If inflation is "by definition" a "monetary" phenomenon, then what are these "other forces" you're talking about? I thought we had defined those out of the equation.
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false inflation myths that are false
- Thread starter billyjoerob
- Start date
If inflation is "by definition" a "monetary" phenomenon, then what are these "other forces" you're talking about? I thought we had defined those out of the equation.
Quote from Swan Noir:
The one thing I take issue with is using one of the most well managed empires in history as the example.
Smaller countries obviously have different dynamics. I think there is something called the Mundell trilemma, basically a country has to choose control of either monetary, exchange rate, or capital markets flows, but can't choose all three. So small countries, with debt denominated in a foreign currency, don't necessarily have control over their own inflation rate or currency. Larger countries like the US, UK, Japan etc. do have more control, and local circumstances dominate. That's the story I'm going with if you point out that demographically suicidal countries like Russia or Poland have high inflation rates.
Quote from billyjoerob:
If inflation is "by definition" a "monetary" phenomenon, then what are these "other forces" you're talking about? I thought we had defined those out of the equation.
One factor, and a major contributor, is the Chinese peg on the U.S. Dollar. U.S. is still able to import a lot of the consumer goods from China. Once China unpeggs, and China will eventually, U.S. will not be able to import much of those goods. Unless we're able to manufacture those goods or get them somewhere else, we're gonna see inflation. And with the way government is driving businesses overseas and taxes and regulation, we're not gonna manufacture anything.
Pick a century in which you think China unpeggs.
Quote from the_domino:
One factor, and a major contributor, is the Chinese peg on the U.S. Dollar. U.S. is still able to import a lot of the consumer goods from China. Once China unpeggs, and China will eventually, U.S. will not be able to import much of those goods. Unless we're able to manufacture those goods or get them somewhere else, we're gonna see inflation. And with the way government is driving businesses overseas and taxes and regulation, we're not gonna manufacture anything.
The entire primise of the OP is odd.
We have had consistent and larger inflation since 1913.
(also note the domino... and piezoe seem to understand this situation.)
In doing a search on google I am seeing widely circulated stat
700 dollars today was equals 100 dollars 50 years ago according to the cpi. ( Which we know understates real inflation.)
So imagine what a dollar was worth in 1913 when the fed took over.
Inflation is systematic, and consistent.
Regarding what will happen?
It seems like you should always have a a bias towards believing the Fed will get what it targets.
They have unlimited uncapped electronic dollars to do it.
They can soak up bonds and assets or they can let them out.
They can lend out unlimited electronic dollars.
If you are a lender and you can debt load govts and people... you are essentially having them all hand over part of their lives to you... the owner of the currency.
So the only questions is how will the bankers who own the private banks and currencies around the world play it out...
Will the next generation be able to service their debt load?
How big a debt load will the bankers want them to have?
Will the bankers be conservative.. or will they push to edge. or will they trigger a change?
The only questions are...
Will the fed give people and countries just enough debt but not push the people too far?
Will the fed give the people so much debt the people demand a new international currency in exchange for wiping out their debt?
(which would be the biggest step to one world govt managed by a few)
Will the fed push national and private debt so far that it causes americans to rise up and have the govt pull the FEDs charter.
I am pretty sure there is no reason for the Fed to load the debt so high it causes a risk of a charter pull.
So we will likely see debt loads remain serviceable with enough inflation out there for most people to be debt slaves. (but like now perhaps they will leave room for smart people to get wealthy by spotting bubbles and sector rotations.)
We have had consistent and larger inflation since 1913.
(also note the domino... and piezoe seem to understand this situation.)
In doing a search on google I am seeing widely circulated stat
700 dollars today was equals 100 dollars 50 years ago according to the cpi. ( Which we know understates real inflation.)
So imagine what a dollar was worth in 1913 when the fed took over.
Inflation is systematic, and consistent.
Regarding what will happen?
It seems like you should always have a a bias towards believing the Fed will get what it targets.
They have unlimited uncapped electronic dollars to do it.
They can soak up bonds and assets or they can let them out.
They can lend out unlimited electronic dollars.
If you are a lender and you can debt load govts and people... you are essentially having them all hand over part of their lives to you... the owner of the currency.
So the only questions is how will the bankers who own the private banks and currencies around the world play it out...
Will the next generation be able to service their debt load?
How big a debt load will the bankers want them to have?
Will the bankers be conservative.. or will they push to edge. or will they trigger a change?
The only questions are...
Will the fed give people and countries just enough debt but not push the people too far?
Will the fed give the people so much debt the people demand a new international currency in exchange for wiping out their debt?
(which would be the biggest step to one world govt managed by a few)
Will the fed push national and private debt so far that it causes americans to rise up and have the govt pull the FEDs charter.
I am pretty sure there is no reason for the Fed to load the debt so high it causes a risk of a charter pull.
So we will likely see debt loads remain serviceable with enough inflation out there for most people to be debt slaves. (but like now perhaps they will leave room for smart people to get wealthy by spotting bubbles and sector rotations.)
Quote from jem:
The entire primise of the OP is odd.
We have had consistent and larger inflation since 1913.
(also note the domino... and piezoe seem to understand this situation.)
In doing a search on google I am seeing widely circulated stat
700 dollars today was equals 100 dollars 50 years ago according to the cpi. ( Which we know understates real inflation.)
So imagine what a dollar was worth in 1913 when the fed took over.
Inflation is systematic, and consistent.
Right, of course there is inflation, but almost always due to war. The norm is deflation, just as war is the exception. And the peaceful, deflationary regimes can last a very long time, eg from Napoleon to WWI. We currently live in the middle of a long, peacetime deflation. You can shout your head off about inflation, but fewer people chasing more goods (the current regime) spells deflation. Short of a regime change - like going off the gold circa WWI or during Nixon administration - deflation will likely prevail.
This is a short and worthwhile precis of 20th econ history.
http://www.columbia.edu/~ram15/nobelLecture.html
This says it all, really. Like I said, you only go off the gold standard once.
http://static2.businessinsider.com/...s-treasury-yields-since-1800-all-time-low.png
http://static2.businessinsider.com/...s-treasury-yields-since-1800-all-time-low.png
The US didn't go off gold standard in WWI, but Europe did, and the Fed raised the price level. Here is how Mundell describes it:
World War I made gold unstable. The instability began when deficit spending pushed the European belligerents off the gold standard, and gold came to the United States, where the newly-created Federal Reserve System monetized it, doubling the dollar price level and halving the real value of gold.
World War I made gold unstable. The instability began when deficit spending pushed the European belligerents off the gold standard, and gold came to the United States, where the newly-created Federal Reserve System monetized it, doubling the dollar price level and halving the real value of gold.
Quote from vicirek:
My question is why there are so many different "truths" and "myths" about something simple that can be counted and expressed as a simple measure in regards to inflation.
exactly.
I see the numbers and see that we have 700 percent inflation in 50 years. And yet someone else sees the same numbers and states the normal state of our economy is deflation.
I wonder how that can be?