How long is the recession going to last?

[Kushinator]

No, you do not understand this subject. No one who understands economics says that increasing the money supply by itself causes inflation. Thus leading me to believe you are talking from a position of sheer ignorance.



Except that's not always true. As pointed out, if asset values rise at the same rate as the money supply, prices stay the same. Corresponding increases in value with the money supply do not result in inflation.
Inflation is when the money supply is in excess of asset values and when they excess is being spent. This is very simple concept you learn in freshmen year of economics. Thus, back to my original post about how someone people need to learn the concepts before talking about them.

Indeed it doesn't, but it does not show that inflation as a whole is caused purely as you say it is.

Japan increased M1 and they got deflation. Under your absolutist rules, we should have seen inflation there. But it did not happen. One size does not fit all. Please learn that simple concept.

To add: There needs to be turn around, or money velocity to drive up prices. If Ben turned up the printing presses, and dropped $100 bills that were not spent, prices would surely not rise in the near term (not accounting for information based speculation).

 

[phattonez]

Wrong again! The monetary base is increasing, therefore lowering the money multiplier ratio. Here is what you are failing to understand; money is created in banks, not directly via the Fed. Sure they are the ones who print it, but they also do so on demand. If a bank is making loans, their reserves will begin to drain (lower monetary base), while transactional accounts (checking) will begin to increase. The Fed will then have to print more currency to accomidate the possible withdrawl from peoples accounts.

I showed the m1 money multiplier to illistrate a point. Banks are not creating money..... Inflation is not, i repeat, is not a short term risk....

So the monetary supply is in effect increasing.

But prices (the majority) are in fact sticky. Contractual obligations such as home, auto, capital, etc... loans do not change when prices begin to fall. As this begins to percipitate, the buying power of a single dollar increases, and the payer of a loan will then have to be paying essentially more to the lender in terms of scale.

This means less overall purchasing on things like food; that is of course if people are rational:2razz:

Don't worry, i once thought like that as well. With a little time, you should be on the right track!

See, this does not apply to responsible borrowers. Why should we worry about people who made a loan that they could not afford to pay back?

:rofl So maybe you don't want to call yourself a libertarian anymore?

 

[phattonez]

No, you do not understand this subject. No one who understands economics says that increasing the money supply by itself causes inflation. Thus leading me to believe you are talking from a position of sheer ignorance.

I did not say that printing money caused inflation, I said that it is inflation. Don't let me be misunderstood.

Except that's not always true. As pointed out, if asset values rise at the same rate as the money supply, prices stay the same. Corresponding increases in value with the money supply do not result in inflation.
Inflation is when the money supply is in excess of asset values and when they excess is being spent. This is very simple concept you learn in freshmen year of economics. Thus, back to my original post about how someone people need to learn the concepts before talking about them.

AS I TOLD YOU BEFORE, increasing the monetary supply raises prices higher than they otherwise would be.

Indeed it doesn't, but it does not show that inflation as a whole is caused purely as you say it is.

Japan increased M1 and they got deflation. Under your absolutist rules, we should have seen inflation there. But it did not happen. One size does not fit all. Please learn that simple concept.

All of this is caused by you not being able to read. Go back and look at what I said inflation was.

 

[Liz Peeps]

I told you that bank notes were decreasing, but we're still getting inflation. If the Fed is printing ANY money that is not just replacing old bills, then there's inflation. Period.

Does the majority of money created come from the Fed or does it come from private banks?

Edit: Oops, I can see somebody else already brought that angle of it. Whatever.

Don't you see that if you keep the new money out of circulation there will be a check on inflation? How are prices going to go up if the money is not put in circulation?

 

[obvious Child]

I did not say that printing money caused inflation, I said that it is inflation. Don't let me be misunderstood.

No, you said increasing the money supply causes inflation. Which is wrong. Increasing the money supply and a variety of other factors causes inflation. Money supply increases by themselves cannot be determined to have caused inflation. One must know the other factors.

AS I TOLD YOU BEFORE, increasing the monetary supply raises prices higher than they otherwise would be.

And as I told you before, several factors will cause that to be untrue. Money supply increasing the asset values increasing results in no change. Money supply increasing and money velocity remaining the same results in virtually no change. Money supply increasing the money velocity decreasing as we saw in Japan results in deflation. Increasing the money supply by itself tells us relatively little.

Thus you need to either learn or relearn your economic concepts.

All of this is caused by you not being able to read. Go back and look at what I said inflation was.

Inflation is an increase in the monetary supply.

That's what you said. You were wrong then as you are wrong now.

You think you understand but how about you answer these questions:

Money supply goes up 5%, asset values or total assets increase by 5%, what's the impact on inflation?

Money supply goes up 5%, but money velocity stays the same, what's the impact on inflation?

Remember, you said "Inflation is an increase in the monetary supply."

Are you willing to change that statement?

 

[phattonez]

Don't you see that if you keep the new money out of circulation there will be a check on inflation? How are prices going to go up if the money is not put in circulation?

Why do prices need to go up?

 

[phattonez]

[I'm going to continue on completely ignoring what phattonez is saying and try to make him look stupid by holding him to my definition.]

Need I say more? We're just arguing about definitions. Enough.

 

[Kushinator]

Need I say more? We're just arguing about definitions. Enough.

But here is the issue: You are claiming "increasing the money supply" will cause inflation. While inflation is entirely a monetary phenomenon, there is much more to it than your generic belief of "increasing the money supply".

Has the money supply increased or decreased? You say it has, i say... show me!

Has monetary velocity increased or decreased? You have yet to respond....

Has the money multiplier increased or decreased? You have yet to respond....

Is there high demand for US Treasuries? Something new to chew on. Why is there high global demand for our debt if a dollar crisis is looming?
---------------------------------------------------------------------

Phattonez, you should begin to differentiate between positive and negative freedom if you are going to claim to lean towards libertarian. That is how it starts out, you believe it is all about "letting your freak flag fly" style freedom. Eventually (and with proper consideration) you begin to realize a few certainties.

1.) People are sometimes highly irrational (see behavioral economics).

2.) Freedom requires one to have a certain level of tolerance.

3.) Laissez Faire is as utopian as socialism. There are no absolutes, only shades of gray.

 

[obvious Child]

Need I say more? We're just arguing about definitions. Enough.

No we are not. I quoted exactly what you said about inflation and proved you were wrong. Then I asked you two very simple questions. I see you outright refuse to answer them. Thus leading me to believe you know you are wrong but refuse to admit it.

Increasing money supply doesn't tell us anything about inflation. We need to know the other circumstances before one can make a judgment.

So I ask you again the same questions:

Money supply goes up 5%, asset values or total assets increase by 5%, what's the impact on inflation?

Money supply goes up 5%, but money velocity stays the same, what's the impact on inflation?

 

[phattonez]

But here is the issue: You are claiming "increasing the money supply" will cause inflation. While inflation is entirely a monetary phenomenon, there is much more to it than your generic belief of "increasing the money supply".

ENOUGH! I am not saying that increasing the money supply will cause inflation, I'm saying that IT IS INFLATION.

Phattonez, you should begin to differentiate between positive and negative freedom if you are going to claim to lean towards libertarian. That is how it starts out, you believe it is all about "letting your freak flag fly" style freedom. Eventually (and with proper consideration) you begin to realize a few certainties.

1.) People are sometimes highly irrational (see behavioral economics).

2.) Freedom requires one to have a certain level of tolerance.

3.) Laissez Faire is as utopian as socialism. There are no absolutes, only shades of gray.

You haven't convinced me that I should accept positive rights.

 

[phattonez]

No we are not. I quoted exactly what you said about inflation and proved you were wrong. Then I asked you two very simple questions. I see you outright refuse to answer them. Thus leading me to believe you know you are wrong but refuse to admit it.

Increasing money supply doesn't tell us anything about inflation. We need to know the other circumstances before one can make a judgment.

So I ask you again the same questions:

Money supply goes up 5%, asset values or total assets increase by 5%, what's the impact on inflation?

Money supply goes up 5%, but money velocity stays the same, what's the impact on inflation?

:doh I hope you're being intentionally ignorant. You know what I said. Read my posts.

 

[obvious Child]

:doh I hope you're being intentionally ignorant. You know what I said. Read my posts.

You can admit you were wrong. And I did quote you. Simply put, your statement is factually wrong.

I'm saying that IT IS INFLATION.

That is even more incorrect.

It seems you outright refuse to even acknowledge the questions both Goldenboy and I have asked you.

Pray tell, how is increasing the money supply inflation when asset values rise faster then the money supply?

After all, less money chasing more assets is actually going to cause price declines! But you seem to think that increasing money supply is inflation independent of everything else.

How is increasing the money supply inflation when money velocity declines reducing the amount of money chasing assets?

:rofl:2wave:

Try again when you understand economics.

As earlier pointed out, under your views, Japan's jacking up of M1 should have caused inflation. Why did we see deflation there? After all, it should be easy for you, who allegedly believes he understands the concepts to explain why your rules utterly failed in reality.

 

[phattonez]

^^Inflation causes prices to be higher THAN THEY OTHERWISE WOULD BE! You still refuse to understand this simple concept. I can't help you if you can't realize this.

 

[Liz Peeps]

^^Inflation causes prices to be higher THAN THEY OTHERWISE WOULD BE! You still refuse to understand this simple concept. I can't help you if you can't realize this.

When it gets put into circulation yeah it does. If I print out 100s in my closet and keep it stored there in my safe in the closet, those 100s in there are not causing prices to go up.

 

[phattonez]

When it gets put into circulation yeah it does. If I print out 100s in my closet and keep it stored there in my safe in the closet, those 100s in there are not causing prices to go up.

But when they go then prices will go up. If people knew that you had those dollars, then prices would go up (well, it would have to be more than a few 100s in your closet for that to happen).

 

[jackalope]

Need I say more? We're just arguing about definitions. Enough.

If you're going to talk about the subject, definitions do need to be understood. You are misinformed greatly on the topic of inflation.

 

[jackalope]

It may already be over:

Recession in U.S. May Have Ended, Leading Index Shows (Update1) - Bloomberg.com

Recession in U.S. May Have Ended, Leading Index Shows

I have been reading this too ... thx for posting the article.

 

[jackalope]

My take is that there will be another panic situation come fall, with another spur of bank failures due to a shaky housing sector combined with the ramifications (still increasing) of double digit unemployment. The California housing market is an example of over inflation, and will be a hot spot in the months to come.

Another panic? Gawd, hope you're wrong. Housing is still a problem tho, for sure.

 

[phattonez]

If you're going to talk about the subject, definitions do need to be understood. You are misinformed greatly on the topic of inflation.

So are you going to deny that prices go higher than they otherwise would be when more bills are put into circulation?

 

[Kushinator]

But when they go then prices will go up. If people knew that you had those dollars, then prices would go up (well, it would have to be more than a few 100s in your closet for that to happen).

I think you are missing the point. If people knew that he had "all kinds of money", when he goes to buy something from these people who know, they will want to charge him more because he has alot of money.

As said many times over, price inflation is entirely a monetary phenomenon.

 

[Kushinator]

So are you going to deny that prices go higher than they otherwise would be when more bills are put into circulation?

That is not all of it. What if people do not spend?

 

[phattonez]

That is not all of it. What if people do not spend?

That's a part of the "otherwise would be" that I'm talking about.

 

[jackalope]

So are you going to deny that prices go higher than they otherwise would be when more bills are put into circulation?

Yes. Putting more bills into circulation may cause inflation down the road, but inflation does not equal increased money supply. If it did, there would be no need for formulas or consideration of other variables.

Very simplistic to think so ... and very wrong.

 

[phattonez]

Yes. Putting more bills into circulation may cause inflation down the road, but inflation does not equal increased money supply. If it did, there would be no need for formulas or consideration of other variables.

Very simplistic to think so ... and very wrong.

No, putting more bills into circulation will cause prices to be higher than they otherwise would be.

 

[ReverendHellh0und]

Don't worry all, Rahmbo says they already fixed it.