User Tag List

First 45678 Last

Results 51 to 60 of 113

  1. #51
    Babylon Candle Venom's Avatar
    Join Date
    Feb 2008
    MBTI
    INTJ
    Enneagram
    1w9 sp/sx
    Posts
    2,128

    Default

    I was originally going go quote by quote with all of you, but it will easier to just state my opinions:

    American Manifesto: An assessment from a political moderate (would you buy my book? )

    1. There wont be an amero.
    Even the euro isnt an optimized currency union. America, Canada and mexico have a lot less political stability to gain (than the EU does) by forming a new currency union.

    2. The problem isnt having a service economy, its having a financial services economy.
    Its a myth that america doesnt do any manufacturing. Based on aggregates Im pretty sure the US is one of (if not THE) biggest manufactures in the world. The difference is that the US manufactures 747s and other expensive shit, while China makes t-shirts and lead toys. Think of it this way, is it that big of a deal that a US worker cant work in a shoe factory?

    The biggest issue is that the US's comparative advantage is selling, inventing and exporting financial assets/instruments (We have a positive Financial Assets balance). This naturally goes along with a negative trade balance (international econ 101). Its our financial innovation that creates our trade imbalance, its not a trade imbalance driving our financial industry.

    Naturally, this spotlights the problem: the financial markets have totally changed over the past 100 years and that change has accelerated in the past 10:
    • the system was designed with dividends as the ultimate end.
    • the system was designed to work best with a long term view.
    • the system was originally a lot less liquid, forcing a longer term approach.


    Now that the system has become much faster with information, transactions and available liquidity, it has made shorter and shorter horizons more profitable. Shorter horizons that are profitable are obviously favorable due to time value and risk. Thus people abandon the longer term views of the financial markets. With the long term views abandoned, the original purpose is completely lost. No even cares about the dividends and companies openly admit that they will NEVER pay a dividend! Thus the entire thing turns into a casino economy. Our brightest college graduates (MBAs, engineers, physicists etc) are sucked up into the Wall Street casino, which operates on a platform designed for the realities of a 100 years ago, but with modern technology, egos and short term profit goals.

    In some ways, the system has just run away from itself. No body takes its basic assumptions seriously anymore (see the listed bullets).

    3. Culture Differences Between Europe and America: why social democracy is much less practical for the US:
    I think a lot of you Europeans think of the Americans as sort of barbaric. America, to you guys, doesn't seem to value basic 'rights' like education, housing, health care and 35 hour work weeks (France). The Europeans look at the quality of life lists and wonder why the US continues on with an archaic capitalist system that appears draconian and aristocratic.

    The big problem with thinking this way, is that it ignores the basic cultural differences between the US and the EU. The average European country is:
    • smaller
    • more dense
    • more homogeneous
    • less religious

    Its a lot easier to pay for your neighbor (lets generalize social democracy for sake of simplicity) when you view your neighbor as "part of your clan". The US simply lacks this homogeneity that many European countries have. Secondly, the US is a lot more populous than the average European country. This makes any sort of universal anything (housing, health care, employment, education) about 5-10 times more of a logistical and bureaucratic nightmare than it is in say...Norway. Thirdly, the average European lives in a denser city than an America. Europeans are used to less personal space. Their culture doesnt demand a big apartment or a big car. They can take the subway, the bullet train and live in small enough apartments that they dont reflect NY rents. This again reflects on how much money a person is feels they "need". Cars and houses are huge expenses. Lastly, Europe is a lot less religious. To many Americans, their 'way of life' has been justified by their religion. Its part of the agrarian psyche of the US to have lots of stuff, a big family and open space in order to feel "prosperous". Its related to the protestant/puritan work ethic and prosperity theology. Its much more widespread in the US than in the EU.

    The point is, America isnt a horde of archaic, selfish barbarians who are consuming their way to their own grave. A lot of the European solutions simply would not work here due to American culture (as explained in the paragraph and bullets above).

    3. American Debt could, but probably wont kill us all.
    The Chinese would be fools to call our debt. It would only cause chaos that reaches back to them. They could, however, stop buying our debt. This has already started to happen, and the Fed now actually buys some of our own debt with money it creates out of thin air. This is not as big of an issue as it seems though. Inflation is not as simple as a 1:1 relation to the amount of dollars printed. The money base is not the same thing as the money supply. The money supply has a lot of other factors involved such as the depositors, lenders and the general transaction levels of the economy. If those things plummet, then you can print a lot of money without adding any inflation (this is what has actually happened). If we had been on a gold standard, then we would not have the freedom to add money when needed (as I just explained) and we would have entered a deflationary depression.

    American Debt is a problem. However, no one knows for sure at what point of debt/GDP our credibility will run out... Consumer debt is actually a bigger issue than the government debt IMO. The cost of housing and college (two of the biggest purchases anyone ever makes in life) have increased at higher rates than income. Add this to increasing fuel and food costs, and consumer debt will strangle the average person.

    4. The way out: Inflation and Buying power can be misleading --> people's demand for more creates a mirage of less buying power
    There is a lot of calamity about how much less able the middle class and poor are able to live comfortably today vs 30 or so years ago. People often cite statistics about the cost of housing, college, food, and energy.

    What if things only appeared to be more expensive now? If I bought a car for 5000 real dollars in 1975, and payed 8000 real dollars today for a new car (numbers made up), am I really losing the value of my money? A new Car today likely has features that a new car in 1975 simply didnt: better gas mileage, better safety, more space, better performance etc. Thus, there is an illusion, that transportation has become more expensive, when in reality only our tastes have become more expensive.

    The same applies to housing, food, energy and college.

    Colleges didnt always provide nearly as much "extra stuff":
    Tuition rates are going up all over the place, but its not the education itself thats pushing prices up, its the campus extras that are doing the deed. Colleges claim they have to offer attractive amenities to stay competitive, but some colleges are taking extra amenities and their tuition costs to the next level. The question is, do students really care about these amenities or would they rather just have lower tuition?

    Then there is the burgeoning demand for luxury campus amenities, like the spanking new Academic Village at [Colorado State University], or the food courts, climbing walls, and exercise facilities our students seem to require. Some campuses even offer discounted massages and free Napster accounts. These amenities are, of course, ancillary to the quality of the education our universities provide. Yet provide them we must, or the students will not come. Its a competitive market, you see.
    Are Frivolous Amenities Worth The Extra Tuition | myUsearch blog

    Houses, apartments and condos didnt always have as much square footage.
    Quote Originally Posted by NPR
    The average American house size has more than doubled since the 1950s; it now stands at 2,349 square feet. Whether it's a McMansion in a wealthy neighborhood, or a bigger, cheaper house in the exurbs, the move toward ever large homes has been accelerating for years.
    Behind the Ever-Expanding American Dream House : NPR

    The average American food bill has become a bigger burden. However, the average american eats out a lot more now. Some even erroneously think that its cheaper to eat out! This simply indicates that once again, American's tastes have gotten more expensive. If you buy meat, fruit, vegetables, eggs, bread and lunch meat, and know how to cook, it will generally be cheaper (unless you live in an overpriced metro like NYC) than eating out every meal.
    Quote Originally Posted by MSN
    In the next decade, more than half the average household food budget will be spent on meals bought outside the home, compared with 25% in 1955, the association reports.
    Is eating out cheaper than cooking?

    The average American actually drives about twice as many miles than they did in 1977: http://pewresearch.org/pubs/?ChartID=147
    Its little wonder that Americans claim that energy costs and gas bills are strangling them!

    The over arching point is that middle class Americans actually have a lot more buying power than every before. When people make comparisons to the "golden years" of the American middle class, they have to be fair about it. If the middle class today lived in the houses of the 70s, drove the miles of the 70s, went to the colleges of the 70s, cooked like the 70s and refrained from such extraneous "2000s entertainment" expenses, then the fact is that Americans would actually have plenty of buying power compared with the golden years. Peoples tastes have gotten more expensive. they demand more for each unit of product, yet the price of actual needed utility hasn't changed that much. This then creates the illusion that the middle class has lost buying power, because the middle class is overpaying for what utility they actually need.


    --------------------

    This post got away from me ...I do however think it is a very accurate depiction of America. Maybe I will write a book ...

  2. #52
    Dreaming the life onemoretime's Avatar
    Join Date
    Jun 2009
    MBTI
    3h50
    Socionics
    ILE
    Posts
    4,460

    Default

    Quote Originally Posted by Gerbah View Post
    I'm no expert, I just try to follow things to know how to position myself, but according to one analyst I follow, it's possible to have deflation at the same time as inflation. You can check out his videos on youtube: YouTube - jberni1's Channel
    Inflation - expansion of the money supply, general increase in price levels
    Deflation - contraction of the money supply, general decrease in price levels

    Different markets can have different localized changes in price levels; for example, the price of food rose last year due to supply constraints while the general price level fell, particularly due to the housing collapse. However, as a whole, the economic environment can be only one or the other.

  3. #53
    pathwise dependent FDG's Avatar
    Join Date
    Aug 2007
    MBTI
    ENTJ
    Enneagram
    7w8
    Socionics
    ENTj
    Posts
    5,908

    Default

    Quote Originally Posted by Babylon Candle View Post
    The federal reserve is a lot more competent than most libertarians give them credit for. The Fed knows what its doing. Money supply is different than money base. Thus the actual amount of money the Fed prints to buy debt, allows to be borrowed etc doesnt actually mean anything until that money is multiplied out through the banking system to become the money supply.
    There are two options:
    - either that money is going to enter the system, in which case it will serve its purpose of buying debt, and will cause inflation
    - or that money won't enter the system, in which case it will have zero net effect; why would you want to issue debt if you're not going to do anything with the money you get?

    The latter is basically impossible. Think about the US balance sheet: debt is emitted in order to finance expenditure, which basically becomes money, through the usual theory of the keynesian multiplier. While this can be a positive shock when money is injected in small doeses, massively showering the system with debt-bought-by-the-central-bank always leads to high inflation (we Italians are experts, we used this system constantly from the early 80s up to '92 - then the Maastricht treaty forced us to stop - and inflation run rampant at constant double digit. As Halla says, the Weimar republic is another good example, albeit a little extreme).

    Of course that money will entery the banking system, anybody being paid by the US state will deposit their money somewhere; unless they move it overseas. Buying through the FED has the positive effect of keeping the interest rate really low, thus lowering the burden of debt for future generations (however it erode savings of the current generation at exactly the same rate). It's a strategy that works if you predict strong growth, which will offset higher inflation.

    Basically, I hope that Obama's bet will be a winning one, since a strong US economy will beneft all of us. However, it will definitely lead, sooner or later, to higher inflation.

    I liked your points above btw ("American Manifesto").

    What's the big deal with the government buying back the very bonds it extends?

    Why be concerned with inflation when there is still general agreement that the real money supply is decreasing?
    I'm sorry, but there is no such a thing as "real money supply". Either it's money, or it's real...
    ENTj 7-3-8 sx/sp

  4. #54
    Babylon Candle Venom's Avatar
    Join Date
    Feb 2008
    MBTI
    INTJ
    Enneagram
    1w9 sp/sx
    Posts
    2,128

    Default

    Quote Originally Posted by FDG View Post
    There are two options:
    - either that money is going to enter the system, in which case it will serve its purpose of buying debt, and will cause inflation
    FDG, I mean this as respectfully as possible, but you are a graduate student of economics/finance right??? You are aware of the velocity of money and the multiplier effect? When there is:
    --rampant deflationary pressure (as there has been in the US in the past 2 years+)
    --much lower velocity of money
    --much lower multiplier effect (banks are simply holding a higher % of deposits rather then lending them out to become more deposits)
    Then the game changes. Printing enough money to double the money base does not mean the money supply will double. Under the right conditions, the central bank printing money does not lead to rampant inflation. The USA currently has those conditions. When these conditions change, and the USA is still borrowing and printing money, then I'll be right there with you! Until then, we have no choice.

    The biggest immediate concern, IMO, is not inflation, but is the US government defaulting on its debt. However, no one honestly knows at what point credible 1st world governments lose their ability to borrow cheaply (I dont think its fair to compare the USA's borrowing reputation to Italy's/Greece's).

    I liked your points above btw ("American Manifesto").
    thanks

  5. #55
    pathwise dependent FDG's Avatar
    Join Date
    Aug 2007
    MBTI
    ENTJ
    Enneagram
    7w8
    Socionics
    ENTj
    Posts
    5,908

    Default

    Quote Originally Posted by Babylon Candle View Post
    FDG, I mean this as respectfully as possible, but you are a graduate student of economics/finance right??? You are aware of the velocity of money and the multiplier effect? When there is:
    --rampant deflationary pressure (as there has been in the US in the past 2 years+)
    --much lower velocity of money
    --much lower multiplier effect (banks are simply holding a higher % of deposits rather then lending them out to become more deposits)
    Then the game changes. Printing enough money to double the money base does not mean the money supply will double. Under the right conditions, the central bank printing money does not lead to rampant inflation. The USA currently has those conditions. When these conditions change, and the USA is still borrowing and printing money, then I'll be right there with you! Until then, we have no choice.
    Hey, I know, I'm not saying that right now that's a wrong policy. I'm just saying that sooner or later it will lead to inflation, namely when the economy will recover and banks will start lending what they're now holding (even if they just hold there's still an increase, even if not exponential). There's quite strong evidence that on the long run - even if we're all dead - changes in money supply lead to changes in inflation (this is why I think the quantitaty theory of money is the one that makes the most sense). It's a "risky" policy, because the policymaker is betting that in the next time-period growth will be higher than the inflation created by injection of money. It's also rather unfair (from my POV) towards citizens that decided to save more of their income, since it will diminish their real savings, unless they are good investors (and that's not something we/should can expect from every household, not everybody can spend quite a lot of time understanding financial products).

    The biggest immediate concern, IMO, is not inflation, but is the US government defaulting on its debt. However, no one honestly knows at what point credible 1st world governments lose their ability to borrow cheaply (I dont think its fair to compare the USA's borrowing reputation to Italy's/Greece's).
    Yeah, I don't think there's any real risk of default, either. In any case, since the FED has bought the debt, they should be able to roll it over without much trouble.
    ENTj 7-3-8 sx/sp

  6. #56
    Senior Member Gerbah's Avatar
    Join Date
    Oct 2009
    MBTI
    ISTJ
    Enneagram
    5w4
    Posts
    433

    Default

    Quote Originally Posted by onemoretime View Post
    Inflation - expansion of the money supply, general increase in price levels
    Deflation - contraction of the money supply, general decrease in price levels

    Different markets can have different localized changes in price levels; for example, the price of food rose last year due to supply constraints while the general price level fell, particularly due to the housing collapse. However, as a whole, the economic environment can be only one or the other.
    It seems that it's a matter of interpretation and how you look at things because Berninger in this video says most people deal with inflation and deflation as though it would be a single number but his point of view is different.

    This is the particular video where he talks about it:

    YouTube - The concept of Deflation and Inflation

    As far as I understand what he says, both deflationary and inflationary pressures exist at the same time in the economy and move in parallel.

    Deflation is more of a monetary phenomenon you see in the banking markets, the asset markets, while inflation is what the average person observes in their daily life and costs. These are happening at the same time.

    There is a tipping point where the deflationary pressure reaches such a degree, particularly when unemployment gets very high, that it shifts into inflation and then your money becomes worthless from one day to the next. So inflation is created through deflation. He gives a historical example of when this happened and silver money became worthless and people could only trade with gold.
    the shoheen ho of the wind of the west and the lulla lo of the soft sea billow - Alfred Graves

  7. #57
    pathwise dependent FDG's Avatar
    Join Date
    Aug 2007
    MBTI
    ENTJ
    Enneagram
    7w8
    Socionics
    ENTj
    Posts
    5,908

    Default

    Quote Originally Posted by Gerbah View Post
    There is a tipping point where the deflationary pressure reaches such a degree, particularly when unemployment gets very high, that it shifts into inflation and then your money becomes worthless from one day to the next. So inflation is created through deflation. He gives a historical example of when this happened and silver money became worthless and people could only trade with gold.
    It's just that printing money (because there is deflation) will lead to inflation. It's not anything "mystic". Tipping point...dunno why he wants to put it into those terms, it's just that it takes time for the money printed to reach the daily-life-market through the credit system.
    ENTj 7-3-8 sx/sp

  8. #58
    Minister of Propagandhi ajblaise's Avatar
    Join Date
    Aug 2008
    MBTI
    INTP
    Posts
    7,917

    Default

    Quote Originally Posted by FDG View Post
    It's just that printing money (because there is deflation) will lead to inflation. It's not anything "mistic". Tipping point...dunno why he wants to put it into those terms, it's just that it takes time for the money printed to reach the daily-life-market through the credit system.
    Which is when the Fed can raise interest rates, to counter inflation. It's a beautiful system.

    In fact, they just did that. And the value of the dollar went up.

    Dollar Rises for Sixth Week Versus Euro After Fed Rate Increase - BusinessWeek

  9. #59
    pathwise dependent FDG's Avatar
    Join Date
    Aug 2007
    MBTI
    ENTJ
    Enneagram
    7w8
    Socionics
    ENTj
    Posts
    5,908

    Default

    Quote Originally Posted by ajblaise View Post
    Which is when the Fed can raise interest rates, to counter inflation. It's a beautiful system.

    In fact, they just did that. And the value of the dollar went up.

    Dollar Rises for Sixth Week Versus Euro After Fed Rate Increase - BusinessWeek
    Right, but then when the govt will start selling its bonds back to the public their interest rate will rise more quickly. It's kind of like trying to heat up a bulding by first setting the heater to MAX levels, then you notice that you're sweating and open all the windows...it's thermodynamically inefficient.
    ENTj 7-3-8 sx/sp

  10. #60
    Senior Member Gerbah's Avatar
    Join Date
    Oct 2009
    MBTI
    ISTJ
    Enneagram
    5w4
    Posts
    433

    Default

    Quote Originally Posted by FDG View Post
    It's just that printing money (because there is deflation) will lead to inflation. It's not anything "mystic". Tipping point...dunno why he wants to put it into those terms, it's just that it takes time for the money printed to reach the daily-life-market through the credit system.
    I don't see him as intending to be "mystical" but it does sound a lot simpler when you put it like that.
    the shoheen ho of the wind of the west and the lulla lo of the soft sea billow - Alfred Graves

Similar Threads

  1. Y: What is the future of our youth?
    By lightsun in forum Politics, History, and Current Events
    Replies: 0
    Last Post: 09-11-2011, 08:35 AM
  2. What is the craziest bit of technology you have read about in SF?
    By macjoven in forum Science, Technology, and Future Tech
    Replies: 1
    Last Post: 01-14-2009, 08:15 PM
  3. What is the purpose of Law?
    By The_Liquid_Laser in forum Politics, History, and Current Events
    Replies: 44
    Last Post: 08-03-2008, 10:51 PM
  4. What is the purpose of Science Fiction?
    By The Ü™ in forum Arts & Entertainment
    Replies: 21
    Last Post: 03-04-2008, 06:53 PM
  5. What is the point of the MBTI?
    By Dufresne in forum Myers-Briggs and Jungian Cognitive Functions
    Replies: 15
    Last Post: 05-31-2007, 04:37 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Single Sign On provided by vBSSO