assets per person in comparison. They are creditors but not in any meaningful way.

The 99% will never be able to become the 1%. This is the system. It is unfair and it has been in place for the last fifty years.

99% of people you meet liking inflation indicates you are probably working in finance, economics or government. Real people with real jobs hate inflation. Especially the millions of unemployed people in the US and Europe.

Debt is just a civilised version of slavery. Maybe we don't need debt. At least now we have a choice in an alternate monetary system called bitcoin.

I don't work. Real people do not understand inflation, they think CPI IS inflation when it isn't. Unemployment are caused by government interferences in the economy.
hero member
Activity: 804
Merit: 501
I'm sure this is a common question, especially since coin generators have been released. 

What's the speculation on inflation/deflation for all these new altcoins?  I'm sure they will continue to come like the open flood gates to a water dam.
full member
Activity: 140
Merit: 100
...
No, actually the 1% hold a lot of assets, which are being driven up by the debt based system. Most of the 99% own a tiny amount of assets per person in comparison. They are creditors but not in any meaningful way.

The 99% will never be able to become the 1%. This is the system. It is unfair and it has been in place for the last fifty years.

99% of people you meet liking inflation indicates you are probably working in finance, economics or government. Real people with real jobs hate inflation. Especially the millions of unemployed people in the US and Europe.

...

No.

Inflation in EU is very low, monetary policy is restrictive and EU has significantly higher unemployment than any other major economy. I haven't heard a single unemployed person complain about inflation ever and I've been around a while (Yugoslavia with hyperinflation, Slovenia with own fresh currency and now €). Which 'real' people are you talking about?

You are also neglecting companies, business. They do most of the borrowing. People work in companies. Companies need to take loans (or issue shares) to grow business and offer jobs. If a company stops to borrow money it's usually a seriously bad sign, it means it has no idea, no room to grow and it will be overrun by competitors, people lose jobs.
As there is low inflation in Europe as you say, people don't complain about inflation. Instead they complain about poverty, unaffordable goods and rising property prices. These are all symptoms of the debt based fiat system artificially raising the prices of food, fuel and assets.

Borrowing is important to the debt based fiat system, however it perpetuates inequality. A new paradigm is dawning. Individually, we can choose to opt out of fiat and into bitcoin. We can rebuild the economy like the Germans did after WW2 on a bedrock of hard money. Bitcoin is harder than the Deutschmark. The euro was also meant to be hard like the Deutschmark but weak countries like Greece, Portugal and Spain incurred too much debt and are now trying to soften the Euro via ECB money printing.

Only weak uncompetitive countries in the EU want a soft currency.  They want more than they are entitled to. Strong countries like Germany, Finland and Austria do not fear a hard currency. They love it because it preserves what they are entitled due to their economic efficiencies.
newbie
Activity: 22
Merit: 0
...
No, actually the 1% hold a lot of assets, which are being driven up by the debt based system. Most of the 99% own a tiny amount of assets per person in comparison. They are creditors but not in any meaningful way.

The 99% will never be able to become the 1%. This is the system. It is unfair and it has been in place for the last fifty years.

99% of people you meet liking inflation indicates you are probably working in finance, economics or government. Real people with real jobs hate inflation. Especially the millions of unemployed people in the US and Europe.

...

No.

Inflation in EU is very low, monetary policy is restrictive and EU has significantly higher unemployment than any other major economy. I haven't heard a single unemployed person complain about inflation ever and I've been around a while (Yugoslavia with hyperinflation, Slovenia with own fresh currency and now €). Which 'real' people are you talking about?

You are also neglecting companies, business. They do most of the borrowing. People work in companies. Companies need to take loans (or issue shares) to grow business and offer jobs. If a company stops to borrow money it's usually a seriously bad sign, it means it has no idea, no room to grow and it will be overrun by competitors, people lose jobs.
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