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The scary general accelerated inflation of legend, can't happen if there is unused resources in the economy. Inflation comes because there is excessive demand

The scary general accelerated inflation of legend, can't happen if there is unused resources in the economy. Inflation comes because there is excessive demand against the capacity of the economy or against imports. Anyway, after watching the Fed, the CEB, and the Japanese Central Bank the last years, is clear where the burden of proof is.

AnimalMuppet 10y ago
First, it's not legend. The course you are suggesting is causing severe inflation, right now, in Venezuela. Second, "it can't happen" - until it does. That is, you adopt this course, and there's not inflation because there's excess capacity. But the new money lets people start buying more things, and eats into the excess capacity. That's good, you say? Yes, so far. But what happens when we run out of capacity? Do we stop UBI? That's going to be politically impossible. Do we raise taxes to cover it? "We'd kill the recovery!" people scream. So it keeps being funded by new money - and now that money turns into inflation, because there's not excess capacity any longer.
- RobertoG 10y ago
  First, you can't choose Venezuela because is convenient for you. You have to explain Japan and, even, nowadays the States. In fact, the fed and the CEB are trying to rise inflation without exit. Venezuela is very easy to explain: their economy have almost nothing except oil that they export to get foreign currency for buying all the rest. If the oil price suffer Venezuela suffers. Second, you say "But what happens when we run out of capacity?" but I could say the opposite, what happens when we have excess capacity? Leaving it alone is good if you are rich, who cares about public spending and unemployment? And who wants even a little of inflation if that means owning less of the pie? If you accept that inflation can be managed balancing spending and capacity, you are accepting that inflation can be managed. Why are you not willing to accept the risk of inflation but you are willing to risk unused excess capacity, what means slow grow and poor living conditions for a lot of people, and unemployment? It seems to me because an emotional aversion to everything that sounds as government expending.
  - AnimalMuppet 10y ago
    > First, you can't choose Venezuela because is convenient for you. I chose Venezuela because you said that accelerating inflation was a legend. Clearly, it's not. It's concrete, and it's happening today. (Want another example? Zimbabwe, though that was more five or ten years ago.) Now you raise a different point: Why doesn't it always happen? Well, I think it comes down to spare capacity, as I said. If you inflate less than you have spare capacity, and you continue to do so forever, you're safe. > If you accept that inflation can be managed balancing spending and capacity, you are accepting that inflation can be managed. I never said it couldn't be. > Why are you not willing to accept the risk of inflation but you are willing to risk unused excess capacity, what means slow grow and poor living conditions for a lot of people, and unemployment? Because the situation in Venezuela is objectively worse for people than the situation even in Greece. Runaway inflation is much worse than unused capacity - much worse not in the abstract, but in terms of actual damage that it does to actual people. > It seems to me because an emotional aversion to everything that sounds as government expending. I could ask, why do you want the government to create money to spend? It seems to me that it's because you have an emotional attraction to being given free money. That is, the game of guessing and assigning motives is uninteresting. We can each yell at each other based on assumed, guessed, or made-up motives, but that does nothing to advance the conversation about the quality of our respective ideas. I think your ideas can do much more damage to people. In the real world, inflation can get out of control. You seem to think that can be managed. But currently it's managed by the Federal Reserve, and what you're proposing is going to have it managed by Congress. That does not encourage me to suppose that there will not be a catastrophe.

AnimalMuppet 10y ago

First, it's not legend. The course you are suggesting is causing severe inflation, right now, in Venezuela. Second, "it can't happen" - until it does. That is, you adopt this course, and there's not inflation because there's excess capacity. But the new money lets people start buying more things, and eats into the excess capacity. That's good, you say? Yes, so far. But what happens when we run out of capacity? Do we stop UBI? That's going to be politically impossible. Do we raise taxes to cover it? "We'd kill the recovery!" people scream. So it keeps being funded by new money - and now that money turns into inflation, because there's not excess capacity any longer.

RobertoG 10y ago
First, you can't choose Venezuela because is convenient for you. You have to explain Japan and, even, nowadays the States. In fact, the fed and the CEB are trying to rise inflation without exit. Venezuela is very easy to explain: their economy have almost nothing except oil that they export to get foreign currency for buying all the rest. If the oil price suffer Venezuela suffers. Second, you say "But what happens when we run out of capacity?" but I could say the opposite, what happens when we have excess capacity? Leaving it alone is good if you are rich, who cares about public spending and unemployment? And who wants even a little of inflation if that means owning less of the pie? If you accept that inflation can be managed balancing spending and capacity, you are accepting that inflation can be managed. Why are you not willing to accept the risk of inflation but you are willing to risk unused excess capacity, what means slow grow and poor living conditions for a lot of people, and unemployment? It seems to me because an emotional aversion to everything that sounds as government expending.
- AnimalMuppet 10y ago
  > First, you can't choose Venezuela because is convenient for you. I chose Venezuela because you said that accelerating inflation was a legend. Clearly, it's not. It's concrete, and it's happening today. (Want another example? Zimbabwe, though that was more five or ten years ago.) Now you raise a different point: Why doesn't it always happen? Well, I think it comes down to spare capacity, as I said. If you inflate less than you have spare capacity, and you continue to do so forever, you're safe. > If you accept that inflation can be managed balancing spending and capacity, you are accepting that inflation can be managed. I never said it couldn't be. > Why are you not willing to accept the risk of inflation but you are willing to risk unused excess capacity, what means slow grow and poor living conditions for a lot of people, and unemployment? Because the situation in Venezuela is objectively worse for people than the situation even in Greece. Runaway inflation is much worse than unused capacity - much worse not in the abstract, but in terms of actual damage that it does to actual people. > It seems to me because an emotional aversion to everything that sounds as government expending. I could ask, why do you want the government to create money to spend? It seems to me that it's because you have an emotional attraction to being given free money. That is, the game of guessing and assigning motives is uninteresting. We can each yell at each other based on assumed, guessed, or made-up motives, but that does nothing to advance the conversation about the quality of our respective ideas. I think your ideas can do much more damage to people. In the real world, inflation can get out of control. You seem to think that can be managed. But currently it's managed by the Federal Reserve, and what you're proposing is going to have it managed by Congress. That does not encourage me to suppose that there will not be a catastrophe.