Replace Trickle Down with Middle Class up

[Blackjack200]

LOL, it's so funny to see the left backtracking on the whole peak oil thing. If only we had printed more money, the oil would just appear!

So you're saying that we wouldn't extract more oil and gas if the price was higher?

 

[BoberFett]

Holy shit, you don't think the money supply affects consumption? LOL!!

Tell the fed, they can all just go home, none of what they do matters!

Do you honestly believe that the reason everyone has bigger houses, more cars, eats too much food, and has more stuff than they did 50 years ago is because there's more money?

Good god, you really are a finance student aren't you?

 

[realibrad]

Holy shit, you don't think the money supply affects consumption? LOL!!

Tell the fed, they can all just go home, none of what they do matters!

It does not in the long run assuming the supply is not changing.

If the market sees the supply changing, it will either invest or hold off, because the value may go up or down. If the money supply is left the same, then nothing happens.

I think what you meant to imply by your sarcastic reply is that changing the money supply can cause short term changes.

 

[glenn1]

What? Im not creating economic policy. Im discussing the diminishing middle class on a tech forum.

So far in response we have

1. tvs were expensive in the 50's therfore...

2. if rich people sold all their cars nobody would even feel it.

3. Them pants are too expensive. Its like 15.

4. We need 0% taxes so companies want to bring their jobs here. Oh and lets get rid of the epa, minimum wage and child labor laws as well.

excuse me for have a discussion about something without 20 years of education on the topic.

You don't need a degree in economics, you just need to actually use the brain you already have.

The TV example was just an illustration of decades long declines in prices of nearly all consumer goods. Whether it's a car, TV, clothes, inexpensive kitchen gadgets, or anything else they are all cheaper. And more widely available to all consumers. And often with far better feature sets and safety than years ago. Plus we are able to use less labor to produce them. Are you seriously going to argue that we should purposely reverse this trend because you think somehow being less productive and making things cost more would somehow boost employment? You have not even laid out a causal mechanism that would support this idea.

 

[realibrad]

So you're saying that we wouldn't extract more oil and gas if the price was higher?

Why would the price of oil be higher, but not everything else that goes into the production?

Changing the money supply tends to inflate or deflate everything, not just one good or service.

 

[BoberFett]

So you're saying that we wouldn't extract more oil and gas if the price was higher?

I'd love to sit here and insult you repeatedly, but I'm going to attempt to take the high road and suggest that maybe we're talking past one another.

If the price oil went up in relation to other commodities, then yes we'd extract more.

If the price of everything goes up, nothing will change.

If every American suddenly had twice as much money tomorrow, would oil output double? Would we all drive twice as much? Or would oil roughly double in price?

Or are you arguing that demand only drives supply, and not price?

 

[glenn1]

Why would the price of oil be higher, but not everything else that goes into the production?

Changing the money suptply tends to inflate or deflate everything, not just one good or service.

Progressives can only think about one side (and sometimes a single element) of an economic equation at a time. It doesn't matter if you double all the costs for a consumer or producer if their policy will increase their income by 50%. It's only important that we reduce inequality, Pareto Efficiency be damned.

 

[Blackjack200]

Do you honestly believe that the reason everyone has bigger houses, more cars, eats too much food, and has more stuff than they did 50 years ago is because there's more money?

Good god, you really are a finance student aren't you?

LMAO, do you just take the most superficial, least informative view of everything?

Let's start with housing. Yes, houses are bigger than they used to be, they're also much older, which when you consider that our population is growing at a pretty good clip, doesn't make much sense.

http://eyeonhousing.org/2015/08/the-aging-housing-stock-2/

In other words, demand for new housing is slack. Or is that supply limited too? Lumber and sheetrock are too expensive for building to be profitable? Or just not enough demand? Yes, big new houses are being 'demanded' by the wealthy, most everyone else is forced to buy a small old house.

More cars?

http://www.ssti.us/2014/02/vmt-drops-ninth-year-dots-taking-notice/

Eats too much food?

Here I agree with you. One place where demand has been pretty healthy is in restaurants. http://www.bloomberg.com/news/artic...vertook-grocery-sales-for-the-first-time-ever

Has more stuff?

Stuff is cheap. As has been pointed out in this thread, shoes and tvs are cheap. Medical care, college, and housing are expensive.

 

[BoberFett]

LMAO, do you just take the most superficial, least informative view of everything?

Let's start with housing. Yes, houses are bigger than they used to be, they're also much older, which when you consider that our population is growing at a pretty good clip, doesn't make much sense.

http://eyeonhousing.org/2015/08/the-aging-housing-stock-2/

In other words, demand for new housing is slack. Or is that supply limited too? Lumber and sheetrock are too expensive for building to be profitable? Or just not enough demand? Yes, big new houses are being 'demanded' by the wealthy, most everyone else is forced to buy a small old house.

More cars?

http://www.ssti.us/2014/02/vmt-drops-ninth-year-dots-taking-notice/

Eats too much food?

Here I agree with you. One place where demand has been pretty healthy is in restaurants. http://www.bloomberg.com/news/artic...vertook-grocery-sales-for-the-first-time-ever

Has more stuff?

Stuff is cheap. As has been pointed out in this thread, shoes and tvs are cheap. Medical care, college, and housing are expensive.

So if you increase the amount of USD in circulation, the price of lumber and sheetrock are unaffected? The price of steel is unaffected? The price of everything that goes into production of homes and cars is unaffected and we can just build twice as many of them because there's more demand?

Again I'll ask, does demand only affect supply and not price?

If demand in the form of currency is all that's needed, and supply will rise to meet demand, then why wouldn't we just give every American $1,000,000? If you're correct, everyone would be wealthy and have everything they could ask for.

 

[JSt0rm]

You don't need a degree in economics, you just need to actually use the brain you already have.

The TV example was just an illustration of decades long declines in prices of nearly all consumer goods. Whether it's a car, TV, clothes, inexpensive kitchen gadgets, or anything else they are all cheaper. And more widely available to all consumers. And often with far better feature sets and safety than years ago. Plus we are able to use less labor to produce them. Are you seriously going to argue that we should purposely reverse this trend because you think somehow being less productive and making things cost more would somehow boost employment? You have not even laid out a causal mechanism that would support this idea.

Technology advancement has made tv's cheaper. Go find out how much a 3d holographic image machine costs and get back to me. Thats newer tech and I will tell you it costs a lot more then $7000 for something proper.

Tv's being cheap have some relationship to made in the most polluting no child labor law enviroments but thats not the only reason.

 

[Blackjack200]

It does not in the long run assuming the supply is not changing.

If the market sees the supply changing, it will either invest or hold off, because the value may go up or down. If the money supply is left the same, then nothing happens.

I think what you meant to imply by your sarcastic reply is that changing the money supply can cause short term changes.

Why do we assume that the supply doesn't change, especially considering that growth is constrained by demand right now?

I could see the argument if we were seeing 3% inflation, but we're not. Inflation is near 0%. In that situation, increasing the money supply absolutely increases demand and by extension economic growth.

Why would the price of oil be higher, but not everything else that goes into the production?

Changing the money supply tends to inflate or deflate everything, not just one good or service.

Really? Then why didn't everything inflate when the Fed was pumping $85 billion a month into the economy a year ago?

If we were supply constrained, you'd be mostly right. More money in the economy would simply push prices up. Now the effect would be far more muted since there's a lot of slack capacity.

I'd love to sit here and insult you repeatedly, but I'm going to attempt to take the high road and suggest that maybe we're talking past one another.

If the price oil went up in relation to other commodities, then yes we'd extract more.

If the price of everything goes up, nothing will change.

If every American suddenly had twice as much money tomorrow, would oil output double? Would we all drive twice as much? Or would oil roughly double in price?

Or are you arguing that demand only drives supply, and not price?

What you don't understand is that it matters which part of the business cycle we are in. If you doubled the checking account of every American tomorrow, you'd certainly see some inflation, but probably far less that what you imagine. A lot of people would simply use the extra money to pay off some of their student loans, or car loans, or mortgages, which would have very little impact in demand.

High debt levels are one of the factors depressing American demand right now.

 

[Blackjack200]

So if you increase the amount of USD in circulation, the price of lumber and sheetrock are unaffected? The price of steel is unaffected? The price of everything that goes into production of homes and cars is unaffected and we can just build twice as many of them because there's more demand?

Again I'll ask, does demand only affect supply and not price?

It depends on a lot of different factors. This is the problem with conservatives, they want to be ideological about everything. If you have excess capacity, if you have exceess supply, if you are demand constrained, then a modest increase in the money supply will not have much inflationary pressure.

But maybe instead of just acting so incredulous about my fairly uncontroversial observiations, you shoudl be the one explaining why a $4.5 trillion balance sheet at the fed has not resulted in runaway inflation?

If demand in the form of currency is all that's needed, and supply will rise to meet demand, then why wouldn't we just give every American $1,000,000? If you're correct, everyone would be wealthy and have everything they could ask for.

Perfect illustration of the simplistic conservative brain unable to accept nuance. 'If more money is good, why don't we just give everyone a million dollars? Hurrr!' A million dollars per person would expand the money supply 300 trillion dollars. But here's the question, if we both accept that that's too much money, and would be a problem for the economy, why is the opposite condition, too little money in circulation, not also a problem? Why are you so unwilling to consider that that might be the case?

 

[JSt0rm]

All this turns into a shouting match.

1 side says the middle class doesnt matter. The 3rd world should have some wealth too. continue trickle down to make sure this keeps going

I mean talk about voting against your own interests. Its like the ideology of capitalism 100% is all that matters. The idea of losing trades people, crafts and any kind of production in this country is ok and those people can die for all they care.

 

[JSt0rm]

Perfect illustration of the simplistic conservative brain unable to accept nuance. 'If more money is good, why don't we just give everyone a million dollars? Hurrr!' A million dollars per person would expand the money supply 300 trillion dollars. But here's the question, if we both accept that that's too much money, and would be a problem for the economy, why is the opposite condition, too little money in circulation, not also a problem? Why are you so unwilling to consider that that might be the case?

Because people on fixed incomes or large amounts of cash in the mattress love deflation.

 

[BoberFett]

It depends on a lot of different factors. This is the problem with conservatives, they want to be ideological about everything. If you have excess capacity, if you have exceess supply, if you are demand constrained, then a modest increase in the money supply will not have much inflationary pressure.

But maybe instead of just acting so incredulous about my fairly uncontroversial observiations, you shoudl be the one explaining why a $4.5 trillion balance sheet at the fed has not resulted in runaway inflation?

It hasn't resulted in runaway inflation? How are median home prices compared to median income? Oh, it's worse than it was during the bubble? And how about that stock market "recovery"? Consumer goods haven't increased because the wealthy don't use their money to consume. Increased money in the hands of consumers will drive consumer good inflation. Increased money in the hands of investors will drive inflated asset prices.

Perfect illustration of the simplistic conservative brain unable to accept nuance. 'If more money is good, why don't we just give everyone a million dollars? Hurrr!'

I take it back, I'm going to insult you. Go fuck yourself sideways with a rusty garden rake, asshole.

A million dollars per person would expand the money supply 300 trillion dollars. But here's the question, if we both accept that that's too much money, and would be a problem for the economy, why is the opposite condition, too little money in circulation, not also a problem? Why are you so unwilling to consider that that might be the case?

I'm not accepting that it's too much money. You're the one who stated that money drives demand which drives supply. Can increased the money supply increase supply of consumer goods infinitely or can it not? If it can, then $300T has no downside. If it can't, then eventually the train is going to run out of track.

 

[BoberFett]

All this turns into a shouting match.

1 side says the middle class doesnt matter. The 3rd world should have some wealth too. continue trickle down to make sure this keeps going

I mean talk about voting against your own interests. Its like the ideology of capitalism 100% is all that matters. The idea of losing trades people, crafts and any kind of production in this country is ok and those people can die for all they care.

Me having more money than my neighbor IS in my interest.

You're talking about some lofty goal of enlightened self interest. Truly enlightened self interest would try to enrich humanity as a whole, but you're saying "Fuck every 3rd world country." There's no difference between you and a billionaire who says "Fuck every other American" other than the size of the group you're telling to fuck off and die for all you care.

If you can't understand that, I'd say it's CBD affecting your brain.

 

[JSt0rm]

The united states is where we live. Its up to us to make it a better place. Im glad some of you have been so open though. Its good to know the other side literally doesnt care about other people in their country.

And I dont understand why you having more money then your neighbor is in your interest? Why would it matter?

 

[realibrad]

Why do we assume that the supply doesn't change, especially considering that growth is constrained by demand right now?

I don't think you understood what I said.

The only time changing the supply changes demand, is during the change in money supply. Once the money supply is stable, the long run demand will be the same. If the money supply increased that would cause inflation as the relative value of goods/services the money represents would be the same but the supply of bills would increase. Money is the value per nominal value, so its really just a simple fraction. Increase the value of the denominator relative to the numerator and you get less value per dollar.

Firms and individuals would hold off on spending while deflation was happening in some situations because the value of the money may go up enough to make up for the lost utility of forgone goods.

Firms and individuals would spend money while inflation is happening in some situations because the value of the money may go down and thus investing in utility may give less of a loss then holding onto the money.

The assumption in all the aforementioned is the real money supply and its velocity.

I could see the argument if we were seeing 3% inflation, but we're not. Inflation is near 0%. In that situation, increasing the money supply absolutely increases demand and by extension economic growth.

It does not increase demand in the way you think it does. There might be a small boost in people spending money because the value of said money is going down, but it wont be long term. Investing now means you can't buy later. You may end up getting people to invest in things that are not as productive as they could have been had you not fucked around with the market.

What you are advocating is to use inflation to make the value of their money less so they will be less likely to hold onto it. Thats pretty shitty to me.

Really? Then why didn't everything inflate when the Fed was pumping $85 billion a month into the economy a year ago?

If we were supply constrained, you'd be mostly right. More money in the economy would simply push prices up. Now the effect would be far more muted since there's a lot of slack capacity.

You seem to be stuck on supply in terms of push pull inflation I think. Read up on some economics and you will learn some shit.

The reason inflation is not rocketing up is because of a neat trick that the FED cooked up. See, there is the money supply and the real money supply. The FED has increased the money supply, but not the real money supply. This has made the velocity of money not increase and thus inflation has not increased.

The FED gave a shit tone of money to the banks, but effectively made the money given unusable. What the FED did was to pay interest on excess reserves. The FED raised the minimum amount a bank must hold. That money cannot be used and thus does not really factor into velocity. Then, the FED pays the banks interest on the Reserves banks hold.

The FED gave the banks money, then paid the banks for holding that money. This allows the banks to balance their books while giving them a small revenue stream.

Like I said, a neat trick.

What you don't understand is that it matters which part of the business cycle we are in. If you doubled the checking account of every American tomorrow, you'd certainly see some inflation, but probably far less that what you imagine. A lot of people would simply use the extra money to pay off some of their student loans, or car loans, or mortgages, which would have very little impact in demand.

High debt levels are one of the factors depressing American demand right now.

Look at what you said like this.

There is a family who is poor who is deciding on a tank of gas or dinner for the night. Say you give that family $50. Did you pay for the dinner, the gas, or both?

If you gave students money, are you paying off their debt, their dinner or both. Are you giving the banks your money, the restaurant, or both?

 

[BoberFett]

The united states is where we live. Its up to us to make it a better place. Im glad some of you have been so open though. Its good to know the other side literally doesnt care about other people in their country.

Holy crap you are dense.

You don't care about the rest of the planet, only the US because... you live in the US but you don't live on the planet?

You say the US matters, but not the rest of the world.

Someone else says their state matters, not the US or the rest of their world.

Yet another person says only their city matters, not the state or the country or the world.

Why not just the neighborhoood?

Or maybe just my house?

You seem to believe that you have chosen the correct level of philanthropy. Why? What makes the particular imaginary border of prosperity that you've drawn better than someone else's?

And I dont understand why you having more money then your neighbor is in your interest? Why would it matter?

Because in a world of scarcity, it allows me greater ability to acquire what I want. Are you new at this whole "money" thing?

Who wins an auction? The person that bids the most money? Or the person who's most deserving?

You realize that EVERY transaction is part of the great auction known as an economy, right?

 

[JSt0rm]

I cant read what you write anymore. You are too high strung and stressed out.

 

[BoberFett]

I cant read what you write anymore. You are too high strung and stressed out.

That's right, wimp out.

 

[JSt0rm]

That's right, wimp out.

I didnt realize this was a sport or some weird testosterone driven activity to you.

 

[BoberFett]

I didnt realize this was a sport or some weird testosterone driven activity to you.

 

[JSt0rm]

boberfett (artistic rendition)

 

[BoberFett]

Looking in Moonbeam's mirror again, eh?