The US has a Centrally Planned Economy now that the Soviets would have been jealous of.

[NJ Brazen_3133]

Originally Posted by Hoonose

Our debt paper is not created on a whim, but through legislation.

But the Legislation just plans on paying back/honoring that debt by simply printing out more money. The method of obtaining the funds cannot be through taxation. No way Legislators can get enough taxes out of the citizen to pay out those amounts. So how is not the same as just "injecting"?

[Hoonose]

Originally Posted by NJ Brazen_3133

But the Legislation just plans on paying back/honoring that debt by simply printing out more money. It cannot be through taxation. No way Legislators can get enough taxes out of the citizen to pay out those amounts. So how is not the same as just "injecting"?

Oh it can be injecting money. Only not through the Fed.

After the 2008 crash the Fed created new money out of thin air, and then swapped it for a like amount of banks debt paper. So very little was actually injected into the economy at the start. Over time some of these excess reserves were eventually loaned out. So that could be considered injection.

The Federal Gov't can create money through legislation, essentially deficit spending.

[Mircea]

Originally Posted by C2BP

What a joke our country has become.

Actually, I thought you were the joke.

Originally Posted by C2BP

Our Fed just keeps lying to us. No real economic growth for 18 years now, just stealing money from the future and creating economic cancers = bubbles.

How did you come to that conclusion?

The Federal Reserve is not involved in GDP calculations. GDP is calculated and published by the Bureau of Economic Analysis.

How can you post on an Economics Forum and not know that?

In spite of you baseless claim, the US has had economic growth for the last 18 years and you cannot prove otherwise.

Originally Posted by C2BP

FEAR OF DEFLATION has done this to us. Sure no one likes a depression.

What does depression have to do with anything?

Do you even know what you're talking about?

Do you understand the relationship between Inflation/Deflation and the Gold Standard? Or the relationship between war and Inflation/Deflation?

I don't think you do.

The US was in a deflationary period, right up the minute the Gold rushes in California and Australia started. Then, you were in a period of Inflation right up the end of the Civil War. You had rampant Monetary Inflation during the Civil War because you did not have a central bank like the Federal Reserve and because war creates shortages you had rampant Demand-pull Inflation.

I would explain the difference between Monetary Inflation and Demand-pull Inflation in detail, but you wouldn't understand.

Once the Civil War ends, the shortages of goods ends, and there were shortages of damn near everything, and the government isn't spending heaps of money, so prices start declining slowly, about 2% per year for the next 20 years or so, right up to the Gold rush in Alaska and South Africa.

Then you have Inflation and then a whole lot of Inflation with WW I.

Yeah, the war-thing. War causes scarcity and shortages, and then you have another issue: communications. The world is mostly wired for telegraph, and that allows people to do something they couldn't do on a mass scale before, and that is speculate, which drives up prices even higher.

Later, you have the Great Depression and a deflationary period of about 4 years.

The stock market crash did not cause the Great Depression, but the failure of the Federal Reserve to act promptly to support failing banks did.

You can read A Monetary History of the United States by Anna Schwartz and Milton Friedman. If you don't like that, you can read Could Stable Money Have Averted the Great Contraction? (Economic Inquiry, July, pp 484-505, 1995 by Michael Bordo, Ehsan Choudhri and Anna Schwartz), and if you don't like that, you can read Was Expansionary Monetary Policy Feasible During the Great Contraction: an Examination of the Gold Standard Constant (Explorations in Economic History, January, pp 1-28, 2002 by Michael Bordo), and if you don't like that you can read The Great Depression and the Friedman and Schwartz Hypothesis (Journal of Money, Credit and Banking, 2003 by Lawrence Christiano, Roberto Motto and Massimo Rostagno), and if you don't like that you can read Was the Federal Reserve Fettered? Devaluation Expectations in the 1932 Monetary Expansion (NBER Working Paper, no 8113, February 2001 by Christina Romer and Chang-Tai Hsieh).

In case you're wondering, the US did not leave the Gold Standard on a whim. The Great Contraction was global and in every country that quit the Gold Standard, their economic depression ended.

The UK was the first to quit in 1931. About two dozen countries followed suit, then the US in 1933, but some countries like France, Belgium and Switzerland continued until they finally saw the light and started quitting in 1935, at which time their depressions ended just as soon as they quit.

FDR's very bad policies caused the 1937-1938 Recession, which was actually more severe than the 1929-1933 problems, but the stock market did well, except as soon as the recession ended, the stock market collapsed in one of the worst crashes ever, losing 48% of its value for 3 years, ending in 1942. During that time, GDP was running about 12.5% quarter, mostly based on exporting war materiel to other countries and gearing up for war.

Then immediately following WW II, there was a major recession and deflationary period.

What you don't understand is that the central bank/Federal Reserve had nothing to do with Deflation.

Yes, there was Deflation in the post-Civil War Period, but that was prices dropping from highly inflated prices caused by shortages and scarcity, and government spending, back to their equilibrium price.

If something is $0.05 and inflates to $1.00 due to shortages, scarcity and the government borrowing from lots of banks instead of a central bank, and then starts dropping 2% year as things return to normal, that is not really Deflation.

Absent the war and other factors, the price would never have been $1.00 in the first place.

Same with the post-WW I Era. That's not Deflation, that's prices inflated due to scarcity and shortages returning to the price they always should have been.

In the 1929-1933 period you really did have Deflation, but it wasn't the Federal Reserve, it was production and demand issues.

The Western World is electrifying. You no longer have 12 guys operating a manual lathe using a foot-treadle. Now you have electric lathes and not only can 2 guys produce the same as 12 guys, they can produce more.

Now you have unemployed workers and more product than you can sell.

Manufacturing methods changed, too.

When radios were first introduced, they were made by hand. One worker assembled a radio by himself. With the introduction of the assembly-line method, you can assemble a helluva lot more radios with fewer workers.

That's more unemployed and more product than you can sell.

Then the Republican-controlled Congress enacts the largest tax increase in history at that time.

Not only did personal income taxes increase, but there were federal excise taxes on 1,000s of products, like chewing gum of all things.

So, growing unemployment leading to lower demand coupled with over-production increasing supply coupled with higher taxes is a disaster.

You can't unload your product and now you can't export it because of the trade tariffs enacted by the US and other countries.

That's just simple Supply & Demand with Supply far exceeding Demand.

Between 1970 and 1982 you had three recessions and rampant Demand-pull Inflation and Monetary Inflation together running 10+% per year. Once Volker reduced the money supply the Monetary Inflation ended and you did have a very, very mild deflationary period in the 1990s. It wasn't even 1%. Most people didn't even notice it.

Obviously, you didn't.

You know, it would help immensely if you actually learned something about Economics.

[Hoonose]

I thought the '70's inflation was more of a cost-push due to oil.

Please limit your answer to 140 words or less. lol

[pittsflyer]

Originally Posted by Mircea

Actually, I thought you were the joke.



How did you come to that conclusion?

The Federal Reserve is not involved in GDP calculations. GDP is calculated and published by the Bureau of Economic Analysis.

How can you post on an Economics Forum and not know that?

In spite of you baseless claim, the US has had economic growth for the last 18 years and you cannot prove otherwise.



What does depression have to do with anything?

Do you even know what you're talking about?

Do you understand the relationship between Inflation/Deflation and the Gold Standard? Or the relationship between war and Inflation/Deflation?

I don't think you do.

The US was in a deflationary period, right up the minute the Gold rushes in California and Australia started. Then, you were in a period of Inflation right up the end of the Civil War. You had rampant Monetary Inflation during the Civil War because you did not have a central bank like the Federal Reserve and because war creates shortages you had rampant Demand-pull Inflation.

I would explain the difference between Monetary Inflation and Demand-pull Inflation in detail, but you wouldn't understand.

Once the Civil War ends, the shortages of goods ends, and there were shortages of damn near everything, and the government isn't spending heaps of money, so prices start declining slowly, about 2% per year for the next 20 years or so, right up to the Gold rush in Alaska and South Africa.

Then you have Inflation and then a whole lot of Inflation with WW I.

Yeah, the war-thing. War causes scarcity and shortages, and then you have another issue: communications. The world is mostly wired for telegraph, and that allows people to do something they couldn't do on a mass scale before, and that is speculate, which drives up prices even higher.

Later, you have the Great Depression and a deflationary period of about 4 years.

The stock market crash did not cause the Great Depression, but the failure of the Federal Reserve to act promptly to support failing banks did.

You can read A Monetary History of the United States by Anna Schwartz and Milton Friedman. If you don't like that, you can read Could Stable Money Have Averted the Great Contraction? (Economic Inquiry, July, pp 484-505, 1995 by Michael Bordo, Ehsan Choudhri and Anna Schwartz), and if you don't like that, you can read Was Expansionary Monetary Policy Feasible During the Great Contraction: an Examination of the Gold Standard Constant (Explorations in Economic History, January, pp 1-28, 2002 by Michael Bordo), and if you don't like that you can read The Great Depression and the Friedman and Schwartz Hypothesis (Journal of Money, Credit and Banking, 2003 by Lawrence Christiano, Roberto Motto and Massimo Rostagno), and if you don't like that you can read Was the Federal Reserve Fettered? Devaluation Expectations in the 1932 Monetary Expansion (NBER Working Paper, no 8113, February 2001 by Christina Romer and Chang-Tai Hsieh).

In case you're wondering, the US did not leave the Gold Standard on a whim. The Great Contraction was global and in every country that quit the Gold Standard, their economic depression ended.

The UK was the first to quit in 1931. About two dozen countries followed suit, then the US in 1933, but some countries like France, Belgium and Switzerland continued until they finally saw the light and started quitting in 1935, at which time their depressions ended just as soon as they quit.

FDR's very bad policies caused the 1937-1938 Recession, which was actually more severe than the 1929-1933 problems, but the stock market did well, except as soon as the recession ended, the stock market collapsed in one of the worst crashes ever, losing 48% of its value for 3 years, ending in 1942. During that time, GDP was running about 12.5% quarter, mostly based on exporting war materiel to other countries and gearing up for war.

Then immediately following WW II, there was a major recession and deflationary period.

What you don't understand is that the central bank/Federal Reserve had nothing to do with Deflation.

Yes, there was Deflation in the post-Civil War Period, but that was prices dropping from highly inflated prices caused by shortages and scarcity, and government spending, back to their equilibrium price.

If something is $0.05 and inflates to $1.00 due to shortages, scarcity and the government borrowing from lots of banks instead of a central bank, and then starts dropping 2% year as things return to normal, that is not really Deflation.

Absent the war and other factors, the price would never have been $1.00 in the first place.

Same with the post-WW I Era. That's not Deflation, that's prices inflated due to scarcity and shortages returning to the price they always should have been.

In the 1929-1933 period you really did have Deflation, but it wasn't the Federal Reserve, it was production and demand issues.

The Western World is electrifying. You no longer have 12 guys operating a manual lathe using a foot-treadle. Now you have electric lathes and not only can 2 guys produce the same as 12 guys, they can produce more.

Now you have unemployed workers and more product than you can sell.

Manufacturing methods changed, too.

When radios were first introduced, they were made by hand. One worker assembled a radio by himself. With the introduction of the assembly-line method, you can assemble a helluva lot more radios with fewer workers.

That's more unemployed and more product than you can sell.

Then the Republican-controlled Congress enacts the largest tax increase in history at that time.

Not only did personal income taxes increase, but there were federal excise taxes on 1,000s of products, like chewing gum of all things.

So, growing unemployment leading to lower demand coupled with over-production increasing supply coupled with higher taxes is a disaster.

You can't unload your product and now you can't export it because of the trade tariffs enacted by the US and other countries.

That's just simple Supply & Demand with Supply far exceeding Demand.

Between 1970 and 1982 you had three recessions and rampant Demand-pull Inflation and Monetary Inflation together running 10+% per year. Once Volker reduced the money supply the Monetary Inflation ended and you did have a very, very mild deflationary period in the 1990s. It wasn't even 1%. Most people didn't even notice it.

Obviously, you didn't.

You know, it would help immensely if you actually learned something about Economics.

So when you can produce more with less and supply is greater than demand and tarrifs are in place (to protect Americans from companies off loading said goods at artificially high prices). Shouldn’t Americans get to enjoy reduced prices, especially since many lost good jobs and their buying power is greatly reduced?

Why should the few get to off load goods at high prices and cut out Americans without a cost, why should the American voters tolerate that?

[lieqiang]

Originally Posted by pittsflyer

especially since many lost good jobs and their buying power is greatly reduced?

See unemployment rate.
See real median weekly earnings.
See real disposable income.

You have a remarkable habit of basing arguments on faulty premise. Have some people lost jobs? Of course! Have some people had their buying power reduced? Sure! However you're acting as if the exception is the norm or the rule, and it isn't.

[pittsflyer]

Originally Posted by lieqiang

See unemployment rate.
See real median weekly earnings.
See real disposable income.

You have a remarkable habit of basing arguments on faulty premise. Have some people lost jobs? Of course! Have some people had their buying power reduced? Sure! However you're acting as if the exception is the norm or the rule, and it isn't.

Did you look on the dol site and see that 60% of working Americans make less than $20/hr

I bet if you calculated the real inflation rate (based on cost of education, housing etc) and adjusted to that inflation number you would see people’s buying power has been gutted big time. ONLY if you have a VERY good job can you do the nice single family home in a nice area with a reasonable commute and 2 cars with a 2 car garage thing. Those jobs have become more precarious due exactly to the reasons you cited.

You make it sound like 5 people in Missouri got laid off 4 years ago when in fact “right sizing” has become prolific and it almost always results in downward mobility.