Topic: Why Mainstream Economists Lie About Deflation (Read 6263 times)
so now that Bernanke has declared that gold is not money, do they let Bernard Nothoff off on his counterfeiting charge?
absolutely.
All the work published on my site is public domain.
All the work published on my site is public domain.
You are about to see a guy with a BBA in MIS smash a Noble prize winning PhD economist’s arguments using simple common sense.
Not that impressive considering that the PhD Economist is Paul Krugman
Regardless, excellent article. And the rebuttals have been spot on as well. Hope you don't mind me reposting this on other sites, due credit given of course.
You still have not explained why the business cycle has existed as along as business has existed.
You can sit there and quote lectures all day, but the historical record still disagrees with you.
You can sit there and quote lectures all day, but the historical record still disagrees with you.
Because there are very few instances of historical record where 100% reserve banking has been enforced.
I'm not familiar with a period of US history where there was widespread 100% reserve banking in place.
Since anything other than 100% reserve banking will cause business cycles, it should be obvious why the historical record shows business cycles going back as far as we can see in the economic data.
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
Considering an expansion of credit to be the same as inflation is a loose definition, but in a temporal fashion, a valid one I suppose. Still, the business cycle is created by the expansion and resultant contraction of credit within an economy. Credit can exist without expansion of the monetary base (inflation), thus inflation does not cause the business cycle. Although inflation can (and does, that's one intent) affect the credit markets, thus altering the timeline and severity of the cycle.
That is simply the semantics of how one defines inflation.
In our monetary system, which is entirely predicated on the notion that debt = money, there is little difference between "credit expansion" or "printing money".
Okay, you're arguing semantics then. That's fine, so long as we all know that you are using a loose definition of the terms. There is certainly little difference between those two terms, but there is a little difference.
Yes, to be precise when I say money printing, I'm referring directly to credit expansion.
You still have not explained why the business cycle has existed as along as business has existed.
You can sit there and quote lectures all day, but the historical record still disagrees with you.
I agree with Rassah. Any hope of a rational economic system is out the door as long as populism is the ideology du jour.
I'm a bit late to this party, but regarding deflation and employment:
I think people as a whole would have a MUCH bigger resistance to their wages doing this:
up, up, up, up, up, up, DOWN, up, up, up, up, up, up, DOWNup, up, up....
in a deflationary environment, than they do to the current inflationary:
down, down, down, down, down, UP, down, down, down, down, down, UP, down, down...
Regardless of the fact that both scenarios are exactly the same in mathematical terms, we humans are just too irrational to accept the scenario where we are hurt quickly and heavily, over a scenario where the pain is drawn out over the course of a year.
Of course we could also just have each paycheck decrease in amount, thus making each payment adjust for deflation and make the pain constant and one we are used to, but, we humans also prefer nice, predictable, round(ish) numbers, and having seemingly randomly calculated (percentage-based) numbers every time will make life rather difficult to plan (how much will I have for bills? Will I have enough to go out to a movie, and what will the price of that be? etc.)
So, my argument, really, is that although deflation and inflation are both mathematically the same in the long run, we humans may just be too irrational to accept it.
I think people as a whole would have a MUCH bigger resistance to their wages doing this:
up, up, up, up, up, up, DOWN, up, up, up, up, up, up, DOWNup, up, up....
in a deflationary environment, than they do to the current inflationary:
down, down, down, down, down, UP, down, down, down, down, down, UP, down, down...
Regardless of the fact that both scenarios are exactly the same in mathematical terms, we humans are just too irrational to accept the scenario where we are hurt quickly and heavily, over a scenario where the pain is drawn out over the course of a year.
Of course we could also just have each paycheck decrease in amount, thus making each payment adjust for deflation and make the pain constant and one we are used to, but, we humans also prefer nice, predictable, round(ish) numbers, and having seemingly randomly calculated (percentage-based) numbers every time will make life rather difficult to plan (how much will I have for bills? Will I have enough to go out to a movie, and what will the price of that be? etc.)
So, my argument, really, is that although deflation and inflation are both mathematically the same in the long run, we humans may just be too irrational to accept it.
Inflation deflation, boom and bust, flooding cycle of the nile are one of the same to me as I see it in the history books. It would not occur unless there is a central control of money supply or in Egypts case, grain/food supply. It is the only reason why boom and bust occurs, anyone denying it need to learn to think critically on your own and study your own economics and start fresh ignoring pretty much everything you ever heard and learned from school/media. Nothing has changed from controlling the food in early civilization to controlling land in the middle ages and on. Wake up people. Once you clear the smoke, everything is very obvious. At least they couldn't make land or grain out of thin air. Today it's changed into controlling the money supply on top of it all and they are printing these like it's no one's business.
Based on the perspective that fiat currency represents a debt obligation of the federal government? I can respect that perspective. I withdraw my objections.
yes.
Thank you.
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
Considering an expansion of credit to be the same as inflation is a loose definition, but in a temporal fashion, a valid one I suppose. Still, the business cycle is created by the expansion and resultant contraction of credit within an economy. Credit can exist without expansion of the monetary base (inflation), thus inflation does not cause the business cycle. Although inflation can (and does, that's one intent) affect the credit markets, thus altering the timeline and severity of the cycle.
That is simply the semantics of how one defines inflation.
In our monetary system, which is entirely predicated on the notion that debt = money, there is little difference between "credit expansion" or "printing money".
Okay, you're arguing semantics then. That's fine, so long as we all know that you are using a loose definition of the terms. There is certainly little difference between those two terms, but there is a little difference.
Yes, to be precise when I say money printing, I'm referring directly to credit expansion.
Based on the perspective that fiat currency represents a debt obligation of the federal government? I can respect that perspective. I withdraw my objections.
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
Considering an expansion of credit to be the same as inflation is a loose definition, but in a temporal fashion, a valid one I suppose. Still, the business cycle is created by the expansion and resultant contraction of credit within an economy. Credit can exist without expansion of the monetary base (inflation), thus inflation does not cause the business cycle. Although inflation can (and does, that's one intent) affect the credit markets, thus altering the timeline and severity of the cycle.
That is simply the semantics of how one defines inflation.
In our monetary system, which is entirely predicated on the notion that debt = money, there is little difference between "credit expansion" or "printing money".
Okay, you're arguing semantics then. That's fine, so long as we all know that you are using a loose definition of the terms. There is certainly little difference between those two terms, but there is a little difference.
Yes, to be precise when I say money printing, I'm referring directly to credit expansion.
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
Considering an expansion of credit to be the same as inflation is a loose definition, but in a temporal fashion, a valid one I suppose. Still, the business cycle is created by the expansion and resultant contraction of credit within an economy. Credit can exist without expansion of the monetary base (inflation), thus inflation does not cause the business cycle. Although inflation can (and does, that's one intent) affect the credit markets, thus altering the timeline and severity of the cycle.
That is simply the semantics of how one defines inflation.
In our monetary system, which is entirely predicated on the notion that debt = money, there is little difference between "credit expansion" or "printing money".
Okay, you're arguing semantics then. That's fine, so long as we all know that you are using a loose definition of the terms. There is certainly little difference between those two terms, but there is a little difference.
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
Considering an expansion of credit to be the same as inflation is a loose definition, but in a temporal fashion, a valid one I suppose. Still, the business cycle is created by the expansion and resultant contraction of credit within an economy. Credit can exist without expansion of the monetary base (inflation), thus inflation does not cause the business cycle. Although inflation can (and does, that's one intent) affect the credit markets, thus altering the timeline and severity of the cycle.
That is simply the semantics of how one defines inflation.
In our monetary system, which is entirely predicated on the notion that debt = money, there is little difference between "credit expansion" or "printing money".
I'm not grossly oversimplifying anything.
Business cycles can not exist without inflation.
Sorry, but the business cycle exists regardless of inflation or deflation.
No, I'm sorry to tell you that it does not.
Only inflation of the money supply causes business cycles. Period.
Garrison's lecture is just one of many. If you don't believe it, then explain to me why you don't believe it. I can produce an absolutely epic volume of literature that demonstrates exactly what causes business cycles and they all say the same thing.
http://en.wikipedia.org/wiki/Austrian_business_cycle_theory
Considering an expansion of credit to be the same as inflation is a loose definition, but in a temporal fashion, a valid one I suppose. Still, the business cycle is created by the expansion and resultant contraction of credit within an economy. Credit can exist without expansion of the monetary base (inflation), thus inflation does not cause the business cycle. Although inflation can (and does, that's one intent) affect the credit markets, thus altering the timeline and severity of the cycle.
I'm not grossly oversimplifying anything.
Business cycles can not exist without inflation.
Sorry, but the business cycle exists regardless of inflation or deflation.
No, I'm sorry to tell you that it does not.
Only inflation of the money supply causes business cycles. Period.
Garrison's lecture is just one of many. If you don't believe it, then explain to me why you don't believe it. I can produce an absolutely epic volume of literature that demonstrates exactly what causes business cycles and they all say the same thing.
I'm not grossly oversimplifying anything.
Business cycles can not exist without inflation.
Sorry, but the business cycle exists regardless of inflation or deflation. It will exist in Bitcoin as well. The business cycle is an aggregate phenomonon that exists despite the Federal Reserve. In fact, elimination of the business cycle was one of the original missions of the Federal Reserve, but in practice the actions of the Fed only act to delay the correction phase, not eliminate it. Since the market has more time to build up inefficiencies before the correction phase wipes them out, those correction phases tend to be deeper and longer than without monetary intervention from the Fed.
If you just said that we didn't experience a depression prior to the creation of the Fed, now you're saying that of course we had depressions prior to the Fed. Which is it?
No, I said the country didn't experience a great depression until the existence of the Fed.
There is a massive difference between a brief recession and a great depression.
The fact that banks were forced to keep their inflation in check by the markets without the Fed and FDIC there to bail them out meant the business cycles that resulted from their fraud were minor and brief.
Why You've Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.
Thanks for sharing the article. It provides me with another list of ridiculous assertions by Keynesian economists who don't understand business cycles. Particularly her first claim, which is utterly preposterous on it's face considering that it wasn't until we had the Fed that the economy experienced the first great depression.
Try again. Like I said, please educate yourself on actual historical events before trying to make these bold claims. The business cycle has existed for long as data has been recorded.
http://www.bloomberg.com/news/2010-09-20/u-s-business-cycle-expansions-and-contractions-throughout-history-table.html
You are grossly oversimplifying many issues, completely misquoting historical evidence, and just generally getting things wrong. Do some more studying before you try to shoot down PhD level economists.
I'm not grossly oversimplifying anything.
Business cycles can not exist without inflation.
If you just said that we didn't experience a depression prior to the creation of the Fed, now you're saying that of course we had depressions prior to the Fed. Which is it?
Thanks for sharing the article. It provides me with another list of ridiculous assertions by Keynesian economists who don't understand business cycles. Particularly her first claim, which is utterly preposterous on it's face considering that it wasn't until we had the Fed that the economy experienced the first great depression.
Try again. Like I said, please educate yourself on actual historical events before trying to make these bold claims. The business cycle has existed for long as data has been recorded.
http://www.bloomberg.com/news/2010-09-20/u-s-business-cycle-expansions-and-contractions-throughout-history-table.html
You are grossly oversimplifying many issues, completely misquoting historical evidence, and just generally getting things wrong. Do some more studying before you try to shoot down PhD level economists.
I'm not grossly oversimplifying anything.
Business cycles can not exist without inflation.
Inflation of the money supply existed BEFORE the fed was created.
The banks were all engaged in fractional reserve banking from the start and had a habit of inflating their notes well beyond their reserves.
You should do some more studying before relying on left wing economists from the Atlantic who don't know their ass from a hole in the ground.
Go ask your glorious economist why banks experienced bank runs prior to the Fed and see what kind of lame answer she provides you.
Here's an article by a real economist that explains it in detail:
http://www.lewrockwell.com/rothbard/rothbard163.html
Thanks for sharing the article. It provides me with another list of ridiculous assertions by Keynesian economists who don't understand business cycles. Particularly her first claim, which is utterly preposterous on it's face considering that it wasn't until we had the Fed that the economy experienced the first great depression.
Try again. Like I said, please educate yourself on actual historical events before trying to make these bold claims. The business cycle has existed for long as data has been recorded.
http://www.bloomberg.com/news/2010-09-20/u-s-business-cycle-expansions-and-contractions-throughout-history-table.html
You are grossly oversimplifying many issues, completely misquoting historical evidence, and just generally getting things wrong. Do some more studying before you try to shoot down PhD level economists.
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