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Originally posted by DOOMBOT You need the money to buy the product, which allows you to act on the demand.

But doesn't necessarily cause demand.

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Originally posted by Brahman But doesn't necessarily cause demand.

You can demand anything if you want. If you don't have the means of acting on it, what good is it going to do you? Which goes back to my example of the homeless person.

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Originally posted by Brahman Post-World War II, the American economy had exponentially more than it did in the 1800's. Compounding interest is an exponential effect of investment, therefore, the American economy saw exponentially more growth post-World War II than it did in the 1800's. Refer to chart below... http://ichart.finance.yahoo.com/z?s=%5EDJI&t=my&q=l&l=off&z=m&a=v&p=s Your facts are wrong.

The DOW isn't exactly the greatest tool to use to determine how good or bad the economy is doing. Hasn't it been climbing most of this year?

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Originally posted by DOOMBOT The DOW isn't exactly the greatest tool to use to determine how good or bad the economy is doing. Hasn't it been climbing most of this year?

search GDP stastics. 1950 saw 20%+ rise in GDP. During no period in the 1800s did GDP grow that quickly.

As for inflation, it's real simple: If we purposefully create inflation, as you suggest, we can't increase consumerism (all else equal) because inflation, by definition, is a loss in purchasing power. How can we reduce purchasing power and increase consumerism? What you're thinking about is the availability of cheap financing, which is NOT inflation. Inflation may result from cheap financing if the supply of dollars is greater than demand. Nevertheless, inflation by-product of cheap financing (and many other factors, including demand, input prices, interest rates, etc...)

I'm not trying to be a dick, but I suggest you read about inflation and the factors effecting inflation before you have an intellectual conversation regarding the topic.

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Originally posted by jerZ07002 search GDP stastics. 1950 saw 20%+ rise in GDP. During no period in the 1800s did GDP grow that quickly. [/b]

GDP figures, first of all, are cooked. GDP can and has risen due to a lot of things, one of which, consumer spending. That's not necessarily a good thing, when the spending is fueled by foreign credit, which we can't pay back now because of the fact we've driven ourselves into the ground with all of this debt. But that's another discussion.

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As for inflation, it's real simple: If we purposefully create inflation, as you suggest, we can't increase consumerism (all else equal) because inflation, by definition, is a loss in purchasing power. How can we reduce purchasing power and increase consumerism?

Simple, you spread out what you are trying to buy into fixed payments. How do you think houses and cars, for example, are bought? Look at Brazil, their dollar is so weak that they resorted to this exact type of system for buying goods that us US citizens would consider very common purchases, such as clothing or electronics. Funny because as I write that, we have resorted to this type of payment for some electronics as well.

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What you're thinking about is the availability of cheap financing, which is NOT inflation.

It can definitely be the cause of inflation. If a banks lending practices are loose and the interest rates are low, you've just made money very easy and cheap to come by. So when the loan is made, the money supply increases, otherwise known as inflation.

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Inflation may result from cheap financing if the supply of dollars is greater than demand.

You just helped proved my point.

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Nevertheless, inflation by-product of cheap financing (and many other factors, including demand, input prices, interest rates, etc...) I'm not trying to be a dick, but I suggest you read about inflation and the factors effecting inflation before you have an intellectual conversation regarding the topic.

You're not being a dick by having this conversation and suggesting to read a book. I'm more concerned with why, when the question "What is inflation" is asked, people answer with "rise in consumer goods", without thinking further, or, how that is made possible. If you dig deeper you find that it happens because the money supply was increased and if it is increased too much, you have what happened Argentina or Zimbabwe take place, to name a couple examples.

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Originally posted by DOOMBOT It can definitely be the cause of inflation. If a banks lending practices are loose and the interest rates are low, you've just made money very easy and cheap to come by. So when the loan is made, the money supply increases, otherwise known as inflation.

That's not inflation.

I think what you're hinting at is depreciation of the dollar, which isn't the same thing as inflation. As jer has pointed out, inflation is tied to the price of a basket of goods and its change over time. Aggregate supply and demand are the two critical components that change the price index. And in any case, this is on a macro level, so your homeless person example isn't really a parallel one.

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Originally posted by Lebezniatnikov I think what you're hinting at is depreciation of the dollar, which isn't the same thing as inflation.

How does the value of any dollar depreciate?

http://dictionary.reference.com/browse/inflation

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in⋅fla⋅tion   /ɪnˈfleɪʃən/ Show Spelled Pronunciation [in-fley-shuhn] �noun 1. Economics. a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency (opposed to deflation ). 2. the act of inflating. 3. the state of being inflated.

Not sure why many feel the need to complicate this. The prices will rise if the money supply is increased. It's just a fact that we must deal with when you inflate the supply of money!

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Originally posted by DOOMBOT How does the value of any dollar depreciate? http://dictionary.reference.com/browse/inflation Not sure why many feel the need to complicate this. The prices will rise if the money supply is increased. It's just a fact that we must deal with when you inflate the supply of money!

Yea after reading many posts, I can't see why you guys are arguing over the little details of what text-books define inflation as. An increase in the printing and distribution of money leads to the devaluation of the currency, therefore causing prices to rise which then hands it off to the "textbook" definition of inflation.

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Originally posted by DOOMBOT You can demand anything if you want. If you don't have the means of acting on it, what good is it going to do you? Which goes back to my example of the homeless person.

I can have money and not choose to spend it.

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Originally posted by DOOMBOT The DOW isn't exactly the greatest tool to use to determine how good or bad the economy is doing. Hasn't it been climbing most of this year?

The stock market reacts the fastest to economic data than anything else. When the economy slumps, the stock market reacts first. When the economy starts to recover, it reacts first. The market is not independent of the overall economy.

If that's not good enough for you then look at industrial output or GDP. Our economy had exponentially more industrial output and GDP after World War II than the entire 19th century. I'm still waiting for that stat of yours about our greatest economic growth happening in the 19th century. Did we have any billionaires in the 19th century?

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Originally posted by Brahman Did we have any billionaires in the 19th century?

http://www.johndrockefeller.org/

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he became the world's richest man and first American billionaire, and is often regarded as the richest person in history.

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Originally posted by DOOMBOT http://www.johndrockefeller.org/

And how many billionaires are there today?

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Originally posted by Brahman And how many billionaires are there today?

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His net worth when adjusted for inflation would put him in the top twenty modern-day billionaires; however, when adjusted for the size of the United States economy in his day, his net worth would dwarf that of any of today's billionaires. In 2001 , it was estimated that in contemporary money Rockefeller would be worth $200 billion. Jay Gould once said a man of John D. Rockefeller's immense business knowledge was born once every 500 years.

With that being said, there were other people during his day who would be considered billionaires today, once their net worth is adjusted for inflation.

Andrew Carnegie, to name another.

PS - I hear there are trillionaires living in Zimbabwe!

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Originally posted by DOOMBOT With that being said, there were other people during his day who would be considered billionaires today, once their net worth is adjusted for inflation. Andrew Carnegie, to name another. PS - I hear there are trillionaires living in Zimbabwe!

Still waiting for that 19th century was our best growth economic century stat. There are far more billionaires now than there were then.

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Originally posted by Brahman Still waiting for that 19th century was our best growth economic century stat. There are far more billionaires now than there were then.

As I stated in the first page of this thread, see The Industrial Revolution in the US.

As for having, "far more billionaires now than there were then", I don't know how you can be confidant in anything you say anymore after you quickly got proven wrong with the billionaire claim that you made. You also don't seem to understand what "adjusted for inflation" means either. Like I said, there are trillionaires living in Zimbabwe. Do we have any of those in the US? Maybe we should learn a thing or two from them, according to what you seem to be trying to say.

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Originally posted by Brahman The stock market reacts the fastest to economic data than anything else. When the economy slumps, the stock market reacts first. When the economy starts to recover, it reacts first.

In regards to this comment, why the heck did the DOW not react to the massive increase of foreclosures starting in 2006? It took over 2 years before it fell!

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Originally posted by Brahman Still waiting for that 19th century was our best growth economic century stat. There are far more billionaires now than there were then.

I don't know the numbers, but I don't find it hard to believe that the 19th century saw the most rapid period of economic growth. Remember, we were starting off from a much lower level at that time. We had very little infrastructure or capital in place, so naturally when you start at the bottom your gains are going to be huge in terms of percentage.

More wealth in dollar terms was certainly created in the 20th century..but wealth does not = growth. It's natural that developing nations converting from agrarian societies to industrial ones will have far bigger gains percentage-wise than established behomoths like the USA today. It's a lot harder for a $13 trillion economy to grow 10% than it is for a $13 billion economy to do it.

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Originally posted by DOOMBOT As I stated in the first page of this thread, see The Industrial Revolution in the US.

That's not a stat.

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As for having, "far more billionaires now than there were then", I don't know how you can be confidant in anything you say anymore after you quickly got proven wrong with the billionaire claim that you made.

Rockefeller became a billionaire in 1916, not the 19th century.

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You also don't seem to understand what "adjusted for inflation" means either.

You don't seem to understand that the compounding equation means industrial output was exponentially higher in the 20th century than during the 19th century.

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Like I said, there are trillionaires living in Zimbabwe. Do we have any of those in the US? Maybe we should learn a thing or two from them, according to what you seem to be trying to say.

Zimbabwe's inflation has nothing to do with this discussion. Completely different topic and an extreme case used in a bad analogy. What do you think I'm trying to say?

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Originally posted by DOOMBOT In regards to this comment, why the heck did the DOW not react to the massive increase of foreclosures starting in 2006? It took over 2 years before it fell!

I never said the stock market reacts immediately, I said it reacts faster than any other indicator of economic performance. The market began falling in 2007, so it was not even 1 year.

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Originally posted by Capitalizt I don't know the numbers, but I don't find it hard to believe that the 19th century saw the most rapid period of economic growth. Remember, we were starting off from a much lower level at that time. We had very little infrastructure or capital in place, so naturally when you start at the bottom your gains are going to be huge in terms of percentage. More wealth in dollar terms was certainly created in the 20th century..but wealth does not = growth. It's natural that developing nations converting from agrarian societies to industrial ones will have far bigger gains percentage-wise than established behomoths like the USA today. It's a lot harder for a $13 trillion economy to grow 10% than it is for a $13 billion economy to do it.

The industrial revolution was a period of high growth, but not greater than the growth experienced during the second industrial revolution (1941-1970) and the information revolution (1980-PRESENT). It was exponentially higher.

We need occrider in here to settle things.

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Originally posted by Brahman Rockefeller became a billionaire in 1916, not the 19th century.

I'm pretty confidant that if you adjust his net worth in the 19th century and adjust it for inflation he would have been considered a billionaire today.

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What do you think I'm trying to say?

Beats the hell out of me! Good night.

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Originally posted by DOOMBOT I'm pretty confidant that if you adjust his net worth in the 19th century and adjust it to inflation he would have been considered a billionaire today. Beats the hell out of me! Good night.

Just wanted to know where you got your stats from.

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Originally posted by Brahman Just wanted to know where you got your stats from.

Well thats common sense, class 6 stuff, no citation needed.

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Originally posted by Kinezi Well thats common sense, class 6 stuff, no citation needed.

You must be a gullible character.

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Originally posted by DOOMBOT I'm pretty confidant that if you adjust his net worth in the 19th century and adjust it for inflation he would have been considered a billionaire today.

You adjust the goalposts so frequently that it's actually quite funny when you pick and choose a battle and lose.

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