Social Unrest?

No, inflation is good. Inflation is when more people have more money, and therefore there's more demand for goods and services. (That's what people want money for, to buy goods and services.) Both of those things are good. Now, under those circumstances, you have a lot of money trying to chase fewer (but more valuable) goods and services - that creates a pretty powerful incentive to get in the business of creating goods and services. Which, basically, is every job whatsoever. So businesses are being started; existing businesses are looking to expand. That creates a demand for labor - people to make goods and provide services, or to help other people do that.So now Mr. Moneybags is sitting on an asset rapidly increasing in value, because it's an asset very much in demand - his own labor. So your low-income laborer gains a higher income, and buys more goods and services.Inflation is good!

I'll be honest - I'm absolutely right and you're completely wrong. Utterly wrong. You're the prime example of the "economic moron" - the guy who's absorbed so much academic economic nonsense that he's completely lost sight of how things work in the real world. This is the only thing you're right about. And why is that? Why is it that the government could give everyone a thousand dollars to bury in their backyard and it wouldn't drive up the price of anything but shovels?Because inflation is caused by more money chasing the same amount of goods and services. The prices of goods and services are driven up as a result. It's supply and demand. You remember supply and demand, right? When demand increased but supply does not, the prices go up. That's the cause of inflation - more money chasing the same amount of goods and services.But that's a good thing. More demand for goods and services puts more people in the business of providing goods and services. Any goods or services that people already have increase in price. I do see it, and I can do math. And your equation says that when the volume and velocity of money increase, so does the price level and value of goods. I never said that it did. The exact opposite is what is true - increased demand for the same amount of goods causes inflation. Why would I think that? 100 GBP and 139.12 USD are the same amount of money. More money creates a greater demand for goods and services, which creates a greater demand for the labor necessary to provide them, due to people getting into the "goods and services" business. This is obviously true. No, think about the absurd world you're proposing, the one where your corner grocer can't figure out how much the price of tomatoes should be that day until he calls up everyone in the country to find out how much money they have. That's the result of "economics moron" thinking, where the economics moron thinks he's being intelligent when he says "increasing the money supply makes money less valuable", as though the value of the money in your pocket comes from how large a percentage of all the world's money it represents.Absolutely wrong. The value of money is what you can buy with it. If the government throws bales of money from helicopters tomorrow, people are going to want to spend it on goods and services. That increases the demand for goods and services but not the supply of them, so the price increases.That's inflation. And the result of that inflation is an increase of investment in the production of goods and services, which increases the value of labor, because of the increased demand for the labor it takes to make those new goods and services.Inflation is good, as I said. This is something upon which every economist agrees, so if you find yourself i the position of arguing against the vast economics consensus I'm pretty sure it's not me who's going to be wrong.

No, right. Inflation is caused by more money chasing the same amount of goods and services. If it wasn't, why would printing more money be inflationary? As you pointed out, if the government gives everyone a thousand dollars to bury in their backyard, there's no inflation. Why not? Because they're burying it, not chasing the same amount of goods and services with it. Right. And that rise is caused by the increased demand for the same amount of goods and services. Supply and demand, remember? Sure, I guess everybody could just agree to pretend that their money is less, every business could agree to raise prices for no reason and pay workers more; but get real. That's economics moron talking. In the real world, inflation is what happens when more money chases the same amount of goods and services.Or, according to Nobel Prize-winning economist Paul Krugman, author of the preeminent textbook on economics:

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In Chapter 31, we learned that in the short run an increase in the money supply increases
real GDP by lowering the interest rate and stimulating investment spending
and consumer spending. However, in the long run, as nominal wages and other
sticky prices rise, real GDP falls back to its original level. So in the long run, an increase
in the money supply does not change real GDP. Instead, other things equal, it
leads to an equal percent rise in the overall price level; that is, the prices of all goods
and services in the economy, including nominal wages and the prices of intermediate
goods, rise by the same percentage as the money supply.

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No, I said assets appreciate when demand for them increases. My single pencil increases in value as pencils get used up, because the demand for pencils begins to outstrip the supply. Of course, if people respond to the demand by making more pencils, then the value of any particular pencil will decrease, because there will be more of them.I don't think my posts are complicated or obtuse, Damouse. Is there some reason you're having trouble reading them? More economics moron talk. People respond to increased demand by increasing supply, not by decreasing it. If all of a sudden bread becomes more valuable, bakers respond by baking more bread - not by burning their bakeries down. I mean, Mouse, at this point I'm forced to ask - have you ever bought or sold anything? Ever? I mean you seem to have absolutely no idea how money works. I can only wonder if you've ever actually had any. Not in the equation you've posted. Q is a variable, not a constant. You know what those terms mean, right? I mean, you're apparently a math lecturer or something, so surely you would know the difference between a constant and a variable? No, he just needs to have a notion of how much money people will pay for his tomatoes. In other words it's the value of tomatoes to people that determines the price of his tomatoes, not the amount of all the money in the world, which he doesn't need to know or care about. No, he changes his prices to account for the supply and demand of tomatoes, economics moron. Businesses operate on supply and demand. They still teach supply and demand in your economics classes, right? Or is that simple concept now considered too basic for economics morons like yourself to bother with? I don't see a graph, just a big blank blue space. Maybe next time use a graph without an alpha channel, just a thought.

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Inflation is always and everywhere a monetary phenomenon. (Ass opposed to a valuation phenomenon)

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That's what I'm saying. Maybe you meant to quote somebody else.

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There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it.

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Not enough context here to have any idea what von Mises is talking about; but von Mises characterized inflation as

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the increase in the quantity of money and money substitutes

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just as I do. Hayek, same deal. Every economist disagrees with you. Including the ones you quoted (which is really amazing.) Doesn't that maybe indicate that you're wrong? I imagine that if you simply cut and paste citations without even reading them, as you appear to have done, it's fairly easy indeed to make yourself feel like you've said something intelligent. Too bad you continue to be completely and absolutely wrong, as I've shown.

It's poor form to quote and reply to an entire message. I choose remarks that are representative of your points, and are the most direct expressions of where we disagree. I'm trying to instruct you in your error, not write a novel. No, of course not. Freidman hates inflation. But he agrees with me on the cause: "more money chasing the same amount of goods." I never said that he was. I never said that von Mises was in favor of inflation, either. But he certainly agrees that it's caused by "more money chasing the same amount of goods." Hayek is a third person I never asserted was in favor of inflation, but he certainly agrees that it's caused by "more money chasing the same amount of goods."It's the textbook definition of inflation, Mouse - in fact I directly quoted a fucking textbook - and to the extent that you've put yourself in clear opposition to Friedman, von Mises, Hayek, and Krugman, no reasonable person is going to believe you over them. The fact that none of them do. Every economist I can find describes inflation as "more money chasing the same amount of goods", frequently in those exact words.

No, again. When more money chases the same amount of goods, inflation will occur. Every economist agrees on this, it's the textbook definition of "inflation." I don't understand why you're so adamant that literally every economist in the western world has it completely wrong. Doesn't that strike you as unlikely, at least? Yeah, you're right. Paul Krugman is just some jack-off that nobody takes seriously. What the fuck was I thinking?You're truly living up to the "economics moron" epithet. I was originally sorry that "moron" was in there, but I didn't have a better word to describe the notion of an "idiot savant" who can quote economists at length but doesn't actually understand how anything works. But you're certainly living up the colloquial notion as well. Right. A return to normal GDP levels. That's what inflation can give you - for instance, if your economy is plagued by a shortfall in demand resulting in depressed GDP or GDP growth. See "The United States economy, 2008-present." That's why Krugman is a proponent of economic stimulus - it's inflationary, and that's what we could use right now. And it shows a positive correlation between price growth and national income, which is exactly what I've been saying.Don't you know how to read a graph? No, I think people would rush out to buy pencils, increasing the demand for them. (Assuming that the only thing keeping people from buying pencils is the lack of money to pay for them. That's probably not true of pencils, but it's true of other goods - people would buy more of them if they had more money.) The next day, the pencil sellers would respond to the increased demand by raising the price.That's such an obviously true thing - supply and demand - that, again, I'm flabbergasted that you think it's not true. I mean, even a complete economics idiot savant knows about supply and demand. We're not on the barter system, that's a different economy. And we don't measure the value of things in "pens", we measure them in "money." That's one of the purposes of money, to represent value. And, no, obviously the pencils couldn't be exchanged for 2 pens; the value of pens has increased alongside the value of pencils, because we're talking about inflation - an increase in demand for everything. Inflation increases the value of all goods and services. It's a rising tide that lifts all boats.The value of money is that you can buy and sell things with it. Under inflation the amount of money it takes to buy a good increases, indicating the increase in its value. There's no "abstract value" that items have independent of their price, because "value" means "how much money something is worth." We measure the value of things in money, that's the point of money. The absurd notion that something has an abstract worth unrelated to it's dollar value is like saying you have an "abstract height", not measured in any discernible unit of length, and that is completely unrelated to the physical measure of the distance between your feet and your head. It's "economics moron" thinking - it sounds all academic and shit but it's completely divorced from economies in the real world, where I (at least) reside.

Jar, why raise taxes when the government can borrow at a negative interest rate?

Right, but it's a negative real interest rate, so the debt you have to pay is lower than what you borrowed.It's free money. Why not use it instead of recovery-threatening taxes?

Nothing of what you've just said is true.The amount that we can borrow isn't limited by "resources", it's limited by Congressional statute. When the Federal government borrows money, it borrows by term at a fixed interest rate so there is, actually, a guarantee of the interest rate over the term of the loan. And the best way to pay back the debt is by increasing revenues, and the best way to increase revenues is by increasing GDP. Borrowing at a net negative rate to make infrastructure improvements that grow GDP is free money for the cost of free money. It's win now, win later. Pursuing an austerity policy of debt reduction in the face of investors so desperate for the security of Federal bonds that they'll pay us to loan us the money is idiotic national suicide.

No, this is exactly not how Federal debt works, because Federal debts are denominated in dollars which the US government can produce by fiat.Imagine that for a second - imagine that whenever you borrowed money, your lenders were willing to let you pay it back in Monopoly money. Imagine also that your name was Milton Bradley and that as a result you were the world's only source of Monopoly money. Now all of a sudden debt looks a lot different, right?Debts that the Federal government sells to investors - primarily US investors, myths about China notwithstanding - don't "enslave" the middle class. You're thinking of debt as a credit you get in the present, to be paid back by your future income (plus an interest rate that represents the statistical risk of lending to people like you.) To the Federal government, debt is a source of revenue in the present that we then pay back with future GDP. And in the present case, we pay back less than we borrowed, because investors want to store their wealth in dollars, and buying Federal debt is the best way to get dollars (because dollars are, in practice, a limited resource.) No, exactly wrong. The rich people conspiracy is to reduce the Federal debt, because that keeps the rate of inflation low, which results in increased wealth for people whose wealth is in dollars, which is rich people, and decreased wealth for people like you and me, whose wealth is primarily in goods (like homes and real estate) and the value of our labor. Yes! And it's exactly what I just told you - take advantage of free fucking cash money to invest in infrastructure projects that grow GDP and make everybody better off, then pay off the debt from the increased GDP. The fastest way to get out of debt is to make more money not cut back on medical care.

Right. Except imagine that the gas station is having a promotion where they're handing out free gasoline. Doesn't it make even more sense right now to be running your tractor, harvesting all the fields you can? Especially since you have fields and fields of crop just sitting there? (I.e, massive unemployment and idle factories?)