On 2008-05-06, The Trucker <mikcob@[EMAIL PROTECTED]
> wrote:
> 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.
If I am really misreprenting you then please
explain just what you mean in the last
two sentances above? How else should
someone interpret "there will be NO inflation.
The money held by the rich will get more
'valuable' and then need not add to their
pile of money..."
>> Can you cite any theory or empirical evidence
>> that sup****ts 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.
If you're going to start changing the presumed
assumptions of please explain why as populations
grow and time passes the innovation of technology
will not increase the velocity of money more
than the factors your common sense tells you
will drive this deflation.
jmh
|
