Armed Polite Society
Main Forums => Politics => Topic started by: Balog on April 18, 2012, 11:31:52 PM
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http://t.co/frPiHFLY
Interesting argument, I'd love to hear our economic gurus thoughts on this. Pull quote...
" The US, Europe and Japan have one overwhelming economic priority: protecting incumbent creditors"
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Since the first "stimulus" we've been following a pretty inflationary course of action.
The devaluing of the dollar, the high price of gold and oil is for all practical purposes inflation.
I would be interested to see what the inflation number is using the pre Carter/Reagan formulation.
From what I understand they don't include food and energy costs in the new formulation of how they figure inflation.
Then there are guys like Krugman who don't think we've inflated our currency enough.
I'd be curious to hear what our experts think myself.
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. . . Then there are guys like Krugman who don't think we've inflated our currency enough.
Krugman thinks the problem with the Obama budget is that he's just not spending enough.
He deserved his Nobel Prize in Economics about as much as Yassir Arafat, Algore, and BHO deserved their peace prizes. :facepalm:
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(Fiscal) Depression is a choice
And Democrats are pro-choice. It all makes sense, now.
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Since the first "stimulus" we've been following a pretty inflationary course of action.
The devaluing of the dollar, the high price of gold and oil is for all practical purposes inflation.
I would be interested to see what the inflation number is using the pre Carter/Reagan formulation.
From what I understand they don't include food and energy costs in the new formulation of how they figure inflation.
Then there are guys like Krugman who don't think we've inflated our currency enough.
I'd be curious to hear what our experts think myself.
Shadow facts has a good inflation graph using the old metrics. The issue isn't really the food/fuel exclusion, it's how other things are calculated...
First, capability increase results in a deflationary input, as a rough example, lets say a new computer is $600, and one three years ago was $600. The new one is 4x as fast, so it's counted as $150...
Second, the "basket" of goods is changed over time, which also deflates the result.
Third, certain exemplar costs are highly variable formulas, not actuals. For equivalent rent, for example, I believe it's calculated by rent price for a given value of property, so while rents haven't increased much, the underlying property is "more valuable", so the rent for a given property value is lower, again, a deflationary factor.
Basically, the CPI is completely flawed. And it's an indirect measurement anyway. The best way is to look at the true zero-maturity money supply, which has jumped massively, at the same time the velocity of money has slowed dramatically from historical norms (credit contraction). This results in an "appearance" of low monetary inflation...however, as the fed and other organizations have proved their inability to ever contract, the big worry is they are pumping in dollars to keep the moving money slightly inflating...so there is a big potential wave stored up...if anything increases the velocity (say worry of a future rate increase--ironically what would be needed to contract money), the credit would open up, the velocity would spike (to get the loans in before the increase) and a truly massive amount of money movement would result--yielding a RAPID increase in true inflation--the CPI is a lagging indicator, and biased both by its calculation method, and the fact that it is an indicator of money that is moving.
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I always feel just a little smarter after reading one of birdman's posts...
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The original link is correct. "Their overwhelming priority is to protect the purchasing power of incumbent creditors. That’s it. That’s everything. All other considerations are secondary."
That is correct. Risk avoidance trumps opportunity exploration. Or perhaps, wealth preservation trumps the desire for wealth expansion. See it all over the place at major investment firms and megacorps. Serious opportunity-risk adverse environments. I can count on one hand the completely new tech or markets developed by such corporations. They let tiny startups do that sort of thing, buy them up, and then run them into the ground. But, with enough existing capital, they can get away with it because honestly GE or UTC can outspend any tiny podunk garage startup. By several thousand times. Plus other megacorps or governments prefer buying from GE or UTC instead of a tiny podunk garage startup, even at perhaps ten times the price.
Business risk is not the same thing as business stupidity. Launching a new product is a business risk. Repackaging known bad loans into bundles and re-insurancing in a loop is business stupidity. No sane individual would do so unless they were a) idiots or b) quite sure they could keep any profits and pass on the losses to the public.
We need fairly massive changes to our foundation. Nothing earth shattering. We need to streamline the ease of regulation compliance so that little companies can become big companies, simplify the tax structure and structure it in a way that promotes economic growth (such as ditching inventory tax) and create an environment that is tolerate of business risk but not business stupidity. The last sounds tricky, but is not. Overhaul bankruptcy law so it is not blatantly rigged in favor of creditors, so that if someone nose dives a business that they are not essentially indentured for life. Biggest thing is, let failures fail. Do NOT pass on business stupidity losses to the general public.
Wage stagnation is another huge issue. It is slowly becoming more and more of a concern. Addressing it will be... problematic. It is theoretically in a company's short term interest to pay it's employees as little as possible. This is contrary to the long term interest of having a viable workforce and a consumer pool large enough to ultimately support itself. Command economy is a bad idea. It'd be wiser to foster an environment that promotes skilled workers and inclines companies to pay well to retain its talented staff.
Problem is, our government listens almost exclusively to folks that do not have the long term best interest of the country in mind. Folks and companies with massive pools of wealth don't primarily care about creating massive new sources of wealth. They care deeply more about keeping what they have now, and rigging the environment to support that concern.
Shadow facts has a good inflation graph using the old metrics. The issue isn't really the food/fuel exclusion, it's how other things are calculated...
First, capability increase results in a deflationary input, as a rough example, lets say a new computer is $600, and one three years ago was $600. The new one is 4x as fast, so it's counted as $150...
Second, the "basket" of goods is changed over time, which also deflates the result.
Third, certain exemplar costs are highly variable formulas, not actuals. For equivalent rent, for example, I believe it's calculated by rent price for a given value of property, so while rents haven't increased much, the underlying property is "more valuable", so the rent for a given property value is lower, again, a deflationary factor.
Basically, the CPI is completely flawed. And it's an indirect measurement anyway. The best way is to look at the true zero-maturity money supply, which has jumped massively, at the same time the velocity of money has slowed dramatically from historical norms (credit contraction). This results in an "appearance" of low monetary inflation...however, as the fed and other organizations have proved their inability to ever contract, the big worry is they are pumping in dollars to keep the moving money slightly inflating...so there is a big potential wave stored up...if anything increases the velocity (say worry of a future rate increase--ironically what would be needed to contract money), the credit would open up, the velocity would spike (to get the loans in before the increase) and a truly massive amount of money movement would result--yielding a RAPID increase in true inflation--the CPI is a lagging indicator, and biased both by its calculation method, and the fact that it is an indicator of money that is moving.
Hmm. CPI is flawed, if not blatantly intentionally rigged. And yes, I agree that monetary velocity is a real problem. For all the economic growth during the 90's, inflation was somewhat checked by the fact that money was moving as quickly as it was. But yes, the economic stats are rigged in a non-meaningful way to say "everything is fine, inflation is and always will be 3%"
At the moment, the credit situation is deeply screwed up. Partly because everyone is worried about what is to come, and is hoarding resources. As well as avoiding all business risk.
I honestly thought of running my own index, a simple "cost of living" one. How much does it cost for a functional vehicle, a place to run, energy costs (heat, gas, electric), clothing, basic food, etc. There is no good widespread metric for "how much does it cost to live?" in the US that I've found.
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I think you'll find extreme risk aversion is at the root of many of our issues, not only political and economic.
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UTC
Don't get me started on those idiots :mad:
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Don't get me started on those idiots :mad:
Wow. I've never heard of anyone being especially angry about standardized time.
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Wow. I've never heard of anyone being especially angry about standardized time.
GE, don't you know anything ???