Regulating inflation.

please tell us why or admit you can't

 

LOL, so now that you have been proven wrong you want to change the goal posts. You said it was mistaken idea starting in the 1950's, Keynes was well before 1950. You lost. Be a man and accept it, being stubborn or playing stupid isn't getting you anywhere. Good thing the other poster did not take you up on your bet, you would be out $10,000.

 

Evidently I understand much better than you do.

History is littered with the husks of gutted countries that has employed Fiat currecy via central banking. The founding fathers were wise enough to understand this. The current trend in Europe and America is relatively very recent, but the momentum of these economies will only carry them so far.

 

Silly partisan nonsense. I'll give you $10,000 to prove that I"m a liberal.

http://www.economicshelp.org/macroeconomics/inflation/definition/
"Inflation means a sustained increase in the aggregate or general price level in an economy. Inflation means there is an increase in the cost of living."

You owe me $10,000.

 

I posted this in another thread but I think it fits here;

This is what happens when money is based on faith and the major players in the game CAN NOT lose. You ask why is paying down deficit good? Well..

We have to go back to the great depression. During the great depression there simply wasn't enough money to go around. That and the Fed and Congress sat and did nothing basically. So most of the major governments of the time moved away from the Gold standard. Thus creating debt as to have more fluidity in the market. The governments had to loan money from their "Reserve" banks.

So you ask why is paying off the debt a good thing? Well, for one it is a psychological and emotional boost. Lots of people just do not want to work today. They may not be able to clearly state why. I think this has much to do with that.

Secondly, sooner or later this will come back to bite us. Deficit spending when ,it reaches a certain ratio to GDP, will bite us. After WWII US debt was at $2.87 trillion, the highest ratio it's ever been; 113%. Now if we count our debt to GDP ratio currently it's at about 109%. You can say well 30% of that is foreign owned! Yes... but you still have to account for that in the value of your currency. Nor can our economy repeat the US economic rebound after WW2.

What the Fed is trying to do now is slowly bleed money back into the economy. While keeping inflation as low as possible. Wanna know why both parents have to work now? Because it's no longer about raising the value of the dollar, it's about keeping it at a low value to pay off the debt and keep fluidity in the global markets.

Thirdly let's not lie to ourselves. This is all make believe and a self imposed system in which we thrust ourselves into, and one that our next generations never voted on.

This is why we must pay down the deficit.

 

Big old meanie Republicans with their evil curses want to mess up the good-hearted Democrat magic spells!

If you can prove that there is any significant difference between the two parties when it comes to economics, I'll let you keep your $10,000.

 

Speak for yourself.

I don't owe anything, nor does anyone else who doesn't work for the government with the ability to incur the government's debt. The nationalist "we" is a falsehood.

 

Then we default it doesn't matter, but we have to do it together.

 

Again, speak for yourself. Don't speak for me. Otherwise, you are no better than the people who claim to rule over everyone else. Maybe you are one of those people.

 

Slows/stops spending means slows/stops spending?? What happens to the price of gasoline if most people start buying 20% less gas? The price goes down to generate sales until it's no longer a viable business.

Never would we talk about single items or selective items...it's an aggregate scenario.

Prices are relative in what way? Anything can be compared to anything but this is meaningless. Whether it's a dollar price or a barter price the prices are constantly changing.

If every consumer decided to place 20% of their available cash into savings each pay check instead of buying the same 20% worth of stuff, the prices on all the stuff would begin to lower...so deflation in this case can happen no matter your 'monetary phenomenon'...

 

As people buy more hybrid-electric and electric cars there is less demand for gasoline. When this reduced demand hits a certain point gas prices will begin to drop. This process has nothing to do with the fed...

 

Curses and spells...all economic voodoo.

 

if I disagreed I will pay you or your strawman $10,000 Bet?

 

you mean in the absence of a Fed whose mandate is price stability or no deflation.

 

95% of Republicans sign the pledge while 97% of Democrats don't . 100% of Republicans voted against Obamacare 100% of Democrats for. Some liberals are very slow and thus don't realize that when we send equal numbers of both to Washington they tend to look homogenized from a distance but upon closed examination we see they are enemies and opposites. Even the homeless guy knew it and so went after Republicans. Sorry to rock your world.

 

Let's say an hour of labor trades for a gallon of gasoline. Now lets say that fewer people buy gas, and the price of gas drops. Now let's say that a gallon of gas can be had for 1/2 hour of labor.

Prices before:
1 gal gas costs 1 hr labor
1 hr labor costs 1 gallon of gas.

Prices after:
1 gal gas costs 1/2 hour of labor
1 hr of labor costs 2 gallons of gas.

So the price of gas went down (from 1 hr of labor to 1/2 hour of labor), but the price of labor went up (from 1 gallon of gas to 2 gallons of gas). There was no general increase/decrease. There was just a change in relative prices.

 

thats true because at the time the Fed did not know enough about monetary policy to know it was time to print some money. Now they do know so not enough money will never be an issue again.

 

simply:
1) people want to buy a lot more stuff than before so they need two incomes
2) economy is very socialist (eg $10,000 per person for healthcare) so things are very expensive.

 

actually you clean forgot to say why we should pay down debt.

We should pay it down so we don't have to pay interest on debt from which we gained nothing because liberal govt wastes our money rather than invests it intelligently.

 

Why is that significant? Politicians promise things as a matter of course, and just as often, if not more often, they violate those promises. Political grandstanding isn't more common to either party.

Still not a significant difference. That's just playing two party politics.

There is little difference of significance between the two parties. You have a few wedge issues, and they mostly agree on everything else.

You aren't going to "rock my world" by naming a few of those wedge issues and getting excited over the division that politicians love to create so that you get up in arms and vote for more power for them. They all hang out together and are friends, regardless of what they do in the media.

 

to say there is little difference between between Republican and Democrat Supreme court nominees and between voting 100% for Obamacare and 100% against it would be like saying there is little difference between up and down. If what you say is true that would make you the only smart person in the world and everyone else stupid for being so passionate about the obvious difference. What are the chances that you are the smartest person in the world?

 

Good Uncle Milton Quote:

“The Fed was largely responsible for converting what might have been a garden-variety recession, although perhaps a fairly severe one, into a major catastrophe. Instead of using its powers to offset the depression, it presided over a decline in the quantity of money by one-third from 1929 to 1933 … Far from the depression being a failure of the free-enterprise system, it was a tragic failure of government.”.—Milton Friedman , Two Lucky People, 233

 

Here's another.

'Any system which gives so much power and so much discretion to a few men, [so] that mistakes ‑‑ excusable or not ‑‑ can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic ‑‑ this is the key political argument against an independent central bank. . .To paraphrase Clemenceau: money is much too serious a matter to be left to the Central Bankers.”

 

Labor can be $20/hour and gas $4/gallon.
Supply and demand of each will determine their value.
If gas drops in price to $3/gallon because of low demand, the hourly labor does not increase...it remains $20. The only thing that changes is the 'purchasing power' of the labor rate. One day $20 gets them 5 gallons gas and the next day $20 gets them 6.5 gallons gas.

 

You're describing a change in the relative prices of these two goods.

First, 1 gal gas costs .2 hrs labor
then
1 gal gas only costs .15 hrs labor.
The price of gas (in terms of labor) went down.

First, 1 hr labor costs 5 gal gas
then
1 hr labor costs 6 2/3 gal gas
The price of labor (in terms of gas) went up.