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Kate87

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Everything posted by Kate87

  1. Are these two comments not moral pragmatism? i.e. disenfranchise people who are unlikely to agree with your political views. Is this not the opposite of a principled approach to politics?
  2. Where do I start with this post? It would be tempting to ignore the whole thing but maybe it’s worth responding for the sake of anyone reading who hasn’t made up their minds yet. This is precisely what Argentina cannot do, since the process of doing this would cause infinite inflation. Bond holders who are expecting to be paid in US dollars will not accept infinitely worthless peso’s. The US’s ability to issue new securities is much greater because it has it’s own central bank that it controls. This bank can create demand for US bonds at any time. This is exactly what happened with QE, and bond yields went DOWN. This surprised many people (like dumb rating agencies who cut the AAA rating), while it was the market who actually decided the credit risk was less. Of course money is not the source of value, but your second sentence doesn’t follow. This summarises the point I am making, bold mine: http://www.nytimes.c...l-phantoms.html
  3. Argentina controls it's peso but its government debts are not denominated in peso's. They are denominated in a foreign currency it cannot control, the US dollar (http://www.businessw...-dollar-payment). Greece's debt is denominated in a defacto foreign currency it cannot control, the Euro. America's debt is denominated in US dollars which it has full control over. Without going into too much detail this means that the US cannot go bankrupt in the same way as Greece or Argentina. It is essentially impossible for the US government to default involuntarily because it can always print dollars to pay it's debts, because all of it's debts are in dollars. This would not be inflationary if done during the right conditions. This is essentially how Japanese government debt is now over 200% of GDP because bondholders know they will be paid back because the debt is denominated in yen and the BoJ controls yen. Witness the low inflation in Japan while this has happened.
  4. Your savings sitting in your bank account aren't actually there you realise? So you are entangled in the "credit/debt system" whether you want to be or not. I guess you could advocate making fractional reserve banking illegal, but this would be an initiation of force against banks, and so would require more cognitive dissonance from you. Those deadbeat children, elderly people, and disabled people! What an insult to America. What happened in Greece cannot happen in America for several reasons. One is that the US's debt's are denominated in a currency that it controls ie the US dollar. Whereas Greece's debt's are denominated in a currency it does not control ie the Euro. The economic implications to this are vast and I think you should read about them before making ridiculous comparisons!
  5. What a ridiculous turn this thread has taken. For example, what about disabled people who rely on charity to live? Their voting rights should be removed because they don't own property and/or haven't "contributed" to government?
  6. Insulting someone in the UK is now not a crime - yay! - http://www.bbc.co.uk/news/uk-politics-21020737 It's pathetic that this had to be fought for and the Labour party's response: "... shadow home secretary Yvette Cooper pressed the government to produce an "assessment of the impact of Section 5 of the Public Order Act on different groups, particularly on minority groups"."
  7. After reading some Austrians, it seems that Austrian economics makes no predictions in relation to inflation in a post-financial crisis. There is nothing in the model to definitively say one way or another. So you have some Austrians saying inflation and some deflation based on no model at all. This is similar to PK's point in a recent post: http://krugman.blogs.nytimes.com/2012/12/31/on-not-learning-continued/
  8. Have you? CPI is at 1.8%. And if you have a conspiracy theory as to why CPI is rigged you can use independent measures such as http://bpp.mit.edu/usa/
  9. Thanks for the Keen tip - I'm halfway through listening to this - http://www.bbc.co.uk/programmes/b01j5h51 - very interesting stuff. OK, so it does seem like I'm wrong on the Austrian deflation thing. So far I have found Mike Shedlock - http://globaleconomicanalysis.blogspot.co.uk/2011/08/yes-virginia-us-back-in-deflation.html and a couple of others in the econoblogs. I am genuinely interested in learning about Austrian's who aren't Schiff style, so if you think there is someone who is worth reading I would appreciate it. And I still don't understand how any Austrian can make a deflation prediction when there is nothing in their model that can warrant this.
  10. The trillion dollar coin idea is a response to ridiculous ideas on the right, namely that voting for spending increases and then threatening not to fund those spending increases is a rational political strategy. As a response to ridiculous politics, I think the coin idea is measured and appropriate. The fact that you are not equally denouncing threats to have the US default on it's debt is revealing. Or do you think that a default would be a good thing? Also, I am still waiting to hear about those Austrian and Libertarian economists who were right about low inflation! Or have you changed your mind and now agree with me that they don't exist?
  11. The above sentence should read: "When Germans sell their US bonds which they have bought...."
  12. Demand pull inflation, cost push inflation, etc it's all in an economics textbook. Ultimately though, inflation is targeted by the central bank. So they use monetary policy operations to cause low and stable inflation. QE is one of those policy tools. Interest rates cannot go below zero so without QE we'd probably have deflation at the moment, so QE is causing enough inflation for CPI to be modestly positive at 1.8%. As soon as that number starts to rise significantly, the Fed will reverse QE and/or raise interest rates. This is probably a revelation to you, but all banks including private banks, create new money out of thin air. When a bank makes a loan that money does not come out of other people's savings which is a common misconception. Also, when you repay your loan, the bank deletes the money. Only the profit on the loan is retained. Now there are capital ratio requirements to prevent banks from infinitely creating money. The Fed though can create money without reference to it's capital. OK, yes I sort of agree, but not with the details. When Germans sell their bonds, they get US dollars which they sell to buy Euros. This puts downward pressure on the EUR/USD exchange rate which is inflationary for the US as it causes the price of imported goods to rise. With regards to your last sentence above, once the money enters the hands of consumers and starts to cause above target inflation, the Fed will take the financial assets bought with the proceeds of QE and sell them. These proceeds are then deleted. QE will be fully reversed if necessary.
  13. When foreigners sell US bonds and then repatriate their money, that is an outflow of US dollars not an inflow. Inflation is a general rise in the level of prices. QE is the creation of new money by the central bank which is sold in exchange for financial assets. If we are to have a meaningful discussion words have meanings that are distinct. What you meant to say was that QE causes inflation? Well in my model that depends on the economic conditions. With today's conditions QE does not cause inflation, and any model that says otherwise has been proved wrong. This is the importance of having reasons behind your predictions, ie a model that can be tested against reality.
  14. There are so many things that you have wrong here, but you seem like a good guy. Just to focus on one of your comments regarding the accuracy of CPI - all independent measures of inflation (such as The Billion Prices Project - http://bpp.mit.edu/usa/) match CPI nicely. If you can point to a well made alternative measure of prices I am all ears, but if you only have a conspiracy theory then I can't take your comment seriously.
  15. I would like to see some links to Austrian, Libertarian, and Monetarist economists who were predicting in 2008-9 (in the midst of bailouts and printed money) that we would have low and stable inflation as a result. Also, even if you can provide such links (which I doubt), it matters why they predicted low inflation. ie in a Keynesian liquidity trap model low inflation is predicted as a result of the model. But it is difficult to see how an Austrian model could predict low inflation after bailouts and QE. Anyone can predict anything, what matters is that a person has a working model that makes predictions that can be tested against reality.
  16. Crow, that's the best analysis I've read on here. I'm interested in why you think PK's analysis is wrong in the long run? ie. All QE and trillion dollar coins etc can be destroyed if necessary once we exit the liquidity trap. And debt incurred for stimulus will shrink as a proportion of GDP once the economy is growing healthily again.
  17. The fact that you think so is telling. It seems Paul Krugman posted on his blog a very similar statement to mine right after my post above: http://krugman.blogs...ainst-the-coin/ So I am morbidly curious, what makes this farcical?
  18. All coins and paper money are directly counted in the monetary base. No, such a solution would work in the short term but not the long term. As the economy exits the liquidity trap, there would be no mechanism for the Fed to take back the coins. Whereas QE money and a trillion dollar coin can be destroyed at will thereby negating inflationary effects. Because I have an accurate model of how the economy works, I can make such predictions, whereas without an accurate model economic analysis becomes the repetition of dogmatic statements.
  19. Hint: The reason such large increases in the base do not mean hyperinflation is because the economy is in a liquidity trap: http://en.wikipedia.org/wiki/Liquidity_trap Anyone worth listening to on economics has adjusted their models to incorporate this theory. There is no other way to hold the above graph and the current inflation rate of 1.8% simultaneously in your mind. Ie to not acknowledge a liquidity trap is to engage in massive cognitive dissonance. So do the smart thing and adjust your thinking to reality! PS: If anyone questions that the CPI is being miscalculated or manipulated to hide hyperinflation then that really does take the dumb award of the day, so don't even bother.
  20. Why are you guys so afraid of a trillion dollar coin? Monetary base has already increased by nearly $2 trillion since 2008: We still have low and stable inflation. Or are you guys part of the brigade who continually and obstinately predict hyperinflation, in the face of all evidence and absolutely refuse to adjust your economic models to reality?
  21. http://www.bbc.co.uk/news/world-us-canada-20923201 - more shooting deaths in Colorado today.
  22. I'm morbidly curious - do you support no speed restrictions on stretches of US highways?
  23. Binswanger: I think Crow has hit the nail on the head with the car speed limit analogy. To apply it to Binswanger's statement: Now is this good logic to scrap speed limits? Of course not. Except if you have a cultural bias which leads you to justify your preconceived conclusion. Ie if you are German you are likely to support no speed limits on highways which is a risk to life. For example bike speeds clocked at 290kph (180mph) are legal - I look at this as a Brit and think "Crazy Germans!" in exactly the same way I look at gun massacres in the States and think "Crazy Americans!". In both cases you are exposing yourselves to objective risks for nothing more than your cultural biases. Germans like fast cars as Americans like big guns. Germany even has it's own NRA, the German Auto Club which campaigns for speed limit reductions claiming they make roads safer. I repeat, this is an entirely cultural phenomenon, exactly like the US fetish with guns. The facts are clear: (http://www.etsc.eu/d...act_Sheet_1.pdf) Speed is a basic risk factor for your family, cut speeds and you protect your family. The facts are clear: (http://www.nejm.org/...199310073291506) Guns are a basic risk factor for your family, cut guns and you protect your family. This couldn't be more contradictory of Binswanger's statement above.
  24. I can't remember who said this but there are two rules about humanity: Things always get better in the long run. People always think they are getting worse. I think the Republicans are overly pessimistic, as are cultural conservatives the world over. For example, literalist Christians (mostly conservatives) believe that the end times are near so by definition the country's best days are in the past. I see Objectivists (many who are culturally conservative) being pessimistic about capitalism for example, which to me flies in the face of the evidence:
  25. That is your opinion. The facts are otherwise - http://www.nejm.org/doi/pdf/10.1056/NEJM199310073291506 As an example in your case, how do you know someone in your home won't become accidentally drunk, and in a perfect storm of unfortunate incidents, you leave the key to your gun cabinet out on show.... The risk of this may be small, but the chances of you using your gun to successfully thwart a criminal is even less. Therefore you have exposed the people in your home to a net risk.
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