economics note

Where did you get your economics degree? Trump must have a PhD. He is cla iming the Fed is damaging the economy by raising interest rates. Can anyon e explain to me how the Fed interest rate would "hyper-inflate" the stock m arket and not raise inflation?

Why does JL continually give aberrant opinions on topics he has little unde rstanding of? Rick C.

cnbc. This was OK...

basically what speff was saying on some previous thread.

George H.

I took Economics 101. They didn't discuss stuff like that.

That author is a macroeconomist, the absolute worst people to advise about economics.

I don't have a problem with economists.

I guess it's about the conservation of money... which is a little like the conservation of energy, but a little looser.

George H.

The idiotic decision was creating the Fed 100 years ago.

The supply of money is fixed? Really? If I make money, someone else loses?

Forget money. If you get given (freely) the power to buy something made by someone else, someone else has to make that thing, and other people are denied the right to use it because you acquired it instead.

So yes, someone else loses.

How is this difficult to understand? You can create money, but you can't create value out of thin air.

Clifford Heath.

No more than the amount of energy is fixed. (But I didn't even take econ 101)

George H.

John Larkin has been listening to James Arthur again.

Low interest rates were a Keynesian pump-priming strategy to keep the US economy growing after the GFC. It didn't grow fast, but it didn't shrink by 6% per year as it did after the Wall Street crash.

James Arthur has an ideological objection to Keynesian economics, and John Larkin doesn't know enough to disagree with him.

Hyperinflation implies more than 30% inflation per year. It's now ten years since the GFC, and the US stock market went up roughly 7% per year.

John Larkin doesn't understand what they are doing, so he thinks that they don't too.

With students like John Larkin they had to skip tricky bits.

Probably not as bad as an electronic engineer who did Economics 101 at Tulane, and thinks he knows better than economists who did second and third year courses.

An expert is somebody who knows the limits of their knowledge, and John Larkin is about as far away from being an expert on economics as you can get.

On Thursday, November 1, 2018 at 11:54:20 AM UTC+11, snipped-for-privacy@notreal.com wrote :

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Krw will learn about inflation sometime soon.

Money is a medium of exchange and a short term store of wealth.

What count are goods and services - basically human labour turned into thin gs that people want. That can be wasted - as by leaving people unemployed, as in the Great Depression - but there are practical limits to the amount o f labour you can extract from the most willing work force.

You can't print energy, but the government can create all the money it wants. The more it creates, the less it's worth.

Creating more dollars is the classic way that government reneges on its debt and steals peoples' savings.

Utter nonsense. Because I created wealth doesn't mean others can't.

What an idiotic statement. That would mean that we have the same standard of living as we did five hundred years ago. Less, actually, because there are so many more people.

Obviously, you don't.

You can't create energy out of nothing. Energy is conserved. Wealth is not. It is created and destroyed all the time.

The classic way for governments to pay their debts is to create inflation, which devalues the currency, making it easier for the government to pay its debts. Never mind what it does to prices, cost of living, exchange rates, savings, etc.

It's not just the government that prints money. Every time Joe Sixpack uses his credit card or scrawls a check, he creates money that wasn't there before. The money he just spent on the latest gizmo is allegedly still sitting in his bank account, and is theoretically backing loans that his bank made to others. 30 days later, Joe Sixpack is expected to pay off his credit card debut, thus reducing canceling the slight increase in the money supply that he caused.

However, Joe Sixpack, and millions of other consumers are spending money that they don't have, and are unable to pay back from their savings or their income. So, the money becomes part of consumer debt which seems to be rapidly growing as Americans are buying most everything on credit: "Americans are swimming in debt" (Nov 2016) "Debt Rising" (May 2017) That's about $4 trillion dollars in consumer debt which could conceivably grow as big as the nation (government) debt: "As of July 31, 2018, debt held by the public was $15.6 trillion and intragovernmental holdings were $5.7 trillion, for a total or "National Debt" of $21.4 trillion."

The Fed does it's part in trying to stabilize the economy by increasing or decreasing the money supply but juggling the interest rate it charges its member banks. "Federal Reserve Discount Rate/ Impact and How It Works" Personally, I think it's a major miracle that the system has worked so long and so well (most of the time) without collapsing under its complexity or being undermined by insiders. The problem is that everything affects everything else. It's also rather inflexible, where minor changes in (for example) the discount rate, will create large changes in everything that is affected by the change.

To put it in electronic terms, the system runs mostly on positive feedback, with almost no damping and generally ineffective negative feedback should it go out of control. In the distant past, there was a delay of a few days between action and reaction, where drastic measures, such as a bank holiday, would slow things down enough to prevent a sell-off and regain control. Today, we have programmed trading, where the entire economy could do a meltdown while we're having lunch.

That's rather difficult to accomplish unless you want to establish a barter or true communist economy, where money is not used. In a capitalist economy, the value of goods and services are generally determined in terms of money (dollars).

That depends on how you define value. Value can be artificially created by simply arranging a shortage. If someone corners the market on some service or commodity, they directly control the value of that commodity. Value can also be destroyed, usually by the government taxing a product, thus making it more expensive to buy, and therefore decreasing its value.

Oddly, value can also be reduced arbitrarily. I was involved in a public company that managed to push it's stock up to impressive values. However, buy/sell volume was too slow for the exchange to tolerate (since it makes it's money on transaction volume). So, one day, we found that the exchange had arbitrarily reduced the quoted asking price. When asked, it was to increase volume and promote more transactions. It was quite a surprise, but there was nothing we could do to change it. We survived.

Want something else (economic) to worry about? "Federal Debt: Total Public Debt as Percent of Gross Domestic Product" At this time, the total public government debut is 104% of the gross domestic product. That means if the entire US economy went on an austerity binge and dedicated itself solely to paying off the national debt for a year, we still would be in dept at the end of that year. Offhand, I would say we're doomed.

That's simple fraud, and you should have been taught about it in economics 101.

So? The classic answer is that people stop accepting the inflating currency, and switch to some medium of exchange which is harder to inflate.

Digging up more gold is a form of inflation, but it is usually difficult to do it fast enough to keep ahead of the growth of the economy (which reqires progressively more money in circulation to keep the goods and services moving freely).

They can't create it using the services and resources you used to create your wealth. To that extent there's a conservation principle in action.

What an idiotic statement. Nothing (except ignorance - a resource that krw has pretty much cornered) stops from people using resources in previously un-thought-of ways to create new good and services that weren't around 500 years ago.

Like many things that are "obvious" to krw and look like totally irrational assertions to everybody else.

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It's more accurate to say that it is being transferred all the time, not al ways in fair exchanges. You can destroy valuable things by using them unwis ely - Trump's use of the office of the president is devaluing it rather dra matically - but this tends to boost the value of comparable items which are n't being misused.