>> ^marbles:

>> ^NetRunner:
Why doesn't inflation cause wages to go up? Why do corporations get to raise prices, but labor never gets to raise the price of their labor? Is it because labor is in a weaker bargaining position?

Mostly because wages, like all other prices, are artificially set.
Artificially. You keep using that word. I don't think it means what you think it means.

Prices are set by market forces, and according to free market advocates this is perfect/moral/only way they can or could ever be set, or else we'll go to hell be socialists.

If the cost of a corporation's inputs goes up, then they raise the price of their goods. If a laborer's costs go up, why can't he raise the price of his services?

No matter what your answer to that might be, it's obviously not "because the Federal Reserve won't let employers pay their employees more."

>> ^marbles:
Better question: Why does inflation occur to begin with?

Different economic models hypothesize different answers. I tend to think the Keynesian story is right -- it's aggregate supply and aggregate demand. When you have a shift in either one that would lead to a higher equilibrium price, then you see "aggregate price" (aka the CPI) rise.

Which is to say, you can get both inflation and deflation without the Fed doing anything. To stabilize inflation, you actually need the Fed constantly adjusting the monetary base so neither inflation or deflation get out of kilter. Look at pre-1913 interest rates if you don't believe me.

>> ^marbles:
You're sorta ignoring the fact that inflation numbers are intentionally manipulated (like excluding food and energy costs) to keep cost-of-living numbers low.

Well, then don't take the government's word for it. Take the market's.

>> ^marbles:
>> ^NetRunner:
Now let's get real about cui bono from inflation.
That's kinda obvious isn't it? The ones that can create money from nothing and then extract that monetary value from those that actually worked and earned their wealth.


Now you're just repeating assertions without responding to what I'd had to say.

But I'll just echo my closing line from the last comment. I agree, if by "the ones that...extract value from that actually worked and earned their wealth" you mean any and all business owners, investors, and so on who have done nothing but collect interest on wealth they already own.

>> ^marbles:

So... where does this increase in price level (i.e. inflation) come from...? Oh yeah, from expanding (or inflating) the fiat monetary base!

Well, prices are set by market forces. You know, supply and demand. It's not necessarily the case that the Fed expanding the monetary base will lead to inflation.

Again, look at the last few years. Bernanke expanded the monetary base radically, but inflation has stayed low, and is on a declining trend.

>> ^marbles:
>> ^NetRunner:
Also, "Without a system built on fractional reserve" means a world without banks.

LOL Says who? It may be a world without corrupt banks. If you or I can't loan money we don't have, why should a bank be able to?

Oy. Okay, so here's how a bank works. People like you and me have some money. The bank offers to "hold" that money for us in an account, and at least used to pay us some small amount of interest on that money as incentive for us to keep our money with them.

But the bank doesn't just take our money and stick it in some vault for safekeeping, they lend that money out to other people, at a higher rate of interest than they offered us.

Problem is, we're allowed to withdraw our money from the bank whenever we want, so the bank has to keep some cash on hand (aka in reserve). However it will only keep a fraction of the total deposits in reserve, because otherwise it wouldn't be able to loan out money. That's what fractional reserve banking means.

>> ^marbles:
Meanwhile, our system uses the power of the state to reward fraud and gambling of the largest banks and biggest corporations while extracting wealth from the poor and middle-class.


I agree. Provided by "our system" you mean laissez-faire capitalism.

The banks take our savings and gamble them on risky, potentially profitable investments. That's sorta key to the functioning of capitalism though. Without that, the whole system crashes almost instantly.

>> ^NetRunner:
Why doesn't inflation cause wages to go up? Why do corporations get to raise prices, but labor never gets to raise the price of their labor? Is it because labor is in a weaker bargaining position?


Mostly because wages, like all other prices, are artificially set. Better question: Why does inflation occur to begin with?

>> ^NetRunner:
Also, it sorta ignores the fact that the worst decade for the middle class in our lifetimes was 2000-2010, which also was a period of the lowest average inflation we've had since WWII.

You're sorta ignoring the fact that inflation numbers are intentionally manipulated (like excluding food and energy costs) to keep cost-of-living numbers low.
Also inflation numbers following WWII were manipulated by using tax withholding in paychecks to "mop up" excess purchasing power.

>> ^NetRunner:
Now let's get real about cui bono from inflation.

That's kinda obvious isn't it? The ones that can create money from nothing and then extract that monetary value from those that actually worked and earned their wealth.

>> ^NetRunner:

Inflation is an increase in the price level, not expansion of the monetary base. That's why we have separate terms for them.


Thanks Peabody, but I'm pretty sure everyone knows that inflation is the increase in prices. (We have separate terms for that too, you know) So... where does this increase in price level (i.e. inflation) come from...? Oh yeah, from expanding (or inflating) the fiat monetary base!

Inflation: a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency

>> ^NetRunner:
Also, "Without a system built on fractional reserve" means a world without banks.

LOL Says who? It may be a world without corrupt banks. If you or I can't loan money we don't have, why should a bank be able to?

>> ^NetRunner:
Speculation has nothing to do with debt, or even banking. It's gonna exist as long as we have markets and contracts. Fraud will also exist as long as there is property.
And all debt is artificial, as is all money.


Meanwhile, our system uses the power of the state to reward fraud and gambling of the largest banks and biggest corporations while extracting wealth from the poor and middle-class.

To give a response to the video at large, I think it's intentionally trying to get people to misplace blame.

Why doesn't inflation cause wages to go up? Why do corporations get to raise prices, but labor never gets to raise the price of their labor? Is it because labor is in a weaker bargaining position?

Why is that? Could it have anything with decreased union membership?

Also, it sorta ignores the fact that the worst decade for the middle class in our lifetimes was 2000-2010, which also was a period of the lowest average inflation we've had since WWII.

Now let's get real about cui bono from inflation. If the bulk of your wealth is in assets like houses, stocks, commodities, etc, inflation doesn't hurt the real value of your holdings. Hell, in straight dollar terms, it makes your bottom line go up.

But what if you're an investment bank, and most of your wealth is comprised of debt owed to you? In this case, inflation is bad, very bad. Debts are issued in fixed dollar amounts for a fixed interest rate. Inflation means the dollars coming back into you are worth less than the dollars you doled out at the start of the loan. If inflation exceeds the interest rate you issued, you might actually lose money on the loan!

So it turns out that the bankers very seriously want hard money. If they could get away with it, they'd prefer to see deflation all the time, because that means the money coming into them is worth more than the dollars they paid out!

The only logical reason to think fiat currency might be helping redistribute wealth upwards is if you believe capitalism is a rigged game from the get go. But the answer to that isn't to get people mad at the government, it's to get people mad at the founding building block of capitalism -- banks.

>> ^marbles:

>> ^crotchflame:
There's nothing about inflation or speculation that requires fiat money.

Huh? That's what inflation is--the expansion of the fiat monetary base. WTF are you talking about?
Without a system built on fractional reserve debt, there is no method to engage in fraudulent speculation. There is no bubble, there is no artificial expansion in debt.


Inflation is a rise in general price levels. Just because the price of gold is fixed with a gold standard doesn't mean everything else is. But to be fair, inflation did tend to be lower under fixed currencies with little threat of runaway inflation and the long-run prices determined by gold mining activity. BUT this came at the cost of a more serious threat of deflation and bank runs, which you can easily argue is much worse.

What's the difference between speculation and investment? It seems people are always certain which is which after the fact, but a full reserve banking system would reduce both activities. It's a matter of degree, there are no magic bullets.

>> ^marbles:

>> ^crotchflame:
There's nothing about inflation or speculation that requires fiat money.

Huh? That's what inflation is--the expansion of the fiat monetary base. WTF are you talking about?
Without a system built on fractional reserve debt, there is no method to engage in fraudulent speculation. There is no bubble, there is no artificial expansion in debt.


Inflation is an increase in the price level, not expansion of the monetary base. That's why we have separate terms for them.

Also, "Without a system built on fractional reserve" means a world without banks.

Speculation has nothing to do with debt, or even banking. It's gonna exist as long as we have markets and contracts. Fraud will also exist as long as there is property.

And all debt is artificial, as is all money.

>> ^crotchflame:
There's nothing about inflation or speculation that requires fiat money.


Huh? That's what inflation is--the expansion of the fiat monetary base. WTF are you talking about?

Without a system built on fractional reserve debt, there is no method to engage in fraudulent speculation. There is no bubble, there is no artificial expansion in debt.

>> ^crotchflame:

Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.


Where is this gold genie you speak of?

>> ^davidraine:

>> ^crotchflame:
Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.
So what is it they're calling for here?

I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is not true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.


Fractional reserve banking has nothing to do with the medium of exchange. Banks have engaged in fractional reserve banking since long before the abolition of the gold standard. A better argument is that the securitization of debt (deregulation of finance) has caused massive inflation by encouraging the underwriting of bad debt by allowing the risk to be sold off.

Further, the video doesn't seem to explain that in our current system I can use my wages to purchase gold at market, and can thus use it as a store of value (if I actually believed it to be fairly valued against e.g. wages or real estate). In the government price fixing system you are proposing that wouldn't be possible, and the value of my gold would be subject to systemic risk (bad policy) just like currency is today.

>> ^davidraine:

>> ^crotchflame:
Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.
So what is it they're calling for here?

I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is not true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.


There's nothing about inflation or speculation that requires fiat money. You could argue that bubbles are made worse by fiat but they aren't avoided completely without them and a fixed money supply leaves you no monetary policy to readjust (this adjustment can both expand during a recession and contract to slow a bubble - which Greenspan famously didn't do). Most of the problems cited in this video are very real, but they're not directly the result of fiat but rather bad policy. It's like saying because people occasionally steer into things, cars shouldn't have steering wheels.

>> ^crotchflame:

Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.
So what is it they're calling for here?


I don't think they're calling for anything -- Simply explaining. Also, the point is that everything they point out is *not* true for any medium of exchange. The hallmark of fiat currency that makes it true is banks' ability to conjure money out of nowhere, which starts the inflationary and speculative balls rolling. With a fixed money supply, this can't happen.

Literally everything they're harping about here is true for any medium of exchange...be that fiat money or gold.

So what is it they're calling for here?

Lies, Michelle Bachman says so, but it's simply not true (and unlike Quant, I actually have evidence to back my claims http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=2435&DocTypeID=2)

Top 1% pays 22.7% of Federal taxes and have 17% of the income. The bottom 90% pay 47.8% with 59.8% of all income. Those numbers are based on verifiable fact, not regurgitated punditry. So yes, the wealthy pay a slightly higher percentage of their income as tax, boo hoo, poor billionaires.

Second, it has been proven, time and again, 100% of the time, that tax breaks to the wealthy do not stimulate the economy nearly as much as tax breaks to the middle and lower classes. It has always been that way and I defy you to find a time and place in history when things worked differently. Middle and lower income people SPEND money, the wealthy HOARD money. It's a simple as that, hoarding does not stimulate the economy. They don't ACTUALLY spend it on job creation, that's just a myth.

Maybe you should get your 'facts' from someone other than Michelle Bachman, she's not very reliable.

>> ^quantumushroom:

Word up, lantern. The top 1% wealthy already pay 40% of the taxes. Forcing them to pay more will weaken the economy further but snag a few more voters seeking "revenge" for perceived economic injustices.
Hasn't President Foodstamps already blown 4 trillion in fiat money with nothing to show for it? The socialists of this corrupt regime can't create a single job for less than half-a-million dollars each.

>> ^lantern53:
It simply isn't true.
Warren Buffett pays about 45% of his income to the gov't whereas the poorest 50% of the citizenry pays no federal taxes at all.
Obama is just a divider encouraging class warfare.

These "statistics" get thrown around a lot, but they don't tell the whole story.

The top 5% pays something like %50 of the taxes, but they have %90 of the money.>> ^quantumushroom:

Word up, lantern. The top 1% wealthy already pay 40% of the taxes. Forcing them to pay more will weaken the economy further but snag a few more voters seeking "revenge" for perceived economic injustices.
Hasn't President Foodstamps already blown 4 trillion in fiat money with nothing to show for it? The socialists of this corrupt regime can't create a single job for less than half-a-million dollars each.

>> ^lantern53:
It simply isn't true.
Warren Buffett pays about 45% of his income to the gov't whereas the poorest 50% of the citizenry pays no federal taxes at all.
Obama is just a divider encouraging class warfare.