Yippee!! Our wages aren't keeping up with inflation!

[Dissipate]

Originally posted by: 3chordcharlie

'Wouldn't happen'.

IT HAS HAPPENED.

How could it happen when your ability to pay back the loan is not damaged in the least? In fact, in a deflationary economy your ability to pay back a loan is even better because the cost of neccesities decreases.

So let's see:

Income stays the same. Check.

Goods cost less. Check.

Debt is the same in terms of $$ amount. Check.

Ability to pay back loan? Even easier!

 

[3chordcharlie]

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

'Wouldn't happen'.

IT HAS HAPPENED.

How could it happen when your ability to pay back the loan is not damaged in the least? In fact, in a deflationary economy your ability to pay back a loan is even better because the cost of neccesities decreases.

So let's see:

Income stays the same. Check.

Goods cost less. Check.

Debt is the same in terms of $$ amount. Check.

Ability to pay back loan? Even easier!

Income doesn't stay the same if deflation is due to a contraction of the money supply (or more accurately, a contraction of the per capita money supply). If it did, it would be the result of some sort of 'sticky wages' and would result in business losses and bankruptcies due to employees refusing to accept a nominal wage decrease. Besides the 'real' factors that I've already re-explained to you here for the thousandth time, there's psychology; a 2% wage increase with 3% inflation still 'sounds' like a wage increase. a 2% wage decrease with 3% inflation is going to be less popular, even though it amounts to a ~1% real wage increase, and the other case is a similar wage decrease.

You could at least try understanding the things you want to talk about before you start telling stories.

By the way, income doesn't stay the same under inflation, either.

 

[Dissipate]

Originally posted by: 3chordcharlie

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

'Wouldn't happen'.

IT HAS HAPPENED.

How could it happen when your ability to pay back the loan is not damaged in the least? In fact, in a deflationary economy your ability to pay back a loan is even better because the cost of neccesities decreases.

So let's see:

Income stays the same. Check.

Goods cost less. Check.

Debt is the same in terms of $$ amount. Check.

Ability to pay back loan? Even easier!

Income doesn't stay the same if deflation is due to a contraction of the money supply (or more accurately, a contraction of the per capita money supply). If it did, it would be the result of some sort of 'sticky wages' and would result in business losses and bankruptcies due to employees refusing to accept a nominal wage decrease. Besides the 'real' factors that I've already re-explained to you here for the thousandth time, there's psychology; a 2% wage increase with 3% inflation still 'sounds' like a wage increase. a 2% wage decrease with 3% inflation is going to be less popular, even though it amounts to a ~1% real wage increase, and the other case is a similar wage decrease.

You could at least try understanding the things you want to talk about before you start telling stories.

By the way, income doesn't stay the same under inflation, either.

I'm not talking about contraction of the money supply. I'm talking about the money supply remaining the same, or increasing relatively slowly under a gold standard (due to mining operations).

 

[3chordcharlie]

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

'Wouldn't happen'.

IT HAS HAPPENED.

How could it happen when your ability to pay back the loan is not damaged in the least? In fact, in a deflationary economy your ability to pay back a loan is even better because the cost of neccesities decreases.

So let's see:

Income stays the same. Check.

Goods cost less. Check.

Debt is the same in terms of $$ amount. Check.

Ability to pay back loan? Even easier!

Income doesn't stay the same if deflation is due to a contraction of the money supply (or more accurately, a contraction of the per capita money supply). If it did, it would be the result of some sort of 'sticky wages' and would result in business losses and bankruptcies due to employees refusing to accept a nominal wage decrease. Besides the 'real' factors that I've already re-explained to you here for the thousandth time, there's psychology; a 2% wage increase with 3% inflation still 'sounds' like a wage increase. a 2% wage decrease with 3% inflation is going to be less popular, even though it amounts to a ~1% real wage increase, and the other case is a similar wage decrease.

You could at least try understanding the things you want to talk about before you start telling stories.

By the way, income doesn't stay the same under inflation, either.

I'm not talking about contraction of the money supply. I'm talking about the money supply remaining the same, or increasing relatively slowly under a gold standard (due to mining operations).

Either the money supply per capita is decreasing (deflation) or it isn't (not deflation).

The money supply increases relatively slowly as it is - we've been through the gold standard thing before and it's even more artificial than your belief in a world where the only right is to property.

 

[Dissipate]

Originally posted by: 3chordcharlie

Either the money supply per capita is decreasing (deflation) or it isn't (not deflation).

Population increase would be negligible and would be offset by gold mining operations.

The money supply increases relatively slowly as it is - we've been through the gold standard thing before and it's even more artificial than your belief in a world where the only right is to property.

The money supply increases relatively slowly as it is?! Bullshit. The Fed and the banks have consistenty increased the money supply outstripping productivity by an average of 3% a year for decades. That isn't relatively slow money supply increase, that's hand over fist theft. Billions for bankers, debt and risk for everyone else.

I claim no such right. But I do think that we as human beings with the capacity for rational thought ought to use that capacity. Acquiescing to a hierarchical political oligarchy is not rational in the least.

Let's not forget your 'check' on political power is simply moving away. This is nothing more than saying that the check on gangster thugs collecting 'protection' money from small businesses is to move away.

Gangster to small business owner:

"Pay us or we won't be able to protect you from us.

Political class to citizen:

"Pay us or we won't be able to protect you from us."

State government to citizen:

"Pay us your property taxes or move out of our state."

Federal government to citizen:

"Pay us your income taxes or move out of our country and renounce your citizenship."

Yeah, great checks on political power. :roll:

 

[3chordcharlie]

Originally posted by: Dissipate

Originally posted by: 3chordcharlie

Either the money supply per capita is decreasing (deflation) or it isn't (not deflation).

Population increase would be negligible and would be offset by gold mining operations.

The money supply increases relatively slowly as it is - we've been through the gold standard thing before and it's even more artificial than your belief in a world where the only right is to property.

The money supply increases relatively slowly as it is?! Bullshit. The Fed and the banks have consistenty increased the money supply outstripping productivity by an average of 3% a year for decades. That isn't relatively slow money supply increase, that's hand over fist theft. Billions for bankers, debt and risk for everyone else.

I claim no such right. But I do think that we as human beings with the capacity for rational thought ought to use that capacity. Acquiescing to a hierarchical political oligarchy is not rational in the least.

Let's not forget your 'check' on political power is simply moving away. This is nothing more than saying that the check on gangster thugs collecting 'protection' money from small businesses is to move away.

Gangster to small business owner:

"Pay us or we won't be able to protect you from us.

Political class to citizen:

"Pay us or we won't be able to protect you from us."

State government to citizen:

"Pay us your property taxes or move out of our state."

Federal government to citizen:

"Pay us your income taxes or move out of our country and renounce your citizenship."

Yeah, great checks on political power. :roll:

You've just claimed that mining will offset population.. which is of course complete random BS.

More importantly, you still have no idea what deflation actually is. Try coming back when you do.

 

[Stunt]

I decided to respond to this thread as it was brought to my attention yesterday. I have since researched a little and thought I'd give my 2 cents in hopes to bring you two to some consensus.

What 3chord explains is indeed correct; deflation has tended to be a bad situation in the past in today's monetary authorities. Deflation either through over supply of money or through lack of business confidence in the past has shown to magnify debt burden, reduced wages and ultimately lowered unemployment. In today's marketplace a small inflation rate is far more favourable compared to deflation as citizens are not burdened with lower wages, and significant effects on debt (very important these days as people use their home equity for investments and leverage).

While 3chord's views are straight up well known economic principles and carry historical merritt; Dissipates views do carry some weight as they are somewhat popular views, just untested. Under a specie backed currency market (ie. based on gold), deflation can be the norm if population and productivity accelerate faster than stock of the specie. These lower prices have been argued as helpful as the fixed currency would be directed to other areas of the economy, increasing total output. While this is a reasonable assumption in a fixed currency market, deflation in the past has shown to decrease investment as holding money becomes a more attractive/low-risk option.

And the fight of practical vs. theoretical battles on!

 

[3chordcharlie]

Originally posted by: Stunt
I decided to respond to this thread as it was brought to my attention yesterday. I have since researched a little and thought I'd give my 2 cents in hopes to bring you two to some consensus.

What 3chord explains is indeed correct; deflation has tended to be a bad situation in the past in today's monetary authorities. Deflation either through over supply of money or through lack of business confidence in the past has shown to magnify debt burden, reduced wages and ultimately lowered unemployment. In today's marketplace a small inflation rate is far more favourable compared to deflation as citizens are not burdened with lower wages, and significant effects on debt (very important these days as people use their home equity for investments and leverage).

While 3chord's views are straight up well known economic principles and carry historical merritt; Dissipates views do carry some weight as they are somewhat popular views, just untested. Under a specie backed currency market (ie. based on gold), deflation can be the norm if population and productivity accelerate faster than stock of the specie. These lower prices have been argued as helpful as the fixed currency would be directed to other areas of the economy, increasing total output. While this is a reasonable assumption in a fixed currency market, deflation in the past has shown to decrease investment as holding money becomes a more attractive/low-risk option.

And the fight of practical vs. theoretical battles on!

Untested?

How are Dissipate's ideas here untested?

 

[Stunt]

Originally posted by: 3chordcharlie

Originally posted by: Stunt
I decided to respond to this thread as it was brought to my attention yesterday. I have since researched a little and thought I'd give my 2 cents in hopes to bring you two to some consensus.

What 3chord explains is indeed correct; deflation has tended to be a bad situation in the past in today's monetary authorities. Deflation either through over supply of money or through lack of business confidence in the past has shown to magnify debt burden, reduced wages and ultimately lowered unemployment. In today's marketplace a small inflation rate is far more favourable compared to deflation as citizens are not burdened with lower wages, and significant effects on debt (very important these days as people use their home equity for investments and leverage).

While 3chord's views are straight up well known economic principles and carry historical merritt; Dissipates views do carry some weight as they are somewhat popular views, just untested. Under a specie backed currency market (ie. based on gold), deflation can be the norm if population and productivity accelerate faster than stock of the specie. These lower prices have been argued as helpful as the fixed currency would be directed to other areas of the economy, increasing total output. While this is a reasonable assumption in a fixed currency market, deflation in the past has shown to decrease investment as holding money becomes a more attractive/low-risk option.

And the fight of practical vs. theoretical battles on!

Untested?

How are Dissipate's ideas here untested?

Meaning, what he advocates has never been tested...ie. a specie backed currency; where deflation can be totally unrelated to an increasing money supply (as in the past).

Edit: interesting article

 

[3chordcharlie]

Originally posted by: Stunt

Originally posted by: 3chordcharlie

Originally posted by: Stunt
I decided to respond to this thread as it was brought to my attention yesterday. I have since researched a little and thought I'd give my 2 cents in hopes to bring you two to some consensus.

What 3chord explains is indeed correct; deflation has tended to be a bad situation in the past in today's monetary authorities. Deflation either through over supply of money or through lack of business confidence in the past has shown to magnify debt burden, reduced wages and ultimately lowered unemployment. In today's marketplace a small inflation rate is far more favourable compared to deflation as citizens are not burdened with lower wages, and significant effects on debt (very important these days as people use their home equity for investments and leverage).

While 3chord's views are straight up well known economic principles and carry historical merritt; Dissipates views do carry some weight as they are somewhat popular views, just untested. Under a specie backed currency market (ie. based on gold), deflation can be the norm if population and productivity accelerate faster than stock of the specie. These lower prices have been argued as helpful as the fixed currency would be directed to other areas of the economy, increasing total output. While this is a reasonable assumption in a fixed currency market, deflation in the past has shown to decrease investment as holding money becomes a more attractive/low-risk option.

And the fight of practical vs. theoretical battles on!

Untested?

How are Dissipate's ideas here untested?

Meaning, what he advocates has never been tested...ie. a specie backed currency; where deflation can be totally unrelated to an increasing money supply (as in the past).

Edit: interesting article

Um... currency has been backed by gold for most of history. It is modern pure fiat currnecy which is the 'invention'.

And deflation did occur in the US under the gold standard; people went broke because of the appreciating value of their nominal debt, as the real dollars became more valuable.

The only thing that saved some of those people was the inflation created by one of the great gold rushes.

The idea is not 'untested' and we have already proven that we can do better.