3 ms·

> Further, wage growth not matching production efficiencies or even decelerating is not a monetary policy issue (or anything to do with inflation) but a social

> Further, wage growth not matching production efficiencies or even decelerating is not a monetary policy issue (or anything to do with inflation) but a social policy issue. Specifically, minimum wage not tracking inflation, and in my opinion, a broad-based rejection of unions. It can be both a monetary policy issue and a social policy issue. Entities that are close to the money-creation spigot that is the Fed have a decreasing cost of money and debt. Anyone / thing further from the cheap supply of money have seen less benefit. The people working for minimum wage are very far from the cheap supply of money. Social policy, as you point out, has not kept up with monetary policy. But the problem is initiated from monetary policy.

arcticbull 5y ago
The "money creation spigot" is lending. Anywho who borrows money is at the spigot - that's how fractional reserve lending works, and that's where money comes from. This means anyone with a mortgage, anyone with a credit card, anyone with a post-paid phone plan. Indexing minimum wage to inflation substantially solves the problem. Can you quantify the spread you claim exists here? I feel like just pointing to the "cantillon effect" and blaming it for everything without actually quantifying the magnitude of the issue you think exists is harmful to the discourse. The charter of the central bank is to maintain low predictable inflation and maximize employment. That's the function of monetary policy.
- andriesm 5y ago
  I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I am certainly a fan of modern day capitalism compared to socialist redistribution, but a lot can maybe be fixed with "honest" money of some sort that is not easy to inflate at will. (Algorithmic money perhaps like a carefully designed crypto or some variation of gold backing) The challenge with honest money, is you cannot really control monetary policy (the free market will set interest rates) , but the benefit is, nobody can debase it too easily. i. e. no bailing out wallstreet during recessions, but also if you gonna bailout consumers with stimmies they will pay for it later in higher taxes.
  - arcticbull 5y ago
    > I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. The thing is, the breakdowns, source materials, algorithms, data - they're all published. This isn't Joe Biden goes to the podium and bestows unto us that the CPI was 7% annualized this quarter and doesn't take follow-up questions. Everything is tracked, measured and published by the BLS. [1] People don't take it at face value, think tanks run their own assessments too. Then you have crackpots that just "add 7.5%" to the number and call it a day. [2] But intuitively we know that "just add 7.5%" is way too high, because if the annualized inflation had been 10% since the year 2000, that means prices would have to be a minimum of 8X higher than they were in 2000. - In the year 2000 an iMac cost $799. The latest iMac is $1299, not $7000. That would be 2.2% inflation. - In the year 2002 a Big Mac cost $2.39. Today a Big Mac is $3.99, not $19.12. That would also be 2.6% inflation. This whole conspiracy theory around a wildly different "shadow" CPI is just that. You can even compute your own based on receipts you have lying around. I suspect you'll find it not materially different from the published numbers. > Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I'm not rejecting the cantillon effect wholesale, I'm asking for a quantification, which I have yet to see anyone provide. Folks tend to point at it and blame it for everything but then not have any substantiation of its size. However, I strongly suspect poor folks and especially middle class folks, have far more debt as a percentage of net worth than rich folks do and so spend more time at the spigot so to speak - relatively, not in absolute terms. > The challenge with honest money, is you cannot really control monetary policy (the free market will set interest rates) , but the benefit is, nobody can debase it too easily. Debase is a poor term to use because modern economics shows us that supply and value are not tied in the way folks intuit. For instance, Japan has 3X'd their money supply since 1990 but their CPI is literally dead-ass 0% and has been for 30 years. Their prices for anything and everything on average remain exactly the same as in 1990. This is why we reject the Austrian school. > ... but also if you gonna bailout consumers with stimmies they will pay for it later in higher taxes. Money has a value and a duration. Stimulus bills pull future money into the present. You don't pay for it later in taxes, per se. If the stimulus creates economic activity yielding revenues in excess of the stimulus itself then it can be 'free.' A stimulus is an investment and it is a common mistake to look at the liabilities line without looking at the assets line. [1] https://www.bls.gov/cpi/ https://www.bls.gov/cpi/ [2] http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
imtringued 5y ago
You should worry about the federal tax "spigot" instead. It does not take very many brain cells to understand that taxes are collected everywhere and paid out wherever politicians want leading to geographical inequality. Interest rates and capital gains kinda act like a tax as well because wealthy people concentrate in a few high profile cities and are not spread out like local bank branches. Oh and land is a natural monopoly so land owners get their cut as well.

arcticbull 5y ago

The "money creation spigot" is lending. Anywho who borrows money is at the spigot - that's how fractional reserve lending works, and that's where money comes from. This means anyone with a mortgage, anyone with a credit card, anyone with a post-paid phone plan. Indexing minimum wage to inflation substantially solves the problem. Can you quantify the spread you claim exists here? I feel like just pointing to the "cantillon effect" and blaming it for everything without actually quantifying the magnitude of the issue you think exists is harmful to the discourse. The charter of the central bank is to maintain low predictable inflation and maximize employment. That's the function of monetary policy.

andriesm 5y ago
I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I am certainly a fan of modern day capitalism compared to socialist redistribution, but a lot can maybe be fixed with "honest" money of some sort that is not easy to inflate at will. (Algorithmic money perhaps like a carefully designed crypto or some variation of gold backing) The challenge with honest money, is you cannot really control monetary policy (the free market will set interest rates) , but the benefit is, nobody can debase it too easily. i. e. no bailing out wallstreet during recessions, but also if you gonna bailout consumers with stimmies they will pay for it later in higher taxes.
- arcticbull 5y ago
  > I wonder if a big part of the allleged theft from the little guy isn't due to dishonest CPI statistics that manipulate officially reported inflation to be lower than the cost of living increases most people experience. The thing is, the breakdowns, source materials, algorithms, data - they're all published. This isn't Joe Biden goes to the podium and bestows unto us that the CPI was 7% annualized this quarter and doesn't take follow-up questions. Everything is tracked, measured and published by the BLS. [1] People don't take it at face value, think tanks run their own assessments too. Then you have crackpots that just "add 7.5%" to the number and call it a day. [2] But intuitively we know that "just add 7.5%" is way too high, because if the annualized inflation had been 10% since the year 2000, that means prices would have to be a minimum of 8X higher than they were in 2000. - In the year 2000 an iMac cost $799. The latest iMac is $1299, not $7000. That would be 2.2% inflation. - In the year 2002 a Big Mac cost $2.39. Today a Big Mac is $3.99, not $19.12. That would also be 2.6% inflation. This whole conspiracy theory around a wildly different "shadow" CPI is just that. You can even compute your own based on receipts you have lying around. I suspect you'll find it not materially different from the published numbers. > Also perhaps fractional reserve banking does create the issue thatp those who can borrow money and buy assers have an advantage over those at the bottom who strugglle to buy assets and cannot borrow. I'm not rejecting the cantillon effect wholesale, I'm asking for a quantification, which I have yet to see anyone provide. Folks tend to point at it and blame it for everything but then not have any substantiation of its size. However, I strongly suspect poor folks and especially middle class folks, have far more debt as a percentage of net worth than rich folks do and so spend more time at the spigot so to speak - relatively, not in absolute terms. > The challenge with honest money, is you cannot really control monetary policy (the free market will set interest rates) , but the benefit is, nobody can debase it too easily. Debase is a poor term to use because modern economics shows us that supply and value are not tied in the way folks intuit. For instance, Japan has 3X'd their money supply since 1990 but their CPI is literally dead-ass 0% and has been for 30 years. Their prices for anything and everything on average remain exactly the same as in 1990. This is why we reject the Austrian school. > ... but also if you gonna bailout consumers with stimmies they will pay for it later in higher taxes. Money has a value and a duration. Stimulus bills pull future money into the present. You don't pay for it later in taxes, per se. If the stimulus creates economic activity yielding revenues in excess of the stimulus itself then it can be 'free.' A stimulus is an investment and it is a common mistake to look at the liabilities line without looking at the assets line. [1] https://www.bls.gov/cpi/ https://www.bls.gov/cpi/ [2] http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts

imtringued 5y ago

You should worry about the federal tax "spigot" instead. It does not take very many brain cells to understand that taxes are collected everywhere and paid out wherever politicians want leading to geographical inequality. Interest rates and capital gains kinda act like a tax as well because wealthy people concentrate in a few high profile cities and are not spread out like local bank branches. Oh and land is a natural monopoly so land owners get their cut as well.