School Me On Inflation

[Zippyjuan]

Then mention them and don't leave them out and pretend as if in that period under the gold standard the money supply didn't change.

I did- I pointed out that supply and demand can effect prices. Thank you for your suppport.

 

[dcjones]

Do you disagree that if demand for something rises faster than the supply does the price for that good will not rise? Steven Douglas agrees that there are many causes of inflation including increases in the money supply. His quote you cited agrees with what I said. We agreed on what can cause it.

I was basically disagreeing that monetary inflation is the only true meaning of the term inflation. It's most common usage is to refer to price increases.

When Katrina hit and there was a shortage of generators in the local area, the price doubled and almost tripled. Is that inflation? No-- that is short term price adjustments. Inflation classical definition was always a monetary relation.

 

[hazek]

I did- I pointed out that supply and demand can effect prices. Thank you for your suppport.

Please.

How stable were prices when we did not have fiat currency?
The money supply was kept pretty stable under the Gold Standard so prices should have been pretty stable as well. But prices were all over the place.
http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg

What are you doing in the above quote? You are pretending. Pretending that when there was no fiat currency that the money supply didn't change. That's somehow because we had a gold standard that the money supply didn't change. Aren't those your words in the above quote?! Where exactly in the above quote have you disclosed that the money supply did in fact change, sometimes change dramatically even on a gold standard?!

I must say your propaganda is very good. Too bad for your FED shilling ass I see right through it and will call you on it every single fking time I get the chance.


BTW out of all the people on this forum I have the greatest distaste for you. I abhor you and your shilling kind.

 

[hazek]

Oh and Zippyjuan, don't worry. Soon your silly little economics theory of robbing people blind through monetary inflation while pretending to serve the price stability for the benefit of the same people will be put to rest by Bitcoin. Once people see how a fixed money supply is actually beneficial, all this nonsense you so eagerly promote will be nothing more but a fking joke at best and a criminal offense at worst.

 

[Zippyjuan]

Perhaps you can share with us some figures indicating what was going on with the money supply during that time. Thank you for looking for them.

You are free to like or dislike whomever you want to. You obviously have some strong feelings about me which is fine. Supporting your position on what you think was happening is better than name calling though.

 

[iamse7en]

I went to the Mitt Romney forums and they are having much more intelligent conversation. You RP supporters are so dumb. /sarc

This thread has been really interesting! I majored in Econ, but they told me lies. I've had to read Hazlitt, Rothbard, Rockwell, Paul, and Woods to understand these issues, but I still have a long way to go.

 

[Seraphim]

I went to the Mitt Romney forums and they are having much more intelligent conversation. You RP supporters are so dumb. /sarc

This thread has been really interesting! I majored in Econ, but they told me lies. I've had to read Hazlitt, Rothbard, Rockwell, Paul, and Woods to understand these issues, but I still have a long way to go.

LOL + rep

 

[Bossobass]

Do you disagree that if demand for something rises faster than the supply does the price for that good will not rise? Steven Douglas agrees that there are many causes of inflation including increases in the money supply. His quote you cited agrees with what I said. We agreed on what can cause it.

I was basically disagreeing that monetary inflation is the only true meaning of the term inflation. It's most common usage is to refer to price increases.

Excess demand does not cause inflation.

Price fluctuations are not the cause of inflation or recession.

Bosso

 

[nobody's_hero]

Very simple.

Say there are 5,000 people on Ron Paul forums, and each person has $1 in our little Ron Paul economy.

Each member has 1/5000th of the purchasing power in the forums.

Then some idiot comes in and dumps another 5,000 dollars into our economy, out of thin air, like magic.

Now each member has 1/10,000th of the total purchasing power in our economy (except the guy who was lucky enough to get that $5,000; he suddenly owns half of the purchasing power in our economy).

The end.

 

[Steven Douglas]

Then some idiot comes in and dumps another 5,000 dollars into our economy, out of thin air, like magic.

It really is that simple. Another way of saying it:

A corporation issues 100% of its original stock, which shares are now actively trading. As the value of that stock rises, each share can end up being cost prohibitive for small investors to buy. The solution: make small change out of all existing shares. In other words, do a stock split. Nobody loses, it is completely transparent. The corporation is just "making change", like giving you 2 half dollars in exchange for each dollar you own - everybody now has twice the shares at half the value.

The corporation can split stock indefinitely - increasing the QUANTITY of shares BY DIVISION of the same existing shares, such that the QUALITY remains the same. So what if it split the shares into tenths. You have ten times the shares at one tenth the price per share. Someone declared that your dollar is now worth ten dimes, and the new dimes are now called "shares".

With currency inflation, you don't split the stock -- you manufacture counterfeit shares in excess of the original 100%, and sell those shares to new investors. In other words, sell more than 100% of the company to new "parties of interest".

If the corporation issues 100% of the company's shares, then later issues brand new "counterfeit" shares equal in amount to the original shares, the original stockholders would have the same quantity of stock, but it would be worth half its original value, based on the addition of a matching number of new "out of thin air" shares sold to new stockholders. This increases the quantity of shares, not by internal division, but by external DOUBLING of the supply, increasing the total number of shares to 200%. Of course, there is no such thing as 200% of a company. So the new aggregate number of shares in existence becomes the new 100%.

The new stockholders aren't necessarily the criminals in this case, even though they may have an economic advantage over the original shareholders (buying undervalued shares). They're just buying shares, like you or anyone else. The ISSUER, however, is most definitely and positively a criminal of the lowest kind, who is absolutely guilty of deliberately defrauding investors - all of them - original and future.

Meanwhile, the effect of this fraud can be fully masked, so long as the corporate stock increases in value at the same time that the stock is being counterfeited/inflated. In fact, so long as the corporation remains productive, it can "leak" new shares, devaluing its own stock just enough to cancel out any rise in value, producing a nice, flat, "price stability" line.

Enter the nastier than nasty apologist for the corporation, who really is a piece of work, who can piss in your face and call it warm spring rain, by pointing to the fact that your stock never actually "lost" value. You have nothing to complain about, because no real "inflation" has occurred (referring only to price, of course, as nasty apologists are wont to do). Pay no attention to the gain in value that really was yours, and really was stolen from you. The idiot apologist only sees that you didn't "lose" the original value. The idiot apologist, who looks at price per share value only, can now point to all kinds of factors that influence price on shares, like supply and demand, overall company health and profitability, etc., so all must be well.

So pay no attention to the criminal in the background who is manufacturing shares out of thin air. That's minor stuff. Nothing to get excited about. No, says the idiot. Look at price only. That's the real indicator. Lots of causes for a change in prices, up or down - plenty to argue about there. That alone can keep us busy for days.

 

[nobody's_hero]

A corporation issues 100% of its original stock, which shares are now actively trading. As the value of that stock rises, each share can end up being cost prohibitive for small investors to buy. The solution: make small change out of all existing shares. In other words, do a stock split. Nobody loses, it is completely transparent. The corporation is just "making change", like giving you 2 half dollars in exchange for each dollar you own - everybody now has twice the shares at half the value.

Douglas, you and I think exactly the same on this subject. Believe it or not, I've worked out that exact argument in my head, stock market and everything.

I sometimes wonder if that's what the Constitution meant by Congress 'fixing the standard of weights and measures.' It wasn't a green-light for government to just print money (coin it, rather), but more of a stock-splitting method to make currency more transferable, without siphoning any wealth from the people who hold existing money. I'd love to know what the actual original intent was behind it, but that's my theory anyways.