119% of Fox news viewers will not understand this

[tornado]

It is not possible to obtain more than 100% of a product. You either have all of it, or a part of it; not more of it.

This is a 100% ridiculous thread.

[PonderThis]

By cracky you are brilliant.

[chuck white]

It is not possible to obtain more than 100% of a product. You either have all of it, or a part of it; not more of it.

This is a 100% ridiculous thread.

So, your part of the 141% that disagrees with the numbers.

Or your not a fox news viewer.

[MarkM]

SW, ran across this story and thought of you. Enjoy.

There have been some extraordinary headlines in recent days. Here's the Economist: "The perils of falling inflation." Here's the Financial Times: "The euro zone needs to get inflation up again."
....
Fast forward to the fall of 2008, the collapse of the stock market and the freezing up of the financial system. Ruinous deflation became a serious risk. The emergency measures taken around the world, including the near $1 trillion injection of public money as a stimulus to keep the economy from total collapse, appeared to fly in the face of Friedman and all his works.

I say "appeared to" because Friedman is often misunderstood — not least by those who say they are devoted to him. Friedman and Schwartz had explored the reasons for the Great Depression and concluded that rather than the pricking of a stock prices "bubble," as Friedrich Hayek contended, the slump resulted from too little money in the system.

Friedman thought President Herbert Hoover should have pumped vast amounts of cash into the system, through public spending or what is known today as quantitative easing (QE). Friedman's embrace of ideas that are an abomination to today's conservatives explains, in part, why his centenary last year was barely celebrated: Most conservatives have switched their allegiance from Friedman to Hayek.

Friedman's main preoccupation was with inflation, but he was not against rising prices per se. He believed a certain amount of inflation was good for the economy — as long as it was kept in check. In practice, average inflation at or around 2 percent was considered optimum to keep the economy as a whole on track.


http://www.nytimes.com/reuters/2013/11/1...tiveeasing

[Sidewinder]

I think if you and I both work equally on a $100 job and I take home $80 while you get $20, you would feel that was inequitable. My response naturally would be to tell you to quit whining and call you a Marxist.

This goes exactly to my dispute about "inequity" in wealth distribution. You seem to be assuming the line that equal pay for equal work and applying it across the board. There are a number of fallacies involved.

First, you are assuming the value of the work is determined by the effort involved. It is not. It is determined by the value of the product produced. No two of us are equal in our job performance. "Equal work" being done by two difference people will not happen. There must necessarily be a difference in the quality of the product. Those that bring greater smarts, greater experience, greater effort, greater education and greater luck will necessarily produce a better product. The idea that the more talented should be rewarded the same as the lesser talented is simply a carryover from modern progressive education.

Second, there is no justice or equity involved in a barter transaction. It is either mutually acceptable or it doesn't happen. I may like peaches and may trade my labor to acquire some. Objectively who is to say whether that trade is equitable? It is simply acceptable to me and person possessing the peaches. However, there is a point at which I value my labor more than the peach and when it gets to that point I decide to do without peaches.

In my personal experience with the super rich, I have found their one defining characteristic is that they, one and all, are incredibly greedy. One has to work a lot harder for that excess wealth and, quite simply, I am not willing to invest the time and effort that they did to acquire their wealth. (I grant you that inherited wealth is another matter and I have problems with that.) The folks I am discussing are people who started with zip and made themselves super wealthy. Believe me, they are a lot greedier than I.

Likewise, your example addresses only one factor associated with profit - the time invested on the assembly line. The weaver in Sri Lanker has to deal with his local market. That is not the same situation the weaver deals with in New England. Location, location, location. Reality is seldom "fair."

What was it the wealthy (top 10%) were doing that was so valuable in the 20's, that they stopped doing from 1943-80, and they resumed doing in the last three decades?

The exact same thing that they are doing now - gambling on the stock market on credit provided by the Fed. Nothing good is going to come of it.

What invaluable skill do they possess that is worth half of America's wealth today?

Don't you see the Marxism in that question? From each according to his ability, to each according to his need. What you don't recognize is that in a free market, the end result is the product of millions of independent, individual transactions. The problem is the inflation provoked by government intervention in the money market, the benefit of which flows directly to the 1% and the cost to everybody else.

And you can't blame QE for this -- it wasn't invented until 2001.

QE is simply the name given a specific application of the on-going policy adopted in 1913. It is called managed inflation.

[Sidewinder]

Friedman's main preoccupation was with inflation, but he was not against rising prices per se. He believed a certain amount of inflation was good for the economy — as long as it was kept in check. In practice, average inflation at or around 2 percent was considered optimum to keep the economy as a whole on track.

That is an excellent explanation of the thinking behind "managed inflation." Inflation, primarily for the wealth transfer I have noted - is bad. We all recognize that where it has appeared in large doses - Weimar, Argentina, etc. The thinking at the Fed is that a little of a bad thing is desirable. The inherent fallacy should be obvious. 2% per year - the target - is "good." 100% is bad - hyperinflation. But 50 years of 2% is 100%. This is a bad plan.

This puts us face to face with the underlying problem. The Fed cannot tolerate monetary deflation. The banks lend money on a fractional reserve basis. They have X dollars of assets and they will create 10 times their value by lending to borrowers - providing "liquidity" in the market place. IF there is a monetary deflation that will lead to a price deflation which would be great for consumers but a disaster for banks. As the value of their assets deflates, their capacity to lend is reduced 10 times over.

Keep in mind that money under the Federal Reserve is nothing but credit. 90% of all money does not exist other than as accounting entries. I charge a dollar on my credit card and a dollar is created. I pay off a dollar on my credit card account and a dollar is eliminated. That is all that is involved.

We are confronted with a demographic situation. The baby boomers are retiring. That bulge in the population is paying off its debts - shrinking the monetary base - and it is not taking on new debt. That is an on-going problem. Add to that the phony bubble in real estate values. Mortgage borrowing went crazy and we had an extraordinary balloon in the monetary supply. When the bubble burst, the value of banks' assets - loans outstanding - plummeted. Banks had to curtail their business accordingly. Depending on their relationship with the Fed, some had to go out of business altogether. Some were deemed too big to fail and for them the government stepped up as borrower in chief. Also the government took the toxic assets off their hands at full value. The Basel convention lists government bonds and mortgages as the two best bank securities. The banks were nicely upgraded.

Long term, the ensuing generations must pick up the credit volume. But those out there in the work force are already maxed out on credit. Therefore, the Fed can only look to the students and guess what - the government has provided them with unlimited student loans. This is only a temporary fix because they are now maxed out and they haven't even started.

The combination of credit based money, fractional reserve banking, and managed inflation is a toxic brew benefitting only the banks and Wall Street. With the changing demographic and a declining population already maxed out, it is set to implode. (Why do you think BofA wants to lend money to illegals? It is a sector of the population that is expanding and is not maxed out on credit.)

[PonderThis]

2% inflation looks to me like it works out just about perfectly, and it's been doing so for quite awhile now too. I fail to see this great calamity you are referring to.

[MarkM]

2% inflation looks to me like it works out just about perfectly, and it's been doing so for quite awhile now too. I fail to see this great calamity you are referring to.

Me neither.

I'm sure SW is a Paul guy. They've been screaming about runaway inflation since Obama was elected. It's never happened. The opposite is true. Deflation has been the challenge since the Great Recession. Where's the fire?

[PonderThis]

I have to admit I was one that predicted great inflation to come also, and it's left me with egg on my face. They do a far better job managing the economy with just enough money to keep it going without it being too much and causing inflation than I would have dreamed they could really do. It's really quite awe inspiring to me, actually.

(And, it sort of pisses me off. I'm positioned so inflation could occur and it won't hardly scathe me, and if I'd known it would stay so low, I might have done things differently!)

[Sidewinder]

2% inflation looks to me like it works out just about perfectly, and it's been doing so for quite awhile now too. I fail to see this great calamity you are referring to.

Check out MarkM's income share chart.

[Sidewinder]

I'm sure SW is a Paul guy. They've been screaming about runaway inflation since Obama was elected. It's never happened. The opposite is true. Deflation has been the challenge since the Great Recession. Where's the fire?

I am not the one crying about the disproportionate wealth of the wealthy. If you don't want to believe when shown why it is happening, Buddha bless you. But stop your whining.

If it is a genuine problem that someone has more wealth than you, your solution is simply take away what they have. What does that make you? Alternatively, you might consider why they are getting all the income and do something about that.

[csrowan]

I'm sure SW is a Paul guy. They've been screaming about runaway inflation since Obama was elected. It's never happened. The opposite is true. Deflation has been the challenge since the Great Recession. Where's the fire?

I am not the one crying about the disproportionate wealth of the wealthy. If you don't want to believe when shown why it is happening, Buddha bless you. But stop your whining.

If it is a genuine problem that someone has more wealth than you, your solution is simply take away what they have. What does that make you? Alternatively, you might consider why they are getting all the income and do something about that.

Well, lets see. Money gives you power. People with power are elected to power and other people with power are paving the way with truckloads of cash. For some odd reason, the people in power keep making laws and legal decisions that make it easier for the people with money to keep and make more and more money while forking over giant subsidies to them, but argue that feeding the hungry is a drain on the system.

And while we try to do something about that, it's kind of hard when our pockets aren't nearly as deep as those of the corporations who are now apparently people and entitled to freedom of speech by donating as much money as they want to support whichever political puppet they've groomed to office.

[Sidewinder]

I have to admit I was one that predicted great inflation to come also, and it's left me with egg on my face. They do a far better job managing the economy with just enough money to keep it going without it being too much and causing inflation than I would have dreamed they could really do. It's really quite awe inspiring to me, actually.

The issue is not settled. There is no question but that there has been monumental monetary inflation under Bush and BO. That cannot translate into price inflation until and unless it gets distributed. So far, it has only gone into the stock market and managed to create a bubble that has taken the market from 6000 to almost 16,000 today. (That was guaranteed btw by the Fed's interest reduction to zero. There was no place else to put one's money.) So, the inflation is there in spades. To understand, one must also remember that there was monumental deflation in the housing market collapse.

Bernanke has been proven right that one bubble can offset another. However, there remains the mass of mortgage defaults that have simply been shelved in the Federal Reserve. The deflation has only been quarantined for now.

The price inflation beyond the stock market average will only begin to appear when profits are taken and then spent in the general market place.

The big criticism of QE infinity is there is no exit strategy - how does the Fed get all that money back - preventing runaway inflation - without returning to deflation. The underlying problem is that the deflationary chickens hatched by the burst of runaway inflation have come home to roost and QE has simply kicked them down the road. One or the other - collapse or runaway inflation - appears inevitable and the insurance you purchased to protect yourself remains good insurance for either event.

[Sidewinder]

Well, lets see. Money gives you power. People with power are elected to power and other people with power are paving the way with truckloads of cash. For some odd reason, the people in power keep making laws and legal decisions that make it easier for the people with money to keep and make more and more money while forking over giant subsidies to them, but argue that feeding the hungry is a drain on the system.

You have your finger on the problem of crony capitalism. That is why I (and thinking Tea Partiers) advocate a wall of separation between the government and commerce. Involve the government and the business interest will seek legislation providing - de facto - for monopoly. The evil is not limited to capitalists btw - look at what the p[ublic sector unions gain for themselves. The ICC was sold as a protection of the consumer and its purpose was to make the creation of competition difficult. The naive think its for them.

[PonderThis]

The big criticism of QE infinity is there is no exit strategy - how does the Fed get all that money back - preventing runaway inflation - without returning to deflation. The underlying problem is that the deflationary chickens hatched by the burst of runaway inflation have come home to roost and QE has simply kicked them down the road. One or the other - collapse or runaway inflation - appears inevitable and the insurance you purchased to protect yourself remains good insurance for either event.

I think you are quite right. We will have either inflation or deflation, with some variation within.

[csrowan]

Well, lets see. Money gives you power. People with power are elected to power and other people with power are paving the way with truckloads of cash. For some odd reason, the people in power keep making laws and legal decisions that make it easier for the people with money to keep and make more and more money while forking over giant subsidies to them, but argue that feeding the hungry is a drain on the system.

You have your finger on the problem of crony capitalism. That is why I (and thinking Tea Partiers) advocate a wall of separation between the government and commerce. Involve the government and the business interest will seek legislation providing - de facto - for monopoly. The evil is not limited to capitalists btw - look at what the p[ublic sector unions gain for themselves. The ICC was sold as a protection of the consumer and its purpose was to make the creation of competition difficult. The naive think its for them.

The problem is, without government intervention, it's even worse. What we need is proper regulation, without crony capitalism. Something the Haliburton party seems incapible of. Not that the Democrats have a clean track record either. But I give them a slightly better chance of cleaning out some of the mess.

[Sidewinder]

The war profiteers are the smallest tip of the iceberg. Look at the education administration industry. Look at the medical industry under medicare. But the biggest hogs at the trough are the "too big to fail" banks and the public sector unions.

[Sidewinder]

The fun thing about Obamacare is that none of the legislators even read it. So who wrote it? Want to bet that when it all shakes out we find that the health insurance companies designed it and then turned it over to the progressive do-gooders who re-wrote it to incorporate more social benefits with the end result that the program fails to work for either?

[csrowan]

Personally, I'm all for a single payer system. And I'd hazard a guess that the majority of voting liberals would be willing to support it as well, or at least wouldn't fight tooth and nail against it.

Want to bet that more than a minute portion of voting conservatives would prefer single payer healthcare to Obamacare?

[MarkM]

The fun thing about Obamacare is that none of the legislators even read it. So who wrote it? Want to bet that when it all shakes out we find that the health insurance companies designed it and then turned it over to the progressive do-gooders who re-wrote it to incorporate more social benefits with the end result that the program fails to work for either?

Oh please. Obamacare was written by Mitt Romney

http://www.politifact.com/truth-o-meter/...dviser-eq/

and the Heritage Foundation.

http://www.forbes.com/sites/theapothecar...l-mandate/

http://www.politifact.com/truth-o-meter/...lth-excha/

If progressive do-gooders had written it would have been single payer, or some form of it, just like the rest of the industrialized world.