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72% of the dollar's purchasing power was destroyed in just four episodes

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Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#171

Post by bumby »

culi wrote: post #166
bumby wrote: post #103

Earlier quoted context omitted.

I believe the idea is to support the “real” economy vs a “paper” economy. The “real” economy manufactures stuff in meat space instead of making value through abstractions like financial derivatives. The real economies are tied to a stronger middle class and national security. That’s the thesis as I understand it.

A service-based economy is also a "real" economy and not a "paper" economy

I agree, depending on what services you’re speaking of. Although I don’t know that it meets the explicit aims of the heritage foundation (which was the OPs question).

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#172

Post by elzbardico »

d3ckard wrote: post #43
thisislife2 wrote: post #30

Earlier quoted context omitted.

Iran is also playing its own Uno card here by saying that it would consider allowing some oil and gas shipments through the Strait if they have been bought with Chinese Yuan, than the US dollar. ( The Islamic Republic may grant safe passage to oil tankers if the cargo is traded in Chinese yuan - https://www.lbc.co.uk/article/iran-allow-chinese-ships-hormu... ).

This is particularly funny if you consider petrodollar to be a bad deal for US, not a good one. Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.

Yes, but for a consumption addicted society like the US, an abrupt end to the petrodolar would be an incredibly traumatic event.

Think about it, every single mother fucking year, the US roughly buys 1 trillion dollars more on services and goods from the rest of the world, than it sells.

It has this privilege/curse basically because the US dollar IS the world's global commerce and finance currency.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#173

Post by jmyeet »

probablypower wrote: post #35

This study doesn't correct for baseline exponential decay due to inflation, to better highlight the meaningful variations. By comparing based on 1914 dollars it also causes old variations to be relatively more extreme and newer inflationary events to look less extreme. You must compare apples to apples. Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason fo…

You're basically critiquing a chart showing how purchasing power is decayed due to inflation because it isn't adjusted for "baseline" inflation. That doesn't make sense.

And yes, earlier variations are more impactful because compounding.

I will say that a better representation would be a logarithm of the inverse. The problem with doing it this way is that later changes look very small. $1.00 to $.99 is the same y-axis delta as $0.05 to $0.04 but the latter is very different.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#174

Post by [deleted] »

cyanydeez wrote: post #63
cperciva wrote: post #44

Note that most of this period falls before the modern inflation target was established in 1995. In the past 30 years we've had 75% accumulated annual inflation (aka prices have increased be a factor of exp(0.75) = 2.1) of which 16% (aka 21% of the total) took place during an inflation excursion (which lasted 2.5 years aka 8% of the total time period). If anything the data points at "inflation targeting works and is p…

I believe the broader reason for an inflation target is to increase the value of "doing something" as opposed to "doing nothing" with money. Of course, like most policies, this acts on people with way too much of it and skews the perception of control and locus of control to those entities with too much.

[deleted]

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#175

Post by znnajdla »

roncesvalles wrote: post #147
znnajdla wrote: post #122

Earlier quoted context omitted.

I have checked. It’s too early to tell but anyway relative price is not what matters. What matters is purchasing power. EUR purchasing power was better and improving compared to USD. And check out interest rate derivatives — the euro has actually overtaken the dollar as the #1 currency in this massive market.

Purchasing power for what? Consumer goods? Most purchasing power calculations are completely bogus because they rarely compare goods of equal quality. A neighborhood with just a Walmart doesn't have higher purchasing power than a neighborhood with just a Whole Foods.

Commodities. Raw materials with which all goods and services are made. Coffee, sugar, wheat, pound of beef, gasoline. Also products which are supposed to be identical like a Big Mac. Purchasing power is hard to measure but it’s a question studied deeply by economists.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#176

Post by MSFT_Edging »

cheema33 wrote: post #95
leche wrote: post #50

Earlier quoted context omitted.

One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. I don't think they're right. I do think they will continue weakening the dollar.

> One of the goals of the Heritage Foundation is a weak dollar. They believe they can bring manufacturing back to the US this way. Only cheap labor can bring manufacturing back to the US. Are Americans willing to work in factories for the same wages as the Chinese and Indians? I don't see it happening.

Cheap labor requires cheap rent and cheap goods. You can't have indian/chinese wages at American cost of living.

How do you bring down costs? generally you'd need to restrict real estate. Lock down rent costs for both residential and commercial.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#177

Post by BigTTYGothGF »

roncesvalles wrote: post #117
skywhopper wrote: post #61

Earlier quoted context omitted.

The bigger question is, why is that even the primary goal?

I'll dig down 3 levels of "why". The endemic anti-intellectualism among white communities (especially rural and southern) has resulted in a steady decline of white people in well-paying professions in America. If you count the Jewish as a separate group, white people are likely a minority in corporate America. Combined with social upliftment of other groups ("wokism") and the opioid crisis (that has disproportionatel…

> white people are likely a minority in corporate America.

I don't see how this can possibly be true.

> that has disproportionately affected hinterland communities but immigrant groups seem immune to

Or this, especially in light of data such as this: https://www.cdc.gov/nchs/products/databriefs/db549.htm

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#178

Post by d3ckard »

ImJamal wrote: post #89
tharmas wrote: post #54

Earlier quoted context omitted.

>Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term. Agreed. Which is why the Chinese do NOT want their currency to become the Petrodollar or world's reserve currency. They know that that is what destroyed US Manufacturing. China wants to maintain their manufacturing dominance. They've seen what de-industrialization has done to the US.

How are you connecting the petrodollar and US manufacturing? US manufacturing was destroyed because companies closed their factories in the US and used factories in China because labor was cheaper and they were less regulated.

Under normal conditions, when your economy becomes less competitive, your currency gets depreciated, increasing competitiveness.

Unless of course everybody is forced to buy your currency to get an essential resource. This causes: - the currency to maintain value better - puts you in position of other countries having to maintain a trade surplus with you so they can actually purchase said resource - the oil producers end up with great amounts of your currency, which they have to spend, getting a political foothold in your country.

Petrodollar almost certainly was devastating to US economy. And like most resource curses, it's like a drug - you need to stop taking it to get better, but it will hurt as hell.

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#179

Post by [deleted] »

vessenes wrote: post #150
probablypower wrote: post #35

This study doesn't correct for baseline exponential decay due to inflation, to better highlight the meaningful variations. By comparing based on 1914 dollars it also causes old variations to be relatively more extreme and newer inflationary events to look less extreme. You must compare apples to apples. Finally the events are quite cherry-picked. It is a conclusion looking for a result, when the statistical reason fo…

Yes, a log chart would be better. That said, apples cannot be compared in this case; probably very few of us would choose to go back to 1914. A Tesla model Y would cost $1,680 in 1901 dollars, but would have been worth millions of those same 1901 dollars. Or nothing, depending on how much charging tech you could fit in the frunk. Many quality of life items are not covered by PPP (or money supply or other measures) ad…

[deleted]

Re: 72% of the dollar's purchasing power was destroyed in just four episodes

#180

Post by d3ckard »

cjbgkagh wrote: post #84
d3ckard wrote: post #43

Earlier quoted context omitted.

This is particularly funny if you consider petrodollar to be a bad deal for US, not a good one. Ironically, if yuan becomes new petroleum currency, it might hurt Chinese long term.

The petrodollar confers a huge advantage to the US, which is the whole point of it. It soaks up liquidity and allows the US to export inflation which allows it to be in the insanely profitable business of printing money. An argument could be made that this is corrupting and economically distorting to society resulting in a net negative but there is no guarantee that the same corruption would undermine China in a time…

It's not advantage, it makes for artificial demand for your currency, which completely screws up all the relevant metrics and makes you unable to actually inflate the currency when getting less competitive.

It's resource curse on steroids.

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