Keynesian: Doing the math: what the FEDs 2% inflation goal and CPI fudging means for purchasing power

[ababba]

I challenge this assertion. Got any numbers to back it up? My parents are on one and I will be too when I retire.

http://www.ssa.gov/policy/docs/ssb/v69n3/v69n3p1.html

I know its from the devil, but here are some details.

 

[ababba]

In all cases, and for the very first time (since about 2011), the purchasing power of corporate profits (and again, those are only the BEST economic performers in the entire economy) are no longer keeping pace with raw commodities--the closest thing to a "sound money" proxy you're going to get.

Yes its difficult to measure inflation. But the fact that its hard doesn't mean we can assume that the economists are always wrong and always wrong in a direction that favors our political arguments. We need reasons for that. And the reasons given in this thread for why inflation statistics are wrong by the OP are just horrible.

Interesting graphs, but aren't corporate profits an accounting statistic that is so screwed up with manipulation and accounting rules that I wouldn't use it in your graphs? Anyway, commodities aren't the only component of what we purchase. The fact that we have low inflation with rapidly increasing commodity prices means something else is getting much cheaper.

 

[ababba]

Yeah, luckily...

I feel so lucky.

I don't know, I guess I assumed libertarians would rather control their own retirement destiny that let their company do it for them.

 

[swissaustrian]

I have an income of 10 dollars in year one. I buy five apples and five oranges in year 1, each of which cost one dollar. In year 2, the price of apples increases to 2 dollars and I decide to buy 10 oranges with my 10 dollars. What is the rate of decrease in my standard of living? Shadowstats says its a 50% inflation rate but that is mind blowing idiocy. Not so Q.E.D. after all.

If the cost of a computer in 10 years goes from 1000 to 1500, but the quality of the computer doubles or triples, then there very well may be deflation in the cost of computers, while shadowstats would claim major inflation. Not so Q.E.D. again.

And of course, surprise surprise, new goods get introduced. Good luck using the same basket from 1950 to measure the cost of living in 2012. People purchase dramatically different baskets of goods in the two years. You have to change the basket over time. Not so Q.E.D. again.

And wait, oh shoot, holding money itself is stupid because you can hold bonds, which, in the long run, outpace the rate of inflation and deliver a real return. Not so Q.E.D. one more time. You might want to think harder about this one.

1. Shadowstats is using the old CPI, nothing more nothing less. It's just not adjusting the method every year. Comparability over time is one of the basic principles of statistics. If you change the method and the composition, you lose comparability and you can stop recording data anyway.

2. Hedonics is a flawed trick to reduce the cost of a good, because it assumes that people would still buy an old version of a good. Nobody buys a 486 PC anylonger. This "let them eat ipads" argument which was famously coined by NY FED chairman Dudley is just a trick to have "deflationary" components in the basket of goods. Quality improvements can only be taken into account if consumers still demand the lower quality. The whole consumer electronics market is specifically funtctioning contrary to that idea. So e.g. claiming that the new iphone is 50% "cheaper" because it's performance is double of the previous version is bogus.

3. Reducing the food component when people are consuming more at the same time (result: increased obesity numbers) has nothing to do with "new products". It's just another trick to limit the impact of rising food prices. So is the usage of a core CPI.

4. You don't understand all the functions of money: standard medium of exchange (1), unit of account (2) and STORE OF VALUE (3). You're probably to young to having experienced the times of the gold standard (so am I), but money should actually be able to store value. If it doesn't, it is partially disfunctional. Naming bonds as the better store of value means essentially you're thinking money is debt. That's true for fiat money only, it's money with a counterparty. And that's the most fundamental problem we have in economics. If you can only store value in debt or equity and not in money, your freedom to decide the timing you're investments is taken away. Your money has no "time value" as Boehm-Bawerk called it with regards to interest rates: http://mises.org/pdf/asc/2002/asc8-reisman.pdf. The current ZIRP environment is the icing on the cake. Now money doesn't even have a price at all. Bond rates are negative in real terms.

 

[Steven Douglas]

Yes its difficult to measure inflation. But the fact that its hard doesn't mean we can assume that the economists are always wrong and always wrong in a direction that favors our political arguments.

See, you throw the word "inflation" out as if it's universally understood to mean "price inflation". I accept that the word has been bastardized to the point where it means only that in common usage, which is why I NEVER fail to qualify the term when I use it. I say price inflation to refer to an effect (the general rise in price levels), and monetary inflation (the increase in the supply of currency) to refer to a cause without regard to its effects.

Monetary inflation has many channels (select favored supply spigots), foreign and domestic, and there is always a delay between monetary inflation and the price inflation it causes, as it takes time for newly counterfeited currency to dilute the wider pool of currency, as it propagates and is "felt" as a upward pressure on general price levels throughout an economy. It never spreads or propagates evenly, and it never affects the same industries in the same way. Furthermore, stable price levels are NOT necessarily valid indicators of "no net price inflation". That is because we are not taking into account (nor have we that ability) all the prices THAT WOULD HAVE OTHERWISE FALLEN--NOT REMAINED "STABLE".

In other words, to put it in more academic terms, it's all a bunch of horse shit.

Interesting graphs, but aren't corporate profits an accounting statistic that is so screwed up with manipulation and accounting rules that I wouldn't use it in your graphs?

Funny that you're not so quick to jump on government accounting statistics that are "screwed up with manipulation and accounting rules" (that change from year to year, no less).

Whatever the case, we're looking at raw reported numbers, and real market prices of commodities (adjusted for NOTHING). At the very least, even if you attribute it to fudged numbers, we can say definitively that Something Very Different has occurred in only the past two years.

Anyway, commodities aren't the only component of what we purchase. The fact that we have low inflation with rapidly increasing commodity prices means something else is getting much cheaper.

Did you miss the part where all Finished Tangible Goods (things of real value--not vaporware--that we depend on for life) are rooted in commodities as factors and costs of production? Raw commodities aren't the only component of what we purchase, but they are all at the roots and foundation of life itself, and all that sustains life. Other things "getting much cheaper" becomes meaningless if the commodities required for life itself become so expensive relative to a thoroughly and intentionally debauched currency that those commodities eventually don't even make it to the shelves.

 

[ababba]

1. Shadowstats is using the old CPI, nothing more nothing less. It's just not adjusting the method every year. Comparability over time is one of the basic principles of statistics. If you change the method and the composition, you lose comparability and you can stop recording data anyway.

2. Hedonics is a flawed trick to reduce the cost of a good, because it assumes that people would still buy an old version of a good. Nobody buys a 486 PC anylonger. This "let them eat ipads" argument which was famously coined by NY FED chairman Dudley is just a trick to have "deflationary" components in the basket of goods. Quality improvements can only be taken into account if consumers still demand the lower quality. The whole consumer electronics market is specifically funtctioning contrary to that idea. So e.g. claiming that the new iphone is 50% "cheaper" because it's performance is double of the previous version is bogus.

3. Reducing the food component when people are consuming more at the same time (result: increased obesity numbers) has nothing to do with "new products". It's just another trick to limit the impact of rising food prices. So is the usage of a core CPI.

4. You don't understand all the functions of money: standard medium of exchange (1), unit of account (2) and STORE OF VALUE (3). You're probably to young to having experienced the times of the gold standard (so am I), but money should actually be able to store value. If it doesn't, it is partially disfunctional. Naming bonds as the better store of value means essentially you're thinking money is debt. That's true for fiat money only, it's money with a counterparty. And that's the most fundamental problem we have in economics. If you can only store value in debt or equity and not in money, your freedom to decide the timing you're investments is taken away. Your money has no "time value" as Boehm-Bawerk called it with regards to interest rates: http://mises.org/pdf/asc/2002/asc8-reisman.pdf. The current ZIRP environment is the icing on the cake. Now money doesn't even have a price at all. Bond rates are negative in real terms.

1. Yes and the old CPI is flawed. It would say that the increase in the cost of living was 50% in that example when we know its less than 50%.

2. Quality adjustments are really important when you are trying to measure the cost of maintaining your standard of living. If the cost of the computer stays the same but it is better, then that is an improvement in your standard of living. That is what we should be concentrating on measuring here, the value of a dollar in terms of goods.

3. You reduce the food component if food is a smaller percentage of the goods consumed. People have greater incomes, so they buy more food. But its a much smaller percentage of the total quantity of goods they buy.

4. A highly inflationary currency would not be a good store of value, we agree. That doesn't mean a country with a high level of inflation involves everyone losing their purchasing power quickly. That was my point, there are other investment vehicles that are more closely indexed to inflation.

 

[ababba]

See, you throw the word "inflation" out as if it's universally understood to mean "price inflation". I accept that the word has been bastardized to the point where it means only that in common usage, which is why I NEVER fail to qualify the term when I use it. I say price inflation to refer to an effect (the general rise in price levels), and monetary inflation (the increase in the supply of currency) to refer to a cause without regard to its effects.

Monetary inflation has many channels (select favored supply spigots), foreign and domestic, and there is always a delay between monetary inflation and the price inflation it causes, as it takes time for newly counterfeited currency to dilute the wider pool of currency, as it propagates and is "felt" as a upward pressure on general price levels throughout an economy. It never spreads or propagates evenly, and it never affects the same industries in the same way. Furthermore, stable price levels are NOT necessarily valid indicators of "no net price inflation". That is because we are not taking into account (nor have we that ability) all the prices THAT WOULD HAVE OTHERWISE FALLEN--NOT REMAINED "STABLE".

In other words, to put it in more academic terms, it's all a bunch of horse shit.



Funny that you're not so quick to jump on government accounting statistics that are "screwed up with manipulation and accounting rules" (that change from year to year, no less).

Whatever the case, we're looking at raw reported numbers, and real market prices of commodities (adjusted for NOTHING). At the very least, even if you attribute it to fudged numbers, we can say definitively that Something Very Different has occurred in only the past two years.



Did you miss the part where all Finished Tangible Goods (things of real value--not vaporware--that we depend on for life) are rooted in commodities as factors and costs of production? Raw commodities aren't the only component of what we purchase, but they are all at the roots and foundation of life itself, and all that sustains life. Other things "getting much cheaper" becomes meaningless if the commodities required for life itself become so expensive relative to a thoroughly and intentionally debauched currency that those commodities eventually don't even make it to the shelves.

Well this is a good response. I think any type of data put out by government or corporations could be manipulated. But that's not the end of the story. The question is whether there is evidence of manipulation.

Now, this is kind of subtle. The corporate manipulation is things like hiding earnings for tax purposes. That can be something that everyone knows is going on, that everyone agrees is an accounting technique and yet still is part of reported earnings for the company.

The criticism of the economists is different. Its an accusation of scientific malpractice, rather than using the tax code to their advantage as in the case of companies. That's perfectly fine to make that accusation, but its reasonable of me to expect some evidence of your claims, which hasn't been provided.

Of course, the commodities might be more expensive, but the finished final goods might not be if there are cheaper more efficient production methods. The point about commodities, is that you like to focus on the things that increase most because it suits your political argument, and then ex post come up with some justification for it that looks good. If commodities were falling and computers were increasing in price, you would find an argument that says that is the true signal of price inflation. Forget all this individual price junk, that's why we average a bunch of prices in an index in the first place.

 

[Steven Douglas]

The criticism of the economists is different. Its an accusation of scientific malpractice...

No, wrong. That isn't my accusation at all. For me it's a question of misapplied science from the git-go. If I went back to the time of Ptolemy, and claimed that I had something to contribute, I might be greeted with, in essence, "Great! Fantastic! Now, sir, which perfectly circular epicycles and which equants do you think should be applied to our Earth-centric model of the heavens?" Those were all bona-fide scientists, and I would have accused none of them of scientific malpractice (i.e., the intentional hiding or distorting of data). I would have no problem assuming that they were all EXTREMELY intelligent, rigorous and detailed in their work. I'm not questioning their answers OR their methodologies. I'm questioning the very framing of their questions, along with all their governing assumptions, at a root level that they aren't questioning at all. The same thing applies with mainstream economists.

Of course, the commodities might be more expensive, but the finished final goods might not be if there are cheaper more efficient production methods.

Commodities are the foundational building blocks of all finished goods. Right now, as commodity prices rise faster than anything else, this erodes EQUITY, which indeed does force firms to cut costs and attempt to become more efficient, in an attempt just to stay in the black. STAPLES' recent move is an example of just that, as they try to get rid of brick-and-mortar overhead (including employees). Meanwhile, the least efficient firms are forced to close their doors as commodity prices continue to rise, as they cannot pass along the increased costs, and find that they can no longer supply the finished goods at a profit. Eventually it gets to the point where even the commodity suppliers can no longer cut costs, because most of their costs are RAW, TANGIBLE AND REAL. Labor, fuel, raw materials, raw machinery. There's nothing more to cut, and no more blood that can squeezed from that turnip.

You must be aware of the historicity of fact that before a fiat currency eventually becomes worthless (as you and I both agree the USD will be), and long before the currency loses all its value, widespread closing of doors, along with COMMODITY SHORTAGES, are an inevitability.

The point about commodities, is that you like to focus on the things that increase most because it suits your political argument, and then ex post come up with some justification for it that looks good.

You're overgeneralizing. Whether the charts I posted can be used as justification for a political argument, the weren't created ex post. It's something I stumbled onto, as I wondered if there was any historical correlation with corporate profits and commodity prices.

If commodities were falling and computers were increasing in price, you would find an argument that says that is the true signal of price inflation.

I'm not looking for a "true signal of price inflation", any more than I'm trying to find out which epicycles and equants can be used to support a Ptolemaic model of an Earth-centric universe. I am all about the long term, and only interested in inevitabilities and mathematical certainties in the long term. As a FUNDAMENTAL, even most of the most addle-brained Keynesians will not argue but that monetary inflation is the PRIMARY CAUSE of price inflation, albeit in the long term. You're trying to look at gauges to find monetary inflation's propagation rates and "true signals" (oops, did you feel that? I think I just felt something)--for something that nobody argues is an inevitability. Otherwise, what would be the point of "targeting" price inflation, and deliberately increasing the money supply as a means of deliberately doing just that, in the first place?!

 

[ababba]

You must be aware of the historicity of fact that before a fiat currency eventually becomes worthless (as you and I both agree the USD will be), and long before the currency loses all its value, widespread closing of doors, along with COMMODITY SHORTAGES, are an inevitability.

The value of the dollar in 1000 years will be worthless relative to the dollar today, if its still around. Probably in 100 years it will be close to worthless. That doesn't mean the dollar still can't be used to purchase stuff. Its just like the old Italian Lira or the Japanese Yen. You may need 100 yen to buy what a dollar buys but you also earn 100 times more Yen for an hour of work. Both the cost of goods and nominal wages rise along with an increase in the level of prices over time. Just because a dollar is only worth a few cents relative to what it was before doesn't mean it still can't purchase things normally.

 

[ababba]

No, wrong. That isn't my accusation at all. For me it's a question of misapplied science from the git-go. If I went back to the time of Ptolemy, and claimed that I had something to contribute, I might be greeted with, in essence, "Great! Fantastic! Now, sir, which perfectly circular epicycles and which equants do you think should be applied to our Earth-centric model of the heavens?" Those were all bona-fide scientists, and I would have accused none of them of scientific malpractice (i.e., the intentional hiding or distorting of data). I would have no problem assuming that they were all EXTREMELY intelligent, rigorous and detailed in their work. I'm not questioning their answers OR their methodologies. I'm questioning the very framing of their questions, along with all their governing assumptions, at a root level that they aren't questioning at all. The same thing applies with mainstream economists.

This is your attempt to have it both ways. Either calculating price inflation is a worthwhile endeavor and we can discuss it, or you disagree and we can go our separate ways.

If you remember the point of this thread is that the OP wanted to say inflation is understated and going to destroy purchasing power of individuals. If you disagree with even the idea of calculating it, then you can't then turn around and say well I think its understated. If you think its understated, then you implicitly agree that there are ways of approximating it or getting a good sense of what it is.

 

[Steven Douglas]

This is your attempt to have it both ways. Either calculating price inflation is a worthwhile endeavor and we can discuss it, or you disagree and we can go our separate ways.

I'm helping someone right now with a budget. She is in pretty deep shit right now, living on a very small fixed income (pension). She's been on it for almost twenty years, and lived quite comfortably for the first ten. The last ten have been like living in a Star Wars trash compactor scene, as she is being squeezed and nibbled to death on all sides. We're waxing all kinds of creative now, working on substitutions, augmentations, etc., and I have already calculated her price inflation. You know, the ones that affect only her, that no fucking comfortably detached aggregate-thinker would even think to consider. I could feel just how real price inflation was (REGARDLESS OF ITS CAUSES) while grocery shopping with her last week--to the point where all I want to do is punch every price inflation obfuscationist in their daft little throats.

So waddya think...should I take a copy of the CPI and a mountain of other manipulated obfuscating bullshit and talk to her about why her "true inflation signals" are fucked up, anomalous, in her imagination only, or somehow exceptional to some pointy-headed theoretical construct?

So yes, I do remember that the point of this thread was that the OP wanted to say inflation is understated and IS destroying (NOT fucking "going to destroy") purchasing power of individuals. I do agree that there are ways of approximating it or getting a good sense of what it is. Why? Because I have felt it personally, firsthand, and have been fucking living it by proxy through others, practically all my life. What I REJECT are all the reality-disconnected and convoluted ways that government and academics call piss on everyone's heads rain (and with straight faces, no less).

Every time I hear someone try to talk reality with those who are affected first, most, and most adversely by MONETARY INFLATION, I want to jump down their throats and rip everything that is daft and stupid out of them. If I could take them firsthand and show them firsthand--or better yet, live it firsthand--I picture them coming out like Lewis Winthorpe, Dan Aykroid's character in Trading Places, after spending a night in jail.

Starting at 00:45



"I mean, if this place is indicative of the state of correctional institutions in this country, they might as well let all the convicts out. It's far worse on the inside!"

 

[NoOneButPaul]

Buy silver and gold, stack stack stack!

 

[ababba]

I'm helping someone right now with a budget. She is in pretty deep shit right now, living on a very small fixed income (pension). She's been on it for almost twenty years, and lived quite comfortably for the first ten. The last ten have been like living in a Star Wars trash compactor scene, as she is being squeezed and nibbled to death on all sides. We're waxing all kinds of creative now, working on substitutions, augmentations, etc., and I have already calculated her price inflation. You know, the ones that affect only her, that no fucking comfortably detached aggregate-thinker would even think to consider. I could feel just how real price inflation was (REGARDLESS OF ITS CAUSES) while grocery shopping with her last week--to the point where all I want to do is punch every price inflation obfuscationist in their daft little throats.

So waddya think...should I take a copy of the CPI and a mountain of other manipulated obfuscating bullshit and talk to her about why her "true inflation signals" are fucked up, anomalous, in her imagination only, or somehow exceptional to some pointy-headed theoretical construct?

So yes, I do remember that the point of this thread was that the OP wanted to say inflation is understated and IS destroying (NOT fucking "going to destroy") purchasing power of individuals. I do agree that there are ways of approximating it or getting a good sense of what it is. Why? Because I have felt it personally, firsthand, and have been fucking living it by proxy through others, practically all my life. What I REJECT are all the reality-disconnected and convoluted ways that government and academics call piss on everyone's heads rain (and with straight faces, no less).

We use aggregate data so we don't have to rely on an anecdote of a single person.

On average, the CPI says that the standard of living has been decreasing but slowly. Now there are some prices that will increase more than others, and some people have a tendency to buy those goods which increase in price the most. This is bad luck but it would exist regardless of the level of increase in average prices. Even if the rate of money creation was zero, the prices of some goods would be going down a lot and the price of other goods could be going up a lot. There might be a lot of ladies out there that are made better off and some that are made worse off. The average over time tells us something about what portion of this comes from monetary policy, which changes the aggregate price level. We live in an economy where relative prices fluctuate around all the time and there are winners and losers.

The appeal to emotion is the opposite of what we should be doing here. Your first reaction, it seems, is to reach for someone to blame and it seems like you always blame the same source for all problems regardless of whether that blame is well founded or not.

 

[Steven Douglas]

We use aggregate data so we don't have to rely on an anecdote of a single person.

Or fifty million single persons taken individually, for that matter.

The appeal to emotion is the opposite of what we should be doing here.

No, it is precisely what we should be doing here.

Your first reaction, it seems, is to reach for someone to blame and it seems like you always blame the same source for all problems regardless of whether that blame is well founded or not.

No, it really was my last reaction. And the same core source IS always to blame, at the core of a "well founded" chain of causes and effects that really is easy to trace to a single source (by Any True Scotsman, or anyone with an ounce of common sense).

 

[ababba]

Or fifty million single persons taken individually, for that matter.

No, it is precisely what we should be doing here.

No, it really was my last reaction. And the same core source IS always to blame, at the core of a "well founded" chain of causes and effects that really is easy to trace to a single source (by Any True Scotsman, or anyone with an ounce of common sense).

50 million people is getting close to the aggregate, the aggregate basket is just the average of what a bunch of different people buy.

If corn went up 50% and wheat went down 50%, you would blame the Fed. I get it, you blame the Fed for everything including variance in individual prices, as if there weren't millions of other things that affect individual prices. We clearly both understand the Fed affects the overall price level, but you seem to think that they pin down every individual price with their actions and any harm done to any person is automatically caused by the Fed. It just defies common sense.

 

[Steven Douglas]

50 million people is getting close to the aggregate, the aggregate basket is just the average of what a bunch of different people buy.

...and then jumbling them into an homogenous, meaningless blob.

If corn went up 50% and wheat went down 50%, you would blame the Fed.

Fucking-A I would. You might enjoy batting at the leaves, and ignoring the roots, but I don't like to waste time. The Fed is exactly where I would start, for all the market distortions that originated with the Fed. Think it's hard to draw a meaningful connection between the Fed and agriculture? It's so easy that anyone with a pair of working eyes and half a brain stem can see it.

I'll provide the dots. You draw the six degrees of Kevin "Fed" Bacon separation lines between them. And if you can't do it, don't worry, there are plenty here who can.

1) Nixon Shock
2) Petro dollars
3) Wars in Iraq and the rest of the Middle East
4) Ethanol
5) Corn

I get it, you blame the Fed for everything including variance in individual prices...

No, that's your obfuscating fingers, trying to get everything framed so that they can point in so many directions, at so many possible causes (and there are many, most of which are minor) that the Fed just gets lost in the jumbled up, obfuscated heap, as one "possible" effect (probably minor, doncha know -- ya just never know!).

TO WIT: (didn't even read this before posting the above, but it's a predictable script, and proves my point)

...as if there weren't millions of other things that affect individual prices.

Game, set, match. Now I'll repeat myself:

...trying to get everything framed so that they can point in so many directions, at so many possible causes (and there are many, most of which are minor) that the Fed just gets lost in the jumbled up, obfuscated heap, as one "possible" effect (probably minor, doncha know -- ya just never know!).

FYI, the Fed's role in everything monetary does not EVER get lost in a "millions of other things" heap for me. The Fed not only causes monetary and price inflation, it FACILITATES every other kind of distortion in the market, making big things out of "millions of other[wise little] things". End the currency debauchery, THEN look at the size of those "millions of other things" that affect prices, both naturally and artificially. What you DON'T do, is work your way backwards, batting at MILLIONS of leaves, most of which could be consequences, unintentional or otherwise, while pretending to address things in a meaningful way.

When Copernicus finally did successfully place the Sun in the center of the solar system (not universe), that was not the end of Ptolemaic epicycles (perfect circles and circles within circles) and equants and such, because he used all of them. We would need a Kepler and others follow after and shake out the cobwebs. But Copernicus had at least put us on the right track, because it did not matter what anyone worked on, so long as the Earth was assumed to be the center of the universe. Likewise, it does not matter how many "price influences" you look at; so long as you leave the Fed as the accepted center of the known monetary universe, EVERYTHING will be incredibly overly-complicated, and completely fucked up.

 

[ababba]

...and then jumbling them into an homogenous, meaningless blob.



Fucking-A I would. You might enjoy batting at the leaves, and ignoring the roots, but I don't like to waste time. The Fed is exactly where I would start, for all the market distortions that originated with the Fed. Think it's hard to draw a meaningful connection between the Fed and agriculture? It's so easy that anyone with a pair of working eyes and half a brain stem can see it.

I'll provide the dots. You draw the six degrees of Kevin "Fed" Bacon separation lines between them. And if you can't do it, don't worry, there are plenty here who can.

1) Nixon Shock
2) Petro dollars
3) Wars in Iraq and the rest of the Middle East
4) Ethanol
5) Corn



No, that's your obfuscating fingers, trying to get everything framed so that they can point in so many directions, at so many possible causes (and there are many, most of which are minor) that the Fed just gets lost in the jumbled up, obfuscated heap, as one "possible" effect (probably minor, doncha know -- ya just never know!).

TO WIT: (didn't even read this before posting the above, but it's a predictable script, and proves my point)



Game, set, match. Now I'll repeat myself:

...trying to get everything framed so that they can point in so many directions, at so many possible causes (and there are many, most of which are minor) that the Fed just gets lost in the jumbled up, obfuscated heap, as one "possible" effect (probably minor, doncha know -- ya just never know!).

FYI, the Fed's role in everything monetary does not EVER get lost in a "millions of other things" heap for me. The Fed not only causes monetary and price inflation, it FACILITATES every other kind of distortion in the market, making big things out of "millions of other[wise little] things". End the currency debauchery, THEN look at the size of those "millions of other things" that affect prices, both naturally and artificially. What you DON'T do, is work your way backwards, batting at MILLIONS of leaves, most of which could be consequences, unintentional or otherwise, while pretending to address things in a meaningful way.

When Copernicus finally did successfully place the Sun in the center of the solar system (not universe), that was not the end of Ptolemaic epicycles (perfect circles and circles within circles) and equants and such, because he used all of them. We would need a Kepler and others follow after and shake out the cobwebs. But Copernicus had at least put us on the right track, because it did not matter what anyone worked on, so long as the Earth was assumed to be the center of the universe. Likewise, it does not matter how many "price influences" you look at; so long as you leave the Fed as the accepted center of the known monetary universe, EVERYTHING will be incredibly overly-complicated, and completely fucked up.

I hope someone else out there realizes how stupid this is. You've blamed the Fed for everything.

I blame the Fed for two things. The money supply and the rate of increase in the aggregate price level. The money supply they control directly and over time that affects the level of average prices. You think they control everything and everything that's bad is caused by the Fed. Your argument about pointing the blame somewhere else is mind blowing idiocy because that's not what I'm doing. I am blaming the Fed for what they actually control, not for the billion things they don't control.

 

[Steven Douglas]

I blame the Fed for two things. The money supply and the rate of increase in the aggregate price level.

Oh. Tha's all, tha's it? Just those two little ol' things, all nicely sterilized, benign and contained in a vacuum, with no repercussions, and nothing else that results from that? Does the Fed defy the laws of logic and physics, as it produces no ripples or other effects? I hope someone else out there realizes how stupid this is, that you've blamed the Fed for two things only, and nothing else that happened as a result.

Your argument about pointing the blame somewhere else is mind blowing idiocy because that's not what I'm doing. I am blaming the Fed for what they actually control, not for the billion things they don't control.

I see the Fed as more like Jigsaw, who just wants to play a game. In a very controlled arena, of course. Everything else that happens in his game--well, that's on everyone else's head, I guess we could say, because they have choices too, doncha know.

The mind blowing idiocy is in not understanding the difference between indirect but powerful influence from a position of near-absolute control (over EVERYONE'S CURRENCY), and actual direct puppet-like micro-control over individuals which is ludicrous and not claimed at all. And you know it. Like the "players" in Jigsaw's macabre game, individuals are having normal human reactions to abnormal "demigod-like" influences that are completely beyond their control.

 

[ababba]

Oh. Tha's all, tha's it? Just those two little ol' things, all nicely sterilized, benign and contained in a vacuum, with no repercussions, and nothing else that results from that? Does the Fed defy the laws of logic and physics, as it produces no ripples or other effects? I hope someone else out there realizes how stupid this is, that you've blamed the Fed for two things only, and nothing else that happened as a result.



I see the Fed as more like Jigsaw, who just wants to play a game. In a very controlled arena, of course. Everything else that happens in his game--well, that's on everyone else's head, I guess we could say, because they have choices too, doncha know.

The mind blowing idiocy is in not understanding the difference between indirect but powerful influence from a position of near-absolute control (over EVERYONE'S CURRENCY), and actual direct puppet-like micro-control over individuals which is ludicrous and not claimed at all. And you know it. Like the "players" in Jigsaw's macabre game, individuals are having normal human reactions to abnormal "demigod-like" influences that are completely beyond their control.

Hey its clear we both think the other is the equivalent of a theist in an atheistic world. I'm not sure where we can go after that.

Obviously everything effects everything else in our world. Unfortunately, this also means that the Fed isn't the sole cause of all our problems. The Fed has an indirect effect on everything. But its not like you say, find the bad things in the world and state that they are caused by the Fed. What I meant by the statements that they control money and indirectly aggregate prices is that I believe any follow on effects need to be traced to these two things.

It seems a lot like the underpants gnomes to be where you seem to be saying

1. Print money
2. ????
3. Everything bad that has ever occurred but none of the good stuff


My logic is something like

1. Print money
2. Too much money chasing too few goods
3. Average prices go up

Which I don't think anyone would argue with as a mechanism. If we want to go beyond this we need some logic instead of assertions.

 

[Vanilluxe]

Right now, U.S. treasury bonds are the most affordable and safest investment you can buy.