On Mon, 05 May 2008 23:44:02 +0000, jmh wrote:
> On 2008-05-04, The Trucker <mikcob@[EMAIL PROTECTED]
> wrote:
>> On Sun, 04 May 2008 15:05:34 +0000, jmh wrote:
>>
>>> On 2008-05-04, The Trucker <mikcob@[EMAIL PROTECTED]
> wrote:
>>>> On Sat, 03 May 2008 20:17:31 -0700, orangatang1 wrote:
>>>>
>>>>> On 2 May, 22:02, Ron Peterson <r...@[EMAIL PROTECTED]
> wrote:
>>>>>> On May 2, 1:12 pm, orangata...@[EMAIL PROTECTED]
wrote:
>>>>>>
>>>>>> > It has long been recognised that deflation is the main cause of
>>>>>> > recessions and depressions.
>>>>>>
>>>>>> What causes deflation? And, how do you know that?
>>>>>>
>>>>>> --
>>>>>> Ron
>>>>>
>>>>> Inflation is caused by increasing the amount of money in
circulation.
>>>>> Roughly speaking, if the amount of money in circulation doubles the
>>>>> value of money halfs. So, if the fed creates a lot of new money
>>>>> inflation increases.
>>>>
>>>> That is what would happen if the money is injected at the bottom --
wages
>>>> or other injections at the consumer level. But if the additional
money
>>>> does not pass through the hands of the dudes at the bottom, of it is
just
>>>> injected at the top like right into the financial markets then it
quickly
>>>> settles into the pockets of people who will not spend it. It is
simply
>>>> dead money.
>>>
>>> Both the above are gross simplifications
Sure....
>>> but I
>>> think the second case is also wrong. Trucker,
>>> are you really trying to say that there is not
>>> inflationary impact/effect when money is injected
>>> via the capital markets?
>
> To which Trucker now seems to be arguing that
> an injection of money into rich peoples pockets
> is not justr dead money but in fact *DE*flationary.
You seem to purposefully misrepresent what I say....
>> "flation" is a "degree". Not black or white or yes
>> or no. Injection of money into the pockets of those
>> who have all they need and no need to "invest" will
>> cause less INflation (if any at all) than money injected
>> into the pockets of those who will spend it. It is the
>> spending that bids up the prices that manifest "inflation".
>> If there is less additional spending then there is less
>> inflation. The major problem with "trickle down" is that
>> there is no reason for the holders of money to invest.
>> They know that the common people will have no jobs and no
>> money and there will be NO inflation. The money held
>> by the rich will get more "valuable" and they need not
>> add to their pile of money to add to their actual wealth.
>
> Can you cite any theory or empirical evidence
> that supports the rather surprising claim of
> money injections actually producing deflation?
>
> jmh
I deal in common sense. I never claimed that injections of money cause
deflation. We can rationally expect population growth. And given
population growth then the people who do not get an injection of money
will have less of the total money and there will be less actual
circulating money per capita. The dead money increases in relative value
so long as it remains dormant. Prices will FALL if that is the case;
especially the price of labor. The deflation is caused by population
growth. Not by the injections of money. It is just that the money
injections do no good if the money lies dormant.
--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org/extend
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