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Topic: Why does anyone pay attention to people that study "economics"? - page 7. (Read 9525 times)

hero member
Activity: 770
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A 2002 International Monetary Fund study looked at "consensus forecasts" (the forecasts of large groups of economists) that were made in advance of 60 different national recessions in the 1990s: in 97% of the cases the economists did not predict the contraction a year in advance. On those rare occasions when economists did successfully predict recessions, they significantly underestimated their severity.[167]

Why should they pay attention to them? There are mostly manipulators.

Exactly.

Economy is irrelevant if money supply can be manipulated. Money drives economy, not the other way around. Because people have an illusion that money's value is constant, it is this illusion give banks power to direct the economy as they wish

Imagine such a scenario: As soon as every merchant heard that FED is going to increase the money supply by 4 fold, they raise the price of everything by 4 times, then QE will not give economy any help at all, or even worse, destroy the USD

The fact that this scenario did not happen is just because people's illusion that fiat money have a constant value, nothing else

The thing is that that illusion only lasts for a relatively small time lapse.  In the mean time, those profiting from the freshly printed money can reap in a lot of seigniorage, because they have more money and the prices didn't increase yet.  While those at the end of the line will suffer and pay all that seigniorage when prices inevitably will start to rise, because of offer and demand.

If a car costs $ 30 000.- and people now have so much cash that they can afford to buy so many cars that the salesman cannot even provide them as the production doesn't follow, he'll finish by rising the prices (and so will the competition).  So nobody is stronger than the market, and in the longer run, printing money will increase prices.  Unavoidably.  Unless that money flees into specific assets where a bubble is blown (that's in fact nothing else but inflation, but concentrated on a few assets instead of on the whole of economy).

Quote
For normal commodity, more supply means lower value. But more money will not affect each dollar's value, since this can be observed by  each individual (especially poor people)

For a while.  In the end, it also follows offer and demand.
hero member
Activity: 770
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No shit, but that's not what I'm pointing out.  In a closed system all exchanges are zero sum.  So over time there will be only one winner.  Its like the game Monopoly.  

These are two misconceptions.

The first misconception is that an exchange (of anything else but a monetary item) is a zero-sum game.  It isn't.

If I have two apples, and you have two eggs, then my satisfaction is lower with my two apples, and your satisfaction is lower with your two eggs, than if we exchange an apple for an egg.  If we do that, we are motivated to do so because we have a higher degree of satisfaction after the exchange than before.  So *value* (= the amount of satisfaction, or the decrease in amount of frustration) for each of us increased when we traded.

Do not confuse "price" with "value".  Price is the exchange rate.  Value is satisfaction.  Price is the equilibrium where the amount of satisfaction increase for both partners is, in their eyes, equal, in the exchange.

We both had an increase in value, just by exchanging an apple for an egg.  We did this, exactly because of that reason.  So just this exchange already created value.

The second misconception is of course that there is production.  If there is production, there is of course value creation (unless the production is inefficient and generates losses: the stuff you make generates less satisfaction than the stuff you used to make it).  If production is exchanged for other production (the basic capitalistic tenet) there is evidently value increase.

The only place where exchange is a zero-sum game is in the exchange of speculative assets, because these items only carry the speculative value of a price, and have no intrinsic capacity to satisfy needs (have no value of usage or consumption).

legendary
Activity: 1988
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Beyond Imagination
A 2002 International Monetary Fund study looked at "consensus forecasts" (the forecasts of large groups of economists) that were made in advance of 60 different national recessions in the 1990s: in 97% of the cases the economists did not predict the contraction a year in advance. On those rare occasions when economists did successfully predict recessions, they significantly underestimated their severity.[167]

Why should they pay attention to them? There are mostly manipulators.

Exactly.

Economy is irrelevant if money supply can be manipulated. Money drives economy, not the other way around. Because people have an illusion that money's value is constant, it is this illusion give banks power to direct the economy as they wish

Imagine such a scenario: As soon as every merchant heard that FED is going to increase the money supply by 4 fold, they raise the price of everything by 4 times, then QE will not give economy any help at all, or even worse, destroy the USD

The fact that this scenario did not happen is just because people's illusion that fiat money have a constant value, nothing else

For normal commodity, more supply means lower value. But more money will not affect each dollar's value, since this can be observed by  each individual (especially poor people)

It is interesting to read the "Real bills doctrine" first invented by John Law, it indicated that the money's value is coming from trust, has nothing to do with supply and demand, you can supply as much money as you want if that trust is intact, and then more money means more wealth

legendary
Activity: 1428
Merit: 1001
getmonero.org
A 2002 International Monetary Fund study looked at "consensus forecasts" (the forecasts of large groups of economists) that were made in advance of 60 different national recessions in the 1990s: in 97% of the cases the economists did not predict the contraction a year in advance. On those rare occasions when economists did successfully predict recessions, they significantly underestimated their severity.[167]

Why should they pay attention to them? There are mostly manipulators.
legendary
Activity: 1330
Merit: 1003
That's implying that technology won't improve. You are ignoring renewable energy such as sun, wind, geothermal, etc. and nuclear energy (and nuclear fusion).

According to everything I've read all the renewable energy sources we have combined cannot solve the problem to supply the amount of energy needed, nuclear fission very unpopular (so not likely to get greatly expanded) and nuclear fusion has yet to produce more energy than has been spent on trying to achieve it (perhaps if we get *lucky* that might change).


We've been talking about this problem for years though. Technology allows production to increase and usage to drop as products become more efficient. Additionally, population growth is finally slowing down.

If a real energy shortage occurs, people will just have to get over their objections to nuclear fission. And we're currently burning off natural gas instead of using it for electricity. We aren't anywhere close to using the earth's entire energy capacity.
hero member
Activity: 784
Merit: 500

NO what happens to the fixed money supply.  Because if its not redistributed then the families that have more kids gets diluted.  This creates disincentive to have kids, and therefore danger of endangerment.  If the money gets redistributed then people have incentive to have more kids to get more money but less per person.

Those that are more prosperous (those producing goods/providing services that are low in supply and high in demand) and can afford them will most likely be the ones having kids.

Having more kids is no justification for stealing from someone else.

Then you have problems of monopoly

How does a fixed money supply result in monopolies?

The prosperous families accumulate more money leaving the rest with less.  Thats every capitalist system.  But its worse when no new money is introduced.  The kids born into the lower class families start from disadvantaged position

Those who supply more demands should have more money.  Those with less money have to figure out what products and services those with more money want and then produce or provide them.

No shit, but that's not what I'm pointing out.  In a closed system all exchanges are zero sum.  So over time there will be only one winner.  Its like the game Monopoly. 
hero member
Activity: 854
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Bitcoin: The People's Bailout

NO what happens to the fixed money supply.  Because if its not redistributed then the families that have more kids gets diluted.  This creates disincentive to have kids, and therefore danger of endangerment.  If the money gets redistributed then people have incentive to have more kids to get more money but less per person.

Those that are more prosperous (those producing goods/providing services that are low in supply and high in demand) and can afford them will most likely be the ones having kids.

Having more kids is no justification for stealing from someone else.

Then you have problems of monopoly

How does a fixed money supply result in monopolies?

The prosperous families accumulate more money leaving the rest with less.  Thats every capitalist system.  But its worse when no new money is introduced.  The kids born into the lower class families start from disadvantaged position

Those who supply more demands should have more money.  Those with less money have to figure out what products and services those with more money want and then produce or provide them.
hero member
Activity: 770
Merit: 629
use human skulls as currency Grin

That's simply brilliant  Cheesy

Sound money !
hero member
Activity: 770
Merit: 629
The prosperous families accumulate more money leaving the rest with less.  Thats every capitalist system.  But its worse when no new money is introduced.  The kids born into the lower class families start from disadvantaged position

If lower class families wouldn't make kids, then the next generation would all be made of rich kids !
Social darwinism revisited.

If those poor people absolutely want to reproduce their Malthusian poverty, then it is on their consience that the poverty of their kids will fall.
hero member
Activity: 770
Merit: 629
That leads to hoarding

Deflation leads to hoarding just as much as inflation leads to overspending and getting broke.

If you have 2% inflation, you're not going to waste all your earnings to buy up the whole supermarket today, because tomorrow prices will be 0.01% higher, right ?

In the same way, if you have 2% deflation, you're not going to postpone all your consumption and lead a miserable life, simply because if you wait for tomorrow, things will be 0.01% cheaper.

The idea that if people start hoarding, the money velocity goes down, prices go even more down, and that makes more deflation, until almost all money is held, and none is used to consume, which makes prices go to 0, is the perfect dual of the hyperinflationary spiral where people want to spend all their money immediately and don't want to hold it, velocity of money goes up, prices go even more up, which makes even more inflation until no money is held at all which makes prices go to infinity.

The "deflationary spiral" is the deflation equivalent of hyperinflation.  That only happens when the run-away kicks in, at high levels of deflation or inflation.

With sound money, the intrinsic deflation is normally equal to economic growth.  If the economy grows 5%, then the same amount of money can buy 5% more, so prices have to plummet 5%.

Nobody is afraid of a hyperinflation spiral when the inflation is single digit.  Hell, in the 70ies we even had double digit inflation and there was no runaway.  So there won't be any deflationary spiral either with single-digit deflation.

However, the big, big difference between slight inflation and slight deflation is that a HUGE part of the banking sector becomes unnecessary.  Indeed, a large part of the banking sector has as a purpose to redistribute a small part of the seigniorage of the monetary inflation to the people saving (by giving them a ridiculous real interest rate over inflation) and keeping a lot of it for themselves.
People have to flee into a bank savings account to try to get back something of their savings which should in principle (by non-consumption) have to increase on average in value equal to economic growth.

With sound money, that happens automatically, by just keeping the money.  The non-consumption by keeping the money automatically liberates resources for capital investment.

So what banks do partially in an inflating environment, happens normally and automatically in a deflating environment.  THAT is the reason why the financial sector gets bleak when they see the monster of deflation coming their way: their lucrative seigniorage machine is then broke and they are not necessary anymore.


hero member
Activity: 854
Merit: 1000
Bitcoin: The People's Bailout
And what happens when people have kids and the population grows?
Then the same amount of money will be able to buy more (deflation).


That leads to hoarding

If someone wants to hoard their money, then that should be their prerogative.

Do you really think the hoarder will just let himself starve to death because he doesn't want to give 5 cents to one of the fisherman for a fish?
hero member
Activity: 784
Merit: 500

NO what happens to the fixed money supply.  Because if its not redistributed then the families that have more kids gets diluted.  This creates disincentive to have kids, and therefore danger of endangerment.  If the money gets redistributed then people have incentive to have more kids to get more money but less per person.

Those that are more prosperous (those producing goods/providing services that are low in supply and high in demand) and can afford them will most likely be the ones having kids.

Having more kids is no justification for stealing from someone else.

Then you have problems of monopoly

How does a fixed money supply result in monopolies?

The prosperous families accumulate more money leaving the rest with less.  Thats every capitalist system.  But its worse when no new money is introduced.  The kids born into the lower class families start from disadvantaged position
hero member
Activity: 854
Merit: 1000
Bitcoin: The People's Bailout

NO what happens to the fixed money supply.  Because if its not redistributed then the families that have more kids gets diluted.  This creates disincentive to have kids, and therefore danger of endangerment.  If the money gets redistributed then people have incentive to have more kids to get more money but less per person.

Those that are more prosperous (those producing goods/providing services that are low in supply and high in demand) and can afford them will most likely be the ones having kids.

Having more kids is no justification for stealing from someone else.

Then you have problems of monopoly

How does a fixed money supply result in monopolies?
hero member
Activity: 854
Merit: 1000
Bitcoin: The People's Bailout
Do I get a weapon? Sorry, that's the fiat talking Wink

For defense...or to impose your will on the unwilling?  Smiley

Oh, we're using fiat. Ok, it take control of the resources by force while trying not to kill too many consumers in the process, rape and pillage the resou... sorry, "produce" the resources as fast and hard as I can in case someone tries to take them from me and then demand about half that $210 for the first batch, about half the remaining $105 for the second....

Better take out the anarchists and libertarians first because they will be the ones coming after your head once you start initiating the use of force.

Also, I'm not sure it could really be considered fiat in this scenario.  No one would be forced to use it, those who didn't want to use it would be free to use some other form of money, or not use money at all.  The biggest drawback to fiat money is that normally a select few can create it while others have to work for it.  That ability doesn't exist in this scenario.
hero member
Activity: 784
Merit: 500
And what happens when people have kids and the population grows?

Then the same amount of money will be able to buy more (deflation).



That leads to hoarding
hero member
Activity: 784
Merit: 500
And what happens when people have kids and the population grows?

They would depend on their parents to provide for them until they became self sufficient.

NO what happens to the fixed money supply.  Because if its not redistributed then the families that have more kids gets diluted.  This creates disincentive to have kids, and therefore danger of endangerment.  If the money gets redistributed then people have incentive to have more kids to get more money but less per person.

Those that are more prosperous (those producing goods/providing services that are low in supply and high in demand) and can afford them will most likely be the ones having kids.

Having more kids is no justification for stealing from someone else.

Then you have problems of monopoly
hero member
Activity: 854
Merit: 1000
Bitcoin: The People's Bailout
Well, if you want to go back to discussing economics I have a thought experiment you may want to consider.

Suppose you were one of seventy people stranded on an isolated island out in the middle of the Pacific Ocean and had no means of leaving or communicating with the rest of the world.  You are all going to be stuck there for a few years.  What would be the most efficient and effective way to allocate the island's resources and ensure that goods and services are fairly exchanged between the island's seventy inhabitants?

To make me their benevolent King and to have everybody worship me of course.  Utility maximized :-)

Trust me.  I know what you should do. 

 Wink

Is that you, Obama?  Wink
hero member
Activity: 770
Merit: 629
I actually think it is rather funny that we have people that are awarded Nobel prizes and given high status at universities (and in governments) when their pseudo-science is really no different to a cult or a religion.

In my view, economics is about finding theories or rules about human monetary behaviour. Most of these theories do not work, do not approximate human behaviour, or only applies in specific conditions. But we do need them to give educated guesses in an economy for government budgeting and stimulating growth.

Human action Smiley

Fundamentally impossible to know, fundamentally impossible to predict, fundamentally impossible to model.  But we are going to "regulate" it.  Even if we know that we don't know.  What a joke, no ?
hero member
Activity: 770
Merit: 629
Well, if you want to go back to discussing economics I have a thought experiment you may want to consider.

Suppose you were one of seventy people stranded on an isolated island out in the middle of the Pacific Ocean and had no means of leaving or communicating with the rest of the world.  You are all going to be stuck there for a few years.  What would be the most efficient and effective way to allocate the island's resources and ensure that goods and services are fairly exchanged between the island's seventy inhabitants?

To make me their benevolent King and to have everybody worship me of course.  Utility maximized :-)

Trust me.  I know what you should do. 

 Wink
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