KAZVorpal
Posts: 31
Joined: 8/31/2007
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ORIGINAL: Real0ne
i do not see how you came to the conclusion that stocks valuate according to or in response to inflation any differently than the value of the dollar does.
I am puzzled by the very premise of doubt in the inflation-proofness (barring market collapses from inflation) of stocks.
The value of stocks is determined by the supply of money offered to put into them, and the perceived value of the companies selling/trading/representing them. The money is available in the economy at large naturally influences, almost mathematically, the money put into the market. Meanwhile, huge companies have assets which valuate with inflation, and their incomes rise and fall with inflation, so that their perceived value tends to do the same. Few things are more naturally going to rise with inflation than stocks.
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Real estate does but there is a delay.
Yes, and the delay is harmful to the economy, but is not nearly so signficant for wealthy people investing money long-term.
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ORIGINAL: KAZVorpal
The more wealth you have, the higher a percentage of your wealth will typically be stored in assets that valuate in response to inflation, like real estate and stocks. Likewise your income will include both cost of living raises AND separate raises to reflect your performance or tenture...or your income will be from investments or business revenue that, again, respond(s) to inflation.
We could say that all "things" eventually respond to inflation at some point if we re-price them.
Any property that you own, you can adjust the selling price accordingly as is the case in industry and inflation is adjusted in that manner. However stocks and similar investments do not get adjusted and all they do is trade up or down as a whole.
But things that could, in a sense, be called persistant commodities, that can almost always be resold without the previous ownership being a dramatic price factor, automatically adjust for inflation. Your car falls in value, you eat your food, the Dollar Store has to figure out what to do with its prices...but prices of real estate, gold, stocks, et cetera automatically rise and fall in the common marketplace, with inflation being an unconscious factor.
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Possibly increase, It depends on the specific economy, resources etc. I do agrtee that inflation that we have compliments of the federal reserve corporation ios entirely artificial and that it is robbery of way more than just the poor.
Actually, a free market economy will tend to increase almost consantly. The "business cycle" is actually a misnomer, being caused by cycles of government interference, not adjustments in free market factors. For example, our recession cycle is based almost entirely on responses to a combination of the Federal Reserve's actions, the ecstatic bursts of damaging legislation according to election cycles, et cetera. You can actually chart the recessions as invariably following interest rate hikes, in fact.
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True, supply and demand. frn's do have value, about 2.5 cents each based on the current level of inflation.
How do you feel that complaining about money having no real value is contradictory? Assuming we are talking about value beyond the value of it being a piece of paper that took some amount of processing to print?
The money has no real value. I would be willling to pay about 2 cents per note regardless of what was printed on it, because that is its real value.
The problem here is that you seem to think that there is some objective measure of value, like production cost. But production cost as a measure of value is as completely false as the labor theory of value. ALL value is nothing more than what one is willing to trade for a thing...or what the typical trade for that thing will be, on a broader scale.
Money has exactly as much objective value as bread, or gold. They all are worth only what people will trade...nothing more, nothing less.
What they cost to produce is not, in any way, their value.
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Whats the difference which way the flation goes? Arent they both resisted or do you mean people tend to resist lowering prices but are only to happy to raise them. Of course their dollar is buying more as the prices lower. Periodic bursts are created by the fed res, how would deflation be any different?
Inflation is actually the adding of money to an economy, but is also used as a word for the inevitable change in that currency's value because there is more of it versus the amount of things you might buy with it. In the supply/demand curve, consumer desire for something can be measured in the dollars they offer...when they have ten percent more dollars, that can translate, overall, into them offering ten percent more, pushing the price higher relative to the supply.
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I do not agree with the bretton woods version as it was however what exactly do you feel is so "dangerous" about the gold standard?
As I said, the supply of gold is either steady, or at least unrelated to the value of the economy. It will either be stable in supply as the economy grows, causing bursts of deflation as the economy resists lowering its prices and then adjusts, or will actually fluctuate in ways contrary what would benefit the economy, causing even greater disruption.
Using a gold standard is like gathering vegetables you find in nature, instead of learning to plant and grow them for yourself. It places you at the whim of something inherently irrational, that cannot respond to your needs. It is only better than an irresponsible government, but cannot perform up to the standards that free market competition in currency could produce.
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ORIGINAL: KAZVorpal
I think Miltron Friedman had the best idea; a currency whose supply was increased in careful synchronicity with the increase of wealth in the economy. This would allow for the slight natural deflation caused by advancements in technology, which benefit even the poor. It should also (starts punching Microsoft Windows for interrupting his typing) be done in some way other than by giving unearned money to wealthy banks, the way the Federal Reserve does. Even as a minarchist, I'd find the government actually spending the newly printed money directly to be a more tolerable means of introducing it into the economy.
Lost me here.
We have been entirely on the friedman keynes plan since nixon and inflation does constantly rise.
Why do you feel we need inflation at all?
What I was saying, above, is that we need to avoid the dramatic deflation caused by a stable currency supply, in the face of technological advancements, competitive industries, and general production of wealth.
Again, "inflating" a currency only means increasing the supply...it doesn't HAVE to mean increasing prices, although that's how people end up using it by shorthand.
Oh, and note that Friedman is virtually the opposite of Keynes, although I'll stipulate that monetarism, as it's been implemented, is just crypro-keynesianism. The premise that you can control the health of the economy, compensating for the imaginary "business cycle", by dealing the economy poison when it's healthy and crack when it's sick (through interest rates) has been proven to be sheer nonsense.
Friedman did not advocate that, but instead detaching the supply of money from such economic nitwittery and simply trying to add about the amount that would PREVENT dramatic price changes in either direction.
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Does the wealth of the economy truly increase or shift from one area to another?
By what process do you feel that the government should spend the money into society and how is that more tolerable?
It's more tolerable because they lose the negative influence they have when they are taxing directly. Instead of punishing productivity through an income tax, or consumption with a sales tax, or eliminating real property ownership by imposing a property tax, the money they are spending is being generated in a punishment-free way.
How they spend it is going to be harmful, no matter what they do. Government spending is inherently disruptive to an economy, because it is not capable of deciding what the economy needs in the efficient ways that all individuals spending their own income can. But whatever things the government is going to insist on spending its money on, better it at least is not influencing economic behavior by taxing to get it, first.
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ORIGINAL: KAZVorpal
Of course even better would be for government to get out of the business of money, altogether. We can't trust it to manage less easily abused aspects of society, much less money. Banks could compete to produce a universally desirable currency, and that competition would both produce better results, and also serve as an absolutely irresistable means of keeping them in line, that the government does not have.
I totally disagree here. That is first off in direct violation of our constitution. Next the government got out of the money business a long time ago and passed it to the federal reserve bank. You are stating the gov should get out of a business they are not in. (except for hard currency they still stamp that).
When the government pretends to not be "in" something, by setting up through its coercive powers/influence a private entity it actually controls completely, like the Federal Reserve or Corporation for Public Broadcasting, that only switches it cosmectically, from honest socialism to fascist socialism. As long as it actually controls that thing, through mandate, regulation, or a sort of conspiracy of cooperation (the agency always intended to do just what the government officials wanted, in the first place), it is the same difference.
How, precisely, would allowing businesses to print their own currency be a violation of the Constitution?
Are you aware that, for the first century-plus of US history, the Federal government let banks print their own currency, except that it allowed them to call that currency "US dollars"?
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Next I do not see how we can have competition in money within a singular sovereign nation?
If the whole world was ruled by Marxists, I'm sure that the same puzzlement would be met by the crazy idea of private competition in car making or farming.
Personally, I don't see what the question is...how could it NOT work?
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The bottom line imo is that we cannot trust the government to do a damn thing. Period. I will buy that!
Naturally. That's the foundation of American philosophy.
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I would vote for more oversight by the people. remove control of money from the banks and place it in the hands of the government again while educating everyone as to banking tactics that will be used to make us believe we need the fed res.
Private competition in currency would give 100% oversight to the People.
Removing control of money, such as exists, from banks and placing it in the hands of the Federal government belies your previous admission that we can't trust government. No matter what we can't trust a bank to do, that is a thing we can even less trust the government to do. It has direct, coercive authority over people, and we have only the vaguest token recourse against it, and that only once every 1200 days or so...whereas we do have SOME recourse against an irresponsible bank, every second of every day.
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