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Mainstream economic analysis of inflation has been wrong for at least 40 years. That is to say, Keynesian economics is wrong. Which is why America is collapsin

by shingen 15y ago

Mainstream economic analysis of inflation has been wrong for at least 40 years. That is to say, Keynesian economics is wrong. Which is why America is collapsing into a hovel of debt, extreme spending, deficits, and poverty: modern economic policy is completely wrong. Such has been the case since 'modern' economics began ruling America in the late 1960s. The US standard of living hasn't improved since the early 1960s, when America was the dominant manufacturing power; it has been downhill since then in real terms, with brief respites courtesy of technology. 10 year mortgages became 30; a high savings rate became a negative real savings rate; the middle class became the impoverished class. When you run inflation far beyond the rate of real wage increases, the working class has no incentive to save junk dollars that lose value 24/7. So instead of saving, they spend, knowing full well their dollar will buy more today than tomorrow.

_delirium 15y ago
First of all, inflation is exceptionally low. Second of all, non-Keynesian mainstream economists reach similar conclusions; and in any case, have you actually read the Keynesian economics literature and economic data in enough depth to have reached an intellectual (as opposed to political) conclusion about its validity? Finally, U.S. income in real terms has increased substantially since the 1960s; there is no credible measure of inflation, not even some of the alternate ones, by which U.S. real GDP per capita today is lower than in, say, 1965. What has failed to increase, or even declined somewhat, is real median income; real mean income has not similarly stagnated or declined. That's a problem of income/wealth distribution, not inflation.
- shingen 15y ago
  First of all, inflation is not exceptionally low. Calculated using the 1980 CPI, inflation is off the charts at about 9% right now. When it was last that high, Volcker was taking extreme actions to crush inflation with high interest rates. In 1971 when inflation was as high as the Fed's current bogus CPI, Nixon installed price and wage controls. The Fed CPI intentionally understates inflation by leaving out food and energy prices, which are prime inflation meters. So they get to hide the radical increase in the cost of a gallon of gasoline, heating oil, and food, over the last decade. The CPI was adjusted during the Clinton Administration to hide the real rate of destruction. US income in real terms has not increased at all since about 1965. The US Dollar, according to the Federal Reserve's own numbers, has declined by about 86% since then. So no, real wages haven't increased at all when you have to calculate off of that decline. It's trivially easy to prove it: run wages against the cost of a new car, the price of oil, the average price of a home, the price of gold, the price of silver, the price of a gallon of gasoline, the price of a gallon of milk, and so on. You'll see the same blatant trend line. How much did those things cost in 1965, and what was the average wage? For your own benefit, take a few minutes and run those numbers; you'll see that the US standard of living has gone nowhere.
  - _delirium 15y ago
    Sure, the dollar has declined by 86% in nominal terms; but per-capita GDP in nominal terms has increased by 1170%. Inflation-adjusted, real per-capita GDP is approximately twice what it was in 1965. The CPI includes both food and energy prices. There is a separate measure called "core CPI" that excludes those, but it's not the one normally quoted, nor the one usually used to correct for real dollars.

by shingen 15y ago

_delirium 15y ago

First of all, inflation is exceptionally low. Second of all, non-Keynesian mainstream economists reach similar conclusions; and in any case, have you actually read the Keynesian economics literature and economic data in enough depth to have reached an intellectual (as opposed to political) conclusion about its validity? Finally, U.S. income in real terms has increased substantially since the 1960s; there is no credible measure of inflation, not even some of the alternate ones, by which U.S. real GDP per capita today is lower than in, say, 1965. What has failed to increase, or even declined somewhat, is real median income; real mean income has not similarly stagnated or declined. That's a problem of income/wealth distribution, not inflation.

shingen 15y ago
First of all, inflation is not exceptionally low. Calculated using the 1980 CPI, inflation is off the charts at about 9% right now. When it was last that high, Volcker was taking extreme actions to crush inflation with high interest rates. In 1971 when inflation was as high as the Fed's current bogus CPI, Nixon installed price and wage controls. The Fed CPI intentionally understates inflation by leaving out food and energy prices, which are prime inflation meters. So they get to hide the radical increase in the cost of a gallon of gasoline, heating oil, and food, over the last decade. The CPI was adjusted during the Clinton Administration to hide the real rate of destruction. US income in real terms has not increased at all since about 1965. The US Dollar, according to the Federal Reserve's own numbers, has declined by about 86% since then. So no, real wages haven't increased at all when you have to calculate off of that decline. It's trivially easy to prove it: run wages against the cost of a new car, the price of oil, the average price of a home, the price of gold, the price of silver, the price of a gallon of gasoline, the price of a gallon of milk, and so on. You'll see the same blatant trend line. How much did those things cost in 1965, and what was the average wage? For your own benefit, take a few minutes and run those numbers; you'll see that the US standard of living has gone nowhere.
- _delirium 15y ago
  Sure, the dollar has declined by 86% in nominal terms; but per-capita GDP in nominal terms has increased by 1170%. Inflation-adjusted, real per-capita GDP is approximately twice what it was in 1965. The CPI includes both food and energy prices. There is a separate measure called "core CPI" that excludes those, but it's not the one normally quoted, nor the one usually used to correct for real dollars.