131–140 of 236 posts
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Zero unless they are rewriting history to claim they saw it 6 months to a year out when it was obvious to anyone who wasn't drunk on soaring home and equity prices.
http://en.wikipedia.org/wiki/Peter_Schiff He saw it in 2007
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So much to learn, you still have. A most basic study of the Federal Reserve would lead you to the exact opposite conclusion. They try to keep interest rates as loan as possible until price inflation gets out of control. I spend a lot of time caring about this issue and all the hype about what the Federal Reserve cares about is just that-hype. They want to inflate the monetary supply all day every day and that's why t…
I'd recommend Peter Schiff or Max Kaiser for an interesting look into the Fed's QE policy minus Mainstream Media hype/ The problem with the FED, and every Keynesian economist is that they think the US will indefinitely be the world currency reserve, and that 5,000 years of gold based monetary policy is less stable than the post war economics that have given us rising inequality, lowering employment, indefinite QE, Ch…
Check out this article on mobilization and money: http://neweconomicperspectives.org/2013/08/mobilization-and-... no other governments buying our bonds were needed. Nor are they needed now.
As for replacing the US dollar with something else as world currency reserve, Mike Norman gives his views: http://www.youtube.com/watch?v=m5fTV4bGO0w
Given that the entire point of the Federal Reserve is to promote inflation it's probably good that they think it's a good idea-otherwise why do they think that they exist? The whole problem is that inflation is theft. You are basically having your property taken out from under you without realizing it. It's historically been very popular as a means of taxing the public without them realizing that's what you're doing.…
"Given that the entire point of the Federal Reserve is to promote inflation" No, that's not what they do. Too much inflation is bad, but you need a little bit. So they seek to maintain a "healthy" amount of inflation. Typically around the world this is something like 2-3%. http://en.wikipedia.org/wiki/Inflation_targeting
An ounce of gold was $21 in 1920 and $1410 in 2010. http://www.wisegeek.com/what-is-the-historical-price-of-gold...
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Deflation is actually bad for people with positive net worth, it helps most the people who live pay check to paycheck because their money goes farther. People with lots of networth are usually hurt by deflation which is the reason it is seen as bad. Deflation means houses and capital assets are worth less than they were before, so people with a positive net worth are "hurt". Now if you are totally liquid, then deflat…
> Deflation means houses and capital assets are worth less than they were before, so people with a positive net worth are "hurt". That's wrong, houses can be bought with less money because the purchasing power of money increased, not because houses are losing value. In a deflationary economy, the owner of a house could be richer if instead he holds money. By holding the house instead of money he has the same wealth (…
If your house stays at $100k but there is 5% deflation. You made 5%. If your house is worth $100k but falls to $95k because of deflation, your networth has dropped, and your buying power has stayed the same.
In the first scenario you can do a happy dance, in the second scenario, if the house is 100% paid off you aren't out anything. If you have paid off 75% of the house you are behind, because the unpaid off portion of the home dropped in value, but the debt stayed the same.
This is why they try to keep inflation at 2-3% it means that debt decreased at that rate because your buying power for that financed amount has decreased effectively lowering the amount of debt.
Imagine you buy a house and pay only the interest. If inflation is at 7% and the interest is 3% you are ahead each year. I your interested is 3% and there is 3% deflation you are behind each year.
Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…
"it does raise questions about why the school's arguments which seem so utterly convincing to so many people, don't manage to gain many converts among people who research the subject professionally." I think it would be easier to convince people with no physics knowledge that a bowling ball falls faster than a golf ball. Intuitively, it seems that bowling ball should fall faster. Austrian economics seems to follow a…
Do you have any reason to believe that their intuition is wrong? If the bowling ball and golf ball were both spheres, so they differed only in size and mass, the bowling ball would have a higher terminal velocity. The golf ball's dimples reduce its air resistance, and I have no idea how to calculate if they reduce it enough to let it have the same terminal velocity as the bowling ball.
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Inflation actually favours the middle and lower income families if they own a house, have any debt, or any investments. Which of course is most of them.
Why is this down-voted? Higher inflation has historically been considered a populist idea. The idea being that the poor had fixed-interest rate debt, and if you have fixed-interest debt, inflation is very good for you (and deflation is brutal) I mean, there are counter arguments, but the idea that inflation favors the poor has been the standard, conventional wisdom for as long as I am aware, and this discussion has b…
Inflation isn't distributed equally. When the money supply rises, firms in strong bargaining positions with few substitutes are in the best place to raise prices, because their customers can't readily switch to competitors. So basically, Google will come out of it like a bandit, because they're the only game in town for search advertising, and their auction pricing means they don't have to take any active effort to raise prices. Walmart will come out of it pretty well, since in many communities they're the only game in town. Software engineers, skilled managers, and other workers with in-demand skills will do okay. The folks competing for all the unskilled labor positions? They're going to get screwed.
So it's only partially true that the poor benefit from inflation. They'll benefit from cheaper debt payments and possibly higher employment. But they're unlikely to see much of the added money supply in wages, and they're going to take it in the chin on prices.
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"Given that the entire point of the Federal Reserve is to promote inflation" No, that's not what they do. Too much inflation is bad, but you need a little bit. So they seek to maintain a "healthy" amount of inflation. Typically around the world this is something like 2-3%. http://en.wikipedia.org/wiki/Inflation_targeting
> they seek to maintain a "healthy" amount of inflation. An ounce of gold was $21 in 1920 and $1410 in 2010. http://www.wisegeek.com/what-is-the-historical-price-of-gold...
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Austrian school not holding much weight with academics is like wondering why creationism doesn't hold much weight with academics. Lots of things can be explained with creationism, but it doesn't mean it's right. Many Austrian economists rail against the use of quantitative models and such. But without them, how can you measure the efficacy of your policies? Faith that the policy works... But most academics like to be…
Academics being funded by Keynesian politicians has surely nothing to do with it.
Absolutely no discussion of inflation is complete without recognition of the fact that inflation and inflation expectations are at historically low levels [1] right now. Economists aren't arguing that we should inflate our way out of debt--they are arguing that we should return to the historical norm. Of course, it's possible that these economists are secretly just pushing inflation as the "hidden tax" we're all up i…
Here's a question: how many "professional" economists sounded the alarm about the last bubble?
How many auditors caught the problems with Worldcom, Enron or Tyco? Extremely small minorities did, and yet people don't question whether 'accounting works, but they may question the incentives for companies to provide honest books to auditors, and the compensation awarded independent auditors.
Let's say that you need someone to think that it will be sunny tomorrow, and you believe that it will be sunny tomorrow. The meteorologist's forecast is for 20% chance of a thunderstorm. You tell your investor that meteorology is not a science. The real probability of a thunderstorm, given the conditions and the most accurate model possible is 18%, or maybe 4% or 93%.
What does any of this mean? Have you ever heard someone say that economics is not a science? Unfailingly, it comes from someone who has a bias toward a specific conclusion, and has no method explaining how they arrived at their conclusion other than something like "common sense".
There was a renaissance for economic data collection in the wake of the 1929 crash, and the collapse of classical economics (How could the same capital equipment and human capital in 1932 produce about 48% of the industrial output it had in early 1929?). That was when most of the data collection programs were created, and the industrial classifications that were only revised again in the late 90s and early 2000s.
It is about as difficult to imagine the world of 7B people without modern economics as it is without integrated circuits or container ships or antibiotics or industrial and agricultural advances of the past 70 years.
Often in medicine, advances have met strong resistance from the respected people and overwhelming expert consensus (a very long list including how to prevent Pellagra, Yellow Fever, stomach ulcers, etc), and yet that is not a sane argument for abandoning medical research funding, condemning the practice of medicine as unscientific, or for choosing folk or "traditional" remedies instead.
And yet, that is what has happened over the past six years. To understand the value of this proposition regarding inflation requires an understanding of the mechanisms and justifications they describe, and then an attempt to assess the most likely outcomes of a course of action. In other words engagement, not people throwing up their hands and stating that it is impossible to choose any actions as better than any other, as though defeatism and fatalism are wise.