Philosophy Now Forum

Posted: **Tue Jun 06, 2017 7:35 pm**

bobevenson wrote:Jesus Christ, you don't know shit about money, I don't know how you pay your rent!

He's probably on welfare like you bob.

Posted: **Tue Jun 06, 2017 7:37 pm**

Philosophy Explorer wrote:It should be mentioned that banks create money through lending, that's the process they use.
PhilX

How?

Posted: **Tue Jun 06, 2017 7:43 pm**

bobevenson wrote: ↑Tue Jun 06, 2017 7:33 pm What a garbled-up response. First of all, inflation does not apply to an increase in the price of specific commodities, only to a general increase in prices. Secondly, money is legal tender backed by the government that issues it. Thirdly, terms of sale is when the money is due from the buyer to the seller. Class dismissed!

Inflation is calculated by looking at a selection of goods and services. Not everything rises or falls by the same amount over the same period.

'Legal tender' are banknotes and coins. That is only a small part of 'broad money'.

'Terms of Sale' describe the delivery and payment terms that apply to a transaction, not the debt.

Posted: **Tue Jun 06, 2017 7:48 pm**

Please, I don't feel like ripping apart your faulty response. My comment is correct and stands as written.

Posted: **Tue Jun 06, 2017 8:01 pm**

Sorry there, Bob, but inflation does involve specific asset market bubbles. It's the same problem as general inflation if you were to actually think things over. This is also why the 2007-08 collapse hit while the central bank was thinking inflation was not in existence. As opposed to a general overall price increase, we had a huge price spike in certain asset markets -- basically real estate and the stock markets. Central bankers now readily admit that they have to address asset bubbles as part of their mandate to curb inflation.

You seem like someone who has confined his study of economics to a handful of Austrian writers, and who has basically avoided the vast majority of the literature on the subject. Instead of insulting people, you may be better off reading up more on the topic of economics. There is a reason why your views are for the most part not accepted as mainstream economic orthodoxy.

Posted: **Tue Jun 06, 2017 8:10 pm**

Arising_uk wrote: ↑Tue Jun 06, 2017 7:35 pm
bobevenson wrote:Jesus Christ, you don't know shit about money, I don't know how you pay your rent!
He's probably on welfare like you bob.

You lost this bet Arising_uk.

PhilX

Posted: **Tue Jun 06, 2017 8:16 pm**

Arising_uk wrote: ↑Tue Jun 06, 2017 7:37 pm
Philosophy Explorer wrote:It should be mentioned that banks create money through lending, that's the process they use.
PhilX
How?

Through bank deposits as this article explains:

https://en.m.wikipedia.org/wiki/Money_creation

PhilX

Posted: **Tue Jun 06, 2017 8:36 pm**

bobevenson wrote: ↑Tue Jun 06, 2017 7:33 pm What a garbled-up response. First of all, inflation does not apply to an increase in the price of specific commodities, only to a general increase in prices. Secondly, money is legal tender backed by the government that issues it. Thirdly, terms of sale is when the money is due from the buyer to the seller. Class dismissed!

1st response: wrong
2nd response: take a $10 bill and burn it, then see how much the government backs it.
3rd response: incomplete

Now you're dismissed Wimpy.

PhilX

Posted: **Tue Jun 06, 2017 8:51 pm**

Philosophy Explorer wrote:Through bank deposits as this article explains:
PhilX

Oh! Broad money. Okay.

Posted: **Tue Jun 06, 2017 9:13 pm**

Science Fan wrote: ↑Tue Jun 06, 2017 8:01 pm Sorry there, Bob, but inflation does involve specific asset market bubbles. It's the same problem as general inflation if you were to actually think things over. This is also why the 2007-08 collapse hit while the central bank was thinking inflation was not in existence. As opposed to a general overall price increase, we had a huge price spike in certain asset markets -- basically real estate and the stock markets. Central bankers now readily admit that they have to address asset bubbles as part of their mandate to curb inflation.

You seem like someone who has confined his study of economics to a handful of Austrian writers, and who has basically avoided the vast majority of the literature on the subject. Instead of insulting people, you may be better off reading up more on the topic of economics. There is a reason why your views are for the most part not accepted as mainstream economic orthodoxy.

Please don't dispute the definition of inflation as a general increase in prices due to a dilution in the value of money by bringing into the argument your so-called "bubbles."

Posted: **Tue Jun 06, 2017 10:36 pm**

Londoner wrote: ↑Tue Jun 06, 2017 2:00 pm
FlashDangerpants wrote: ↑Mon Jun 05, 2017 11:30 pm The money in circulation today does not come remotely close to matching the value value of extant goods (just plain old hardware such as land and houses and cars and TVs and beer).
In circulation in the sense of being in the form of dollar bills, no, but the value of the US currency as a whole will be exactly equal to the total of goods and services that can be purchased for dollars.

It's nothing of the sort. The amount of money in circulation is adjusted to facilitate the amount of stuff that is actually being purchased right about now without causing prices to spiral up or down. That is a fraction of the physical stuff that actually rexists and can be accounted for in ledgers. It isn't even nearly enough for the land that is lying around not being sold every day, let alone all the stuff on and under it that also isn't being sold right now either.

I wasn't restricting myself to m0 money (dollar bills) which would be silly given that that isn't what got printed by QE. What I am saying here even with to the broadest possible definition of money called M4 or "broad money" which includes that, plus all the money in bank deposits, and all the money in the short term money markets, and all the money in the long term money markets too.

Work out all the M4 money there is in the entire world, and you don't have enough to purchase just the land of the USA. Create enough to do so, and the excess money (given that nobody is presently buying all the land in America) will become practically worthless, and it would no longer be enough to buy said land. This is how hyperinflation works.

If you printed enough money to pay for all the potential services that aren't being sold then the value of that money would approach zero so rapidly that it would be impossible to use the stuff for any purpose whatsoever.

Edit ---- I hadn't read all the other replies and realised everyone knows what broad money is.
I guess technically if everyone who owns anything at all in the whole world sold it all on the same day, then the amount of money in circulation would determine the prices they could get for it all (and thus oversupply and lack of money in circulation would force prices down to the point where all value and all money were equal). I don't know if that's what you were aiming for, but I guess it's sort of monetarily true.

Posted: **Tue Jun 06, 2017 10:40 pm**

bobevenson wrote: ↑Tue Jun 06, 2017 9:13 pm
Science Fan wrote: ↑Tue Jun 06, 2017 8:01 pm Sorry there, Bob, but inflation does involve specific asset market bubbles. It's the same problem as general inflation if you were to actually think things over. This is also why the 2007-08 collapse hit while the central bank was thinking inflation was not in existence. As opposed to a general overall price increase, we had a huge price spike in certain asset markets -- basically real estate and the stock markets. Central bankers now readily admit that they have to address asset bubbles as part of their mandate to curb inflation.

You seem like someone who has confined his study of economics to a handful of Austrian writers, and who has basically avoided the vast majority of the literature on the subject. Instead of insulting people, you may be better off reading up more on the topic of economics. There is a reason why your views are for the most part not accepted as mainstream economic orthodoxy.
Please don't dispute the definition of inflation as a general increase in prices due to a dilution in the value of money by bringing into the argument your so-called "bubbles."

Nothing is as inflated as your ego, bubblehead.

PhilX

Posted: **Wed Jun 07, 2017 9:49 am**

FlashDangerpants wrote: ↑Tue Jun 06, 2017 10:36 pm Me: In circulation in the sense of being in the form of dollar bills, no, but the value of the US currency as a whole will be exactly equal to the total of goods and services that can be purchased for dollars.

It's nothing of the sort. The amount of money in circulation is adjusted to facilitate the amount of stuff that is actually being purchased right about now without causing prices to spiral up or down. That is a fraction of the physical stuff that actually rexists and can be accounted for in ledgers. It isn't even nearly enough for the land that is lying around not being sold every day, let alone all the stuff on and under it that also isn't being sold right now either....I wasn't restricting myself to m0 money (dollar bills) which would be silly..

'

I don't see how that is different to what I wrote; I also distinguished between the amount of money in circulation and the total value of the currency.

Work out all the M4 money there is in the entire world, and you don't have enough to purchase just the land of the USA. Create enough to do so, and the excess money (given that nobody is presently buying all the land in America) will become practically worthless, and it would no longer be enough to buy said land. This is how hyperinflation works.

But all the land in the USA is not for sale. Suppose it was, suppose that every land owner in the USA tried to sell their land at the same time. What would happen to the price of land? It would not stay the same, it would fall. Each dollar would be worth more in terms of land purchasing power.

If you printed enough money to pay for all the potential services that aren't being sold then the value of that money would approach zero so rapidly that it would be impossible to use the stuff for any purpose whatsoever.

But we agreed we were not discussing printed money. The amount of cash made available is just a matter of convenience.

As to 'potential services', they do not affect prices. Only things that are 'in the market' affect supply and demand and thus set prices. If those potential services become real services and are offered on the market, then we expect deflation. As I wrote, the value of the US currency as a whole will be exactly equal to the total of goods and services that can be purchased for dollars. If something is not for sale (or is something nobody wants to buy) then it has no effect.

Suppose the US government announced that from now on everything would be distributed through a system of rationing. No more shopping! No more Wall Street! No more real estate salesmen! There would still be the same amount of land, cars, food etc., but the dollar would then be worthless - because there was nothing to spend it on.

So, all else being equal, if there was nothing available for sale (for dollars) the US dollar would be worthless. If there was twice as much available for sale (for dollars); the US dollar would be worth twice as much. The two are always in balance. The government can mess about with the amount of dollars available, but the relationship will still hold. If the government doubled the number of dollars everyone owned then prices would also double, so the value of these new dollars would still exactly match what was available to buy.

Posted: **Wed Jun 07, 2017 9:17 pm**

Well ok, we seem to agree.
So the point I made originally about Bob's insane plan to create enough money to match all the property that exists in the USA rather than what is merely being sold stands, and you agree with it.
I'm not sure what you disagreed with in the first place now.

QE is routinely referred to as printing money. Obviously no money was physically printed in the process. Everybody recognises it as a metaphor to describe something that would otherwise require a page of dense text.

Posted: **Thu Jun 08, 2017 12:37 am**

Every time I see this topic heading my first thought is "the big bang" and variations in density in the cosmic microwave background. Then, with disappointment, I realise it's just more bickering about social and political stuff

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