Do you think you know more about economics than the Deputy Secretary of the Treasury?

[imagep]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

some inflation is good. inflation due to higher incomes is a good kind of inflation.
what is bad is when inflation is not because of those incomes. that operating expenses for the business
increase without wage increases being the primary reason.

also you are correct if the fed did what VZ has done you would see a huge increase in prices

The amount of inflation that we have had over the past 8+ years is most likely just about the ideal amount to incentivize economic growth (at least according the the most well known economists in the world). Most economists believe that small and predictable amounts of inflation spur economic growth because it increases immediate demand, disincentivizes the hording of cash, and increases actual productive investment (investment and savings aren't exactly the same thing).

Any amount of deflation can harm the economy though. Some of the things that tend to deflate are wages, business sales, business profits, the GDP, PPP, stock markets, GOLD, home values, the number of jobs, etc. Most people think "deflation, that's great, stuff will be cheaper", but they forget that they will likely have less income also. Deflation is only desirable to people who hold large amounts of cash, not invested in anything productive.

 

[imagep]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

some inflation is good. inflation due to higher incomes is a good kind of inflation.
what is bad is when inflation is not because of those incomes. that operating expenses for the business
increase without wage increases being the primary reason.

also you are correct if the fed did what VZ has done you would see a huge increase in prices

So you agree that inflation driven by an increase in the min wage would be a good thing? I'm surprised.

 

[imagep]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

I absolutely agree.

So you agree that inflation driven by an increase in the min wage would be a good thing? I'm surprised.

 

[Gimmesometruth]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

If the fed instantly doubled the money supply, homes that are in demand would go up most likely because the dollar would be worth less.

I am sorry are we using Euros now?

No, we aren't....how in the hell did you get there, Doctor Quack?

You did this before, I had to point out that "dollars", currency, are a very small part of the US monetary system. But that doesn't stop you from once AGAIN engaging in this nonsense. The FED actually DID grow "the money supply" during "QE", and yet we were not hustling wheel-barrows full of "dollars" because of the burden of inflation. But yet....we still get this econ 101 understanding blurted out. I wish you would stick to insurance coding, 'cause yeh got some big 'ol blindspots when it comes to macro.

 

[ludin]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

So you agree that inflation driven by an increase in the min wage would be a good thing? I'm surprised.

No it wouldn't. As it is not being driven by people improving themselves.
When you raise the floor you just set a new floor. What you would do is devalue millions of working Americans
That wouldn't get the same increase. Yet they would have to suffer the massive increase in price.

Others would face the worst prospect of losing their jobs.

 

[ludin]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

No, we aren't....how in the hell did you get there, Doctor Quack?

You did this before, I had to point out that "dollars", currency, are a very small part of the US monetary system. But that doesn't stop you from once AGAIN engaging in this nonsense. The FED actually DID grow "the money supply" during "QE", and yet we were not hustling wheel-barrows full of "dollars" because of the burden of inflation. But yet....we still get this econ 101 understanding blurted out. I wish you would stick to insurance coding, 'cause yeh got some big 'ol blindspots when it comes to macro.

Because the banks hoarded all the ad money and it never entered the system.
The actual money supply stayed roughly the same.

There is a reason that the fed controls th money supply, and there is a reason we don't print zillions of dollars.

This is Econ 101. To do so would devalue the currency so bad that the paper would have more value.

 

[Gimmesometruth]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Because the banks hoarded all the ad money and it never entered the system.
The actual money supply stayed roughly the same.

Uh, they were reserves.....but for those not keeping score....it is still a part of the US money supply/monetary base.

There is a reason that the fed controls th money supply, and there is a reason we don't print zillions of dollars.

This is Econ 101. To do so would devalue the currency so bad that the paper would have more value.

Uh, you missed it, the doctor wasn't making a distinction...then or now.

 

[JohnfrmClevelan]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Because the banks hoarded all the ad money and it never entered the system.
The actual money supply stayed roughly the same.

There is a reason that the fed controls th money supply, and there is a reason we don't print zillions of dollars.

This is Econ 101. To do so would devalue the currency so bad that the paper would have more value.

It is beginning economics, and you get a "D" in it.

Banks don't - can't - "hoard" money by choosing not to loan it out. Neither reserves nor credit. You still don't understand how it all works.

Second, the Fed does not control the money supply, be it MB or M1/M2. The Fed controls interest rates. You can't do both.

I have corrected you on all of this stuff before, yet you continue to push these incorrect ideas. Do some research and learn the material, then get back to us.

 

[ludin]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Uh, they were reserves.....but for those not keeping score....it is still a part of the US money supply/monetary base.

No it isn't. as reserves are held back and never enter into the money system.
The reserve is basically the savings account the bank holds at the federal reserve.
it is never distributed into the system.

Uh, you missed it, the doctor wasn't making a distinction...then or now.

uhh you missed it yes he was.

 

[ludin]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

It is beginning economics, and you get a "D" in it.

Banks don't - can't - "hoard" money by choosing not to loan it out. Neither reserves nor credit. You still don't understand how it all works.

Second, the Fed does not control the money supply, be it MB or M1/M2. The Fed controls interest rates. You can't do both.

I have corrected you on all of this stuff before, yet you continue to push these incorrect ideas. Do some research and learn the material, then get back to us.

yes you do get a D.

banks do not lend reserve money. they used the QE money to shore up their reserve pool. The money never got lent out. it was never distributed into the system.
I have given you 3 articles that have shown you this so you are wrong the articles are correct. if you want to say the articles are wrong then please give us what authority
you have to say that the writers are wrong. since you have no authority in the matter then to say that the articles are wrong you are committed an appeal to authority fallacy.

actually they do I have also provided evidence of this as well in fact it is one of their main jobs.

yes you have been corrected on this before backed up by actual articles. all you have is "I'm right because I say I am right" you are nothing more than an appeal to authority fallacy.
you have no authority in this matter which is why we ignore pretty much everything you say.

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

We will always have at least a little inflation because natural resources, including land, are becoming gradually more scarce in relationship to the size of our population. One or two percent inflation would exist even if we held the money supply the same size. And I realize that you don't recognize the existance of scarcity, or understand how it when combined with demand determine price - but that's just basic free market capitalistic economics.

Wrong.. I understand WHEN there is an existence of scarcity and what it does to prices.

The problem is that you make the assumption that inflation occurs ONLY because of "scarcity" or issues with supply.. and that's simply not the case. Venezuela does not have a supply problem. It has access to the worlds production. there is no trade embargo etc that prevents supplies getting to Venezuela nor is the worlds production maxed out.

Venezuela has a problem because its money is not worth enough for suppliers to sell to Venezuela.

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

So you agree that inflation driven by an increase in the min wage would be a good thing? I'm surprised.

Well.. first I doubt that an increase in the minimum wage would have much effect on inflation. the number of people making minimum wage is quite small generally and I doubt it would have much impact. Now. if the increase in minimum wage increase was so significant.. lets say to 15 dollars and hour.. I still don't think it would have that much effect on inflation. And that's because with such a huge increase in minimum wage across the board.. It would likely make some industries like agriculture and meat packing etc less competitive, particularly if they are already competing with foreign labor that is much cheaper. The result would be that instead of actually increasing the amount of money in the hands of workers.. the resulting layoffs as companies shut down or automate even more would cause increase in unemployment and result in an overall decrease in demand.

now.. if say we fixed illegal immigration thus reducing downward pressure on wages... the increase in wage pressure for American citizens would increase wages probably across the board for the middle class. The resulting increase in demand would probably lead to a slight increase in inflation, but prices would not be able to increase that dramatically because of outside supply (foreign competition). So we would end up with a small increase in inflation but a stronger economy and a stronger middle class.

 

[JohnfrmClevelan]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Wrong.. I understand WHEN there is an existence of scarcity and what it does to prices.

The problem is that you make the assumption that inflation occurs ONLY because of "scarcity" or issues with supply.. and that's simply not the case. Venezuela does not have a supply problem. It has access to the here is no trade embargo etc that prevents supplies getting to Venezuela nor is the worlds production maxed out.

Venezuela has a problem because its money is not worth enough for suppliers to sell to Venezuela.

And that is the (downstream) result of Venezuela's production problem. Ultimately, a country pays for what it consumes by selling their production, and Venezuela's production suddenly brought in a whole lot less money (not because of inflation, but because the price of oil went down). If your real income gets cut in half, then you are only going to be able to afford half of what you once could. That is the underlying problem, and it's a problem regardless of what their money is worth. Your oil, once worth X, is now only worth 0.5X, while the stuff you import is still worth Y.

Now, if oil was a much smaller part of a more balanced economy, the drop in oil prices wouldn't have been such a disaster. A more balanced economy would produce more stuff domestically, and would export a broader range of products, resulting in a more stable real income. Maybe their income from exports only goes down 10%. People can still eat and buy toilet paper.

So the government, to appease its citizens, attempts a bunch of ill-advised measures, running down their foreign reserves in the process. They exacerbated the underlying problem, but they were not the genesis of Venezuela's problems.

Anyway, jaeger, your claim that they didn't have supply problems because the rest of the world could fill their shelves is misplaced. It ignores the fundamental point that the real shortage is in Venezuela's production. Same with Zimbabwe, same with just about every economy that experiences hyperinflation. They don't have the means to buy imports no matter what their currency is worth.

 

[JohnfrmClevelan]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

yes you do get a D.

banks do not lend reserve money. they used the QE money to shore up their reserve pool. The money never got lent out. it was never distributed into the system.

You keep on saying this, and this is why I keep saying that you don't understand how it all works. "The money never got lent out," strongly implies that you think it could get lent out, if the banks chose to do so. And that is simply incorrect. That's not how banks operate.

Also, banks didn't need to shore up their reserves. Reserves were never a problem.

I have given you 3 articles that have shown you this so you are wrong the articles are correct. if you want to say the articles are wrong then please give us what authority

Yeah, your sources stink. You go from citing a CFA on Investopedia to completely fabricating quotes which you then attach to a link. I am way past the point of trusting the garbage you link to. Plus, posting links is not a substitute for an argument; posting links is supposed to be backing evidence for what you say in your argument. But you never get into the details enough to prove your points, you just slap up a few links and consider your work finished.

Here are my sources, yet again, each one from a qualified source, not just some bloggers:

Money creation in the modern
economy

Repeat After Me: Banks Cannot And Do Not "Lend Out" Reserves

Can banks individually create money out of nothing? — The theories and the empirical evidence

 

[Critter7r]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

...

Anyway, jaeger, your claim that they didn't have supply problems because the rest of the world could fill their shelves is misplaced. It ignores the fundamental point that the real shortage is in Venezuela's production. Same with Zimbabwe, same with just about every economy that experiences hyperinflation. They don't have the means to buy imports no matter what their currency is worth.

In addition, Venezuela does not control the price of oil. And the vast majority of their income is derived from the sale of oil. That's a recipe for disaster on par with Greece not having control of the Euro.

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

And that is the (downstream) result of Venezuela's production problem. Ultimately, a country pays for what it consumes by selling their production, and Venezuela's production suddenly brought in a whole lot less money (not because of inflation, but because the price of oil went down). If your real income gets cut in half, then you are only going to be able to afford half of what you once could. That is the underlying problem, and it's a problem regardless of what their money is worth. Your oil, once worth X, is now only worth 0.5X, while the stuff you import is still worth Y.

Now, if oil was a much smaller part of a more balanced economy, the drop in oil prices wouldn't have been such a disaster. A more balanced economy would produce more stuff domestically, and would export a broader range of products, resulting in a more stable real income. Maybe their income from exports only goes down 10%. People can still eat and buy toilet paper.

So the government, to appease its citizens, attempts a bunch of ill-advised measures, running down their foreign reserves in the process. They exacerbated the underlying problem, but they were not the genesis of Venezuela's problems.

Anyway, jaeger, your claim that they didn't have supply problems because the rest of the world could fill their shelves is misplaced. It ignores the fundamental point that the real shortage is in Venezuela's production. Same with Zimbabwe, same with just about every economy that experiences hyperinflation. They don't have the means to buy imports no matter what their currency is worth.

An issues with your post here John. You completely gloss over those "ill advised measures".. which included increasing the money supply... and substantial deficit spending. Which according to your premise.. can't be a problem because it will "increase demand".. and because the government can never default on its payments because "it has a fiat currency"..

Anyway, jaeger, your claim that they didn't have supply problems because the rest of the world could fill their shelves is misplaced.

Not at all. YOUR claim was that the real shortage was "when there is nothing on the shelves to buy".. because demand outstripped production of those supplies. .. but that's not the case here.. the case here is that there is no shortage of supply. Venezuela has access to the worlds production.

It ignores the fundamental point that the real shortage is in Venezuela's production

Wow John.. your arms and legs must be tired from running around with the goal posts in your arms. :lamo

What you are describing is a shortage in INCOME.. real income from Venezuela.. and its proof positive that simply increasing the money supply (Venezuela's money supply has increased some 200 percent in one year) as your premise holds.. simply doesn;t work.

Apparently the world didn''t get your little speech on injections and leakages huh?

This is proof positive of why the assumptions that you make under Modern Money Theory.. simply don't work.

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

In addition, Venezuela does not control the price of oil. And the vast majority of their income is derived from the sale of oil. That's a recipe for disaster on par with Greece not having control of the Euro.

Gee.. whats your point? Cuz... what you appear to be saying is that increasing the money supply doesn't necessarily increase demand and that having a fiat currency doesn't allow you to always pay your bills... like your mentor (John) has claimed.

Which by the way.. is what the rest of us have been trying to explain to you.

 

[Critter7r]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Gee.. whats your point? Cuz... what you appear to be saying is that increasing the money supply doesn't necessarily increase demand ...

No ****, Sherlock. It only increases demand in an environment with THE CAPACITY TO INCREASE PRODUCTION. Something VZ does not have. They have essentially one industry that provides the country with income. Oil. Absent the CAPACITY to double their oil production and export, they could not combat the 50% drop in the price of oil. They didn't have the CAPACITY TO INCREASE PRODUCTION. In that environment, printing dollars was going to do nothing except cause inflation, because there would be more dollars chasing less production.

The US, on the other hand, HAS THE CAPACITY to increase production in its wildly diversified economy. So additional dollars printed up will have a place to go.

And besides, VZ has a population of about 30 million ... Less than one TENTH of the US population.

... and that having a fiat currency doesn't allow you to always pay your bills... like your mentor (John) has claimed.

Which by the way.. is what the rest of us have been trying to explain to you.

I hate your condescending attitude, by the way. As if your explanation couldn't possibly be wrong.

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

No ****, Sherlock. It only increases demand in an environment with THE CAPACITY TO INCREASE PRODUCTION. Something VZ does not have. They have essentially one industry that provides the country with income. Oil. Absent the CAPACITY to double their oil production and export, they could not combat the 50% drop in the price of oil. They didn't have the CAPACITY TO INCREASE PRODUCTION. In that environment, printing dollars was going to do nothing except cause inflation, because there would be more dollars chasing less production.

The US, on the other hand, HAS THE CAPACITY to increase production in its wildly diversified economy. So additional dollars printed up will have a place to go.




I hate your condescending attitude, by the way. As if your explanation couldn't possibly be wrong.

First off.. screw your "I hate your condescending attitude". You have continually berated my positions even when you get proven wrong. Heck.. you basically called me a liar about economists predicting that the end of the WW2 would cause a depression.. and when I posted the positions of those economists.. not a word from you. If you want to be treated as an adult.. I suggest that you act like one.

Well "SHERLOCK".. you might want to consider a couple of things in your diatribe. First.. Venezuela sits on a ton of oil.. so theoretically it COULD increase production. It has the CAPACITY to increase oil production and export. Secondly.. it HAS the capacity as a fiat nation of increasing their money supply and putting that money in the hands of its citizens (which it did). the "production that it would be chasing"... is the production of goods and services that a person COULD PURCHASE with those dollars. There is no "chasing production" as in oil production except for domestic oil needs. IF we were to follow Johns premise.. then that money could be used to buy things "on the shelves".. in other words the worlds production.. .WHICH IS WHAT THEY WERE DOING PREVIOUSLY!!!. But of course it didn't work the way John's premise says it would.

Before copping an attitude about others.. I suggest that you take a big breath and evaluate your own behavior.

 

[Critter7r]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Well "SHERLOCK".. you might want to consider a couple of things in your diatribe. First.. Venezuela sits on a ton of oil.. so theoretically it COULD increase production. It has the CAPACITY to increase oil production and export.

It's only increasing export by slashing prices, which doesn't help their case.

Secondly.. it HAS the capacity as a fiat nation of increasing their money supply and putting that money in the hands of its citizens (which it did) ...

... After the bottom fell out. And their dollars are pegged.

the "production that it would be chasing"... is the production of goods and services that a person COULD PURCHASE with those dollars. There is no "chasing production" as in oil production except for domestic oil needs. IF we were to follow Johns premise.. then that money could be used to buy things "on the shelves".. in other words the worlds production.. .WHICH IS WHAT THEY WERE DOING PREVIOUSLY!!!. But of course it didn't work the way John's premise says it would.

We're obviously not going to meet in the middle.

Before copping an attitude about others.. I suggest that you take a big breath and evaluate your own behavior.

I've been completely civil until today when I got a bug up my ass about you guys being so snooty.

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

It's only increasing export by slashing prices, which doesn't help their case.
.

But they still have the capacity to increase production. They don't have a production problem.. they have income problem

After the bottom fell out. And their dollars are pegged.

No.. they were a fiat currency before the bottom fell out.

We're obviously not going to meet in the middle.

I know.. my position is in the middle. And you want to remain in the extreme fringe.

I've been completely civil until today when I got a bug up my ass about you guys being so snooty.

Again.. you need to check your own behavior. And "you guys" is a cop out.

 

[imagep]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Well.. first I doubt that an increase in the minimum wage would have much effect on inflation. the number of people making minimum wage is quite small generally and I doubt it would have much impact. Now. if the increase in minimum wage increase was so significant.. lets say to 15 dollars and hour.. I still don't think it would have that much effect on inflation. And that's because with such a huge increase in minimum wage across the board.. It would likely make some industries like agriculture and meat packing etc less competitive, particularly if they are already competing with foreign labor that is much cheaper. The result would be that instead of actually increasing the amount of money in the hands of workers.. the resulting layoffs as companies shut down or automate even more would cause increase in unemployment and result in an overall decrease in demand.

now.. if say we fixed illegal immigration thus reducing downward pressure on wages... the increase in wage pressure for American citizens would increase wages probably across the board for the middle class. The resulting increase in demand would probably lead to a slight increase in inflation, but prices would not be able to increase that dramatically because of outside supply (foreign competition). So we would end up with a small increase in inflation but a stronger economy and a stronger middle class.

I think that hell must have just froze over. I actually pretty much agree with all of that!!!

 

[jaeger19]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

I think that hell must have just froze over. I actually pretty much agree with all of that!!!

Well.. welcome to being a fiscal conservative. :2wave:

 

[ttwtt78640]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Well.. first I doubt that an increase in the minimum wage would have much effect on inflation. the number of people making minimum wage is quite small generally and I doubt it would have much impact. Now. if the increase in minimum wage increase was so significant.. lets say to 15 dollars and hour.. I still don't think it would have that much effect on inflation. And that's because with such a huge increase in minimum wage across the board.. It would likely make some industries like agriculture and meat packing etc less competitive, particularly if they are already competing with foreign labor that is much cheaper. The result would be that instead of actually increasing the amount of money in the hands of workers.. the resulting layoffs as companies shut down or automate even more would cause increase in unemployment and result in an overall decrease in demand.

now.. if say we fixed illegal immigration thus reducing downward pressure on wages... the increase in wage pressure for American citizens would increase wages probably across the board for the middle class. The resulting increase in demand would probably lead to a slight increase in inflation, but prices would not be able to increase that dramatically because of outside supply (foreign competition). So we would end up with a small increase in inflation but a stronger economy and a stronger middle class.

It would also impact those on fixed incomes, like pensions and social security, which have little or no chance to re-enter the workforce. IMHO, the idea that mandating a "living wage" to entry level workers would save some "safety net" money is more than offset by the resulting COLA increases for those unable to work, including the newly (and permanently?) unemployed that you predicted.

 

[imagep]

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

An issues with your post here John. You completely gloss over those "ill advised measures".. which included increasing the money supply... and substantial deficit spending. Which according to your premise.. can't be a problem because it will "increase demand".. and because the government can never default on its payments because "it has a fiat currency"..



Not at all. YOUR claim was that the real shortage was "when there is nothing on the shelves to buy".. because demand outstripped production of those supplies. .. but that's not the case here.. the case here is that there is no shortage of supply. Venezuela has access to the worlds production.

Wow John.. your arms and legs must be tired from running around with the goal posts in your arms. :lamo

What you are describing is a shortage in INCOME.. real income from Venezuela.. and its proof positive that simply increasing the money supply (Venezuela's money supply has increased some 200 percent in one year) as your premise holds.. simply doesn;t work.

Apparently the world didn''t get your little speech on injections and leakages huh?

This is proof positive of why the assumptions that you make under Modern Money Theory.. simply don't work.

Venezuela doesnt have access to the worlds production, beyond whatever foreign currency it has in reserve (which I just read is running out rapidly). Other countries don't want to accept the Venezuela currency because other than oil, Venezuela doesn't produce much that we are interested in purchasing. And if Venezuela produced more of what they consume internally, then they wouldn't have an economic issue at all. So there economic problem IS production, both internally and for foreign trade.

The US doesn't have either of those problems. If China was to stop accepting US dollars, the US has the manufacturing capacity to make up the difference, so our standard of living wouldn't change much, more Americans would be employed. There is virtually no product that the US isn't capable of producing, assuming that we couldn't buy it from foreign nations anymore. Yes, that might result in a tad of inflationary pressure, but maybe not actually inflation, the fed would just reduce it's policies that are attempting to keep our inflation rate at it's target rate. It would mean almost nothing to most already employed people in the US, and it would allow more American job growth, so that would be good for those of us who are seeking work.