Quote from bluematrix:
one thing I've noticed - is the number of people here that discuss rising prices as inflation - i.e. definition of inflation = "average increase in prices" - basically what they've been fed in recent econ 101.
if you look into a old economics book - inflation is nothing but the supply of money. i.e. prices don't cause inflation - supply of money does. but ofcourse they changed that definition in econ books so no one really questions money printing. so it's now a mysterious increase in prices. yes - there is merit to demand side inflation - higher demand or higher wages demanded by the same monkeys providing the same function year on year, but money supply clearly dominates recent history.
having said that money printing isn't that bad. you have to realise much of the world isn't productive, and there is a huge population. there really isn't an efficient production process anywhere - u must keep most of these people employed somehow! hence, there is a gap where productivity is operates at lower efficiency but keeps people employed and society in order. Most of this is taken care of by fiscal policy - the free tax given to starbucks et al employing 8 monkeys on every high st. the rest is taking care of by monetary policy. don't hate the fed, they're keeping the world go round.
yes rising prices hurts the poor - but would you have that or higher unemployment?
would the poor have no job and high prices - or no job at all?
how many entrepreneurs do you personally know capable of being productive economically on their own feet?
much of the western economics world today is based on a feather. it's a fake world, it's an illusion. but it works. look at the banks, the silly policies around them needing regulating jobs, the risk jobs, settlements etc etc that have no function at all. they create nothing and do nothing. but they create jobs.
the quicker an economic transforms to a service based economy the quicker it can grow - because it will be based on illusion. the supply of real goods like apple and banans won't keep up - but their price will.
there is no efficient stock price or value in the markets - it's mostly an illusion. it makes absolutely no different if spx is at 100 or 1600, or if JPM CDS spread is 30 or 200. the fact is about almost everyone you know is gambling on it one way or another. actually, internet has done great with given poker access, how many poker players did u know 10 years ago? now about every college kid considers it a career path! at this rate GDP will be 10% sometime soon. and that's why most people are surprised when some house (a fixed land) suddenly is sold for $200million. or some painting is sold $150million. because they have lost order of value.
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