5 ms·

From the article, the two charts referenced don’t say what I think you were hoping they say. The first chart claims to show how CPI fluctuated wildly on the go

by lowkey 5y ago

From the article, the two charts referenced don’t say what I think you were hoping they say. The first chart claims to show how CPI fluctuated wildly on the gold standard, except if you read the * and footnote in the article you will see it discloses that the US actually went off the gold standard at the same time as the increase in inflation. The second chart aims to show how low and stable CPI has been under the current fiat standard not backed by gold. However the chart is old and doesn’t include the recent CPI readings of 6.4% and 6.8% annualized inflation that were reported in the most recent 2 months by the BLS. In other words if chart 2 were continued to today they would include spikes of 3x, not exactly the narrative someone arguing in favor of the current system would want to show. I don’t buy your argument that allowing a handful of central bankers to manipulate the money supply and print money out of thin air, is a good thing.

throw0101a 5y ago
> except if you read the * and footnote …it says: > These restrictions on gold exports continued until June 1919, at which point we returned to the full gold standard. I have started from this last date, because there is no question that we were operating under the gold standard at this point. So the gyrations were occurring when the gold standard was full-on. See also: * https://www.vox.com/2014/7/16/5900297/case-against-gold-standard https://www.vox.com/2014/7/16/5900297/case-against-gold-stan... > However the chart is old and doesn’t include the recent CPI readings of 6.4% and 6.8% annualized inflation that were reported in the most recent 2 months by the BLS. The chart is "old" because the article was written in 2012. It was written during a period when QE was going on and there was much tearing of garments about 'money printing': > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://economics21.org/html/open-letter-ben-bernanke-287.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... And for the next decade the CPI was doing not a whole lot. So much for Friedman's "always a monetary phenomenon"—which he was wrong about even in the 1980s when Volcker was doing his thing. Further a spike in inflation was expected and predicted, and that a number of folks said it could last a year, like happened during the Korean War: * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in... In the fact last month's numbers were not surprising because of their value, but because they so closely matched predictions: > The consumer price index increased 0.8% last month, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.7% advance. * https://www.marketwatch.com/story/coming-up-u-s-consumer-price-index-for-november-11639142278 https://www.marketwatch.com/story/coming-up-u-s-consumer-pri... * https://www.reuters.com/business/biden-says-inflation-data-due-friday-will-not-reflect-recent-drop-some-prices-2021-12-09/ https://www.reuters.com/business/biden-says-inflation-data-d... > you will see it discloses that the US actually went off the gold standard Being "on" the gold standard will take as much political will as not printing money. Probably more, because of the economic suffering that deflation causes… as was seen Greece in the 2010s (Gold Dawn), and Japan and Germany in the late 1930s. > I don’t buy your argument that allowing a handful of central bankers to manipulate the money supply and print money out of thin air, is a good thing. Not being able to print money when it is needed in the economy can cause depressions: * https://www.nber.org/books-and-chapters/financial-markets-and-financial-crises/gold-standard-deflation-and-financial-crisis-great-depression-international-comparison https://www.nber.org/books-and-chapters/financial-markets-an... And the folks who like the gold standard tend to also like balanced budgets and austerity, which is another bad idea: * https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Dangerous_Idea https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da... It should be noted that historically 'printing money' has mostly not the cause of (hyper)inflation, but rather printing money was the effect of something else: * https://clintballinger.com/2021/01/12/the-myth-of-hyperinflation/ https://clintballinger.com/2021/01/12/the-myth-of-hyperinfla... > In this paper I will argue why the common misconception that “inflation is always and everywhere a monetary phenomenon” cannot be used to explain most historical hyperinflations. I will argue that “money printing” is often the response to exogenous and unusual events and not the direct cause of the hyperinflation. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102 Further, "printing money" isn't what people think it is: > This paper provides a general understanding of the workings of the modern fiat monetary system in the United States within the context of the global economy. The work is primarily descriptive in nature and takes an operational perspective of the monetary system using the understandings of Monetary Realism. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 If anyone is still thinking about bank reserves and multipliers then they are severely out of date. Tobin described this as the "Old View" in 1963: * https://cowles.yale.edu/sites/default/files/files/pub/d01/d0159.pdf https://cowles.yale.edu/sites/default/files/files/pub/d01/d0...
- lowkey 5y ago
  I can see you subscribe to modern monetary theory and believe that central bankers and their ability to freely print money without limit are essential to a functioning modern economy. Further, I see that you don’t share my concerns about increasing inflation. In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. We are currently experiencing 6.4% inflation based on official data.
  - throw0101a 5y ago
    > I can see you subscribe to modern monetary theory Nope. I generally lean more towards Krugman (whose not too hot on MMT): * https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo... > Further, I see that you don’t share my concerns about increasing inflation. I've been hearing people yammer on about inflation for a while now (at least 2009). The constant droning on about it is becoming like background tinnitus. It's not that it doesn't matter when it gets "too high", but given the modern secular stagnation we've been seeing in the developed world, little growth and deflation seems like a higher probability. Japan has had a bank rate of <1% since April 1995 and has printed money and… nothing. > In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my eyes economists see inflation in the context of the time that is (or is not) occurring. They can work towards preventing it, stopping it, encouraging it, or letting it run for a while depending on the situation. Annualized inflation was -0.36 in 2009, was that a good thing? * https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA If they can predict inflation then it implies they have a decent understanding of what various policies are doing / will do. It allows them to tailor those policies towards various objectives: the current objective could be that they want to get people employed again, and as the unemployment number decreases (or the participation rate increases) they can scale back the program(s). At least in the US, remember that the central bank has a dual mandate: * https://twitter.com/ritholtz/status/1468924345703706631 https://twitter.com/ritholtz/status/1468924345703706631 > In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). Contra: > Inflation redistributes from creditors to debtors — not exactly a burden on the bottom half of the income distribution 2/ * https://twitter.com/paulkrugman/status/1469728251643838467 https://twitter.com/paulkrugman/status/1469728251643838467 A good portion of people have debt, the largest portion of which is often their mortgage. > A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. Assuming that wages don't rise. Fight for inflation-indexed minimum wage (at state and federal levels), and fight for unions. Having 0 or negative inflation (deflation) is worse from the reading I've done (see 1930s). > We are currently experiencing 6.4% inflation based on official data. And we'll see what it is over the next year. I'll go with the prediction of a spike over the course of 12-18 months (probably ending late-2022): * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in...

by lowkey 5y ago

throw0101a 5y ago

> except if you read the * and footnote …it says: > These restrictions on gold exports continued until June 1919, at which point we returned to the full gold standard. I have started from this last date, because there is no question that we were operating under the gold standard at this point. So the gyrations were occurring when the gold standard was full-on. See also: * https://www.vox.com/2014/7/16/5900297/case-against-gold-standard https://www.vox.com/2014/7/16/5900297/case-against-gold-stan... > However the chart is old and doesn’t include the recent CPI readings of 6.4% and 6.8% annualized inflation that were reported in the most recent 2 months by the BLS. The chart is "old" because the article was written in 2012. It was written during a period when QE was going on and there was much tearing of garments about 'money printing': > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://economics21.org/html/open-letter-ben-bernanke-287.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... And for the next decade the CPI was doing not a whole lot. So much for Friedman's "always a monetary phenomenon"—which he was wrong about even in the 1980s when Volcker was doing his thing. Further a spike in inflation was expected and predicted, and that a number of folks said it could last a year, like happened during the Korean War: * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in... In the fact last month's numbers were not surprising because of their value, but because they so closely matched predictions: > The consumer price index increased 0.8% last month, the government said Friday. Economists polled by The Wall Street Journal had forecast a 0.7% advance. * https://www.marketwatch.com/story/coming-up-u-s-consumer-price-index-for-november-11639142278 https://www.marketwatch.com/story/coming-up-u-s-consumer-pri... * https://www.reuters.com/business/biden-says-inflation-data-due-friday-will-not-reflect-recent-drop-some-prices-2021-12-09/ https://www.reuters.com/business/biden-says-inflation-data-d... > you will see it discloses that the US actually went off the gold standard Being "on" the gold standard will take as much political will as not printing money. Probably more, because of the economic suffering that deflation causes… as was seen Greece in the 2010s (Gold Dawn), and Japan and Germany in the late 1930s. > I don’t buy your argument that allowing a handful of central bankers to manipulate the money supply and print money out of thin air, is a good thing. Not being able to print money when it is needed in the economy can cause depressions: * https://www.nber.org/books-and-chapters/financial-markets-and-financial-crises/gold-standard-deflation-and-financial-crisis-great-depression-international-comparison https://www.nber.org/books-and-chapters/financial-markets-an... And the folks who like the gold standard tend to also like balanced budgets and austerity, which is another bad idea: * https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Dangerous_Idea https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da... It should be noted that historically 'printing money' has mostly not the cause of (hyper)inflation, but rather printing money was the effect of something else: * https://clintballinger.com/2021/01/12/the-myth-of-hyperinflation/ https://clintballinger.com/2021/01/12/the-myth-of-hyperinfla... > In this paper I will argue why the common misconception that “inflation is always and everywhere a monetary phenomenon” cannot be used to explain most historical hyperinflations. I will argue that “money printing” is often the response to exogenous and unusual events and not the direct cause of the hyperinflation. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102 Further, "printing money" isn't what people think it is: > This paper provides a general understanding of the workings of the modern fiat monetary system in the United States within the context of the global economy. The work is primarily descriptive in nature and takes an operational perspective of the monetary system using the understandings of Monetary Realism. * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 If anyone is still thinking about bank reserves and multipliers then they are severely out of date. Tobin described this as the "Old View" in 1963: * https://cowles.yale.edu/sites/default/files/files/pub/d01/d0159.pdf https://cowles.yale.edu/sites/default/files/files/pub/d01/d0...

lowkey 5y ago
I can see you subscribe to modern monetary theory and believe that central bankers and their ability to freely print money without limit are essential to a functioning modern economy. Further, I see that you don’t share my concerns about increasing inflation. In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. We are currently experiencing 6.4% inflation based on official data.
- throw0101a 5y ago
  > I can see you subscribe to modern monetary theory Nope. I generally lean more towards Krugman (whose not too hot on MMT): * https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wonkish.html https://www.nytimes.com/2019/02/25/opinion/running-on-mmt-wo... > Further, I see that you don’t share my concerns about increasing inflation. I've been hearing people yammer on about inflation for a while now (at least 2009). The constant droning on about it is becoming like background tinnitus. It's not that it doesn't matter when it gets "too high", but given the modern secular stagnation we've been seeing in the developed world, little growth and deflation seems like a higher probability. Japan has had a bank rate of <1% since April 1995 and has printed money and… nothing. > In your eyes, if economists can predict inflation we don’t actually need to prevent or stop inflation. In my eyes economists see inflation in the context of the time that is (or is not) occurring. They can work towards preventing it, stopping it, encouraging it, or letting it run for a while depending on the situation. Annualized inflation was -0.36 in 2009, was that a good thing? * https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA If they can predict inflation then it implies they have a decent understanding of what various policies are doing / will do. It allows them to tailor those policies towards various objectives: the current objective could be that they want to get people employed again, and as the unemployment number decreases (or the participation rate increases) they can scale back the program(s). At least in the US, remember that the central bank has a dual mandate: * https://twitter.com/ritholtz/status/1468924345703706631 https://twitter.com/ritholtz/status/1468924345703706631 > In my mind inflation is theft by central powers, stealing the most from those with the least leverage (aka the poor and middle class). Contra: > Inflation redistributes from creditors to debtors — not exactly a burden on the bottom half of the income distribution 2/ * https://twitter.com/paulkrugman/status/1469728251643838467 https://twitter.com/paulkrugman/status/1469728251643838467 A good portion of people have debt, the largest portion of which is often their mortgage. > A 2% annual rate of inflation over a 40 year career will steal 40% of the purchasing power of the wage-earner. Assuming that wages don't rise. Fight for inflation-indexed minimum wage (at state and federal levels), and fight for unions. Having 0 or negative inflation (deflation) is worse from the reading I've done (see 1930s). > We are currently experiencing 6.4% inflation based on official data. And we'll see what it is over the next year. I'll go with the prediction of a spike over the course of 12-18 months (probably ending late-2022): * https://www.piie.com/blogs/realtime-economic-issues-watch/inflation-fears-and-biden-stimulus-look-korean-war-not-vietnam https://www.piie.com/blogs/realtime-economic-issues-watch/in...