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Dan-
I wanted to post a very interesting read (long, but
probably worth reading) which was an economic commentary
by Dollar Daze. I couldn't locate the article. From
memory, it was an article titled "The People's Fight
Against
Centeral Bankers" or something of the sort. It was a
historical chronology of how banks have always tried to
gain control of
this nation's money supply (which was not ordained: only
Congress should have the right to print and
regulate money) to the detirment of honest, hard working,
productive citizens. Nothing has changed much
since that time. I heard someone remark that the average
life of a fiat currency was around 100 years.
Well, do the math from when the Fed was founded in 1913.
Chas
----
On Sun, 18 May 2008 17:57:40 -0400
Daniel Ustick <dan@xxxxxxxx> wrote:
> Yes, that's exactly what I was getting at. We would
>have fewer dollars
> but we would have a lot more stuff. So the real wealth,
>the stuff that
> is made in the country would expand and grow from
>people's great ideas
> on either new product development or by making all sorts
>of processes to
> be more efficient. Either way, we use less real
>resources to produce
> more stuff for all of us to use in some capacity.
>
> But in my example, we hold the money supply as a
>constant so as not to
> inflate the money and reduce it's value in the process.
> The money is
> only a reflection of the true wealth that has been
>created. It is a
> convenient way of valuating everything using a common
>measuring rod. Of
> itself, it is worthless, but for the fact that it also
>represents the
> store of wealth we keep in our local bank's savings
>account. In that
> sense it's our claim on everything out there that we
>could use sometime
> in the future. Our savings are our tangible claim on
>the universal
> stockpiles that we all rely on. It stands to reason
>that our savings
> dollars could go a lot further if the price of stuff
>that is reflected
> by those dollars actually drops over time and doesn't
>rise or stay
> constant as in your example. It would seem to me that I
>could reach a
> comfortable retirement a lot sooner this way.
>
> I don't think we need to add more dollars just because
>of newer
> efficient innovations and processes that make an economy
>hum. As I see
> it, the only possibility could be the need to add money
>at the rate at
> which people enter into the economy with their labor.
> After all, if new
> immigrants add to the pool of the nation's work force,
>then they too
> will consume the stuff that people make while producing
>the stuff that
> people need. In that respect there may be a need to
>expand money at the
> rate that new labor enters the labor force and is
>valued. All else
> should be a constant in order to raise our standard of
>living over time.
>
> Just my thoughts.
>
> Dan
>
> Danhostmaster wrote:
>>
>> You say " ... If prior increases in productivity add
>>value to the
>> nation's pile of
>> stuff and you don't inflate the money supply, then I
>>think all that
>> happens is the value of the dollar would go up."
>>
>> If it worked that simply and no expansion of the money
>>supply were
>> done then we'd have the same fixed amount of dollars
>>chasing more and
>> more stuff. This would result in running out of dollars
>>before the
>> expanded stuff could be all bought by the limited number
>>of dollars.
>> Hence the overall economy fails to grow.
>>
>> Afterall, money (if macro economics is idealized) is
>>merely a symbol
>> for the barter the marketplace performs.
>>
>> Lets look at the simplist of examples. You have $10
>>and Bob can
>> produce 10 widgets for $ each
>>
>> Bob invents a widget mold that can now produce 100
>>widgets / week and
>> it costs him $3 to build it.
>> Now, Bob can sell 10 widgets to you for $7 or 100
>>widgets to you for
>> $7 (the other $3 is tied up in his plant expansion.
>> The economy has
>> actually shrunk then rather than remained constant or
>>expanded.
>>
>> Its an overly simplified example of course but scale it
>>up to an
>> economy and it remains true. Without growth of the
>>money supply to
>> mirror productivity growth the productivity will either
>>quit growing
>> both from lack of incentive and lack of capital, or
>>worse, the economy
>> will actually contract due to dollars previously
>>available to be used
>> to make purchases now being tied up in investment to
>>produce goods.
>> Expanding the money supply faster than productivty
>>growth + value of
>> physical plant will lead to inflation (more dollars
>>chasing fewer
>> goods). Expanding slower will lead to contraction as
>>per the bob
>> example above.
>>
>> boater805
>>
>> At 11:17 AM 5/18/2008, you wrote:
>>
>>> Thanks for the added insight, but....
>>>
>>> I still can't figure out why future productivity growth,
>>>or an economic
>>> expansion, needs the extra money creation to work better
>>>at making new
>>> innovations? Why should a piece of paper, an IOU backed
>>>by the
>>> government, have anything to do with bringing new idea's
>>>to market? The
>>> money is only a convenient way to transfer some sort of
>>>implied value
>>> from one person's hands into another person's hands. It
>>>just makes it
>>> easier for the inventor to create or consume whatever it
>>>is needed to
>>> create their new masterpiece. If the inventor still
>>>needs a partner to
>>> try out or perfect a new idea, he or she still needs to
>>>convince
>>> someone, maybe a banker, to provide the needed funding.
>>> If prior increases in productivity add value to the
>>>nation's pile of
>>> stuff and you don't inflate the money supply, then I
>>>think all that
>>> happens is the value of the dollar would go up. It
>>>represents the
>>> output, or more of the stuff, made by a nation's
>>>innovators and, I
>>> think, can only be valued in the currency of that
>>>nation's producers.
>>> It seems to me that the only thing that would change is
>>>the amount of
>>> money needed to fuel the new ideas. Since the value of
>>>the dollar goes
>>> up, and no inflation of the money supply, I would need
>>>fewer dollars to
>>> fund my idea. I still need to compete with everyone
>>>else's ideas for
>>> getting my funding.
>>>
>>> I know this is simplistic, but isn't this kind of
>>>intuitive? Am I still
>>> wrong about this?
>>>
>>> Dan
>>>
>>> hostmaster wrote:
>>> >
>>> > Friedman's is exactly the model I have in mind. To
>>>some extent we do
>>> > see productivity gains "passed along" to the consumer.
>>>Market forces
>>> > however do come into play and without an expansion of
>>>money supply in
>>> > accordance with productivity gains we experience a
>>>choking off of
>>> > capital available for growth (of both inovation and
>>>production) as
>>> > more and more successes (that have created and
>>>benfited from the
>>> > productivity gains) compete for the same limited
>>>capital pool for
>>> > their own growth.
>>> >
>>> > The federal reserve bank in San Francisco used to have
>>>a game in their
>>> > lobby (I don't know if they still do) where the
>>>visitor could adjust
>>> > knobs for interest rates, money supply, and taxes and
>>>then watch the
>>> > effect on the economy in terms of inflation and
>>>productivity. Their
>>> > algorithm included lag time from the time of change
>>>until the effects
>>> > rippled thru the economy and reflected the ripples
>>>thru the feedback
>>> > loops. It was quite a challanging game to maintain
>>>growth and avoid
>>> > collapse while fiddling with the knobs. Only very
>>>slight tweaks used
>>> > sparingly from time to time (like flying a helicopter)
>>>were ultimately
>>> > successful.
>>> >
>>> > Boater805
>>> >
>>> > At 06:32 AM 5/18/2008, you wrote:
>>> >
>>> >> This is an interesting discussion and one in which
>>>I'd like to
>>> join with
>>> >> my take.
>>> >>
>>> >> Milton Friedman stated that inflation is and always
>>>will be
>>> nothing more
>>> >> than a monetary phenomenon. I believe that this makes
>>>a lot of sense.
>>> >> It hearkens back to the simplicity of the barter
>>>system of trade.
>>> >>
>>> >> You bring up an important point, namely, that
>>>productivity gains can
>>> >> offset inflationary growth in the monetary base. I
>>>believe this makes
>>> >> sense also. If we can produce more stuff with fewer
>>>resources,
>>> then the
>>> >> price of that stuff should come down relative to
>>>everything else.
>>> >> Right? If we increase the money supply by the same
>>>amount, give or
>>> take
>>> >> a bit, then I would think that price reductions from
>>>productivity
>>> >> improvements would be erased. Perhaps remaining about
>>>the same as it
>>> >> were before the inflation of the money supply. So,
>>>why is that
>>> maneuver
>>> >> by central bankers necessary at all? Why can't
>>>consumers just keep the
>>> >> benefits derived from these productivity improvements
>>>and passed along
>>> >> to the masses, creating a higher standard of living
>>>for all?
>>> >>
>>> >> What am I missing?
>>> >>
>>> >> Just my thoughts.
>>> >>
>>> >> Dan
>>> >>
>>> >> hostmaster wrote:
>>> >> >
>>> >> > Ira's post in thinly veiled nonsense. Yes, the
>>>Saudi's still have
>>> >> > almost 2 million bbl/day reserve output available.
>>>However, the
>>> >> > Saudis CORRECTLY point out that an increase in
>>>production by them
>>> >> > would not have any material effect on the markets.
>>>The markets
>>> >> > themself are setting the price largely due to
>>>speculation in futures
>>> >> > trading (the sort of thing this list is really
>>>supposed to be about
>>> >> > but that Ira's article totally ignored to comment
>>>upon). A look at
>>> >> > the price fluctuations compared to net changes in
>>>inventories shows
>>> >> > they are decoupled and therefore therefore we can
>>>conclude price is
>>> >> > not currently linked to supply/demand. In fact the
>>>net inventory
>>> >> > changes in crude oil (both in the US and globally)
>>>show that prices
>>> >> > are rising while inventories are rising. Rising
>>>inventories indicate
>>> >> > a declining demand (or at least demand in excess of
>>>supply). Either
>>> >> > way one wishes to interpret it the conclusion is
>>>that price is
>>> >> > decoupled from supply and demand and an increase in
>>>supply would
>>> >> > merely increase inventories without moderating
>>>prices.
>>> >> >
>>> >> > Likewise, Ira's rant goes on about inflation and
>>>interest rates and
>>> >> > money supply expansion without discussing
>>>productivity. While I
>>> won't
>>> >> > attempt to argue that productivity gains completely
>>>offset some
>>> of the
>>> >> > money growth supply factors, the fact Ira
>>>completely ignores
>>> that part
>>> >> > of the equation again exposes his tirade for what
>>>it is (as
>>> opposed to
>>> >> > any kind of sound financial analysis). I have been
>>>a member of this
>>> >> > list long enough to know that Ira is not a fool nor
>>>unaware of these
>>> >> > counterbalancing economic factors. Therefore I can
>>>only conclude his
>>> >> > article was authored deliberately in a way to
>>>justify a viewpoint
>>> >> > rather than to provide a financial analysis of any
>>>kind. That's just
>>> >> > my opinion but if you go back and reread his tripe
>>>in detail I think
>>> >> > you will find it funny instead of freightening.
>>> >> >
>>> >> > Boater805
>>> >> >
>>> >> > At 11:55 AM 5/17/2008, you wrote:
>>> >> >
>>> >> >> First of all, I seriously doubt if the Saudi's can
>>>raise output. I
>>> >> >> strongly suspect they are at full production now.
>>> >> >>
>>> >> >> As to filling up the reserves, Bush is hell bent
>>>to keep the
>>> reserves
>>> >> >> up rather than use them for a short term solution
>>>to high
>>> prices. (A
>>> >> >> solution which would do little to help the price
>>>problem anyway).
>>> >> >>
>>> >> >> Ira's post offers some sobering thoughts but what
>>>would happen
>>> if oil
>>> >> >> came down? What if it came down to $80? And if we
>>>stopped promoting
>>> >> >> the insane idea of bio fuels driving up food
>>>prices? If grain came
>>> >> >> down 50% and meat 30%? Then what would the
>>>consumer situation look
>>> >> >> like? Science fiction? I don't think so. I think
>>>the whole ethanol
>>> >> >> craze is being seen for just what it is, crazy. A
>>>fuel that costs
>>> >> >> more to make, pollutes worse than fossil fuels,
>>>and drives food
>>> >> >> through the roof is certainly not the answer.
>>>Atomic energy and
>>> >> >> hydrogen fuel cells are where I'm putting my
>>>energy dollars
>>> from this
>>> >> >> point forward. Solar and wind will be minor
>>>players, especially for
>>> >> >> home use but they do little or nothing for
>>>transportation and
>>> large,
>>> >> >> commercial purposes.
>>> >> >>
>>> >> >> So, a lot of the problems can be solved by simply
>>>forgetting about
>>> >> >> ethanol and I feel there is a large amount of
>>>speculation in oil
>>> >> >> now. We moved from 100 to 125 in days but demand
>>>most certainly
>>> >> >> didn't increase by 25% in days. Who knows, maybe
>>>things will work
>>> >> >> out after all.
>>> >> >>
>>> >> >> Bob
>>> >> >>
>>> >> >> At 01:46 PM 5/17/2008, you wrote:
>>> >> >> >And strangly Mr.Bush justifies Saudi for not
>>>raising oil
>>> outputs,not
>>> >> >> >only that he was not in a favour of stopping
>>>filling oil reserve
>>> >> >> >near Gulf of Mexico...very strange attitude and
>>>this has been
>>> >> >> >discussed among all leading newpapers round the
>>>world.
>>> >> >> >--- In realtraders@xxxxxxxxxxxxxxx
>>> <mailto:realtraders%40yahoogroups.com>
>>> >> < mailto:realtraders%40yahoogroups.com
>>> <mailto:realtraders@xxxxxxxxxxxxxxx>>
>>> >> >> < mailto:realtraders%40yahoogroups.com
>>> <mailto:realtraders@xxxxxxxxxxxxxxx>
>>> >> < mailto:realtraders@xxxxxxxxxxxxxxx
>>> <mailto:realtraders@xxxxxxxxxxxxxxx>>>, "Ira"
>>><mr.ira@xxx> wrote:
>>> >> >> > >
>>> >> >> > > It is time to take a good look at where we are
>>>at this time. In
>>> >> >> >the first quarter of this year more than 158,000
>>>families lost
>>> their
>>> >> >> >homes to foreclosure. The American public is
>>>going deeper in debt
>>> >> >> >every day. In a society where 70% of the economy
>>>is driven by
>>> >> >> >consumer spending, inflation and debt are economy
>>>killers.
>>> Millions
>>> >> >> >of people have homes that are worth less than the
>>>mortgage
>>> amount on
>>> >> >> >their home. When they look at the economics of
>>>the situation will
>>> >> >> >they pay the inflated mortgage payments or walk
>>>away from the
>>> >> >> >house? Family homes were the main source of their
>>>wealth and now
>>> >> >> >with that gone they have no place to go for that
>>>extra money they
>>> >> >> >need to pay the ever-increasing cost of living.
>>>Duke Power said
>>> >> >> >that they are cutting off utilities to 50 people
>>>a day because of
>>> >> >> >unpaid utility bills. Whether the government
>>>wants to admit it or
>>> >> >> >not we are in a recession. We are also in an
>>>inflationary spiral
>>> >> >> >that won't quit. The government is pumping
>>>liquidity into the
>>> >> >> >system at an alarming rate to save the financial
>>>institutions that
>>> >> >> >created a large portion of the problem.
>>> >> >> > >
>>> >> >> > >
>>> >> >> > >
>>> >> >> > > The balance of the article is on the web site
>>>if you are
>>> >> >> >interested.
>>> >> >> > >
>>> >> >> > >
>>> >> >> > >
>>> >> >> > > Just one man's opinion.
>>> >> >> > >
>>> >> >> > > Ira
>>> >> >> > > www.delta100.com <http://www.delta100.com/> <
>>> http://www.delta100.com/ <http://www.delta100.com/>> <
>>> >> http://www.delta100.com/ <http://www.delta100.com/> <
>>> http://www.delta100.com/ <http://www.delta100.com/>>>
>>> >> >> > >
>>> >> >> > > No virus found in this outgoing message
>>> >> >> > > Checked by PC Tools AntiVirus (4.0.0.26 -
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>>> >> >> > > http://www.pctools.com/free-antivirus/
>>> <http://www.pctools.com/free-antivirus/>
>>> >> < http://www.pctools.com/free-antivirus/
>>> <http://www.pctools.com/free-antivirus/>>
>>> >> >> < http://www.pctools.com/free-antivirus/
>>> <http://www.pctools.com/free-antivirus/>
>>> >> < http://www.pctools.com/free-antivirus/
>>> <http://www.pctools.com/free-antivirus/>>>
>>> >> >> > >
>>> >> >> >
>>> >> >> >
>>> >> >> >
>>> >> >> >------------------------------------
>>> >> >> >
>>> >> >> >Yahoo! Groups Links
>>> >> >> >
>>> >> >> >
>>> >> >> >
>>> >> >>
>>> >> >> No virus found in this incoming message.
>>> >> >> Checked by AVG.
>>> >> >> Version: 8.0.100 / Virus Database: 269.23.20/1452
>>>- Release Date:
>>> >> >> 5/17/2008 6:26 PM
>>> >> >
>>> >>
>>> >>
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>>> >
>>>
>>>
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>>
>
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