Obama's Inflation

[Chris Austin]

Spot on. It is too easy to blame Obama for the actions that have been taking place to intentionally debase our currency since the 70s. Heck, as far as I am concerned every politician who ever supported an theses nonsensical budgets have an equal share of the blame.

Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?

[led mike]

Rob Graham wrote:

These Harvard guys are killing us.

LMAO Best quote so far this year!!!! :beer: :jig:

[Oakman]

Rob Graham wrote:

Didn't you mean the "Bush-Paulson-Geithner-Obama" inflation?

Of course, but I didn't want to get sidetracked when Stan started defending Bush ;) I find our collective amnesia amazing. Breton Woods[^] was established as a way of stablising the nascent global economy at at time when most of the signatories were spending more than their GNP on WWII. It worked. But in 1971, the US gutted it to deal with short-term problems far less threatening than NAZI Germany. Since then the Fed has slowly but surely dumped more and more monopoly money into our laps, encouraging the banks to borrow ten pieces of paper from them and then loan 100 pieces of paper to their customers in return for a promise to pay back 103, no 105, no 107, no 110 pieces of paper in a year. That quote from Bernanke shows that he knows exactly what he is doing. (Even though he's a Harvard undergrad, he got his PhD from MIT)but, I suspect, he doesn't know how to stop. Like the engineer on a train going off the tracks, all he can do is hang on - there's no way for him to even try to steer.

Jon Smith & Wesson: The original point and click interface

[Ilion]

Oakman wrote:

Anyone else know of a country trying to fund major social changes while struggling to cover the costs of a war just ended?

The Washington (and Hamilton) administration of the fledgling US.

[Oakman]

Ilíon wrote:

The Washington (and Hamilton) administration of the fledgling US.

I want to congratulate you on discovering the existence of Hamilton. I've always like Aaron Burr, myself.

Jon Smith & Wesson: The original point and click interface

[Ilion]

Oakman wrote:

I've always like Aaron Burr, myself.

You would, wouldn't you? Aaron Burr: Not Yor Average Sore Loser!

[73Zeppelin]

I admit, at one point I admired the von Mises guys - I had even considered moving to Auburn. BUT, like the economists they like to disparage so much, I find they fall into the same traps. Like this "doomsday" inflation scenario. Not for one minute do I buy this story of inflation being measured by some kind of price aggregate - do store managers really up prices when they know more money enters the system? I don't think so. I can't imagine mom and pop shops across America watching the M2 index and saying "Okay Jeb, time to up the price on them Heinze beans!". Ben's words, quoted above, really refer more to purchasing power and there are a million reasons, other than inflation, as to why prices can change. So I do agree to some extent that printing money leads to inflation, however, I don't agree that it is simply an abundance of paper dollars that leads to inflation. I think it has more to do with a misunderstanding of the distinction between "money" and "credit". So I kind of agree with the von Mises guys, but for different reasons. Re: the von Mises institute - beware of any economist or school who/that claims to have the "solution" to the economic woes of the world. More specifically, be wary of those who speak of "marginal utilitly". Anyways, I'm not convinced we're going to see hyper-inflation anytime soon. And I also agree that something needs to be done about fiat money, but backing it with gold (even a fraction) is a very bad idea. I think the more pressing matter is the talk from Russia and China about replacing the dollar. Not to toot my own horn, but I have been harping about this issue for some time. Now, the two great opponents of the US (Russia/China) seem to be converging and in agreement with each other. A bid to counterbalance American influence, or something else? I trust neither Medvedev no Jintao. I think they speak one thing and do another.

[Oakman]

Ilíon wrote:

You would, wouldn't you?

You betcha. A man who stood up for what he believed; a Revolutionary War hero (you understand the meaning of that word, don't you?); and a man who wouldn't allow Hamilton, who wanted to set up Washington as America's king and who was far better at making speeches and kissing GW's ass than fighting, to insult him publically and get away with it.

Ilíon wrote:

Aaron Burr: Not Yor Average Sore Loser

It's spelled "your." But given the demonstrated paucity of your understanding of Burr, a small spelling error of a common word pales in comparison. By the way, I forget: What were you doing while Stan and I were serving our country in uniform?

Jon Smith & Wesson: The original point and click interface

[Oakman]

73Zeppelin wrote:

I don't agree that it is simply an abundance of paper dollars that leads to inflation

I'm assuming that you are referring to paper dollars as opposed to gold-backs. There is evidence that there is a collorary between the two. Looking at the increasing rate of inflation and comparing it to the increasing rate of fiat money since 1971, there is either a striking coincidence there, or a relationship. Both the hyper inflation of the Weimar Republic and of Zimbabwe both seem quite closely tied to the government's issuing of more paper. The Roman Empire's inflation, done by adding base metals to silver, contributed greatly to civil and military unrest and ultimately resulted in local coinage becoming the only one accepted by merchants.

73Zeppelin wrote:

I can't imagine mom and pop shops across America watching the M2 index and saying "Okay Jeb, time to up the price on them Heinze beans!".

I think the underlying question is whether money is a commodity like any other and whether or not the law of supply and demand apply to it.

73Zeppelin wrote:

Re: the von Mises institute - beware of any economist or school who/that claims to have the "solution" to the economic woes of the world.

That can be said of more than just schools of economics, but it cannot be said too often in a time when there are a lot of folks looking for someone who knows the road to the Promised Land.

73Zeppelin wrote:

Anyways, I'm not convinced we're going to see hyper-inflation anytime soon.

I wish I was smart enough to know for sure. My best guess is that we'll see increasing inflation over the next four years followed by a steep rise in the rate that will later be called the moment the US economy went south.

73Zeppelin wrote:

I think the more pressing matter is the talk from Russia and China about replacing the dollar.

I think that is a more serious threat in the short-term (though I wish someone in the Obama Administration worried about the long-term) and it is, of course, politically inspired. But ultimately, if it comes to pass it will not be the Chinese and Russians who own the ultimate responsibility but the US which has been pissing away the value of its currency and giving away its industrial and military might

[73Zeppelin]

Oakman wrote:

I'm assuming that you are referring to paper dollars as opposed to gold-backs. There is evidence that there is a collorary between the two. Looking at the increasing rate of inflation and comparing it to the increasing rate of fiat money since 1971, there is either a striking coincidence there, or a relationship.

I don't disagree that inflation is tied to money. I disagree that the causes of inflation are a simple as "increased money stock leads to increased inflation" (and I disagree that inflation can be measured by some kind of price index, but anyways...). I do believe there is a correlation, I question the causality. I tend to think that inflation is more tied to what goes on in the balance sheets of banks and international payments rather than a crude measure of the number of dollars floating about. I could be wrong, but if it was a simple relationship, inflation wouldn't be that hard to control.

Oakman wrote:

I think the underlying question is whether money is a commodity like any other and whether or not the law of supply and demand apply to it.

Mmmmm. That would be the million dollar question. However, there is a rather large problem there - to trade a commodity, it must be standardized somehow. How do we standardize money without resorting to backing it by an exhaustible resource (like gold)? And if it becomes a tradeable asset, how do we prevent speculative attacks, bubbles and bursts? I'm not saying your idea is a bad one (I have the same thoughts), I'm saying that we need to look at whether money is a commodity, or not.

Oakman wrote:

That can be said of more than just schools of economics, but it cannot be said too often in a time when there are a lot of folks looking for someone who knows the road to the Promised Land.

I like the way the Austrians think, I don't like their undercurrents of political activism - it kind of turns me off. I know politics and economic systems are intertwined, but it helps if they weren't so, reactionary, I guess. Just my opinion.

Oakman wrote:

I think that is a more serious threat in the short-term (though I wish someone in the Obama Administration worried about the long-term) and it is, of course, politically inspired. But ultimately, if it comes to pass it will not be the Chinese and Russians who own the ult