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The most pressing problem (pg. 5)
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| Capitalizt |
| quote: | | GDP growth seems to track money reserves pretty well... ooooooh inflation! |
booga booga booga!;) Unfortunately money supply is growing much faster than the private (productive) area of the economy right now. Government spending is one of the main parts of GDP though so it must be considered.. Obama's new budget is $3.6 trillion with a $1.75 trillion deficit this year.. The money supply and national debt is obviously being increased to pay for it. Thanks to this the GDP will likely grow this year instead of shrinking...but is that necessarily a good thing? Is growth without regard to cost really a good thing? Should we continue borrowing and printing trillions to keep things on an upward trajectory? I don't think so.. Unfortunately our leaders have convinced themselves that we should, and that there isn't a cost involved in all this..or that the cost isn't a big concern because they can pass the bill down to future generations. The day of reckoning won't come until they are comfortably retired so yippee for fiscal insanity in 2009.
P.S. Seriously, just check out the book..lol You're at a college aren't you? It's probably in the library there..You should be open to new ideas. It contains 4 essays that can be finished in an hour or so. I'd like to hear your thoughts on it. |
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| Lebezniatnikov |
| quote: | Originally posted by Capitalizt
booga booga booga!;) Unfortunately money supply is growing much faster than the private (productive) area of the economy right now. Government spending is one of the main parts of GDP though so it must be considered.. Obama's new budget is $3.6 trillion with a $1.75 trillion deficit this year.. The money supply and national debt is obviously being increased to pay for it. Thanks to this the GDP will likely grow this year instead of shrinking...but is that necessarily a good thing? Is growth without regard to cost really a good thing? Should we continue borrowing and printing trillions to keep things on an upward trajectory? I don't think so.. Unfortunately our leaders have convinced themselves that we should, and that there isn't a cost involved in all this..or that the cost isn't a big concern because they can pass the bill down to future generations. The day of reckoning won't come until they are comfortably retired so yippee for fiscal insanity in 2009.
P.S. Seriously, just check out the book..lol You're at a college aren't you? It's probably in the library there..You should be open to new ideas. It contains 4 essays that can be finished in an hour or so. I'd like to hear your thoughts on it. |
Neither graph takes into account the past 12 months. You've been using inflation as a boogeyman for sometime now, yet even you seem to acknowledge that up until September 2008 the Federal Reserve printed money at about the same pace as the GDP grew... this is an interesting reversal of tactics from you. |
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| Capitalizt |
The fed certainly tries not to grow money supply too fast but like all institutions of central planning they have imperfect knowledge and aren't very good at what they do. That imperfect knowledge resulted in a prolonged period of easy credit in the early 2000s which led to the massive bubble of 07.. And the extraordinary actions being taken today in response to it's collapse guarantee that we will face the MOAB (mother of all busts) once the next inflationary "boom" cycle hits a peak. Call me chicken little if you want, but I gotta say it..the sky is about to f*cking fall! ;)
Uber-inflation (15%+ annually) by 2014.. Great depression #2 2015-2020 |
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| Lebezniatnikov |
| quote: | Originally posted by Capitalizt
The fed certainly tries not to grow money supply too fast but like all institutions of central planning they have imperfect knowledge and aren't very good at what they do. That imperfect knowledge resulted in a prolonged period of easy credit in the early 2000s which led to the massive bubble of 07.. And the extraordinary actions being taken today in response to it's collapse guarantee that we will face the MOAB (mother of all busts) once the next inflationary "boom" cycle hits a peak. Call me chicken little if you want, but I gotta say it..the sky is about to f*cking fall! ;) |
That doesn't address why you posted that graph before - if the Fed wasn't outpacing GDP growth before, are you basing your Chicken Little theory only on economic data gathered since September 2008? |
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| Capitalizt |
lebez, I don't recall ever posting these charts before last year. I've been harping on how inefficient and destructive fed policy can be for a while now..but I never expected to see what we've seen over the past 12 months. I never believed that we are in for a world of hellish inflation until I saw the extreme measures we've taken recently...private companies being taken over, partial nationalization of the banking industry..trillions spent in the blink of an eye on bailout and stimulus plans, the money supply doubled in a matter of weeks..$13 trillion in committed stimulus + trillion dollar deficits as far as the eye can see, etc.
The government/fed have upped the ante on an extreme scale never seen before..far worse than I could have imagined. I've always expected a slow devaluation of the dollar but until I witnessed these events, I never predicted a complete collapse in the currency. Now I'm afraid it's inevitable. |
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| Krypton |
| quote: | Originally posted by Capitalizt
I don't think there's any way to overstate what's already been done. The US alone has already implemented more than $12.8 Trillion in stimulus. Even if we're completely done with bailouts, I don't think that amount of stimulus can be unwound in a reasonable amount of time to prevent inflation. I'm rootin for Bernanke though. Hopefully he will have the balls to choke off the cocaine supply before the party gets out of control. |
You do realize that roughly that amount of capital has been lost right? |
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| jerZ07002 |
| quote: | Originally posted by Lebezniatnikov
I think I see what you mean now as well when you talk about personal choices trumping the structural nature of some of these, but I would still argue that even in matters of "personal choice" the deck is stacked in favor of a particular outcome.
Unfortunately, this is true in the US, but in the developing world we've discovered ways to circumvent the role of government in this equation.
http://www.microfinancegateway.org/...le/detail/25590
I agree that this is a result of poor choices in some segments of society, but you have to take into account that 22 million Americans don't even have a bank account. Pawn Shops and places where you can trade in car titles for loans become the only way of securing funds in times of economic shock - with no savings and no means of securing a loan, people can be forced into bad financial decisions.
Another thing that plays into this is another trap altogether - The Institutional Knowledge Trap - when a family is poor chances are that education is low and the resources available (internet, books, etc.) to learn about opportunities are scarce. The social network is largely in the same boat, so this is a reason why we see poor people not even knowing about the opportunities that are available to them or how to secure them (such as Medicare, microfinance loans, etc.). Their lack of knowledge becomes a trap. This is why community organizers often focus on community education programs.
This is indeed more common in the agricultural sector, where laws governing child labor and mandatory schooling aren't adhered to as closely. It's very common in the Midwest to hold back students in Middle School and High School from attending class in order to help out at home with harvests. Eventually many of these students drop out - some rural public school districts have much higher drop-out rates than the most "ghetto" neighborhoods in urban centers.
That said, I watched an interesting independent film this weekend about immigrant families in the Bronx and their propensity to have children forgo education in order to help earn enough money to put food on the table, so I assume it does happen.
This is a bigger issue in the developing world, but it isn't really correct to view it as a poor personal choice on behalf of the parents. They're viewing it in a coldly practical way - the more children, the better off they will be in the future. That's more children able to contribute to household income in the near future, and a higher likelihood that someone will be able to take care of them when they can no longer work. It's like blindly rolling a dice 12 times to ensure that you roll at least one 6. The unintended economic consequence of course is that by bearing more children into poverty who will likely go on to make the same fertility choices, you're substantially increasing the number of people in poverty.
Yes, I didn't phrase this in terms of a trap. Collective action is a problem, because most people are more concerned with securing food and shelter than taking steps that are available to them through collective action. It's mostly a time and energy concern, though lack of institutional knowledge is also key.
I can't remember the economist who writes about it, but this is more a case of economic coercion, where economic choices are dictated by circumstances. If you had a choice between working as a janitor for 5.15/hour or joining an organized crime group where your food and shelter for your entire family was covered, which would you choose? If we view opportunity cost as important, the only "smart" economic decision is to become a criminal. Much higher returns. And gangs are about the only groups in most poor communities to collectively share risks in an effective manner. |
i don't think our views on this issue are really that far apart. You just view collective actions of extremely poor individuals as a structural element of society holding them back. On the other hand, i take the view that their individual actions do not form a structural blockage for their ascension from poverty. Nevertheless, I understand there is an interconnection among elements in society that may cause impoverished individuals to act a certain way with greater frequency. For example, poor education and lack of access to other resources (which i agree exists) will lead to higher crime among that population. So, in a way, the personal choices are a result of some structural flaws. In my view, however, attributing most of the blame to something that is beyond the control of an individual does nothing to help those individuals. They can't change the structure of society, but hopefully they can change individual behaviors that will lead to better results. If they are indoctrinated as children that their situation is beyong their control then it is highly likely they will simply fall right back into the same cycle of their parents. In a way, we are creating a structural blockage by telling them it is not their fault they can't succeed. |
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| Lebezniatnikov |
| quote: | Originally posted by jerZ07002
So, in a way, the personal choices are a result of some structural flaws. |
Yeah, I think this is the basis of both of our points, and I agree that we are just looking at policy prescriptions differently.
I side with the likes of John Rawls who argue that just societies remove structural barriers to allow everyone to have full potential - they needn't realize that potential to live in a just society, but they have to have equal access.
| quote: | | In a way, we are creating a structural blockage by telling them it is not their fault they can't succeed. |
You're probably right about this. Perhaps in poverty, as in everything semantics are important. |
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| jerZ07002 |
| quote: | Originally posted by Lebezniatnikov
I side with the likes of John Rawls who argue that just societies remove structural barriers to allow everyone to have full potential - they needn't realize that potential to live in a just society, but they have to have equal access.
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Like i said, our positions aren't too far off. My position is that everyone should have equal access to societal resources so that they have the opportunity available. I think this is different than saying we need to remove all structural barriers because certain barriers you noted appear to result largely as a result of poor personal choices (for purposes of this statement i assume they are all in fact structural flaws in our system - but as i stated, i'm not convinced that we should label all of them as structural). Like you, I'm more concerned with the opportunity than the achievement. |
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| Lebezniatnikov |
| Krugman > Cap |
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| atbell |
| quote: | Originally posted by Capitalizt
The fed certainly tries not to grow money supply too fast but like all institutions of central planning they have imperfect knowledge and aren't very good at what they do. That imperfect knowledge resulted in a prolonged period of easy credit in the early 2000s which led to the massive bubble of 07.. And the extraordinary actions being taken today in response to it's collapse guarantee that we will face the MOAB (mother of all busts) once the next inflationary "boom" cycle hits a peak. Call me chicken little if you want, but I gotta say it..the sky is about to f*cking fall! ;)
Uber-inflation (15%+ annually) by 2014.. Great depression #2 2015-2020 |
I have to agree with Capitalizt here. I've been concerned for a long time and on the edge of my seat since the start of September. Most recently I've gone on a very strict watch of news papers for articles about money supply and hints of inflationary news. By the same token I've been sure to try and find articles that would refute this fact.
I've got 12 articles in the folder in front of me that all point to inflation, none that say otherwise.
In particular the Germans would probably agree with Capitalizt the most, all the other countries seem to be mostly concrned with trying to inflate away thier debts.
I like the time line of 2015 - 2020 although it's not easy to really call things that far ahead. What I thought might have been a blip in March could certainly gain some stability and hold out for a couple of years. The problem is that nothing has been fixed. Mark-to-market accounting standards have been changed so now no one knows what a company is worth, money has been printed, and there is a cheering section saying 'we did it!'.
The bottom has not been hit hard enough to change anything. If there's any recovery it will be a false one built on the back of deception. I fully expect capital flight to continue in the US until there is more balence in the global standard of living. |
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