Q: How do we pay off the National Debt? A: We inflate it away! (rates, laws)

[Mircea]

Originally Posted by Hoonose

Our debt shall always grow,....

So long as entities are willing to buy it.

Originally Posted by Hoonose

The US Gov't competes with no one.

Yes, it does compete, and competition will get stronger.

Originally Posted by Hoonose

The Fed/Treasury sets the rates, not the markets.

When there is sufficient competition, the Federal Reserve will not be able to do that. It will be stuck with what rates the Market says.

Originally Posted by Hoonose

We can bring back more employment by returning general industry to the USA. But with that we would also bring back more general inflation. Tariffs do the same.

No, it would not. Learn the meaning of "global."

Originally Posted by Hoonose

A major driver of our housing boom was based in the potential equity expectations of the buyers. Not nearly so many folks would buy, sell and flip housing if they knew their equity would continue to decline. So the whole housing and oh so numerous industries would relatively decline moving forward. Not good.

Housing balloon, not boom.

Booms are naturally occurring. Your housing market is artificially driven by Interest Inflation caused by government policies, with help from the Federal Reserve.

If your economy thrives on flipping houses, then you don't have an economy.

What is flipping?

That's speculation, and speculation is what happens when you have excess credit.....like you do in the housing market due to government policies and the Federal Reserve.

Same thing with college tuition.....excess credit leads to speculation....in this instance people speculating that obtaining a degree will pay off.

Originally Posted by Hoonose

A nation doesn't hyperinflate from simple money creation without some other serious concurrent destructive process.

In a closed system it does.

Originally Posted by Hoonose

Recessions = low DOW.

Wrong.

1925 Recession = DJIA setting records.

1928 Recession = DJIA setting records.

1937 Recession = DJIA jumping 100+ points (92 to 194)

1938-1942 DJIA collapses during the greatest growth on record when GDP averaged +12.5% per quarter.

DJIA breaks records during the 3rd and final Eisentryant recession (which lapped over into the first year of the Kennedy Administration).

DJIA breaks records during the Nixon recession.

Originally Posted by Hoonose

We're not going to see a record high Dow during a general recession. But we certainly might see a strengthening DOW towards the end of one.

History proves you wrong.

I forgot....the DJIA jumped 500+ points to set a new record high during the Reagan recession.

Originally Posted by Hoonose

But we can't have a DOW at or near record heights in a Depression. So there has to be some correlation there. The stock markets reflect a part, but one major part of our overall economy.

Still wrong.

Go to school....study economics.....look at the DJIA during recessions.

Then......look at the DJIA during growth periods......because the DJIA often collapsed.

As a point of fact, prior to the Plunge Protection Team and global stocks, the DJIA setting records indicated a recession was looming, and then the collapse of the DJIA signaled the end of the recession.

Originally Posted by petch751

Excellent post but it's probably way above a lot of people's heads.

The entire thread premise is a major fail.

Originally Posted by Little-Acorn

They keep inflation at a level where people won't complain too much, but which keep siphoning wealth into government coffers. In other words, they can keep "borrowing" while knowing that, thanks to inflation, they will eventually have to pay back only 1/10 of what they "borrowed". If they play their cards right, they can go on soaking their populaces indefinitely, without even having to answer for what they've done.

The only thing they have to worry about, is zero-inflation or deflation. And you've seen in this thread, how the leftists scream bloody murder over the slightest suggestions of them.

Um, Real Deflation is what erases debt, but don't let reality intrude upon your fantasies.

Are you sure you don't want to release details about how the Federal Reserve controls the weather globally?

Originally Posted by Finn_Jarber

I said what you just quoted me saying, that increasing money supply should increase inflation.

In a closed system.

Originally Posted by Finn_Jarber

I Earlier I said inflation is currently low, which is a fact, so currently the money which is being added is not feeding inflation. Both claims are true.

1. Increase in money supply feeds inflation
2. Current increase in money supply has not triggered significant inflation

The US is not a closed system.

The fact that US Dollars are used as reserve currencies is proof it is not a closed system.

Originally Posted by Finn_Jarber

Facts are facts. Anyone can always argue there is huge inflation even when the inflation rate is 1%. You could have said the same thing in 1986 when the rate was 1.5%, but what good does it do? You keep talking about gasoline priced which just keep going up, but they don't keep going up. They have been steady the past four years.

Wrong.

The week of January 4, 2010 for all formulations and all grades of gasoline, the average retail price was...

...$2.718/gallon.

January 6, 2014 for all formulations and all grades, the average retail price was....

...$3.411/gallon.

Is it your claim that $2.718 equals $3.411? I don't know which one of JRR Tolkien's worlds you live in, but in this world, that is a 25.49% increase.

That is not the fault of the Federal Reserve, because it is not due to Real Inflation. The price increases are due to Cost-push Inflation and Demand-pull Inflation.

Government -- but not the Federal Reserve -- is responsible for Cost-push Inflation....but then you are the government....

....so it's your fault.

Demand-pull Inflation is your fault, too.

Originally Posted by InformedConsent

Then why do we have to pay interest on it. Interest on the National Debt takes a greater percentage of the Federal Budget every year.

Interest on debt to nearly quadruple over decade - CBO - Feb. 4, 2014

The reason you pay interest is because it is a loan...and no one would loan the US money if the US did not pay interest.

Interestingly....

Mircea

[greywar]

Wow...I've disagreed with Mircea and got into what I'd call a shoving matchs-some I feel I won by being right, others....I also won by learning something...but that...that was a painful smackdown from Mircea.

That being said...

Real deflation erases debt....

whose debt specifically? Cause I'm not sure I am thinking of deflation the same way you are Mircea. Can you clarify?

[Mircea]

Originally Posted by emcee squared

This thread is hilarious. I'm no economist, and I'm glad some on this thread aren't either.

The scary thing is they get to vote.

Originally Posted by emcee squared

Economics trumps political ideology.

Indeed, it does. Economics is apolitical and amoral.

Originally Posted by Loveshiscountry

No it's not. The purchasing price of the dollar increases.
If expenses go down faster than whats brought in then the company makes more money.
We're not talking about less profit. Be it wages or net profit. We have more left over at the end of the day, 1 dollar more.

When the cost of wide screens came down did tv makers contract? And demand factors in. Sell 1 tv and make 100 or sell 2 tvs and make 60 on each?

Well they ain't too bright.

These morons are too stupid to understand that there are different causes of Inflation.

Real Inflation (and Real Deflation) are caused by changes in money supply. The central bank controls that, but you don't have any Real Inflation to speak of.

If we use EIA data for gasoline prices:

Week of January 4, 2010 (all formulations/grades) = $2.718/gallon.
Week of January 6, 2014 (all formulations/grades) = $3.411/gallon.

The average price of gasoline has "inflated" by 25.49%.

The OP and many others would have you believe that is due to some conspiracy by bankers and the Federal Reserve.

That is not Real Inflation. Have wages increased 25.49%?

No.....and that is proof there is no Real Inflation and that the Federal Reserve is in no way responsible. Have the prices of "everything" increased 25.49%?

No....and again that is proof there is no Real Inflation and that the Federal Reserve is in no way responsible.

See, with Real Inflation, everything increase in price at a uniform rate....your wages would increase 25.49%, housing 25.49%, rent 25.49%, salt 25.49%, pepper 25.49%, fast-food 25.49%, cars 25.49%, all insurance of all kinds 25.49%, all utilities of all kinds 25.49%, all food, all cosmetics, all clothing....everything increases 25.49%.

There is nothing for sale in the US that would not increase 25.49%.

And why?

Because Real Inflation is caused by changes in the money supply, which then causes the money to be worth less, and prices are increased to offset the lower value of the currency.

Understand the goods and services aren't worth more, rather the currency is worth less.

When you increase the money supply to a point where the value of the currency declines 10%, then prices and wages rise 10%; if it declines 25%, then prices and wages rise 25%; if 100%, then prices and wages rise 100%.

There's a lag-time with wages, due to data collection and reporting, which happens to be quarterly and it usually takes two consecutive quarters before employers respond with appropriate wage increases.

A currency backed by any specie -- like gold -- is very sensitive to changes in the money supply. That's why those who advocate going back on the Gold Standard are clueless, and why they'd be on their hands and knees begging to dump the Gold Standard after 30 seconds.


If the Federal Reserve is not causing gasoline prices to inflate, then what is?

Demand-pull Inflation, plus Cost-push Inflation.

You had 49 operating refineries with only 17 producing gasoline. Three have been closed (in 2012 I think) leaving you with 46 operating refineries and only 16 producing gasoline.

Has demand decreased? No. So your static supply of gasoline has decreased while demand is constant or increasing and that causes gasoline prices to rise.

On top of that, not all of the 16 refineries producing gasoline produce it for domestic consumption.

It's cheaper to take crappy tar sands or fracked oil with its high Sulfur content and refine it into high Sulfur gasoline for export.

What about Americans?

Who cares?

$1 profit is $1 profit and 6.6 Billion People is $6.6 Billion which a helluva lot more than 317 Million Americans and $317 Million.

And then Cost-push Inflation due to government regulations. It was government regulations that led to the shut down of 3 refineries. And then you have EPA Tier 3 requiring gasoline to be at 15 ppm Sulfur.

The time and expense required to reduce the Sulfur that low, results in lower production, which results in lower supply, which against constant or increasing demand, results in higher prices.

And the E85 Standard. The price of corn skyrockets due to E85, and then skyrockets more due to drought, and so the price of ethanol increases causing the price of gasoline to increase.

Deflation occurs when the excess money is removed from the Market, if not by the central bank or government, then through Market forces.

The central bank can also reduce the money supply, resulting in too few dollars chasing too many goods and prices drop accordingly: Real Deflation. And yes, wages will decrease if the Real Deflation is persistent....meaning it would have to be in effect for more than a year.

Originally Posted by Goinback2011

Runaway inflation is another term for hyperinflation.

Just say you don't know.

I like it, but don't expect much from that one.

Originally Posted by greywar

Go read above. This is a different question.

The "runaway" inflatino was cause by MASSIVE WW I debts that could not be inflated away since they were in foreign currency, added together the three war bond reparations were 260% of Germanys GDP. (arguably 100% if you ignore the C bonds that were more of a negotiation point.....)

What kind of gobbledy-**** gibberish nonsense is that?

"Runaway" Inflation was caused by the German government printing money 24/7.

Um, genius, since the Wiemar Republic cannot print French Francs or Pound Stirling, how do you think the Germans obtained those currencies?

Um, the Germans bought Francs and Pounds.....and they printed money to do that.

Originally Posted by greywar

You have ZERO idea of what caused Germany's hyper inflation do you? You're just parroting back what someone said.

And what are you doing? Parroting something from pukipedia that you don't even understand.

Originally Posted by Goinback2011

Wow, you're a Wikipedia genius.

Quiz: how did the money printing feed back into the real economy in Germany?

Hyper-Real Inflation.

Originally Posted by greywar

Doubtful at best given your comments and lack of knowledge. I could quibble about parts of the Wikipedia but its relatively accurate.

"Relatively accurate?"

Gosh, I feel so much better now. The time you waste on Pukipedia you could get scholarly articles on the subject that are more than "relatively accurate" (of course you'd have to be able to read them).

Originally Posted by greywar

LOL, ahh yes. When facts fail apparently out and out lies work?

Jan 1, 1960 1.03% Jan 1, 1959 1.40% Jan 1, 1958 3.62% Jan 1, 1957 2.99% Jan 1, 1956 0.37% Jan 1, 1955 -0.74% Jan 1, 1954 1.13% Jan 1, 1953 0.38% Jan 1, 1952 4.33% Jan 1, 1951 8.09% Jan 1, 1950 -2.08%
Thats "no real inflation". (Average of 1.86% per year)

You don't even know what Real Inflation is.

Prove it wasn't caused by Supply & Demand issues (hint: it was).

Originally Posted by greywar

Really? Who here actually believes that?

People who are lucid and sane.

The Market sets interest rates. If the Market sets rates at 12% for promissory notes in the $100,000 to $500,000 range, then you can scream and demand 20% interest all you want, but you won't get it.

Originally Posted by greywar

What if I say "loan me 100K at 1% interest?" Would you do it? Of course not!

There's something called "the Market" and it sets interest rates......you still haven't quite been able to wrap your brain around that.

Originally Posted by greywar

What if I said "loan me 100K at 12% interest" and we knew for a FACT that inflation was going to hit 20%?

So you're claiming that you're the Amazing Kreskin?

Originally Posted by greywar

I think I and most others reading this would disagree....

Only if they are other insects.

Originally Posted by greywar

Really? Sooo...that 2% cost of living raise that was on top of my last performance raise that increased my month to month income didn't happen?

That is....

Anecdotal Evidence

This is fallacious generalizing on the basis of a some story [sic] that provides an inadequate sample.

Did everyone in the US get a 2% "cost of living raise?"

Small Sample

This is the fallacy of using too small a sample. If the sample is too small to provide a representative sample of the population, and if we have the background information to know that there is this problem with sample size, yet we still accept the generalization upon the sample results, then we use the fallacy.

Originally Posted by greywar

Ahhh and then name calling. Stay classy Mircea!

That wasn't a denial....and then you employed even more fallacies....you earned your nickname.

Hilariously...

Mircea

[greywar]

LOL, knew Mircea would get back around to arguing with me

Mircea the Weimar republic debt issues arose because their debts were in foreign currencies. This wasnt a debt like US bonds for example that can be inflated away slowly and over time. the runaway inflation part is because the inflation of printing the money meant that to make the war repayments they had to inflate it even further each time they made a payment.

I stated that the wikipedia article was relatively accurate because there are parts you could quibble about depending upon your viewpoint. I HAVE in fact read scholarly papers on this. If you had actually read the earlier conversations you would realize this.

Then you proceed to respond to a lot of my comments with....nonsense. Really?

You do a great takedown of someone, then you proceed to start gibbering. Come on Mircea, at least take some time to provide me with a rational response, not this.

[CDusr]

Originally Posted by pknopp

I've noted it's far more complicated than argued here. My participation started when it was noted that deflation would destroy us. As has been shown by most, no it wouldn't.




How much of the difference is because the government is subsidizing the rents and are those with the government subsidized rents actually any better off than those in 1960? Especially considering in 1960 there were no cable, internet, cell phone etc, bills.

My comment on complexity wasn't aimed at you specifically, just in general. I find many look at the variables in our economic situation too simplistically and absolutely. It has far more dimensions and complexities to it than many seem to be perceiving. NM the blatant obfuscation and opacity.

Govt is subsidized by people. It offers services in exchange for revenue and returns. Both banks and govt have no value at all without people.

So-called rent subsidies don't seem to really help renters much. If one looks at affordable housing it is really part of redevelopment and offers more money on the backend to the same players. It's no coincidence when all these arrangements occurred and one can see the fattening of the resulting funds, as well.

Meet Wall Street. Your New Landlord

Money Laundering Exposed As A Key Component Of The Housing Bubble's "All Cash" Bid

The True Size of the Shadow Banking System Revealed

I don't think for the most part people are better off. Costs are higher all around and the job market is nowhere near the same. Rents/Mtgs etc... have become much more volatile, like other debt due to the gambling casino, on the backend.

Someone paying a mtg in 1960 is in a very different environ than someone of today. The giant casino is the biggest factor in all of this and the "house always wins" has been more than applicable in all of this.

[Loveshiscountry]

Originally Posted by Opin_Yunated

Any comparison between a government balance sheet and personal finances is irrelevant. Government finances are double-entry bookkeeping.

Because government doesn't have to live within their means?

[Loveshiscountry]

Originally Posted by greywar

Why exactly do you believe that someone could refinance their mortgage? AND that it would make a huge difference,

Because after paying it down you'll finance less and hence have smaller payments.

Originally Posted by greywar

in fact with deflation you are FAR less able to refinance your mortgage, as you are far more likely to be underwater.

How so? If one put down 3 percent and within the first few years then yes. Which was hardly ever done until the housing bubble.
But that's not because of deflation.

Originally Posted by greywar

You're just making up numbers to use in the hope that you can make your idea workable. Its not.

That's what you did. And yes it is workable.

[Loveshiscountry]

Originally Posted by Mircea

Because Real Inflation is caused by changes in the money supply, which then causes the money to be worth less, and prices are increased to offset the lower value of the currency.

And the first ones to get their mitts on it, the banks are hurt the least. The last ones to get it, we the people, are hurt the most.

Originally Posted by Mircea

That is not Real Inflation. Have wages increased 25.49%?

No.....and that is proof there is no Real Inflation and that the Federal Reserve is in no way responsible. Have the prices of "everything" increased 25.49%?

No....and again that is proof there is no Real Inflation and that the Federal Reserve is in no way responsible.

See, with Real Inflation, everything increase in price at a uniform rate....your wages would increase 25.49%, housing 25.49%, rent 25.49%, salt 25.49%, pepper 25.49%, fast-food 25.49%, cars 25.49%, all insurance of all kinds 25.49%, all utilities of all kinds 25.49%, all food, all cosmetics, all clothing....everything increases 25.49%.

There is nothing for sale in the US that would not increase 25.49%.

Hilariously...

Mircea

compared to the year 2000 it really hits hard

Living Expense Jan-00 Mar-14 % Increase
Gallon of gas $1.27 $3.51 176.40%
Barrel of oil $24.11 $100.00 314.80%
Fuel oil per gallon $1.19 $4.07 242.00%
Electricity per Kwh $0.08 $0.13 59.50%
Gas per therm $0.71 $1.08 51.40%
Dozen eggs $0.97 $2.00 106.20%
Coffee per lb $3.40 $5.20 52.90%
Ground Beef per lb. $1.90 $3.73 96.30%
Postage stamp $0.33 $0.49 48.50%
Movie ticket $5.25 $10.25 95.20%
New car $20,300 $31,500 55.20%
Annual healthcare spending per capita $4,550 $9,300 104.40%
Avg private college tuition $22,000 $37,000 68.20%
Avg home price (Case Shiller) $161,000 $242,000 50.30%
Avg monthly rent (Case Shiller) $635 $890 40.20%
Ounce of gold $279 $1,334 378.10%


THE FOURTEEN YEAR RECESSION « The Burning Platform

[pknopp]

Originally Posted by CDusr

My comment on complexity wasn't aimed at you specifically, just in general. I find many look at the variables in our economic situation too simplistically and absolutely. It has far more dimensions and complexities to it than many seem to be perceiving. NM the blatant obfuscation and opacity.

Sure. Unfortunately too many only care about what they think will be good for them today and not worry about the ramifications of those actions long term also.

Someone paying a mtg in 1960 is in a very different environ than someone of today. The giant casino is the biggest factor in all of this and the "house always wins" has been more than applicable in all of this.

As an abstract idea I agree.

[greywar]

Originally Posted by Loveshiscountry

Because after paying it down you'll finance less and hence have smaller payments.

How so? If one put down 3 percent and within the first few years then yes. Which was hardly ever done until the housing bubble.
But that's not because of deflation.

That's what you did. And yes it is workable.

OK my example in many ways is fairly typical of a large number of homeowners.

I have a mortgage. year after year my payments for it wont vary as I have a fixed rate mortgage. I bought at the low end of the mortgage rates. I am depending on inflation to make the effective rate of payment to go down over time, especially as I get older and my income stops accelerating.

Your argument is that I would make LESS, and be stuck paying the same on my mortgage....and somehow I'd be OK? This is so unworkable its insane. This is like a guy jumping off a 900 foot cliff, and as hes getting closer and closer to the ground muttering to himself "This is workable"

No its not. Your idea isnt remotely workable, even thinking its workable means you're hearing someone else say it and taking it as gospel.

Ask Japan how well deflation works for them. You know, the country that in the 80's was going to clean our clocks? You remember them right?