Haha sorry about that. I’m always on mobile. The only way I can follow the conversation is for someone to reply with the quote. I’m sure that does mess up the normal view!
National Debt
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Haha sorry about that. I’m always on mobile. The only way I can follow the conversation is for someone to reply with the quote. I’m sure that does mess up the normal view!
You seem to be missing the fact that there are less goods. Money is a substitute for goods or services. If we have less good and services and more money in active circulation... That's the very definition of inflation.
Don't take my word for it. Here's Milton Friedman:
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output."
I think a lot of people are being lulled to sleep by phony CPI numbers. Inflation has been happening at much higher levels than we acknowledge since 2008. Housing, autos, healthcare, education, bank reserves and equity investments are where all of the money gas gone and each of those segments has experienced 4% plus inflation.
There have been deflationary forces in other areas due to technology and the biggest factor is the vast majority of excess money supply found its way into the hands of banks and wealthy individuals and companies.
This time around, money is going into the hands of the middle and lower class at significant rates Many will invest and save at first so we are going to fight deflationary pressures, which will result in more significant reductions in output. But once the virus is cured, money will come in off the sidelines...
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Trump put out a series of tweets this week bragging about the amount of federal spending happening in a number of swing states.
But you are counting SS outlays for the future ($5T+) as a debt burden for today's taxpayer, but counting no other future outlays. Thats inconsistant.
A change in price to a good(s) due to a change in supply or demand is not inflation. Your own MF quote describes this. Your definition is wrong, take out a decrease in the supply of goods and it will be correct.
You're close, you're just missing a piece, a piece that did not apply in MFs time: suppression of workers pay. Again, you can't have inflation without wage increases. (How do you pay more for goods without more money?) In the past, an increase in the money supply would increase wages. That is not true today. Or put another way, an increase in the money supply will lead to inflation ONLY among the goods primarily purchased by those that experience the increase in money supply (income). today, thats the banks, the rich, etc. The goods you listed fit that don't they? Assets most especially.
Money will come in off the sidelines, but only temporarily. Those workers will see even less wages than before. They can't drive inflation without income increases. (Credit can substitute for this, but I think that effect is already maxed out like a Republican Congressman's credit card. In fact maybe even the opposite: credit has been used to maintain the same level of spending for those making less income. As that credit is maxed, spending must decrease.)
I agree with your statement about supply... Output is the right word.
MF Quote broken down:
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by"...... A lot of words to say:
Inflation is caused by "a more rapid increase in the quantity of money than in output."
In the last 4 months we have increased the money supply by $7 trillion and decreased output by the amount of goods and services produced by 20-30 million. I would call that a rapid increase in the quantity of money. And a decrease in output.
It takes a while for inflation to work to work through the system, but we are already seeing it. Ask anyone that is trying to hire lower wage workers what they are having to do? I bet you can guess.
Workers are getting pay increases. They are getting stimulus, extra unemployment benefits. This is unlike last time. All of the extra money went to upper income earners, corporations, and banks. This caused isolated inflation in there world.
There is more money and less output in the real economy now. And there is no turning back. Higher wages for lower earners are coming. Target, Costco, Best Buy, Starbucks, Amazon and others have mandated it.
The DXY is dropping like a rock, which is a signal of inflation expectations. Imports and commodities are going to cost more. We can get into the semantics of inflation vs price increases good by good, service by service. But the general concept is a dollar is going to be worth significantly less for the average American in 2022-2023 than it is today.
The only way to curb this is through raising interest rates in my opinion. That will encourage saving vs spending. Taxes are not getting raised on lower and middle earners.
I still think it's a ways away. 12-18 months.
We also saw massive decrease the money supply due to the pandemic. Did we more than offset that, less than offset that? Dunno. But you've got to account for it.
We've seen much more of a decrease in services than goods. And it ain't like restaurants are jacking prices.
Not saying we won't see inflation for a quarter of even a year. But that's it. Wages will stay stagnant like they have for decades. And without increasing income, you don't get inflation. MF understood that.
Lmao at the idea that wages will increase. If WS thought even for a second that that might happen, the DOW would be at 10k today.
The MEDIAN American will have the same income and will be buying the same goods at the same prices a year from now. Once you average in the Bezos' of the world, then you may see some inflation. But I ain't them, so that average stat is useless to me.
I'm counting debt associated with the "trust fund", not just future expected social security outlays.
You are correct that the bonds in the "trust fund" are not real debt like the other treasuries because they are non negotiable and all we have to do to avoid paying them is change the law. The argument for including them is that unless we are planning on reducing social security payments to the point that we don't exhaust the "trust fund", we're going to pay it out and it should be included. But I think you've convinced me. There are lots of government expenditures that we have implicitly committed to just based on the current budget and I guess social security is not really different than those just because we have a more explicit commitment when the "commitment" is subject to the then sitting legislature, just like all the other budget items. It's a little different, but closer to other future "discretionary" expenditures than it is to debt held by the public.
I uswd to think that about Clinton but it was Clintons policy that caused the economic collapse of 2008. Remember the policy everybody has the right to own a home? They were letting folks with a McDonald's salary buy 300k homes and then when they were about to foreclose they'd allow them to go get another loan to catch them up. After awhile it finally caught up and collapsed the economy. If it weren't for that 1 mistake I'd say you are right other than saying Obama had a better economy. Trumps the best by far.
Oh hell just print more money and devalue the US $. I mean what could that hurt? Or just realize your kids, grandkids and great grandkids will be paying for it after we all long gone! I means it’s just money and we know Pelosi, Schumer and the rest “serving” our country are set for life with their extremely generous retirement setup they’ve voted themselves while raiding the social security trust fund.
http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877339,00.html
The link has good info on how complex the issue was. To claim its Clinton's fault alone is dishonest at best.
Clinton didn't make all the banks choose to fund mortgages for scores that were traditionally unreliable.
Clinton didn't deregulate the crap out of banking to allow it to happen.
Clinton didnt create credit default swaps.
Etc etc etc.
Banks created this because they were and still are greedy. Greed is good per Gordon.
A company exists to make money for its shareholders and banks found a way to make thst happen- high risk and low oversight.
The link has good info on how complex the issue was. To claim its Clinton's fault alone is dishonest at best.
Clinton didn't make all the banks choose to fund mortgages for scores that were traditionally unreliable.
Clinton didn't deregulate the crap out of banking to allow it to happen.
Clinton didnt create credit default swaps.
Etc etc etc.
Banks created this because they were and still are greedy. Greed is good per Gordon.
A company exists to make money for its shareholders and banks found a way to make thst happen- high risk and low oversight.
The budget is words on a piece of paper. Clinton’s government never followed the budget. He had an actual deficit every single Year. The National debt doubled in Clinton’s 8 years.
Look, don’t make it a R vs D thing. Congress controls the bank account. We just don’t have a fiscally Conservative party in this country.
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Monetary policy is way simpler than people realize.
There is a certain amount of money in circulation. Our federal debt is skyrocketing because Congress is spending way more than they take in in taxes. To pay back the debt, Congress just prints more money. The more money they put into circulation, the less the dollar is worth.
It’s why your grandfather ate lunch for a dollar and why Gold is $2,000 an ounce now and was $40 an ounce 50 years ago. Gold isn’t worth that much more, the dollar is just worth so much less. I don’t suppose it matters as long as your paycheck can keep up... until that is unsustainable, then what?
There is a certain amount of money in circulation. Our federal debt is skyrocketing because Congress is spending way more than they take in in taxes. To pay back the debt, Congress just prints more money. The more money they put into circulation, the less the dollar is worth.
It’s why your grandfather ate lunch for a dollar and why Gold is $2,000 an ounce now and was $40 an ounce 50 years ago. Gold isn’t worth that much more, the dollar is just worth so much less. I don’t suppose it matters as long as your paycheck can keep up... until that is unsustainable, then what?
Bc most Súper pacs are started by wealthy people and they care more abt wealth than they do doing what’s good for the country. (D or R)
I'd disagree that it's simple at all. It's easy enough to understand that there is a certain amount of production or goods and services available and if you double the amount of dollars in circulation, then that means there's twice as many dollars chasing the same number of goods and services, and therefore everything will cost about twice as much. And that's fine for understanding what inflation is, but then there are all the complications/nuances/subtleties/whatever you want to call them involving primary and secondary money, velocity, positional goods, etc.
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