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Traders can't even drive .... (pg. 2)
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| jerZ07002 |
| quote: | Originally posted by DOOMBOT
And our consumption has only been possible due to the massive amounts of inflation we've created. |
Inflation is the by-product of those activities not the cause. |
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| DOOMBOT |
| quote: | Originally posted by jerZ07002
Inflation is the by-product of those activities not the cause. |
I'm sorry, I don't follow. Are you saying that inflation is the byproduct of consumption? |
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| Lebezniatnikov |
| quote: | Originally posted by DOOMBOT
I'm sorry, I don't follow. Are you saying that inflation is the byproduct of consumption? |
Consumption is definitely linked to inflation.
| quote: |
Cost-push inflation and demand-pull inflation can be explained using our four inflation factors. Cost-push inflation is inflation caused by rising prices of inputs that causes factor 2 (The supply of goods goes down) inflation. Demand-pull inflation is factor 4 inflation (The demand for goods goes up) which can have many causes.
The text "Economics" (2nd Edition) by Parkin and Bade gives the following explanation for cost-push inflation:
"Inflation can result from a decrease in aggregate supply. The two main sources of decrease in aggregate supply are
•An increase in wage rates
•An increase in the prices of raw materials
These sources of a decrease in aggregate supply operate by increasing costs, and the resulting inflation is called cost-push inflation.
The inflation resulting from an increase in aggregate demand is called demand-pull inflation. Such an inflation may arise from any individual factor that increases aggregate demand, but the main ones that generate ongoing increases in aggregate demand are
1.Increases in the money supply
2.Increases in government purchases
3.Increases in the price level in the rest of the world
"(pg. 862)
Inflation caused by an increase in aggregate demand, is inflation caused by factor 4 (An increase in the demand for goods).
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http://economics.about.com/cs/money...ation_terms.htm |
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| DOOMBOT |
In response to your link, I agree that if over consumption happens and there is not enough supply, that prices most likely will go up, if the service or good is in high demand. That's price inflation, where as I was talking about monetary inflation.
So to go back to my main point, our over consumption came from the increase in the money supply. Without fractional reserve banking, we simply wouldn't have had the ability to consume as much as we do or did, as a nation. People wouldn't have bought houses they couldn't afford without the loans that they received. They wouldn't have had the ability to buy 3 cars, without the ability of a loan as well. And what does a loan, in our current banking system, do? Increases the supply of money, also known as, inflation. |
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| jerZ07002 |
| quote: | Originally posted by DOOMBOT
I'm sorry, I don't follow. Are you saying that inflation is the byproduct of consumption? |
that's not exactly what I was saying, but I agree that inflation is a by-product of consumption. I was trying to be more general, i.e., inflation is a consequence of behaviors and not a direct means of accomplishing something.
regardless, your understanding of inflation is not correct. inflation is an increase in consumer prices; that's a text-book definition. If we cause an increase in consumer prices then, necessarily, we can consume less. Thus, if all else is equal, if we create inflation we decrease our capacity to consume. |
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| DOOMBOT |
| quote: | Originally posted by jerZ07002
that's not exactly what I was saying, but I agree that inflation is a by-product of consumption. I was trying to be more general, i.e., inflation is a consequence of behaviors and not a direct means of accomplishing something.
regardless, your understanding of inflation is not correct. inflation is an increase in consumer prices; that's a text-book definition. If we cause an increase in consumer prices then, necessarily, we can consume less. Thus, if all else is equal, if we create inflation we decrease our capacity to consume. |
What do you believe causes the increase in consumer prices? |
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| Kinezi |
| quote: | Originally posted by Brahman
See compounding interest. The more you have the more you make. |
This is a not a place for religious fanatics, Yo, Ima let you finish.. but before that why dont you go and be terrorist somewhere else? |
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| Lebezniatnikov |
| quote: | Originally posted by DOOMBOT
What do you believe causes the increase in consumer prices? |
Demand, for starters. |
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| DOOMBOT |
| quote: | Originally posted by Lebezniatnikov
Demand, for starters. |
What does the consumer need in order to create the demand? |
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| Lebezniatnikov |
| Desire for a product. Your causality is all wrong here. Money doesn't create demand. |
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| DOOMBOT |
| quote: | Originally posted by Lebezniatnikov
Desire for a product. Your causality is all wrong here. Money doesn't create demand. |
You need the money to buy the product, which allows you to act on the demand. A homeless person doesn't have any influence on the price of a Ferrari just because he wants one. |
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| Brahman |
| quote: | Originally posted by DOOMBOT
I'm not exactly sure what that has to do with the industrial revolution in the US. Explain? |
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. |
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