Inflation: please explain

[Username17]

Well, yes, except for the evidence, there is no evidence, I grant you that. I just don't think you realize how powerful your conditioning is to simply not see what you don't wish to see. I'm sure none of these countries even exist on your world. You'll note many of these countries have non-fail economies, it's the paper currency that has failed.

Could you at least pretend to get reputable news from somewhere instead of collecting everything from crank blogs? Seriously, you just linked to a rant that takes as fact that the US is facing "massive hyperinflation" on the first sentence of paragraph two. What the fuck? Massive hyperinflation is a real thing with a real definition, and it does not include wage stagnation for three years running.

But even aside from that, pointing at the nominal exchange rates of a bunch of diplomatically and economically isolated countries and claiming that it says anything at all about fiat money is tinfoil hat, pants-on-head crazy. Yes, the nominal exchange rate of pariah states like Iran is shitty. That is because you can't spend their money anywhere other than Iran and the border provinces of Afghanistan and Iraq. No one outside the country wants their money because they can't use it for anything, and so the exchange rate is really bad. But that would be true even if you could trade the stuff for gold and silver inside Iran, and has been true of numerous isolated countries with metal backed currency throughout history.

Iranian money's exchange rate is so out of whack that the GDP in Purchasing Power Parity is the 19th largest in the world, but in nominal dollars it is ranked twenty ninth. You can look this shit up on Wikipedia or the CIA World Factbook. You know, real sources of information people can actually trust, rather than the crank blogs you keep linking to.

And yes, having an exchange rate that is wildly undervalued compared to the purchasing power of the currency is inflationary. It's something that China is dealing with, for example. But it's a diplomatic and capital controls problem, not a fiat money problem.

-Username17

[Doom]

So you don't like the guy writing the top ten list. No biggie.

I agree with you, the US is *not* experiencing hyperinflation at this time, and is unlikely to do so in the near future. I didn't link his blog because I agreed with the author, I linked because it was a list of current countries with wildly failing paper currencies.

The point is still: all paper currencies are in a near constant state of free fall, it's simply a race to the bottom. Even the US dollar--according to that crank blog, the BLS, which reports positive inflation far more often than deflation--I don't agree with everything the BLS says, either, but I still cite their data. I've also cited other crank sites, like Forbes, no point in going back to list 'em all.

I grant you, Iran's paper currency falling may be for a very different reason than Vietnam's paper currency falling which in turn is for a very different reason than Zimbabwe's paper currency falling. I don't care why for each case, and that's not the thesis at all.

To quote Voltaire (after being forced to suffer through paper collapse twice):

"Paper money eventually returns to its intrinsic value -- zero."

Granted, 'eventually' could be as long as 100 years (obviously, for the US dollar), but eventually comes alot quicker for paper than other things. There are many examples of paper currencies wiping out in a handful of years...and still searching for a gold backed currency to wipe out quickly. Or heck, any sanely backed currency (I'm weasel-wording with 'sanely', as there was a tulip bulb bubble in the middle ages where it could sort of be argued that tulip bulbs were money for a little while).

Or do you believe the blog writer lying about the current (at the time of posting) exchange rate values he's citing? I mean, that would be a legitimate criticism, and if you have it, I'll apologize for citing crap every bit as bad as you quoting a graph from a guy notorious for data mining in arbitrary and unreproducible ways.

exchange rates of a bunch of diplomatically and economically isolated countries

Of course, it's not about exchange rates, you've misread that, also. It's about the fact that their paper currencies have fallen so hard that coinage has dropped out of circulation in many cases. Go and reread the blog with less emotion, then come back.

Again, if you can show he's lying about how much coinage is being used, you'd be onto something.

Since you've misread the article the first time around, I'll emphasize what it's about: it's not about exchange rates. The areas in the article used to use coins, since the invention of coinage, most likely. With the introduction of paper currency, the value (even within the country--exchange rate irrelevant) has dropped so fast, so quickly, that the coins have often vanished from circulation. This is simply a demonstration of the informal Gresham's Law: "Bad money drives good money out of circulation."

To reemphasize: it doesn't matter if these countries are diplomatically isolated, if anything such isolation further demonstrates the point about paper money. The currency isn't failing because it's in competition--such an assertion is pure ignorance in general, as well as in these cases--they're isolated, and thus *can't* be in competition. Bad exchange rates don't explain paper currencies becoming worthless, either...they're isolated, there's not that much exchanging going on anyway. The paper currencies are so worthless that people generally don't use coins.

For laughs, we can see DSM' doppleganger getting shredded at the Voltaire quote site. There's a reason why he sounds and behaves familiar, of course.

[DSMatticus]

This is getting exceptionally stupid.

Being close IS a relationship...in typical muddied thinking, you're confusing this with the belief that there must be a causal relationship.

Icecream sales increase proportionally with shark attacks and local violent crimes. Are you fucking stupid enough to think that when we're talking about icecream, it's relevant to bring up either of these things? Apparently, your definition of 'meaningful relationship' is that two things happen together, and that's completely fucking stupid beyond words.

Not to mention, you haven't even pointed out a mutual relationship - you've pointed out a one-sided relationship. Collapsing economies have high inflation rates. You haven't shown high inflation rates lead to collapses. You haven't shown that each shares the same cause. You haven't pointed out ANYTHING that helps your position, and I have explained your observations in a way that supports my position.

You'll note many of these countries have non-fail economies, it's the paper currency that has failed.

Problem one, exchange rates are fucking useless indicators of anything. We're going to imagine a hypothetical situation, where the entire world does nothing but sell bricks, and each country has its own fiat currency.

Country A has 100 bricks. It has 1000 dollars in circulation.
1 brick: 10 dollars
Country B has 200 bricks. It has 10000 dollars in circulation.
1 brick : 50 dollars

It takes 5 of country B's dollars to buy a single of country A's dollars. But country B has twice as many bricks as country A.

If you're measuring by exchange rate, country A has a stronger currency. If you actually fucking care who has the stronger economy, country B has the stronger economy because it has more damn bricks.

So, now that we've established that exchange rate means jack shit...

Problem two, you said it your goddamn self. The countries have non-fail economies (some of them, anyway), and in some of those economies, people still actually use the currency to buy and sell shit. Seriously. In those countries, you can literally walk to the store and buy things with the printed currency (and sometimes, it takes a 10,000 dollar bill, but that's okay, because they PRINT 10,000 dollar bills instead of 1 dollar bills). And if that's the case, by what standard are you fucking claiming that it's "failed?" People are using it, successfully (and again, pointing out 'wow, the exchange rate is huge!' is fucking worthless).

You really aren't understanding this - the sum of all existing fiat currency in a given economy has a total value proportional to the actual value of that economy. Printing more money lowers the value of an individual unit of currency, like a single dollar, but it does not lower the value of the sum of all the existing currency. It doesn't matter if a loaf of bread is 1 dollar or 10 dollars, as long as when it costs 1 dollar, you have 1 dollar in your pockets, and when it costs 10 dollars, you have 10 dollars in your pockets.

Again, I am waiting for you to say ANYTHING that actually supports your position.

sacrificed for 'a strong economy'

1) Low inflation rates mitigate the effect compared to high ones. High inflation rates are bad because from the time the dollar enters your pocket to the time you use it, its depreciation can be 'felt.'
2) There are perfectly valid ways to save that don't involve keeping currency. Investing, coupled with insurance programs and things of that like. Enforcing fair bank interest rates. Social programs.

So, believe it or not, you can have the stronger economy and not sacrifice anyone. So this point is completely fucking moot - unless it was to point out our government and corporations take advantage of us, that's totally true. But of course, that was true back when we had gold-backed economies, when we had labor reforms and tons of other shitty corporate practices.

So, again, yeah. This doesn't say what you think it does. At fucking all.

[Doom]

This is getting exceptionally stupid.

Well, I'm optimistic that I'll get through eventually.

Any luck on that example?

Icecream sales increase proportionally with shark attacks and local violent crimes. Are you fucking stupid enough to think that when we're talking about icecream, it's relevant to bring up either of these things?

Yes, there's a common relationship between the two concepts there. It's called summer. You mentioned it before, but forgot.

that's completely fucking stupid beyond words.

Agreed. Why do you keep bringing it up, then?

You haven't shown high inflation rates lead to collapses.

You haven't shown that I urinate chocolate syrup. What of it?

Inflation is bad, collapses are bad...why is it suddently so important to you that there be a fundamental mathematical proof that one leads to the other. I maintain both should be avoided.

And about that example?

I have explained your observations in a way that

You accurately describe as 'completely fucking stupid beyond words'. What of it?

Problem one, exchange rates are fucking useless indicators of anything.

Never said they were. What of it? You keep on with obfuscation and sidetracks...focus, please.

Country A has 100 bricks. It has 1000 dollars in circulation.
1 brick: 10 dollars

It takes 5 of country B's dollars to buy a single of country A's dollars. But country B has twice as many bricks as country A.

Lordy, so much confusion here. You're wildly missing the point. Country B isn't the issue here, this is just a result of your indoctrination. Human beings matter.

Rulers of country A run the printing presses, printing out an extra 10000 dollars. They then buy all the bricks. The guy that makes to the bricks, he sells them, and he now has paper. He think it's worth something, but on the way to the bank, the rulers start printing out thousand-dollar notes.

By the time he makes it to the bank, his 10000 bucks won't even buy a single brick. Do you see how he's getting screwed here?

He goes back and makes more bricks (taking out a loan to get the newly inflated dollars, since all his old money is worthless). He's a little smarter now (but only a little, since he was trained in school to love his rulers, and thus blames the rising prices on speculators, who he hates with a burning passion), and selling for $10000 apiece.

He gets paid with more hot money...but by the time he gets to the bank, the printing press is running off $1,000,000 notes...he can't keep up with that, and in the mean time any other money he had is slurped away by inflation. He's become poorer in the process, indebted even.

Now he's in debt, and inflation certainly helps with that, but now he's got to take out a bigger loan just to produce what he was able to produce before without a loan. This is a death spiral, and eventually the producer realizes there's no reason to bother, and packs it up. (More knowledgeable readers might see a parallel here in the real world)

You claim the death spiral is fine if we just do it slower, but doing things in slow motion doesn't change the fact: the actual producer is getting screwed. The guys with the printing presses are making out like bandits, and producers are being punished. Screwing over producers and getting rid of them is often bad for an economy, for what it's worth.

Problem two,The countries have non-fail economies (some of them, anyway), and in some of those economies, people still actually use the currency to buy and sell shit. Seriously. In those countries, you can literally walk to the store and buy things with the printed currency (and sometimes, it takes a 10,000 dollar bill, but that's okay, because they PRINT 10,000 dollar bills instead of 1 dollar bills). And if that's the case, by what standard are you fucking claiming that it's "failed?"

Because all the common people got screwed by the folks with the printing press. Their middle class savings got completely obliterated over time, and they're the poorer for it...now they're shit countries, as someone else said.

Get it, yet?

the sum of all existing fiat currency in a given economy has a total value proportional to the actual value of that economy. Printing more money lowers the value of an individual unit of currency, like a single dollar, but it does not lower the value of the sum of all the existing currency.

You really aren't getting it. Printing funny slips of paper that represent nothing screws over the folks that don't get the fiat currency first. It doesn't matter if it all averages out.

Again, I'll ask you to demonstrate your convictions. Give me everything you have. Hey, the average wealth between the two of us is the same, so by your argument above, everything is A-OK.

If you won't do this, why not? If all that matters is the average, it's all good, right? We're both in the same economy, and the economy is just as strong, and that's all you care about, right?

And where's that example I keep asking about?

It doesn't matter if a loaf of bread is 1 dollar or 10 dollars, as long as when it costs 1 dollar, you have 1 dollar in your pockets, and when it costs 10 dollars, you have 10 dollars in your pockets.

Yep, in utopia, that would be fine. Unfortunately, that's not how it works here, much as in the bricks example, above (note the number of folks on food stamps keeps setting records).

Again, I am waiting for you to say ANYTHING that actually supports your position.

Ah, there's the problem. I'm not saying anything, I'm writing here. Try reading.

1) Low inflation rates mitigate the effect compared to high ones.

Cutting off a finger is good because it's not as bad as cutting off a hand? I humbly do not agree with your position.

High inflation rates are bad because from the time the dollar enters your pocket to the time you use it, its depreciation can be 'felt.'

So, if anesthetic is used, and I can't feel my hand being cut off, that's good too, then?

If people don't know they're being screwed, then it doesn't count...is that basically your thesis, now? Does it work for murder, too?

I'm repeating this line, because it's just that bad:

High inflation rates are bad because from the time the dollar enters your pocket to the time you use it, its depreciation can be 'felt.'

So, if it can be felt, it's bad.

I can feel it, as can many others.

So, we're done, you've just acknowledged inflation is bad. QED.

2) There are perfectly valid ways to save that don't involve keeping currency. Investing, coupled with insurance programs and things of that like. Enforcing fair bank interest rates. Social programs.

Yep, all nice pie-in-the-sky promises. But why can't people just be allowed to save, rather than risk getting screwed over in these magical programs of yours that don't always exist?

Let's quote Alan Greenspan here:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
Alan Greenspan

Please note, that each of your utopian plans still don't avoid the problem highlighted here. You can't protect savings, instead you must gamble with them, and any winnings from such gambling still is vulnerable to inflation.

Confiscation is theft...do you understand that theft is wrong in most Western cultures?

I feel this is wrong, I feel people should actually own their money, and should be allowed to keep it without it being confiscated "for the good of the economy"....impoverishing people for the good of the economy, do you really see nothing wrong with that?

So, believe it or not, you can have the stronger economy and not sacrifice anyone.

Of course you can, and you can do so without the mass confiscations of a paper currency. Paper currencies sacrifice from everyone except the folks that get access to the newly printed money first. The old, the young, the folks with a savings account, the folks with a checking account, the folks with investments, the folks with pockets holding change...everyone.

So this point is completely fucking moot - unless it was to point out our government and corporations take advantage of us, that's totally true. But of course, that was true back when we had gold-backed economies, when we had labor reforms and tons of other shitty corporate practices.

Absolutely, having a real money system is not utopia. But right now (slurp), the money in my pocket is being (slurp) reduced in value by the printing presses (slurp). Increases in productivity would (slurp) normally cause deflation in prices, but (slurp) these are slurped away by (slurp) inflation. The money in my checking account (slurp) is also being constantly (slurped) sipped away by inflation. The $5 dollar bill (slurp) grandma sends to her grandchild doesn't get there without (slurp) being slurped a bit by inflation. Even in my investments, my profits (slurp) are constantly being reduced (slurp) by inflation. My home (slurp) might be going up in value (slurp) but this increase can be negative depending on (slurp) inflation. My paycheck (slurp) is direct deposit (slurp), but if I don't do (slurp) something with it (slurp) it gets sipped away by (slurp) inflation. When I tutor, I get handed a check (slurp), I have to deposit that check (slurp), wait for it to clear (slurp), get the money (slurp), go to the store (slurp) and spend it, all the while getting slurped away by inflation.

The point: it's constant, always there. Just like tumors growing in my lungs, just because I don't notice them, doesn't mean they're not a problem.

Now, many people have habituated to the constant slurping sound of inflating draining it all away. But that doesn't mean it's a good thing.

In my opinion, of course. How's that example coming along?

[DSMatticus]

Any luck on that example?

I don't get this. Do you seriously fucking think that every economy that's been gold-backed has been economically fantastic? We have had less and weaker recessions since we got off the gold reserve. Our economy is more stable than it's ever been (ignoring the past decade of complete bullshit financial practices we for some reason refuse to regulate).

The Great Depression is a perfectly legitimate example of the weaknesses of a gold-backed economy. So are the hundred years before it with a few exceptions.

Inflation is bad...

This is what I'm waiting to see any real evidence of, and the only argument you've provided is that you don't like that it doesn't let people hold onto stacks of paper, and I think economies that let people hold onto stacks of paper are stupid, and there are lots of benefits to be had from encouraging people to not hold onto stacks of paper (and there are, increased spending means a stronger economy).

Never said they were. What of it? You keep on with obfuscation and sidetracks...focus, please.

The entire article you quote is a bunch of exchange rates, as though they are somehow meaningful. If you're going to cite shitty, useless information, own up to it. Nobody's buying the, "oops, that's not what I meant," shit, since you explicitly just linked to it. If you cite stupid things, be prepared for people to point out why they're stupid. And you cite a lot of stupid things.

@Printing presses and such

Are you not fucking aware that this is a completely separate issue? You are talking about inflation, and hyperinflation.

With inflation, the printing presses run intermittently (and you occasionally even take currency off the market, to get some deflation, but this is rarer, whatever), and it 100% does not matter because between the time you get your paycheck and the time you spend it values have only changed trivially.

With hyperinflation, the printing presses run crazily off the charts, and in the time between getting your paycheck and spending it, the number on the paycheck becomes worthless.

You're making the argument that hyperinflation is bad - no fucking shit. Fortunately, moderate inflation can be used to alleviate the pains of economic recessions, and is in many cases a good thing, and none of this argument applies to regular old inflation which doesn't do any of the shit you're saying it does.

You are fucking saying, "I don't trust the government, so inflation is bad." If you can't trust your government, inflation is the least of your problems. Do you seriously think that a hostile government can't ruin you under a gold economy?

[Doom]

Any luck on that example?

I don't get this. Do you seriously fucking think that every economy that's been gold-backed has been economically fantastic?

No, and I made no such claim. You said that if you had an example of gold dropping to zero and causing incredible inflation, that it would make your case. I keep asking for that example.

I ask again.

We have had less and weaker recessions since we got off the gold reserve.

Prove this. I've seen much evidence this is not the case. Your counter-evidence?

Our economy is more stable than it's ever been

Prove this, prior to 2002. I've seen much evidence this is not the case. Your counter-evidence? Simply saying something doesn't make it so.

The Great Depression is a perfectly legitimate example of the weaknesses of a gold-backed economy.

Except, of course, it was not gold-backed. If people asking to change in their funny money for gold crashes the system because the gold does not exist, then it's not gold backed, it's *fraud*. Fraud is different than legitimate, honest. Simply saying something does not make it so.

So are the hundred years before it with a few exceptions.

Whoahoa! Exceptions? Plural, too. But...paper currency is basically your god, the god bleeds, you say? Often?

What were these exceptions? I mean, we're talking less than 100 years here, and 'panics' of previous centuries were spaced by generations. How many exceptions are we talking about? I only pointed out one exception in 5000 years re: gold-backed, and you're telling paper needs many multiples of that rate in order to be considered comparable, in addition to not counting the previous 10 years. Your god bleeds much.

This assertion of comparability only works under the assumption theft and sacrificing the innocent is A-OK, which leads the next issue we hope to resolve:

This is what I'm waiting to see any real evidence of,

Well, I'm taking on faith that you believe that theft is wrong, and the innocent should not be victimized. I guess these were unreasonable assumptions on my part.

So let's make things clear.

1) Do you believe people are entitled to own things that legally they own?

It seems like this is obvious, but with so much confusion, I'd like to make sure. See, the law says when I agree to work for money, I give my work, I get my money.

So, to clarify: is my money my money, or someone elses?

Let's just keep it simple, and go from here rather than shred the rest of this part of your screed.

increased spending means a stronger economy).

So, spending by your definition, means economic strength? I can just go out and buy everything all the time (running up huge deficits, which apparently don't count), and that will, by your defintion, improve my economic situation? I can go and buy, say, a beat up station wagon for $500,000 and improve my status? Seriously?

Why isn't this obviously wrong for you? If it doesn't work for human beings, why should it work for the divine economy composed of human beings?

Simply saying something does not make it so. Strong economies probably do have much spending, the but converse isn't true...it's a shame they don't teach logic in schools, albeit obvious why.

(massive confusion over the site)

No oops, clearly it went above you. My apologies: to emphasize, it demonstrates that the paper currencies have basically gone to zero; coins from a few decades ago, even ones made of aluminum, are now worth vastly more than the funny money printed by government.

I see this troubles you, so pretend those countries don't exist, if need be.

Are you not fucking aware that this is a completely separate issue? You are talking about inflation, and hyperinflation.

Yes, and printing paper from nothing is a source of inflation, a rather important one, and the key problem with paper currency.

You're making the argument that hyperinflation is bad

In addition to the obvious, it's also true that inflation of the sort I've specifically cited repeatedly is bad.

Fortunately, moderate inflation can be used to alleviate the pains of economic recessions,

Prove this. I've seen and presented much evidence that you are wrong, and, once again, you simply state as fact that which is not. Simply saying something does not make it so.

"I don't trust the government, so inflation is bad."

Uh, no, that's not what I said, but it's interesting how you've been trained to have this response at a challenge to the sovereign.

[DSMatticus]

No, and I made no such claim. You said that if you had an example of gold dropping to zero and causing incredible inflation, that it would make your case. I keep asking for that example.

That'd be great, if it was ever what I said. But since it's not and never has been... Getting shot will kill you just as much as drowning, but it certainly doesn't do it the same way. Gold standards fail in different ways than paper currencies. The argument was never about how they fail, so who gives a shit about inflation in a gold economy?

You've pointed out that fiat currencies exist, and some of them have sucked. I've pointed out that gold economies exist, and some (many) of them have sucked. And that's all I ever claimed.

I don't know if you're just an idiot, or if this is intentional, but you are completely misrepresenting the things I've actually said. You should stop that.

Prove this. I've seen much evidence this is not the case. Your counter-evidence?

http://en.wikipedia.org/wiki/List_of_re ... ted_States

I haven't the time to do the averages, but a quick glance will tell you that the latest recessions have bigger intervals between them and the severities are much smaller. Same goes for economic stability. Less economic recessions means more economic stability.

@Great Depression

People seriously traded in their money for gold, and they got all the gold they bought. It's certainly the case that if everyone had cashed in simultaneously, there would not have been enough gold. But the people that choose to buy gold got all the gold they bought. If it was 'fraudulent,' the effects of the fraudulence were never felt. But that's not the main point - the main point is that we were in fact 40% gold-backed, and our economy tanked horribly due to speculation on gold-dollar value, which is an inherit weakness of a gold-based economy.

That link I provided gives you a list of recessions and rough severity - you can see how much our economy sucked comparatively on the gold standard yourself. It doesn't have to be the Great Depression, but the Great Depression is a fine, more modern example.

@Theft, victimization

The idea that inflation is theft is a ridiculously fucking stupid claim.

1) Is it theft for a wheat farmer when his neighbor has an especially good season, and his own profit is reduced? Things happen that are going to devalue the things you have, and that's fucking fine and normal and it happens everyday.

2) Inflation can be accounted for. It can be expected. That's like saying taxes are theft. Taxes just are, because they improve society for everyone. Inflation just is, because it can improve society for everyone. Most saving accounts have interest rates that could (but probably currently fail to) cover inflation rates. Any investment is largely immune to small inflation, because investment turns money -> tangible wealth -> money -> tangible wealth. Wages go up to cover inflation. Things scale.

These arguments only apply if inflation is unpredictable OR large, such that nobody can accurately predict how much the contents of their wallet will depreciate, or the rate of change of the value of currency is faster than the time it takes for that currency to distribute itself.

The reality of the situation is that to really feel the effects of inflation, you have to hold onto money in a low or zero-interest situation for a few years. And if you're not planning to do anything with that money for that long, find something with a good interest rate to put it in, and the inflation will be almost completely negligible.

Inflation isn't theft any more than taxes - it's a part of the system that makes things better for everyone. And if you'd argue, "taxes are bad because I deserve all my money," you apparently have a problem with stable, healthy societies, and that would explain why we don't agree on anything.

Edit: have to add some things

Prove this. I've seen and presented much evidence that you are wrong, and, once again, you simply state as fact that which is not. Simply saying something does not make it so.

Do you understand abso-fucking-lutely nothing about modern economic policies? We do this ALL the time. It is literally the foundation for the fiat economy - the fact that you can do this IS its key advantage, and we do it all the god damn time, and our recessions are shorter and better because of this.

The basic premise is that inflation encourages spending. Spending makes economies stronger. Not to mention, it gives you a lot more control over things like interest rates and all that jazz that lets you totally put the brakes on a failing economy (until you cross a line and hyperinflate, which are the examples you're pointing out).

[Doom]

That'd be great, if it was ever what I said.

Ah, once again you forget. Once again I remind. You said:

If that were the case, if I were to point out any gold-based economy that collapsed,

This was in reference to paper currency becoming worthless. So, can you please, please, give me that example of gold becoming worthless? Or simply acknowledge that no such example exists, and so your conditional is meaningless. Either is fine.

As a minor aside, it doesn't have to be gold, just the obvious and well known and thoroughly demonstrated risks of paper make it a hideously reckless thing to do to a society.

. Gold standards fail in different ways than paper currencies.

Yes; primarily by currency debasement (the ancient world equivalent to printing more paper). Back then, people weren't educated as you are, and generally wouldn't accept pieces of paper, so instead governments typically diluted the precious metal content of their coins.

You've pointed out that fiat currencies exist, and some of them have sucked.

If some means all, yes. I reiterate, the dollar (best paper currency by far) has lost 95% of its value since becoming paper. Here's a crackpot website that confirms it.

95% suckage isn't good.

I've pointed out that gold economies exist, and some (many) of them have sucked. And that's all I ever claimed.

SO sorry, I missed those examples. Refresh my memory of the ones where gold became worthless and so you need great quantities of it to buy anything? That *is* what we're talking about, despite your many attempts to squirm around.

I don't know if you're just an idiot, or if this is intentional, but you are completely misrepresenting the things I've actually said. You should stop that.

I can't help but notice you're just getting more and more abusive as I reveal the lies you were told as a kid. I get the feeling you musta really let Mom have it when she told you there's no Santa.

http://en.wikipedia.org/wiki/List_of_re ... ted_States

Wow, some actual evidence, and it's pretty good. Granted, there's no way to compare numbers (GDP is uncalculated, and 'unemployment' is a bit harder to achieve in the 19th century, even if it was calculated).

But we can at least do the times.

1843 - 1913, 28.25 years of recession.

1913 -1983, 26.17 years of recession.

I'll give you there's a bit more recession in the pre-Fed era, but The Great Depression, the worse economic issue ever, happened post-Fed. Basically a wash, and certainly not enough to say one 'sucked' over the other strictly on this basis; I won't address the other basis of measurements possible, in order to keep things simple enough.

Is it debateable under-10% improvement enough to justify stealing from little old ladies? I mean, if we practiced cannibalism, we'd improve the meat available for consumption, too. The extensive risks need to be weighed against the questionable benefit in both cases, in my opinion.

Same goes for economic stability. Less economic recessions means more economic stability.

Heh, here we go again. Massive currency printing/inflation also causes booms (eg, the roaring 20s, the housing bubble, etc), so you're basically arguing that paper currency is even worse than I've been saying. Fair enough.

People seriously traded in their money for gold, and they got all the gold they bought.

Ok, this is a serious lack of understanding, in addition to being circular. $20 represented an ounce of gold, you didn't 'buy' it, the word is meaningless here. "They got all the gold they got"...yes, they did, but they didn't get all the gold their money was claimed to represent. And, by 1933, it became illegal for anyone to even ask the government to back its claims.

It's certainly the case that if everyone had cashed in simultaneously, there would not have been enough gold.

So agreed, a fraudulent system. Paper.

The idea that inflation is theft is a ridiculously fucking stupid claim.

And yet, fact, to judge by your unwillingness to answer a simple question that determines the legitimacy of printing paper.

1) Is it theft for a wheat farmer when his neighbor has an especially good season, and his own profit is reduced? Things happen that are going to devalue the things you have, and that's fucking fine and normal and it happens everyday.

And not even remotely the same thing. Markets rise and fall as a matter of principle. "The weather" can not sanely be considered less random than "guy running a printing press". And yet, here you are doing it.

Hey, if the neighbor went over and burned the guy's farm, you'd call it good for society, right? After all, the ashes would spread around the country, and that helps crop yields. Who cares about sacrifice of one guy, it's for the good of the economy! Would burning all the farms be even better? Probably not...who gets to choose who gets to keep their farm?

I'm not saying paper currency is all bad, it surely helps those with access to the printing press, but it really seems no matter how you slice it, better ways are certain.

2) Inflation can be accounted for. It can be expected.

Um, no. There are at least half a dozen sites trying to calculate inflation in half a dozen different ways, and these sites often don't agree on inflation of 20 years ago, much less today, much less on the definitions. So, blatantly wrong.

Taxes just are, because they improve society for everyone.

Another great line from high school. You honestly believe our tax dollars paying for the invasion of Iraq really has helped the Iraqi people? They do count as people, right? Well, maybe not, depends on what you were taught. You seriously think the invasion helped most Americans? Do Americans count as people?

Heck, I said 'most', you said 'everyone'. Our US soldiers killed invading Iraq on our tax dollars...did our taxes help them?

So, wrong again: taxes aren't fundamentally good any more than inflation...just not fundamentally evil.

Inflation just is, because it can improve society for everyone.

I've already reminded you many times, and I'll do so again. It doesn't improve society for old people that are living off savings...do they not count as people? I won't bother listing all the many other examples of who it hurts, which basically includes everyone.

Most saving accounts have interest rates that could (but probably currently fail to) cover inflation rates.

They could, theoretically, but as you acknowledge they don't, so not an example....even if there was agreement on what inflation was. So, wrong again.

Any investment is largely immune to small inflation, because investment turns money -> tangible wealth -> money -> tangible wealth.

Dude, seriously, don't recite, think about it. What's 'small'? You've already said earlier, if it's noticeable, it's bad. Lots of people notice, ergo, it's bad for lots of people. An actual investment immune to inflation would be golden (heh, a funny there), but no such exists. No investment is immune to inflation, the concept makes no sense since inflation has no solid definition. Gold is often touted as such, but no, it's not even close, no matter whose numbers you use, outside of folks that define it so that it matches exactly.

So, no investment is immune to inflation, as even casual thought shows...and here you are saying any investment is.

Wages go up to cover inflation. Things scale.

Eventually, sure, but only after a goodly while, often forcing people to spend money they don't have while they're waiting for salaries to catch up...and by the time they recover, a new round of inflation has arrived. This is questionable thinking at best, although an understandable simplification for the 9th grade.

and the inflation will be almost completely negligible.

But, still noticeable, and by your own definition, bad.

Inflation isn't theft any more than taxes - it's a part of the system that makes things better for everyone.

That's right, just keep repeating it, it'll get true eventually. You keep stating as fact that which is clearly not true. At least with taxes, most people can tell how much is being taken from them.

our recessions are shorter and better because of this.

You didn't even check to make sure, and yet you've no problem repeating it. I'm not convinced all the harm done to people without a printing press is worth the very slight and highly arguable improvement for 'society'. People are part of society.

I do acknowledge that the forced sacrifice made by the serfs might possibly be helping the economy, just as when Aztecs cut out the hearts of their victims, it pleased their gods enough to give a good harvest.

Please, consider respecting a differing opinion, for now. I really have faith in a few decades you'll understand better.

The basic premise is that inflation encourages spending. Spending makes economies stronger.

Again with the thoughtless repetition. So, again I explain how this fundamentally is not true. Spending does NOT make economies stronger. If this were the case the US could spend its way out of debt and into prosperity, by purchasing grains of sand for a million bucks apiece.

[ckafrica]

Well, yes, except for the evidence, there is no evidence, I grant you that. I just don't think you realize how powerful your conditioning is to simply not see what you don't wish to see. I'm sure none of these countries even exist on your world. You'll note many of these countries have non-fail economies, it's the paper currency that has failed.

As someone who actually lives in Vietnam the Dong is not a failing currency. The exchange rate has gone done only by about the same rate as the US dollar has gone done against the Canadian dollar over the last decade. A lot of VNs inflation is caused by foreign capital inflows increasing the local money supply. The inflation here has been high at times but not completely crazy for a developing economy. The extra zeroes have been there for decades; they just haven't bothered taking them off.

Edit: As far as gold prices go. In 1980 gold was up $800 and dropped to under $400 with a year and then fluctuated between 3-400 for 20 years. This current price spike is a bubble.

[DSMatticus]

@Example

That was never the phrasing of your conditional. If it were, you could reliably establish that inflation causes economic collapses (something you've failed to establish). So yes, when you go ahead and refine your argument to something that actually fucking matters and has coherency, you'll have some ground for pestering me for an example. But you've failed to do that, and will continue to do so, because correlation is not causation and you have it completely fucking backwards.

If some means all, yes. I reiterate, the dollar (best paper currency by far) has lost 95% of its value since becoming paper. Here's a crackpot website that confirms it.

The question you should be asking is, does that matter? And the answer is: not even a fucking bit. Because I easily have 20 times as much money in my wallet as much as the average man of the time you refer to (or rather, the money in my wallet goes >20 times as further). Seriously, you're basically fucking complaining, "When I got paid in pennies, loaves of bread cost pennies! When I got paid in dollars, loaves of bread cost dollars! This is an OUTRAGE! I posit that penny-scale transactions are fundamentally superior to dollar-scale transactions, even though the ratio's are identical or even superior!" And that's just fucking stupid and meaningless.

@Suckage Gold economies.

Ours. For a hundred years. See link I provided.

I can't help but notice you're just getting more and more abusive as I reveal the lies you were told as a kid. I get the feeling you musta really let Mom have it when she told you there's no Santa.

No, I get increasing annoyed at dealing with condescending morons who are too stupid to see reason through their crackpot conspiracy theories.

But we can at least do the times.

1843 - 1913, 28.25 years of recession.

1913 -1983, 26.17 years of recession.

Wow, yeah, that's a completely fair analysis. You've included the years of the Great Depression, when we were 40% gold-backed, in the fiat currency system. So, yes, when you consider one of the worst recessions our gold-backed economy ever had a part of our fiat economy, it weighs those numbers pretty far in the gold favor. But then again, getting to blame your problems on other people always makes you look good.

Let's cut the Great Depression out from both, since we can't seem to agree where it falls (and that's semi-fair, as its a transition phase) and see how they compare.

1850-1900: 22.25 years
1940-1990: 8.67 years

Wow! What a remarkable difference. Completely removing that transition era shows just how much more awesome the fiat economy is, right?

Ok, this is a serious lack of understanding, in addition to being circular. $20 represented an ounce of gold, you didn't 'buy' it, the word is meaningless here. "They got all the gold they got"...yes, they did, but they didn't get all the gold their money was claimed to represent. And, by 1933, it became illegal for anyone to even ask the government to back its claims.

And all of this is irrelevant to the cause of the Great Depression, which was people asking for (or buying on the open market) their gold with dollars, and getting it. And trashing the dollar.

Um, no. There are at least half a dozen sites trying to calculate inflation in half a dozen different ways, and these sites often don't agree on inflation of 20 years ago, much less today, much less on the definitions. So, blatantly wrong.

Yes, and there are a half dozen sites trying to claim 9/11 was an inside job. If you want to dig up nutjobs, you're welcome to, but nobody sane cares.

Another great line from high school. You honestly believe our tax dollars paying for the invasion of Iraq really has helped the Iraqi people? They do count as people, right? Well, maybe not, depends on what you were taught. You seriously think the invasion helped most Americans? Do Americans count as people?

Wow, you mean Americans suck at holding their government accountable and making responsible social decisions? That's so terrible to hear! And definitely 100% true. Remind me what it has to do with inflation or taxes - or do you think the taxes that pay for roads and water killed U.S. soldiers too? If you want to point out some of our 'expenditures' are unjustified, that's fine. You might also want to point out our foreign policy and energy policy blow, too, but it still doesn't have anything to do with inflation or taxes.

I've already reminded you many times, and I'll do so again. It doesn't improve society for old people that are living off savings...do they not count as people? I won't bother listing all the many other examples of who it hurts, which basically includes everyone.

And I've totally told you there are supposed to be mechanisms in place for those people (social programs, investments with INTEREST rates equivalent to inflation, investment in capital/business/stock). If you want to tell me the way we do that currently sucks, I agree. We could certainly benefit by a healthcare reform that made everything affordable. But again, this is a problem that's totally solvable in other ways.

Here is a clear example of people it doesn't hurt at fucking all - people living paycheck to paycheck, which is a looot of people.

As I've said, inflation is only bad if you expect to hold actual stacks of paper (as opposed to invest them or spend them). And I literally don't care about that, because that is an obsolete idea that's bad for everyone.

Dude, seriously, don't recite, think about it. What's 'small'? You've already said earlier, if it's noticeable, it's bad. Lots of people notice, ergo, it's bad for lots of people.

Ugh. Look, when inflation is fucking steady, it really doesn't matter, because prices reflect future inflation rates, and wages reflect them too. It's like a regular price trend where every few months prices go up relative to your pay somewhere between 0.0-1.0%, and then go back to 0.0% as your wage increases a bit later. At least, ideally. We currently have wage stagnation, which is a separate issue because it means corporations are looting and pillaging the middle class. They can do that under a gold or fiat economy (and history suggests they did a lot of it under the gold, too).

But that's completely predictable and measurable and the system accounts for it, and this complaint is meaningless.

Eventually, sure, but only after a goodly while, often forcing people to spend money they don't have while they're waiting for salaries to catch up...and by the time they recover, a new round of inflation has arrived. This is questionable thinking at best, although an understandable simplification for the 9th grade.

And that doesn't matter, because at that point it's the same as having no inflation and a slightly lower wage, and staying at that point forever. The only problem is when inflation goes up faster than wages. So, no. Don't care.

Again with the thoughtless repetition. So, again I explain how this fundamentally is not true. Spending does NOT make economies stronger. If this were the case the US could spend its way out of debt and into prosperity, by purchasing grains of sand for a million bucks apiece.

Again, that's ridiculously stupid. Here's how it actually works.

1) When people spend, this increases demand.
2) Increased demand will lead to higher investment in assets which can fulfill that demand, i.e. increasing supply.
3) This not only employs people, but raises the overall wealth of the economy, because it is producing more things.

Deciding to artificially pay a million dollars for a grain of sand doesn't fucking do that, at all, because they don't have to employ people to get that grain of sand, and manufacturing grains of sand does nothing to improve the overall wealth of your economy, so it's a dead-end.

However, encouraging people to buy the latest smartphone will increase the volume of smartphones sold, which will increase the volume of smartphones which need produced, which will employ people and add wealth to the economy (more employees, more smartphones).

See the difference?

[Doom]

Neat. Do they still use coins in Vietnam, or can all transactions be handled with slips of paper, since the smallest units of currency 50 years ago no longer exist in practice?

I'm not entirely convinced gold is in a bubble; that word usually applies to when the price spikes upward (with the downard half completing the bubble). Generally, you look for a parabolic increase in prices. For example, silver had a 'bubble' recently, and if you look on a price chart, you see a bubble, a downward facing parabola.

On the other hand, the last 10 years of gold have been a steady upward slope, to complete the bubble, you'd need a decade. Gold might well drop, but I honestly don't see it ever dropping to $20 an ounce.

[Doom]

@Example

That was never the phrasing of your conditional.

That was your conditional, you phrased it. Oopsie.

The question you should be asking is, does that matter? And the answer is: not even a fucking bit.

Yes, it only matters to people that have anything. Not you, apparently. Go out and live, earn something...I bet this will change your perspective an eense.

Ours. For a hundred years. See link I provided.

OH! You mean the 19th century. The one where America went from a tiny backwater in 1801 to a burgeoning world power in 1901, ready to completely dominate the 20th century? Yeah, that economy TOTALLY sucked. Still not convinced gold was worthless during this period.

No, I get increasing annoyed at dealing with condescending morons who are too stupid to see reason through their crackpot conspiracy theories.

Definitely touching nerves here. All those countries are just a massive conspiracy of cartographers.

Wow, yeah, that's a completely fair analysis.

Yeah, starting with the last years of the graph, and counting backwards. Yes, you can cherry pick and choose things to get utterly different results.

You've included the years of the Great Depression... in the fiat currency system.

Exactly, at least we've established this.

Wow! What a remarkable difference. Completely removing that transition era shows just how much more awesome the fiat economy is, right?

Yes, if we ignore the great disasters of a fiat economy, the fiat economy looks better. Agreed.

I mean, my way includes the Civil War under the gold standard, and the war was a very serious economic disruption. You do know that was before 1913, right? The country nearly ripped itself in half...but was still better off. Yikes, it really is just that bad, isn't it.

And all of this is irrelevant to the cause of the Great Depression, which was people asking for (or buying on the open market) their gold with dollars, and NOT getting it.

Fixed your typo. You're welcome. Apparently, you don't know about it becoming illegal to own gold? You're saying the opposite of reality.

Yes, and there are a half dozen sites trying to claim 9/11 was an inside job. If you want to dig up nutjobs, you're welcome to, but nobody sane cares.

So now the entire concept of inflation is a conspiracy theory? You're really going this far not to admit you're wrong?

Dude, give it up already.

Wow, you mean Americans suck at holding their government accountable and making responsible social decisions? That's so terrible to hear! And definitely 100% true.

Finally, you're starting to acknowlege when you're wrong. Definite progress.

Remind me what it has to do with inflation or taxes - or do you think the taxes that pay for roads and water killed U.S. soldiers too?

I never asserted that taxes hurt everyone. You recited that taxes help everyone. Do you see how there's a difference there?

And I've totally told you there are supposed to be mechanisms in place

And these mechanisms are not in place, and will never be sufficiently in place to compensate for the destruction.

Here is a clear example of people it doesn't hurt at fucking all - people living paycheck to paycheck, which is a looot of people.

Another classic example of not thinking it through. These people you mention, that live from paycheck to paycheck. You know why they live from paycheck to paycheck?

Because they don't have savings. You know why they don't have savings?

Because the fiat system makes it impossible, ill-advised even, to save. You're absoutely right, the paper system has made aloooot of people live paycheck to paycheck now.

So, in the sense that people already destroyed by the system aren't being further hurt by the system, you've got a point, but even this is a meager one. These people not only have no savings, they have no assets (which tend to rise with inflation), and are hard pressed to acquire anything because they're trapped living from paycheck. They get no benefits from inflation. Any time they try to accumulate (i.e., save) capital over time, it just gets wiped out by expenses that are so much higher than they were before.

This is not a good thing, and I thank you for pointing that aloooot of people have been hurt badly by this system.

As I've said, inflation is only bad if you expect to hold actual stacks of paper (as opposed to invest them or spend them).

Or if you have a checking account. Or a piggy bank. Or if you're trying to save up to buy something big, like sending a child to college. Or if you're saving for retirement. It really is darn near everyone.

And I literally don't care about that, because that is an obsolete idea that's bad for everyone.

And you get to be the arbiter of what people should do with their money. Once again I ask, do you think you own your money? Why do you think other people don't own their money? Why do you get the right to punish people for not doing what you think is best with their money?

Ugh. Look, when inflation is fucking steady,

Nice theory. Irrelevant, it's never 'steady', unless you redefine the word.

it means corporations are looting and pillaging the middle class. They can do that under a gold or fiat economy (and history suggests they did a lot of it under the gold, too).

Hey, no assertion that a real currency would be utopia...just eliminates the easy way of destruction for everyone.

But that's completely predictable and measurable and the system accounts for it,

Yes, keep repeating that. What will inflation be in February, 5 years from now? Are you sure your prediction is completely accurate? I assume you mean the BLS's definion of inflation is predictable and measurable...seeing as the BLS changes its definitions every few years (and changes sub-aspects of the definition nearly continually), how are you going to predict what their definition will be in 5 years?

So easy to shred what you say.

Deciding to artificially pay a million dollars for a grain of sand doesn't fucking do that, at all, because they don't have to employ people to get that grain of sand, and manufacturing grains of sand does nothing to improve the overall wealth of your economy, so it's a dead-end.

Good, you understand. Spending does not necessarily make a strong economy. Please stop saying that now.

[Koumei]

As someone who actually lives in Vietnam the Dong is not a failing currency.

So you'd say the Dong is standing firm?

[DSMatticus]

That was your conditional, you phrased it. Oopsie.

Except it wasn't, and you can seriously dig through the pages and find it and show me where you think I said that. Good luck finding the part where I said, "gold economies have inflation just like fiat economies!"

Yes, it only matters to people that have anything. Not you, apparently. Go out and live, earn something...I bet this will change your perspective an eense.

I keep what little money I have in a savings account with an interest rate (albeit a shitty one). I'm little more than a broke college student. I don't care that inflation exists - I care that my interest is either less than or more than that inflation rate. Actually, I personally don't even care about that, because the money doesn't stay for long. Inflation literally has no effect on me, as long as A) the interest rates on my account reflect the inflation rate, and B) my wages go up in correspondence with the inflation rate.

A can be expanded - "as long as low-risk investment opportunities with inflation-equivalent return rates are available to me." As long as that holds, I don't actually lose any money to inflation. And if there are minor discrepancies, I still don't care, because significant losses won't manifest in the next 10 years.

Do you wanna know what'll make my life really bad, though? A shitty economy. So why don't I spend more time worrying about what actually makes the economy stronger, as opposed to what just helps me.

@Great Depression

I really don't know how I can make this clearer. We had a partial gold-standard through the Great Depression. The explicit number was 40%. That is not a fiat economy, under any interpretation, and you are flat out wrong to say it is. The Great Depression was directly caused by gold speculation, something that is only particularly devastating in a gold-backed economy.

You're wrong. So wrong you should be hitting yourself on the forehead for saying something so profoundly stupid and wrong. You cannot count it as a failure of a fiat economy, because it never fucking happened under a fiat economy. If you don't want to count it as a failure of the gold economy because "it was only 40% backed! It doesn't count!" I will roll with that. That's why I cited a 50-year range completely excluding the roaring 20's and the 'worst hangover ever,' the Great Depression. But make no mistake, being 40% gold-backed is not a fiat economy.

If you don't like what the numbers say, tough shit. You don't get to rewrite history and make the Great Depression a fiat economy, because it wasn't.

Fixed your typo. You're welcome. Apparently, you don't know about it becoming illegal to own gold? You're saying the opposite of reality.

You're not very good with timelines. You said that happened in 1933. The speculation started well-before that, and they gradually tried (and failed) to put the clamps on for half a decade, a decade following. And passing laws after the fact doesn't retroactively get your gold back, does it?

So now the entire concept of inflation is a conspiracy theory? You're really going this far not to admit you're wrong?

Oh, you mean all the things you've been saying are really just descriptions of the theory of inflation, and not insinuations that it single-handedly ruins economies, and that the U.S. is hiding a huge inflation rate that they are reaping the benefits of by printing money and handing it to themselves? Boy, what a mistake this has been.

Finally, you're starting to acknowlege when you're wrong. Definite progress.

Depressingly, you're continuing to suck at understanding half the shit you say, let alone what I'm saying.

Do you understand that, 'not trusting your government' is a separate issue from 'fiat currencies?' They're independent? Or do you think the mere act of having a gold-backed currency magically protects you from fiscally irresponsible governments? When you answer this question in the only intelligent fashion ('no'), hopefully you'll realize you're talking about two separate things.

If you want to say our government is poorly ran, kudos. If you want to say our fiat currency has anything to do with that that, you'll have to try making compelling arguments.

I never asserted that taxes hurt everyone. You recited that taxes help everyone. Do you see how there's a difference there?

No, you pointed out, "well, sometimes governments misappropriate taxes to things I don't necessarily agree with." Which is not a flaw with the taxation system, it is a flaw with representative governments - you have to have mechanisms that hold representatives accountable, and we suck at that. Doesn't change the fact that taxes make society work.

And these mechanisms are not in place, and will never be sufficiently in place to compensate for the destruction.

Except in the countries where they are, and this destruction practically doesn't exist in the first place in our country (you are aware you can put your money in places that accrue interest?).

So, in the sense that people already destroyed by the system aren't being further hurt by the system, you've got a point, but even this is a meager one.

Another unsubstantiated leap. You realize you just assumed that anyone who doesn't save has been economically destroyed? Which is a ridiculous assertion. But I suppose you're right, what I actually meant was they maintain a small nest egg proportional to their expected emergency costs, and don't save much beyond that.

And that totally works. That doesn't 'destroy' you.

But yeah, if your standard for "being economically destroyed and bereft of wealth" is "not being able to maintain an investment that doesn't lose a few percent of its value very 5-10 years," fiat economies and inflation destroy everyone. Fortunately, in the real world, that uhh... isn't what indicates someone's economic destruction, so woohoo for that.

Or if you have a checking account. Or a piggy bank. Or if you're trying to save up to buy something big, like sending a child to college. Or if you're saving for retirement. It really is darn near everyone.

Most checking accounts come with saving accounts. They're awesome like that. So you keep at most a little bit in the checking account, and if the same money stays in your checking account for a very long time (and it shouldn't, because if it were you'd move it to the savings account), it will depreciate in value by a few percent every year.

But what you apparently don't get is that the wealth in checking accounts is fluid - as money is entered, it is spent. Then more money is put in. This fluid nature means inflation doesn't matter. If you keep your checking account at a steady 1,000 dollars, and refill it every year, after ten years that doesn't mean you've lost a shit ton of money. You've been buying things with that money the entire time, and then replenishing it at your higher wages.

Keeping money in a piggy bank is dumb when there are savings account.

Speaking of saving accounts (or actual investments, like CD's or whatever), that is how you're supposed to 'save for something big.' And in those cases, you will totally be near, slightly below, or slightly above inflation, depending on luck and your chosen method. You'll have losses, or even possibly gains, but they're triflingly small.

So, glad to have explained how all that works in a fiat economy.

And you get to be the arbiter of what people should do with their money. Once again I ask, do you think you own your money? Why do you think other people don't own their money? Why do you get the right to punish people for not doing what you think is best with their money?

Wow, you're completely right! People should come and take money out of everyone's wallets, because they don't own it.

Oh, wait, that's not what I said - you're hyperbolically equating two entire dissimilar things. Haha, I almost missed that.

It is an expectation in a fiat economy that currency held in non-growth forms will depreciate over value in time. If you think that's bad, then you also think it is bad for gold economies to EVER, EVER acquire more gold or print more bills (or even do both together, since those bills won't be distributed evenly among the bill-holding populace). This would also 'reach into people's wallets and steal some of their hard-earned cash,' in the same way printing money does.

So, yes. I guess you've got a point! And it applies to fiat economies as well as gold economies. A possible response: "the effect is less noticeable in gold economies." In which case it isn't bad to steal from people, it's only bad to steal enough that they notice. So we just have to pair interest rates with inflation rates, like I've been suggesting the entire time, and people won't notice the theft, and it becomes completely okay.

Deciding to artificially pay a million dollars for a grain of sand doesn't fucking do that, at all, because they don't have to employ people to get that grain of sand, and manufacturing grains of sand does nothing to improve the overall wealth of your economy, so it's a dead-end.

Wow. So, your point is... "You said A does this. Here's B, that sounds vaguely similar to A, but fails to match A in several key ways, and B does not do this. Since B does not do this, A also does not do this."

You're going to have to refute my actual arguments, not strawmen you invent. We'll chalk this up to your far looser definition of 'spending' to an imaginary situation where you attribute imaginary value to a pebble and pretend handing it back and forth generates wealth.

Thankfully, actual spending on goods people want usually involves finding them or making them. And that employs people. And it adds more goods to your economy. Ergo, stronger economy.

[Username17]

As someone who actually lives in Vietnam the Dong is not a failing currency. The exchange rate has gone done only by about the same rate as the US dollar has gone done against the Canadian dollar over the last decade. A lot of VNs inflation is caused by foreign capital inflows increasing the local money supply. The inflation here has been high at times but not completely crazy for a developing economy. The extra zeroes have been there for decades; they just haven't bothered taking them off.

The general thrust of your argument is correct. The Dong is a reasonably hard currency that shows no indication of hyperinflating or of wilting away. However the specific diagnosis of Vietnam's exchange rate as it currently exists is wrong.

Capital influxes drive the value of your currency up. If more people are trying to buy your currency with foreign money in order to invest in your country, it makes the currency stronger by simple supply and demand. More demand for your currency in foreign markets means that your currency is more expensive in foreign currency denominated exchanges.

The Vietnamese situation is more complicated than that, and actually has to do with having capital controls and an official exchange rate that is set deliberately low in order to make Vietnamese exports more attractive and boost the domestic economy. An artificially low exchange rate acts as a tariff on foreign goods and a subsidy for domestic industry for export or foreign investment. It's basically China light, and it causes inflation by putting pressure on domestic wages and prices to rise to what their foreign denominated equivalents are.

But the Vietnamese can stop doing that at any time, and last month they did, causing the value of the Dong to shoot up 2% since April.

-Username17

[MfA]

Asian countries are trying to run a currency peg with a country which has a stagnant economy and which is trying to devalue, while at the same time having a growing economy. The problem with this is that you might be able to maintain growing exports that way ... but your cost for materials increases at a faster pace and goods available for internal consumption decrease. So real inflation inside your country will exceed that of the country you're trying to run a peg with.

Which is kind of the point for the country trying to devalue, they are trying to make you stop running a peg, to stop subsidizing outsourcing from their country.

[sabs]

Arguing that you don't like how Taxes are spent.. is silly.

My taxes got spent invading Iraq, I want them back.
My taxes get used for all sorts of stuff I don't approve of. But they also get used for stuff I approve of that, you don't. So it' evens out.. sometimes.

Taxes pay for roads, police, social safety nets. These are all things I like.

[violence in the media]

Does anyone not invested in gold ever argue for a return to a gold standard? Does it ever occur to them how untrustworthy they seem because of how self-serving their arguments are?

"I think we should go to a Magic card standard. Why, no, the fact that I have 40,000 Magic cards has nothing to do with that--I just think it would be a sound fiscal policy."

Also, is Doom arguing that bread and wages should remain static over time? That I should be able to buy a loaf of bread today for $1 and, should I tuck that $1 into my mattress, when I retreive it that I should be able to trade it for a loaf of bread in 2061? Would the only way to get a raise in this world be a complete career shift? Or do we just pay engineers less than cashiers once there are more engineers than cashiers? How would this even work?

[tzor]

I agree with you, the US is *not* experiencing hyperinflation at this time, and is unlikely to do so in the near future.

The United States is not experiencing hyperinflation because QE2 isn't doing what you think it is. Since the too many dollars isn't getting directly into the hands of people to spend it, it isn't driving up the inflation in a direct obvious way. (I'm almost convinced that gold is a "penny stock" - a lot of the increases is due to the massive pressure by salesmen who make a commission off of the sale. It's practically non stop on the conservative and financial channels these days.)

It does show up in other ways. I just heard that long term transactions are starting to take place more and more in Euros. It shows up (but still not the leading cause) in gas and food prices. On the positive side it is propping up the stock market (but we are going to have a hangover in June when it ends).

[tzor]

Does anyone not invested in gold ever argue for a return to a gold standard? Does it ever occur to them how untrustworthy they seem because of how self-serving their arguments are?

The problem with people who argue for the gold standard is that they generally have a good idea but argue it from the wrong direction. The key to a comodity standard is that it peggs the supply of currenty to something. It really doesn't matter what, but it's pegged never the less. The problem with "fiat" currency is that it is far too easy to change the supply of currency.

So people will say, "you see ... it's gold that keeps it fixed." No it's not. It's just easier to say "I'll fix the currency supply to something" than "I'll fix the currency supply." (And in fact it's also just as easy to cheat as well ... are you really certain that a comodity currency really has a commodity in storage for every bill for that commodity that is incirculation?)

Now, one could argue that an absolute fix might not be the best thing. (Printing money like there is no tomorrow is clearly crap.) So, if you excuse me, I'm going to go all capitalist on you because government is really a corporation. All that currency you see out there? Those are non voting shares of stock - that don't yeild a dividend.

Yes, every dollar printed is a dollar that went to the federal government.

So what happens when a company dumps more stock on the market? The "value" of the stock drops. (Compared to what? To other companies of course ... and every government is its own company ... welcome to the wonderful world of ForEx.) Some companies are dragged down by bad divisions they can't really sell off (like the EU and their PIGS).

Anyway, back to the corporate model. You might tie the money supply (and the bond market aka the debt ceiling) to the revenue side of the balance sheet (that's the nation's GDP) as the best optimal way, but in any event it has to be a really hard and solid rule that would be very difficult for any one to simply override on a whim.

I don't know is this is true, but there was an old story that one of the societies of mezzo america was really into maintaining the currency levels. Their currency was the cacco bean. When good crops were threatening to cause inflation by having too many beans chace too few goods, they announced another religious festival that required the consumption of hot cocca, thus keeping the supply at a near constant level. So even with a variable commodity, you can maintain a constant level if you try really hard.

[Maj]

The problem with gold, though, is that the economy is expanding faster than it's being mined. There isn't enough gold in the world to supply the US dollar, let alone other countries around the world.

So while the allure of gold might be awesome because it doesn't hyperinflate, the horrible downside is that if there isn't enough gold, you start having serious problems. And if you don't believe me, go ask the Romans.

[Doom]

The problem with gold, though, is that the economy is expanding faster than it's being mined. There isn't enough gold in the world to supply the US dollar, let alone other countries around the world.

And again this argument rears its head. I again remind that, in the history of the entire world, basically NO country has had 'enough' gold to truly represent it's transactions. Always, countries without gold simply acknowledged the standard, and determined a market price of gold based on commodities it did have. Something that's never been a problem before is likely not going to be a problem now.

It's interesting that you mention the Romans. Even when they had very little gold (gold coins were all but unheard of until Caesar conquered Gaul, which had gold mines), they still had a hard currency model.

When Romans 'ran out of gold', it didn't mean literally people didn't have a way to purchase things, it referred the government running out of money to pay for things. They started to 'solve' this problem by devaluing the coins, by reducing the purity of the gold (and especially silver, which was more commonly used for everyday transactions then).

Does anyone not invested in gold ever argue for a return to a gold standard? Does it ever occur to them how untrustworthy they seem because of how self-serving their arguments are?

Does anyone not using paper ever argue for the use of paper? This is a silly argument. It would be *bizarre* and as horribly dishonest as anything DSM says if someone argued that gold was good, but unwilling to put his money where is mouth is.

Arguing that you don't like how Taxes are spent.. is silly.

Absolutely, but arguing that taxes benefit everyone is utterly retarded. Don't get distracted by his confusions and dissembling.

[tzor]

This Roman thing is interesting. But there is a problem with the argument. Back in Roman times there was a commodity just as important as gold, but more so because it was actually needed. It was at the time rare. It would continue to be rare until it was artifically manufactured in the 20th century. Wars were fought over it. It was a major factor in the defeat of the Southern States in the Civil War because there was nothing else to preserve food long term. (Refrigeration would not come into play into the 20th century, along with freeze drying.)

It was salt. And salt was the "currency" of the Roman Legion. Long before they had gold, they had a very stable commodity currency in the Empire. The legion kept the empire running.

The roman highway system? Built to transport SALT! "An example was the Via Salaria (originally a Sabine trail), leading from Rome to the Adriatic Sea. The Adriatic Sea, having a higher salinity due to its shallow depth, had more productive solar ponds compared with those of the Tyrrhenian Sea, much closer to Rome."

[sabs]

No, Taxes benefit EVERYONE. Absolutely everyone in the US benefits from the taxes being paid. You might not benefit from every tax dollar spent, directly. But everyone benefits from some of the tax dollars.

Police
Firemen
FBI
Road contruction/Maintenance
Food Stamps
Low Cost housing

If you can't understand how giving someone an alternative between robbing you and starving to death doesn't help you.. well. Everyone benefits from some of the taxes. Sure, you may not be collecting State Disability Insurance. But you might need to at some point, and there but for pure random luck, go you.

Roman Legionaires were paid in Salt. It was that Salari
Salad was a mix of greens and salt, and considered a rare treat. To this day we talk about being paid in Salt, even though.. our salt is now the US Dollar

[Doom]

Except it wasn't, and you can seriously dig through the pages

I already dug through the pages and showed you the quote. That's about all I can do.

Actually, I personally don't even care about that, because the money doesn't stay for long. Inflation literally has no effect on me,

Yes, this is what I've been saying, you're young and just don't realize it yet. Have faith, in the years to come, you'll come back to this, and in turn, you'll try to explain to trained-to-be-hostile children that, indeed, the things you have faith in now are lies.

I really don't know how I can make this clearer.

Allow me, then. A customer goes into the Federal bank to turn his slips of paper back into gold.

Customer: "I'd like to turn these slips of paper into gold."

Banker: "I'm sorry, we can only turn 40% of your slips of paper into gold, the rest is trash."

Customer: "You mean 60% of my money is worthless paper?"

Banker: "Correct. But hey, we'll give you some gold."

Customer: "Fine, do that, then."

Banker: "Here you go, sir. Please return the gold soon, as soon it will be illegal for you to hold gold, making all your money just paper."

Customer: "..."

That is not a fiat economy, under any interpretation, and you are flat out wrong to say it is.

Again, no. We had a system where funny money flooded the markets, causing a boom (the roaring 20's), and a crash followed. When people started to figure out what was going on, they tried to turn the counterfeit money back into gold. The rather than acknowledge that the money was counterfeit, the government made it became illegal to own gold. If you don't want to call it fiat, call it fraud, although all fiat runs in this manner, explicitly or not.

This is little different than any pyramid scheme, really.

The Great Depression was directly caused by gold speculation,

Fascinating claim. Proof?

But make no mistake, being 40% gold-backed is not a fiat economy.

Heh, just keep saying that.

You're not very good with timelines. You said that happened in 1933. The speculation started well-before that, and they gradually tried (and failed) to put the clamps on for half a decade, a decade following.

Yes, they tried and tried to discourage people from cashing in the funny money, eventually having no other recourse than to make it illegal to do so.

And passing laws after the fact doesn't retroactively get your gold back, does it?

Exactly, people were legally obligated to turn in their gold, in addition to no longer even theoretically able to cash in the funny money for gold. The gold, if it did exist, was gone, never to return.

Depressingly, you're continuing to suck at understanding half the shit you say, let alone what I'm saying.

Perhaps, but what you're saying is fundamentally wrong so often, it's hard to follow the gibberish at times.

If you want to say our fiat currency has anything to do with that that, you'll have to try making compelling arguments.

Come back in a decade or two and reread.

No, you pointed out, "well, sometimes governments misappropriate taxes to things I don't necessarily agree with."

I said no such thing, liar. You recited what you were told to recite, that taxes help everyone. I simply demonstrated that you were taught wrong. By repeatedly doing so, it'll eventually sink in how badly you've been taught, and you'll come to relearn things from the ground up. I feel your pain, I spewed the same stuff you did when I was a kid.

Another unsubstantiated leap. You realize you just assumed that anyone who doesn't save has been economically destroyed?

No, just shredding your assertion that people that live paycheck to paycheck aren't hurt by the system.

But I suppose you're right, what I actually meant was they maintain a small nest egg

People that live paycheck to paycheck don't have this. But, you're right, if they have a nest egg, they're being hurt by inflation, too.

it will depreciate in value by a few percent every year.

Absolutely, and if I didn't own my money, there'd be nothing morally bad about this.

You never did answer: do you own your money, or not?

inflation doesn't matter.

Just keep saying this over and over. The people that live paycheck to paycheck? Many of them used to have savings, but it got wiped out by inflation (indirectly of course, quite often by massive medical expenses). If not them, then their parents got wiped out by the inflation. If not them, the grandparents. It's brutal once you realize what's been going on.

You'll have losses, or even possibly gains, but they're triflingly small.

Any time you want to put your money where your mouth is, I'm game.

Wow, you're completely right! People should come and take money out of everyone's wallets, because they don't own it.

And finally, your true belief comes out. Everytime the government creates more money, it's confiscating wealth from all the citizens (as Greenspan himself said). You don't believe this is theft because people don't actually own their money. I guess it's possible you were being sarcastic here...but it's so hard to tell.

So we just have to pair interest rates with inflation rates, like I've been suggesting the entire time.

And again, this is a *wonderful* theory. You know, Communism is a wonderful theory, too. Much like fiat currency, Communism has failed spectactularly many times, causing incredible suffering and human misery.

Do you believe we should keep on trying Communism, because it's a beautiful theory, and continue to ignore empirical evidence?

You're going to have to refute my actual arguments,

Which I've done, many times, you just don't understand them enough to respond intelligently. Please, come back to this after you've earned something.