TPS Posted December 10, 2012 Share Posted December 10, 2012 (edited) A good piece from Bloomberg this morning on global central banks and inflation. Of course, it supports the view (I've argued here for the past 4 years or so) that the Fed's "money printing" will not lead to significant inflation while there is a glut of labor and capital. A good test case coming up again as the Fed is expected to buy $40 billion of MBS and treasuries per month (until unemployment comes down).. http://www.bloomberg...n-mandates.html Edited December 10, 2012 by TPS Link to comment Share on other sites More sharing options...
Keukasmallies Posted December 10, 2012 Share Posted December 10, 2012 I agree. Printing $ is always a good thing; I'm considering printing some tonight. Of course, when unemployment falls below [fill in the blank], I'll stop printing $. Let's see, I'm 72 now ..... Link to comment Share on other sites More sharing options...
/dev/null Posted December 10, 2012 Share Posted December 10, 2012 I agree. Printing $ is always a good thing; I'm considering printing some tonight. Of course, when unemployment falls below [fill in the blank], I'll stop printing $. Let's see, I'm 72 now ..... In the long run we're all dead anyway Link to comment Share on other sites More sharing options...
Duck_dodgers007 Posted December 10, 2012 Share Posted December 10, 2012 I agree. Printing $ is always a good thing; I'm considering printing some tonight. Of course, when unemployment falls below [fill in the blank], I'll stop printing $. Let's see, I'm 72 now ..... Unfortunately this is the basic understanding of the average person. Can anyone point to a way we would be better off if there was less money? Link to comment Share on other sites More sharing options...
RkFast Posted December 10, 2012 Share Posted December 10, 2012 Unfortunately this is the basic understanding of the average person. Can anyone point to a way we would be better off if there was less money? Wow, are you dumb...... Link to comment Share on other sites More sharing options...
Duck_dodgers007 Posted December 10, 2012 Share Posted December 10, 2012 Wow, are you dumb...... See, you probably think you just made a great economic point. "The impact on stocks from central banks’ concern for economic growth and employment is “unambiguously positive,” said Allen Sinai, chief global economist at Decision Economics Inc. in New York." I'm down with that! Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted December 11, 2012 Share Posted December 11, 2012 (edited) Unfortunately this is the basic understanding of the average person. Can anyone point to a way we would be better off if there was less money? While money is infinite, wealth is limited by real physical scarcity of goods. That money only has value relative to the goods it can purchase. If the money is abundant, but goods are scarce, prices will be high to reflect that discrepancy. Likewise, if money is more scarce relative to the amount of goods, prices will be lower. As a result of this supply and demand relationship, when you transition from a period of lesser money supply to one of greater money supply relative to the existance of wealth, you drive prices up. This creates an environment where more money is worse, unless your savings and income scale up in value proportional to the cost of living. Edited December 11, 2012 by TakeYouToTasker Link to comment Share on other sites More sharing options...
Duck_dodgers007 Posted December 11, 2012 Share Posted December 11, 2012 While money is infinite, wealth is limited by real physical scarcity of goods. That money only has value relative to the goods it can purchase. If the money is abundant, but goods are scarce, prices will be high to reflect that discrepancy. Likewise, if money is less scare relative to the amount of goods, prices will be lower. As a result of this supply and demand relationship, when you transition from a period of lesser money supply to one of greater money supply relative to the existance of wealth, you drive prices up. This creates an environment where more money is worse, unless your savings and income scale up in value proportional to the cost of living. So we would be better off with less money? Huh? And scaricty of goods? WTF are you talking about? We can make an unlimited amount of anything now. The real trick is not how to make stuff, but ensuring people can buy everything that is made. I'll also say this, if this doesn't work, increasing the money supply and all, the next step will be the direct creation of jobs by the governments of the world. And what would you Conservatives rather have, more money circulating or more government? Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted December 11, 2012 Share Posted December 11, 2012 ... Link to comment Share on other sites More sharing options...
3rdnlng Posted December 11, 2012 Share Posted December 11, 2012 ... You shouldn't have responded to Davey in the first place. Some people have no capacity to comprehend even the most basic concepts. You'd have better luck potty training a mouse. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted December 11, 2012 Share Posted December 11, 2012 You shouldn't have responded to Davey in the first place. Some people have no capacity to comprehend even the most basic concepts. You'd have better luck potty training a mouse. You have no idea how grateful I am for his existence. Link to comment Share on other sites More sharing options...
Duck_dodgers007 Posted December 11, 2012 Share Posted December 11, 2012 You have no idea how grateful I am for his existence. Why, because you like learning how you know nothing? You guys are two complete idiots Link to comment Share on other sites More sharing options...
3rdnlng Posted December 11, 2012 Share Posted December 11, 2012 Why, because you like learning how you know nothing? You guys are two complete idiots I was referring to "Davey", dumbass. Are you Davey, Ducky? Link to comment Share on other sites More sharing options...
Cinga Posted December 11, 2012 Share Posted December 11, 2012 While money is infinite, wealth is limited by real physical scarcity of goods. That money only has value relative to the goods it can purchase. If the money is abundant, but goods are scarce, prices will be high to reflect that discrepancy. Likewise, if money is less scare relative to the amount of goods, prices will be lower. As a result of this supply and demand relationship, when you transition from a period of lesser money supply to one of greater money supply relative to the existance of wealth, you drive prices up. This creates an environment where more money is worse, unless your savings and income scale up in value proportional to the cost of living. That is the best, in layman's terms, explanation of the cause and effect of current Fed monetary policy on inflation I have ever read. Tip of the hat fine sir... Link to comment Share on other sites More sharing options...
GG Posted December 11, 2012 Share Posted December 11, 2012 A good piece from Bloomberg this morning on global central banks and inflation. Of course, it supports the view (I've argued here for the past 4 years or so) that the Fed's "money printing" will not lead to significant inflation while there is a glut of labor and capital. A good test case coming up again as the Fed is expected to buy $40 billion of MBS and treasuries per month (until unemployment comes down).. http://www.bloomberg...n-mandates.html That's fine and dandy for the near term, but will your story be the same as we settle in for perpetual sub 2% growth and 8% unemployment? Link to comment Share on other sites More sharing options...
TPS Posted December 11, 2012 Author Share Posted December 11, 2012 While money is infinite, wealth is limited by real physical scarcity of goods. That money only has value relative to the goods it can purchase. If the money is abundant, but goods are scarce, prices will be high to reflect that discrepancy. Likewise, if money is more scarce relative to the amount of goods, prices will be lower. As a result of this supply and demand relationship, when you transition from a period of lesser money supply to one of greater money supply relative to the existance of wealth, you drive prices up. This creates an environment where more money is worse, unless your savings and income scale up in value proportional to the cost of living. And this describes precisely why you should increase the supply of money now because the money in circulation is less than the real supply of physical goods we can create right now. That's fine and dandy for the near term, but will your story be the same as we settle in for perpetual sub 2% growth and 8% unemployment? My story changes when resources (labor and capital) become scarce. It's as simple as that. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted December 11, 2012 Share Posted December 11, 2012 And this describes precisely why you should increase the supply of money now because the money in circulation is less than the real supply of physical goods we can create right now. No... Just... no.... That's staggeringly untrue. Link to comment Share on other sites More sharing options...
GG Posted December 11, 2012 Share Posted December 11, 2012 My story changes when resources (labor and capital) become scarce. It's as simple as that. Not all bubbles are created by the rich guys buying paper assets. The only reason there's available capital now is thanks to Ben Bernanke. He's his own supply & demand machine right now. Link to comment Share on other sites More sharing options...
/dev/null Posted December 11, 2012 Share Posted December 11, 2012 The only reason there's available capital now is thanks to Ben Bernanke. He's his own supply & demand machine right now. For both private and public spending. Government is borrowing 46 cents of every dollar it spends. With rates this low, that $16Trillion (that's Trillion with a T) in debt is more easily serviced. Once rates start going up, so does the amount of money the government spends just to pay the interest on the money it already owes Link to comment Share on other sites More sharing options...
TPS Posted December 11, 2012 Author Share Posted December 11, 2012 Not all bubbles are created by the rich guys buying paper assets. The only reason there's available capital now is thanks to Ben Bernanke. He's his own supply & demand machine right now. I am talking about physical capacity utilization, not financial capital. There is NO scarcity of financial capital right now. For both private and public spending. Government is borrowing 46 cents of every dollar it spends. With rates this low, that $16Trillion (that's Trillion with a T) in debt is more easily serviced. Once rates start going up, so does the amount of money the government spends just to pay the interest on the money it already owes If you look at the CBO's deficit projections, the primary deficit is expected to be in balance, so, yes, the interest expense is what is projected to drive growing deficits in the medium term. Link to comment Share on other sites More sharing options...
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