When is Reality more important than your Political Ideology? With graphs.

Inflation is the restraint in our system. We can spend as much as we want, we can increase our debt to whatever we want, we can have 0% tax rates... but it all comes down to inflation and growth. Basically a balancing act.

 

Inflation doesnt genrally happen without at least some economic growth Aski economic growth at the moment is essentially flat and inflation is occuring among food stuff and oil products as people have to have these things. Rising housing cost year over eyar are driven by investment groups not individuals and most people are having all they can do to stay even.

 

Right, but the current low inflation is artificial and temporary. Your thought process plays right into their hands, the government is able to show high debt accumulation without inflation over a short period of time to justify more debt being acceptable. I'd love to hear your thoughts in 8-10 years, when our debt grows $10 trillion dollars and inflation is rampant. It seems the scenario would baffle you.

 

So if inflation doesn't generally happen without economic growth, then economic growth doesn't generally happen without inflation. Great job! You're learning.

 

They are going to bombard this thread with nonsense. As if you didn't already know that. But, none the less it is very true. Well done!

 

if the gop would stop trying to obstruct economic recovery for political reasons

i suspect we wouldn't have those problems

 

When you understand the mathematics of it, nothing baffles you. And low inflation is not "artificial". It's low because people aren't spending a lot, people are saving more, and people are not taking on as much debt. We call it the balance sheet recession.

 

So I want to hear you say it: There is no reason for us to reduce our current expenditures, because even if we add $20 trillion dollars in debt over the next 10 years, it will NOT cause high inflation UNLESS there is offsetting growth, hence making it work either way for us. True?

 

Lol, no doubt. I honestly get thoroughly entertained with the kind of stuff they come up with to try to argue these basic facts being put forth. Like one guy argued that military spending is different from other spending, one guy said because employment grew slower for 3 years under Clinton during the tech boom with high growth, that means I'm wrong, lol.

It's just hilarious. Their ideologies are so ingrained in their heads that absolutely nothing will change it. Pure comedy gold.

 

Yes, I will agree with this except I'm not to sure about the comment "UNLESS there is offsetting growth". I would like it to be "unless there is higher than expected growth". Which to me does not seem like the biggest problem to have, lol.

But like I said earlier, mathematically there is only two ways to grow an economy valued in a currency... people can either spend more of the same money, or spend new money. If you can figure out a way that we can grow velocity 3-4% per year to infinity, then we would never need debt or money supply increases.

 

What if we added $50 trillion in debt over 10 years and experienced only 1% growth/year? Good or Bad and why?

 

If one cannot distinguish reality from fantasy, one will have a difficult time ever siding with reality over political ideology. This is why, if you'll notice, liberals are never swayed by facts.

 

what joke

 

That would be really bad in the sense that it only created 1% growth, but it would be good that we are still growing at 1% per year.

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Lol....

 

I'll ask a different way. If the only constraint on spending is inflation, and inflation will not kick in without growth, why should we limit spending at all?

 

There are external factors that can create inflation without growth, but in terms of spending and real fundamentals, if you are only growing 1%, it simply means people aren't spending very much money. If people aren't spending very much money then why would there be inflation?

The problem with high inflation, is the growth is not sustainable unless wages/income grow at the same rate, which they rarely ever do. So you'll have a high period of growth, but that will stop once prices become too high for the majority of wage earners which would create a recessionary type environment. Everything is about sustainability and balance in our system.

 

You are contradicting yourself here. First what are the external factors you speak of that can increase inflation without growth, because your previous line of reasoning does not allow for them without giving credit to my point of view.

If growth causes inflation, and wages/income rarely keep pace, how does that bode well for our current policies in spending?

 

No contradiction at all. We are talking about spending and inflation. We were not talking about external factors. And external factors are things like oil prices, supply shocks for raw materials, global demand for resources, speculators, etc. Things that are not entirely controlled by our demand but can have effects on prices.

Wages and income growth is a problem in our current economy, but not everyone is gonna be happy and having wages that grow less than inflation is better than not having any wages at all.

 

So if only external factors can make inflation occur without growth, what effect does increasing the money supply have on inflation? None?

What scenario has us making no wages at all?

 

Unless it's spent creating more demand for goods and services, none.

Didn't mean no wages at all. Just speaking from an individual perspective of losing a little purchasing power due to inflation versus being unemployed

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And hourly earnings has actually kept up pretty nicely with inflation. Just goes to show you how linked these things really are.

 

"If the facts do not conform to the theory, what else is there but to change the facts?"

Signed:
A Republican

 

Aside from the more common sense point that if you increase the money supply it would devalue the current supply of money (POSSIBLY offset by growth but NOT assuredly), there is another point:

How else could you inject more supply of money into the system WITHOUT creating extra demand for goods and services? When money is supplied to the banks at essentially 0% interest by the government and then funneled into various government funded initiatives, such as (but not exclusive to) FHA financing offers, it loosens the ability of consumers to attain credit to purchase a home, thus RAISING demand for homes. If a credit card company offers 0% financing to its customers because its receiving free money itself, does this not drive demand for any good or service they could use the card for?

 

Obamacare is the new El Nino.

Tripped over a crack in the sidewalk? Blame Obamacare.

Wife's cheating on you? Blame Obamacare.

It's easy! You try it!

 

The current supply of money means nothing with out how much that money is spent. If the government creates a $1 trillion bill and gives it to me and I do nothing with it, there is no change to the value of USD or prices simply because there is more money out there. Inflation in this context is created by actual demand for goods and services.

 

You dodged the question though. No one does nothing with money given to them, even if you merely placed it into the bank it would have an effect.

What happens when this money supply supports FHA lending to consumers? Does the expanding of credit not create demand for houses now that consumers can afford them?