Now that's not fair. He's actually laying all of the countries ills at the foot of the left.
22% Food Inflation = middle class destruction
- Thread starter jem
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Now that's not fair. He's actually laying all of the countries ills at the foot of the left.
He's laying them at the foot of the government and the Fed, but not the left.
Progressive taxing and spending like crazy are the root cause of income inequality.
The left is destroying tax payers standard of living with their sick, destructive policies.
Looks like he is hysterically blaming "The Left" again.
Ah, my apologies, I missed that first part and just read the article.
See below to what my point was...
Tsing and I were just having a discussion about whether QE causes inflation.
Tsing is also correct in that the govt could not be spending our kids future away if the FED was not allowing it... given our current set up.
To be fair to the left right dichotomy ... the establishment Rs are almost as bad as the left when it comes to spending.
Tsing and I were just having a discussion about whether QE causes inflation.
Tsing is also correct in that the govt could not be spending our kids future away if the FED was not allowing it... given our current set up.
To be fair to the left right dichotomy ... the establishment Rs are almost as bad as the left when it comes to spending.
No problem. It is difficult trying to figure out what he is babbling about.
TT is right. The author of the article quoted is being incredibly cavalier with their logic. In fact, that's a compliment as there's marvellously little logic present in the author's argument. In general, food prices across the globe have risen, as evidenced by the recent performance of the CRB Foodstuffs index. That's partly due to a collection of various one off natural events, but also a result of a predictable supply response. How it all plays out throughout this year is very interesting indeed. I am betting on higher inflation, but then I also did that last year and that bet didn't work out too well.
http://mises.ca/posts/articles/why-isnt-qe-causing-inflation/
The Cantillon Effect and Boom/Bust Business Cycle
Richard Cantillon first observed that money enters the economy in certain places, enriching the early receivers of new money at the expense of later receivers. Money expansion transfers wealth within society, benefiting the politically connected and harming the true engines of progress, the savers. This is the Cantillon Effect of the non-neutrality of money. In his first great book, The Theory of Money and Credit, Ludwig von Mises went even further and corrected a major deficiency of the classical economists by integrating money into general economic theory that governs all economic processes. For example, money is just as much subject to the law of diminishing marginal utility as all other goods and services. Our monetary masters admit as much when they muse that more recent quantitative easing measures have had less effect on their favored monetary metrics than earlier ones. What they do not understand is that the economy was not helped by increases in money. Quite the contrary.
At the conclusion of The Theory of Money and Credit, Mises introduced another great contribution to economic theory: that bank credit expansion is the source of the boom/bust business cycle. Money and GDP aggregates fail to identify the capital destruction set in motion by monetary interventions. GDP may indeed increase but only due only to the Keynesian fascination with monetary aggregates. The capital structure of production is set in disequilibrium, sending too much capital to the earlier, long term stages of production which eventually cannot be completed due to the fact that there never were enough resources in the economy for their profitable completion. Mises termed such misallocation âmalinvestmentâ.
No one can predict when people will begin to lose confidence in the purchasing power of the dollar. Each new dollar that the Fed creates is like one more strand of straw laid on a mountain of straw. The real question is âIs this next strand of straw going to be the one that breaks the camelâs back?â
The Cantillon Effect and Boom/Bust Business Cycle
Richard Cantillon first observed that money enters the economy in certain places, enriching the early receivers of new money at the expense of later receivers. Money expansion transfers wealth within society, benefiting the politically connected and harming the true engines of progress, the savers. This is the Cantillon Effect of the non-neutrality of money. In his first great book, The Theory of Money and Credit, Ludwig von Mises went even further and corrected a major deficiency of the classical economists by integrating money into general economic theory that governs all economic processes. For example, money is just as much subject to the law of diminishing marginal utility as all other goods and services. Our monetary masters admit as much when they muse that more recent quantitative easing measures have had less effect on their favored monetary metrics than earlier ones. What they do not understand is that the economy was not helped by increases in money. Quite the contrary.
At the conclusion of The Theory of Money and Credit, Mises introduced another great contribution to economic theory: that bank credit expansion is the source of the boom/bust business cycle. Money and GDP aggregates fail to identify the capital destruction set in motion by monetary interventions. GDP may indeed increase but only due only to the Keynesian fascination with monetary aggregates. The capital structure of production is set in disequilibrium, sending too much capital to the earlier, long term stages of production which eventually cannot be completed due to the fact that there never were enough resources in the economy for their profitable completion. Mises termed such misallocation âmalinvestmentâ.
No one can predict when people will begin to lose confidence in the purchasing power of the dollar. Each new dollar that the Fed creates is like one more strand of straw laid on a mountain of straw. The real question is âIs this next strand of straw going to be the one that breaks the camelâs back?â
http://mises.ca/posts/articles/why-isnt-qe-causing-inflation/
Misesâ Three Phases of Inflation that Lead to Money Destruction
Ludwig von Mises explained that there are three phases to monetary destruction. Murray N. Rothbard summarizes Misesâ explanation in his Mystery of Banking, Chapter V (The Demand for Money), pages 68 through 72.
In phase one the monetary authorities inflate the currency, but the public expects that prices will not rise or may actually fall, so they withhold their spending, which is the same thing as saying that they increase their demand to hold money. Prices may actually drop during this period of monetary inflation, which seems paradoxical but actually is explained by proper theory. The demand to hold money rises faster than the supply printed by the monetary authorities. The people believe that whatever crisis causes an increase in money will end and prices will fall to pre-crisis levels or even lower. They are long accustomed to lower prices or even a gently falling price level. Therefore, their firmly held belief in lower prices becomes self-fulfilling, at least for awhile, because their increase in demand to hold money brings about this very situation.
Phase one may last a long time, but eventually the demand to hold money abates and prices start to rise, gently at first but more robustly as time progresses. In this second phase the people come to believe that prices are not going to fall and that they actually will continue to rise. Therefore, they begin spending more to purchase goods before the inevitable increase in prices. In this phase, even if the monetary authorities shrink the money supply, prices still can rise, because the peopleâs demand to hold money is falling too fast. Again, the peopleâs belief that prices will continue to rise becomes self-fulfilling. Price increases in phase two come faster and faster, as more and more people accelerate their spending to thwart the falling purchasing power of their money.
Phase two morphs into phase three, when people lose all confidence in the future purchasing power of their money and demand to hold money goes to zero. In this final phase the monetary authorities are unsuccessful in stopping the loss of monetary confidence even if they take drastic action to curb monetary inflation. People wish to exchange their money for any vendible commodity. The panic feeds on itself. This is what Mises calls the âcrackup boomâ, because there is a flurry of buying as everyone tries to exchange his money for whatever he can.
Misesâ Three Phases of Inflation that Lead to Money Destruction
Ludwig von Mises explained that there are three phases to monetary destruction. Murray N. Rothbard summarizes Misesâ explanation in his Mystery of Banking, Chapter V (The Demand for Money), pages 68 through 72.
In phase one the monetary authorities inflate the currency, but the public expects that prices will not rise or may actually fall, so they withhold their spending, which is the same thing as saying that they increase their demand to hold money. Prices may actually drop during this period of monetary inflation, which seems paradoxical but actually is explained by proper theory. The demand to hold money rises faster than the supply printed by the monetary authorities. The people believe that whatever crisis causes an increase in money will end and prices will fall to pre-crisis levels or even lower. They are long accustomed to lower prices or even a gently falling price level. Therefore, their firmly held belief in lower prices becomes self-fulfilling, at least for awhile, because their increase in demand to hold money brings about this very situation.
Phase one may last a long time, but eventually the demand to hold money abates and prices start to rise, gently at first but more robustly as time progresses. In this second phase the people come to believe that prices are not going to fall and that they actually will continue to rise. Therefore, they begin spending more to purchase goods before the inevitable increase in prices. In this phase, even if the monetary authorities shrink the money supply, prices still can rise, because the peopleâs demand to hold money is falling too fast. Again, the peopleâs belief that prices will continue to rise becomes self-fulfilling. Price increases in phase two come faster and faster, as more and more people accelerate their spending to thwart the falling purchasing power of their money.
Phase two morphs into phase three, when people lose all confidence in the future purchasing power of their money and demand to hold money goes to zero. In this final phase the monetary authorities are unsuccessful in stopping the loss of monetary confidence even if they take drastic action to curb monetary inflation. People wish to exchange their money for any vendible commodity. The panic feeds on itself. This is what Mises calls the âcrackup boomâ, because there is a flurry of buying as everyone tries to exchange his money for whatever he can.
How long are these phases that we're talking about here?