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Rich (Now with the Upper Middle Class) Rich (Now with the Upper Middle Class)

10-07-2010 , 01:10 PM
Quote:
Originally Posted by pvn
This is basically why I stopped reading this thread. I don't have a team. Yet a there are posters who would rather lump a bunch of people into an undefined collective and then try to beat one person with weaknesses they thought they saw in some other member of the collective.
Zygote is effectively defending your point - do you agree with his arguments?
10-07-2010 , 01:18 PM
I haven't read his post. I only accidentally clicked on this thread the last time, and just happened to see "PVN" in your post (the bulk of which I also didn't read).
10-07-2010 , 01:18 PM
man this thread heated up. Politics has become > than OOT. Loving the shift to economics-speak. There really should be an outward demarcation between those who have studied it, or work in the field. Here's a place to start for those who are REALLY interested in it: http://repec.org/
10-07-2010 , 01:44 PM
Quote:
Originally Posted by Zygote
well depending on the selling price, sure he may make the same money either way. you have no point.
The dealer doesn't care about the selling price. How does he make money from the intervention?


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its entirely irrelevant to the point i made. your trying to conflate the use of the word "prices". try liquidate 60 trillion and see how far you get. how can the demand for something be greater than the means of demand?
So your fantasy land prices are only applicable if we're selling the entire planet to some aliens? We're not doing that, so I suppose M0 doesn't constrain us the same way.


Quote:
capitalizations are calculated via last price, but that is not the same as the sense im discussion prices. just because someone would purchase one unit at certain price, doesnt mean much larger units will fetch those prices. you cant aggregate prices like that in a meaningful sense because people will have to make choices in their spending with finite means push come to shove.
This is wholly irrelevant. Market prices are what matter for the purposes of who benefits here. I mean, if inflation due to adjustments, M2, blah, blah affects my GOOG purchases and sales and P&L, that's a concrete effect. It's irrelevant, if in some fantasy universe you made up, you can't sell the entire planet at those prices - I still benefit if I'm able to sell my shares at those higher marginal prices.

What's really funny is that you're copying my model here (where you btw, argued the exact opposite)

http://forumserver.twoplustwo.com/11...regime-397397/

but you're doing it all wrong! Nominal size of the economy was constrained by M0 in my model because M0 is guaranteed to be constant and guaranteed not to be bypassed as a means of transaction. Neither is true for any currency in this world.


Quote:
i just sold a share of myself for a dollar to a friend. im also listing a googleplex shares, i guess my market cap is a googleplex * 1. who gives a ****? this changes nothing about what i was saying. unless your trying to prove that the value of something is greater than the thing giving it value. good luck. the market capitalization of all the companies is 1 googleplex ounces of gold lets say, what does this tell you when there are not nearly a small fraction of that much gold out there?
World GDP is also like 60 trillion and that's by measuring actual transactions, not extrapolation of marginal prices. Did these transactions not happen?



Quote:
so sad your ability to understand people and make prediction sucks.
Hope =/= Prediction


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you clearly cannot seperate the issues of speculation and inflation and relative prices.
What? Your entire point is that you could. Inflation is apparently a net benefit to very specific, privileged people in a way that's not accessible to anyone else. Now you're saying that effects of inflation are dependent on what speculative position people have? That's been my exact point all along. This is the point you're arguing against:


Quote:
A particular level of inflation financially favors people who bet on higher inflation when expected inflation was lower or people who bet on lower inflation when expected inflation was higher. Any change in inflation or general volatility generally benefits those who spend more cognitive resources on understanding that particular market over those who spend less. Beyond that, specifics can be debated.
So what's going on here? Apparently, according to you, early receivers of the money, that is, sellers of treasuries benefit in some strange way that you refuse to explain. But anyone could sell treasuries - you don't even need to own treasuries to sell them! Anyone could get a hold of this new, freshly minted money if they wanted to, but most don't bother. Why?
10-07-2010 , 02:07 PM
Quote:
Originally Posted by Zygote
the neutrality of money or its denial are well recognized concepts. apparently you are the one in the dark.
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overall though you should just look up cantillon effects like i told you before or read the original work from cantillon i posted. this stuff is pretty well accepted and not original to me.
You keep trying to reframe things, but no one is arguing that inflation affects everyone equally. The question here is whether this inequality is structural and to the extent it is, how much can be known about this structure. And it's very obvious that this structure cannot be known beforehand in a market that allows one to bet on these things, because people can bet on this structure and betting both corrects those mispricings and changes beneficiaries.


Quote:
Originally Posted by adios
WTF? I can't believe someone would spout drivel like this to make a point about something in this forum. Hey NFL teams as a group win only about 50% of their games too LOL.
The point you seem to have missed is that market participants are similarly constrained. Experts can't all be right, precisely because they are competing against one another. Central banks are even more so, because they're always working against their own predictions. Whenever they are saying that X is a big risk, they are working to make sure that X doesn't happen. Whenever they say X is not a risk, they are not working to reduce the possibility of X. So in a strange way, only central banks that could be consistently correct are central banks that are omniscient, but completely ineffective.


Quote:
Originally Posted by mjkidd
Also have you seen most NFL coach's clock management? A 12-year-old Madden player could do a better job than those idiots.
Clock management is a lot harder when you have lots and lots of other things to think about (even if a lot of it is irrelevant, due to cognitive load) and have to work to control the situation, both for the short term and the long term, instead of pushing buttons that make everyone around you instantly obey everything you say. And it may seem shocking to Madden aficionados, some "clock management tools" in the NFL are used for reasons other than clock management. If you need a timeout, it's possible that you need a timeout, even if it's bad for game/clock management. In Madden, I assume you don't ever actually need a timeout for legitimate reasons.
10-07-2010 , 02:20 PM
My favorite part of this thread so far is PVN claiming to have come into the thread by accident, and to have happened to notice his name (but not read the post), yet finding a way to respond.

Lol. Adults!
10-07-2010 , 02:38 PM
Quote:
Originally Posted by mjkidd
Also have you seen most NFL coach's clock management? A 12-year-old Madden player could do a better job than those idiots.
Almost everything "dumb" that coaches do can be explained by basic psychology(risk adversity, results oriented media affecting job security, etc.). That wasn't the point of the analogy, though, and since he said the point of the analogy immediately afterwards I dunno what to tell you.

Anyway, the analogy here would be something like "NFL coaches don't try enough backdoor cut alley oops in the 8th and 9th innings". Like all the words Zygote writes are real words spelled correctly, but the concepts he's trying to explain are nonsense.
10-07-2010 , 02:41 PM
Yeah maybe NFL coaches wasn't the best example to use to make a point considering the vast amount of obvious, mathematically provable mistakes they make every week.
10-07-2010 , 03:01 PM
Quote:
Originally Posted by .Alex.
Yeah maybe NFL coaches wasn't the best example to use to make a point considering the vast amount of obvious, mathematically provable mistakes they make every week.
Is the better evidence for that argument

A) Actual mistakes they made and why
or
B) That they only win, in aggregate, 50% of their games?
10-07-2010 , 03:09 PM
B isn't an argument at all.
10-07-2010 , 03:53 PM
Quote:
Originally Posted by Phone Booth
The dealer doesn't care about the selling price. How does he make money from the intervention?
huh? i never said that?

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So your fantasy land prices are only applicable if we're selling the entire planet to some aliens? We're not doing that, so I suppose M0 doesn't constrain us the same way.
this makes no sense. if we were selling the whole planet to aliens they wouldnt be able to pay us out of our money supply.

there is a constraint in spending power and that is m0. the society can not spend more than they have. velocity can change etc., but without more money nominal prices are constrained on the upside. all that changes is their distribution. its applicable in analyzing aggregate spending power. its not really applicable obviously in on going sense when m0 is fixed though.

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This is wholly irrelevant. Market prices are what matter for the purposes of who benefits here. I mean, if inflation due to adjustments, M2, blah, blah affects my GOOG purchases and sales and P&L, that's a concrete effect. It's irrelevant, if in some fantasy universe you made up, you can't sell the entire planet at those prices - I still benefit if I'm able to sell my shares at those higher marginal prices.
its not really as concrete in the way people account for it. like i said, the last price isnt a precise measure. neither is the midpoint, or just the best priced ask. you need to have everything weighted to the quantity of available asks at varying prices to really know the true immediate liquidation value of an asset. sometimes you have to dig deep into the asks to fill an order. gains in price historically are concerning what has occurred. evaluating a current balance requires analyzing the available asks to precisely know available gains.

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What's really funny is that you're copying my model here (where you btw, argued the exact opposite)
i wasnt arguing this part of it. but i think my views were a bit mixed then anyways if i remember correctly. id probably make a similar case but what id consider myself to be more effective means of explanation.

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but you're doing it all wrong! Nominal size of the economy was constrained by M0 in my model because M0 is guaranteed to be constant and guaranteed not to be bypassed as a means of transaction. Neither is true for any currency in this world.
constancy has nothing to do with it. by passing would. but my point is its not as bypassed as people think. bank debts often trade as cash but its really only to the extent people believe these deposits will, push come to shove, be made whole by the expansion of m0. the expectations are structurally based because the fed's mandates essentially requires them to prevent widespread discounting of these deposits. this contingent liability of the fed is actually an expansion of m0 (since money at heart is really just fed liabilities). So really it isnt that m0 was bypassed, it was rather employed. Physically though these expectations can be tested and the discounting will occur if they are upset. what were thought to be price adjustments from this money will disappear too. only the distribution of funds will have shown to have changed, not people actual ability to spend. the increase in ability to spend was a farce.

read this from what i posted earlier:

Quote:
Situation

Assume Bank A has a deposit from Joe for $100 and holds $10 on reserve while loaning the remaining $90 to Sam. In this case we have seemingly created a $90 expansion of the money supply relative to the start of the example. This is because Joe has an unlimited demand to $100 in the form of a deposit receipt while Sam has an equally unlimited but more direct claim to the $90 cash he has been lent. As a result, we see the initial $100 deposit balloon to money claims as large as $190, assuming a 10% reserve.

Analysis

Here is the difficulty with this supposed private expansion story, however. What if Joe and Sam attempt to spend their claims to money in full simultaneously, in effect forcing their outstanding claims to be realized? We now realize a $10 reserve simply cannot cover the full $100 in claims against the bank from Joe while the other $90 is invested in an outstanding loan. As a result, the bank will be forced into bankruptcy causing the claims against it to be reduced in proportion to the initial money supply in order to return solvency.

Another way of seeing the need for the money supply to return to its base is to assume Sam takes the $90 he is lent and deposits it back in the bank. Sam now has a $90 receipt for claims to money while Joe retains a $100 receipt for money and the bank provisions $100 on reserve given their new $90 deposit being added to their already $10 sitting in reserve. Now, the bank can lend 90% of their new deposit out again and keep expanding to the technical limit of 10 times the initial amount, per the money multiplier, but this is beyond the point of this paper. What is important is if both try spending their money simultaneously there is only a $100 proverbial pie for them to get pieces of. No more than $100 can ever be spent. Or, in other words, no more than the initial real money funds can ever be spent. This remains unchanged regardless how much expansion the bank takes on. If more spending than this initial amount is attempted the bank will go bankrupt and claims are reduced until the initial money supply is restored. There is no period in time where this so-called private money expansion can work as effective money and this is why it is only superficial or fraudulent in nature.


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World GDP is also like 60 trillion and that's by measuring actual transactions, not extrapolation of marginal prices. Did these transactions not happen?
i never said that? what is with you recently and putting words in my mouth. you dont normally do this much assuming. i never said anything about aggregate transactions having any problem being larger than the quantity of money available.

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Hope =/= Prediction
keep praying for me.

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What? Your entire point is that you could. Inflation is apparently a net benefit to very specific, privileged people in a way that's not accessible to anyone else. Now you're saying that effects of inflation are dependent on what speculative position people have? That's been my exact point all along. This is the point you're arguing against:
my entire point is that i did already.

anyways ive never said its not accessible to anyone else. its not lock shut, but certainly the banking cartel and its growing connection to government has exclusive tendencies. There are also those who benefit by accident by being their favored interest of spending or that of their government aided special interests. obviously this lobbying process can attempt to be exploited by everyone etc. i was never really arguing against this. i just thought there was not point to take from it either way. it doesnt matter how accessible it is to argue against its existence.

Quote:
So what's going on here? Apparently, according to you, early receivers of the money, that is, sellers of treasuries benefit in some strange way that you refuse to explain. But anyone could sell treasuries - you don't even need to own treasuries to sell them! Anyone could get a hold of this new, freshly minted money if they wanted to, but most don't bother. Why?
because getting a hold of this new freshly minted money involves buying from the open market what the fed wants to sell it to them. the mere fact the fed wants it pushes people to try and arbitrage the situation. the arbitrage doesnt only happen from the demand side. the holders of treasurys now know not to sell to others at low prices and will hold off until they can sell to the fed themselves (via the dealers) if no one offers the equivalent. there are situations where they can never bring the price up from the demand side if enough money is printed relative to the cash balances of others. assume there is 100 in money supply and someone prints 10 million to now spend. its way out of their reach now to take advantage of this fact even if they know that money is going to be spent.
10-07-2010 , 03:57 PM
Quote:
Originally Posted by mjkidd
B isn't an argument at all.
Exactly PB's point.
10-07-2010 , 04:10 PM
PB's point is nonsensical and is not analogous to savman's post.
10-07-2010 , 04:16 PM
Quote:
Originally Posted by FlyWf
Is the better evidence for that argument

A) Actual mistakes they made and why
or
B) That they only win, in aggregate, 50% of their games?
I get the point, I just think it's funny that PB used NFL coaches to counter the argument that experts can be wrong too. In any case, shouldn't Timothy Geithner and other high ranking economic analysts be more like Bill Belichick than coaches in aggregate?
10-07-2010 , 04:28 PM
I think we can all agree that economists have about the same track record as NFL coaches lately.
10-07-2010 , 04:29 PM
Quote:
Originally Posted by mjkidd
PB's point is nonsensical and is not analogous to savman's post.
PB's point makes perfect sense. It wasn't supposed to be perfectly analogous, it was an example of the principle that overall aggregate performance doesn't indicate that individual participants are ignorant.

Basically, I know what's going on here. savman, like the rest of you, wants mainstream economics to be discredited because that **** is hard and has math and doesn't make you feel as fuzzy inside as the Austrian fairy tales you read on your blogs. I get it. It's same flavor of overweening arrogance that permeates nearly every post in this forum.

But attacking the credentials of the people who work on Treasury desks is a really bizarre way of going about discrediting mainstream economics. It's almost as if you guys have no idea what you're talking about.

No, wait, it is that you have no idea what you're talking about.
10-07-2010 , 04:31 PM
PB's point is nonsensical because his NFL coach example is neither exactly nor remotely analogous. NFL coaches are by definition constricted to an aggregate 50% winrate; economists have no such restriction on the accuracy of their predictions or models.
10-07-2010 , 05:24 PM
The debate for the last 200 comments or so revolves around one concept. Does the Fed print money willy-nilly.

There is a reason the Fed is a private bank with investors. That should be enough for answers.
10-07-2010 , 06:52 PM
Quote:
Originally Posted by Zygote
huh? i never said that?
So the primary dealer does or does not benefit from government intervention? Or are you saying that the market maker here benefits from higher prices?


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there is a constraint in spending power and that is m0. the society can not spend more than they have.
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i never said that? what is with you recently and putting words in my mouth. you dont normally do this much assuming. i never said anything about aggregate transactions having any problem being larger than the quantity of money available.
What are aggregate transactions, if not "spending?" Or are you saying that in some specific amount of time, you can't spend more than M0? Well, then by arbitrarily reducing that amount of time, you can spend as much money as you want! So how is M0 constraining people? And who says people have to use dollars to buy things? I can just use dollars as a measurement stick and just do barter. I can use debt to buy stuff. That's the entire derivatives market.

To refer to my old model, leverage could always increase!


Quote:
i wasnt arguing this part of it. but i think my views were a bit mixed then anyways if i remember correctly. id probably make a similar case but what id consider myself to be more effective means of explanation.
I'm just saying that if you're going use someone else's ideas from a while ago to argue against the same person it might be wise to do so properly and perhaps with the understanding that he may have thought through some of the things you haven't.


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bank debts often trade as cash but its really only to the extent people believe these deposits will, push come to shove, be made whole by the expansion of m0. the expectations are structurally based because the fed's mandates essentially requires them to prevent widespread discounting of these deposits. this contingent liability of the fed is actually an expansion of m0 (since money at heart is really just fed liabilities).
So it's not just current M0 that matters, but all possible future M0. Which is unbounded. And decidedly not what people mean by M0. And has no relationship with the Fed's open market operations. How does this help your contention that prices cannot adjust before actual growth in M0? Now you're saying that future expected growth in M0 can affect prices? That's my argument!


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because getting a hold of this new freshly minted money involves buying from the open market what the fed wants to sell it to them.
So now to get hold of new money, you have to buy from the open market? So who are these people who benefit by receiving the early money? It seems like they have to buy from the open market like the rest of us?

Are you or are you not aware of how many times you've changed the story? Or is this sort of incoherence an inherent part of your reality? Try taking what you have, and reading from the beginning of your involvement in this thread.
10-07-2010 , 06:59 PM
Quote:
Originally Posted by mjkidd
PB's point is nonsensical because his NFL coach example is neither exactly nor remotely analogous. NFL coaches are by definition constricted to an aggregate 50% winrate; economists have no such restriction on the accuracy of their predictions or models.
Sure they do, as long as they meaningfully interact with the market, either through active participation or announcements people pay attention to. For policy makers, the burden is higher because:

Quote:
Originally Posted by Phone Booth
Central banks are even more so, because they're always working against their own predictions. Whenever they are saying that X is a big risk, they are working to make sure that X doesn't happen. Whenever they say X is not a risk, they are not working to reduce the possibility of X. So in a strange way, only central banks that could be consistently correct are central banks that are omniscient, but completely ineffective.
Besides, when people say economists are inaccurate, they are measuring them against predictions of the market and predictions of other economists. Here, they are restricted the same way as NFL coaches. The market predicts a lot of things and we take this information for granted. Without "expert" analysis or indicators from capital markets, most non-economists would have a very hard time where the economy is going. Simply looking at the stock market, job boards (larger employers obviously pay attention to capital markets, aggregate statistics and stated intentions of policy makers, etc), you're benefiting from the insight of many experts.

Another way to think about it is, say you're the guy who writes the most accurate guide to fantasy baseball player ratings. It's super awesome and everyone reads it. You play in several leagues yourself and someone noticed that your own fantasy draft picks are fairly mediocre. Is this because you have mediocre fantasy baseball knowledge, or is it because you're very good at communicating what you know to other people?


Quote:
Originally Posted by .Alex.
Yeah maybe NFL coaches wasn't the best example to use to make a point considering the vast amount of obvious, mathematically provable mistakes they make every week.
Hahaha, still, they are a lot better at their jobs than most economists are at theirs.


Quote:
Originally Posted by bustowithnobra
There really should be an outward demarcation between those who have studied it, or work in the field.
Once things get this detailed, you normally have three kinds of people participating - 1) gurus (with understanding that comes from professional experience, formal studies at a higher level, or both), 2) cranks, or 3) nerds (in this sense of compulsion to understand).


Quote:
Originally Posted by bustowithnobra
The debate for the last 200 comments or so revolves around one concept. Does the Fed print money willy-nilly.
This isn't quite what we're discussing. We're discussing, while granting every possible incorrect assumption Zygote has about how the system works, whether we can know which specific people monetary inflation benefits. You have to be careful when you read my posts because I'm presuming lots of ridiculous nonsense that's part of Zygote's personal reality for rhetorical purposes.


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There is a reason the Fed is a private bank with investors. That should be enough for answers.
Elaborate? The Fed is far from a private bank with investors in any real sense.
10-08-2010 , 12:28 AM
Quote:
Originally Posted by pvn
This is basically why I stopped reading this thread. I don't have a team. Yet a there are posters who would rather lump a bunch of people into an undefined collective and then try to beat one person with weaknesses they thought they saw in some other member of the collective.
Maybe if you werent so racist and antisemitic people would side with you....


Last edited by samsonh; 10-08-2010 at 12:29 AM. Reason: Joking obv bc I agree with pvn
10-08-2010 , 11:54 PM
Quote:
Originally Posted by Mrmusicrecorder
That's funny because almost all of your rhetoric relies on a fundamental misunderstanding of how deficits and usury work.


$250,000 per year for a family is NOT rich, only a poor man would say otherwise.



Maybe, because they are going to make 20% less than they did in 2007.

Flies are so short sighted.

Cap gains, div tax, new itemized deduction limits, lifting cap on social security tax, taxing health benefits...

The cost of doing business and the cost of your government is going up.

People making $250k+ will see their tax payments per dollar earned increase under Obama.
Thought so fly, go pick on the weak and uninformed. Stand on your supposed economic prowess, not realizing you tumble every time an actual market issue is involved.
10-08-2010 , 11:56 PM
Quote:
Originally Posted by Phone Booth
I hope you meant treasury/government desks at IBs - not sure how jobs at the actual Treasury, which I did not mention at all and don't know much about, are like at all (by "Fed" I mean Federal Reserve), either way I wrote:.
Most Federal Reserve employees make **** money, US Treasury employees make **** money and without a doubt most of them are second rate. My point is the same, I knew what you meant, I should have elaborated a bit more.
10-09-2010 , 10:14 AM
Quote:
Originally Posted by Phone Booth
So the primary dealer does or does not benefit from government intervention? Or are you saying that the market maker here benefits from higher prices?
the market maker benefits obviously because they are the only ones who can deal directly with the fed. that is an obvious benefit.

then, even if someone else does take advantage of it, the money they receive from the fed is still accessible by the bank because the money is deposited in the bank. you cant get away from the banks benefiting for the most part. this access for the bank is a benefit in two ways. for one, the receiving bank benefits because their direct ability to expand rises. then the other banks benefit because the overnight rates they depend so much on end up being cheaper due the increase supply of loanable funds.

also we know dealers benefit strictly by their willingness to be involved in the process and the fact that new money benefits its early receivers. this is so obviously true i cant believe we're arguing it.

also what would be the effect to current banks if tomorrow the fed said they are stopping liquidity support to all banks and giving it rather to registered gambling houses only? do you see no advantage to gambling houses thereafter and no harm to banks? first you'd see pretty much all banks go bankrupt in the fashion they currently operate over time. what would then happen is youd see people like pokerstars start lowering significantly their reserve ratios to their minimum allowable rate. if pokerstars uses this freed up money to bankroll players they'd seemingly be playing against people with their own money. Of course this is inst really the case because their expansion of money is likely to be supported by their new found liquidity problem solver (pokerstars only expanded because they felt comfortable now with a liquidity bank stop and dont need to make sure they can personally fund all their obligations). they dont have to worry as much about the scarcity of their reserves in short. Which means what really happens is people's balances are inflated relative to the real economy, and prices will rise as the money is spent. the people playing on poker stars receive the initial benefit of more money to play for though. Whether the player is a losing or winning player is irrelevant but this is equivalent to the notion of speculation. more money to play for is the business your in when playing poker so they all benefit in this sense. The benefit will only trickle past winning players obviously, and the new found income they have they can go and spend elsewhere in the economy to bring about the price rises which will effect everyone.

lets talk about speculation in that everyone else in the rest of the economy can anticipate the new money so will force the prices of the items desired by the new money receiver to rise before he can spend it. due to human action, there is obviously no way to be certain here. but if you can predict where his demands will lay, you can invest whatever resources you have trying to take advantage. There are cases where everyone elses resources are limited however, and cannot take full advantage, and if they know exactly where he will go (something that is not the case ever).

If the money supply expands 1000 and the initial money supply was 100, even if society diverted all their money to the resource they thought the expander would buy, they cannot bring the price up high enough to take away his benefit of an inflated balance (assuming no credit is used). Since the expander is really always getting something for nothing, he wins no matter how high the price assuming he can still outbid for something. The only way the price could fully adjust without credit though is via the supply side, but again we'll leave this aside for now. Even if the rest of society pushed all their demands to the one item that they expect the money supply expander to go towards, they leave every other item in society with no demand and therefore extreme price falls. This means to try speculate they must create distortions elsewhere. They can't fully adjust all prices and cant even fully adjust the price that they divert all their money towards. so lets say they buy the good the expander wants for 100 and sell it to him then for 1000. now the person who received the 1000 clearly benefits for speculating correctly, and because his income rose in inflated fashion relative to the rest of the prices in the economy. He now has enough money to buy any other good before its price can rise high enough to make his new income worthless in real terms.

If the speculator gets the item for 1000 on credit lets say, and then sells it for a 1000, yes he benefits nothing even though he is seemingly the earliest receiver of the money. He has to give the money instantly to the initial seller. The thing here is he never really received the income initially nor speculated correctly. The item was only bought on credit for 1000 because of the anticipation of the fed coming but the price rise is only real if the fed actual comes in. If the fed doesnt come in the guy defaults and the price falls. So the price doesnt really rise in anticipation, the fed money is the only thing that can make it actually rise. because he buys on credit too, the money he receives is not really his, so he is not actually the initial receiver.

The person on the supply side who can predict the item also cant take away the benefit. if they decide to not sell the item for less than 1000, the fed will still get an item for which they pay for out of printing rather than saving. so inflation benefits them first. the seller gets more for his item then he could have possibly got otherwise, so he benefits with his new inflated income. since he has all the new money, he controls a good share of the ability of total money to circulate.

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What are aggregate transactions, if not "spending?" Or are you saying that in some specific amount of time, you can't spend more than M0? Well, then by arbitrarily reducing that amount of time, you can spend as much money as you want! So how is M0 constraining people? And who says people have to use dollars to buy things? I can just use dollars as a measurement stick and just do barter. I can use debt to buy stuff. That's the entire derivatives market.
aggregate transactions are one way of looking at spending. looking at the base money supply is important too. the only thing that differs my view from conventional economists is that base money really anchors the system and everything depends on its size and growth/shrinkage rates. in additions the higher m's are overstated often in that they are thought of as powerful as base money and its some times forgotten that the higher m's are really just overwritten cheques on base money. this is somewhat realized but in the least improperly emphasized.

im just saying m0 is the total mobilizable money for the purpose of circulation. this meaning it is the only money that can be fully transacted, in contrast to the higher m's. the unique function of the introduction of new money isnt that it can be transacted any differently than existing money. its that it changes the level overall prices can potentially reach. the quantity of floating demands rise.

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To refer to my old model, leverage could always increase!
i highly disagree with your idea about leverage in the sense you use it. mostly your interpretation is the problem. nominal assets versus cash balances is not a measure that matters at least in the way you use it. What matters to people is real growth, and leverage does not have to increase for this. The whole point of fixing the money supply to focus the economy in real terms and avoid nominal distortions which have real effects.


Quote:
I'm just saying that if you're going use someone else's ideas from a while ago to argue against the same person it might be wise to do so properly and perhaps with the understanding that he may have thought through some of the things you haven't.
im not using your idea. there a similar features to the way you see it and i see it. i know many others who see it similarly too, whose views on this likely predate your existence. the IP is really a stupid place to venture especially because they idea has an essence, and was discovered not invented.

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So it's not just current M0 that matters, but all possible future M0. Which is unbounded. And decidedly not what people mean by M0. And has no relationship with the Fed's open market operations. How does this help your contention that prices cannot adjust before actual growth in M0? Now you're saying that future expected growth in M0 can affect prices? That's my argument!
future m0 is unbounded only in a very loose sense. realistically there are bounds, and the specific areas we expect the fed to enter can extend those bounds. just think about what is likely and weight it based on this. its obviously a superior way of acting and understanding versus assuming the future of m0 is unbounded.

also, again, i never said prices cannot adjust before actual growth in m0. they just cant fully adjust and to adjust they leave gaping holes (to speculate on where one thinks new money will go one must make choices and diversions to engage in this speculation).

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So now to get hold of new money, you have to buy from the open market? So who are these people who benefit by receiving the early money? It seems like they have to buy from the open market like the rest of us?
the benefit of the fed comes from who they chose to support. they generally involve themselves in things that help their friends. where their friends happen to find problems they enter. where their friends happen to be involved they enter. and the virtue of them already being involved in this, gives them an advantage over others. whether you think the cause works in that they are friends because they help them matters not. the point is once the fed choses to support something, it benefits all those who had that stuff before their announcement.

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Are you or are you not aware of how many times you've changed the story? Or is this sort of incoherence an inherent part of your reality? Try taking what you have, and reading from the beginning of your involvement in this thread.
i havent changed my story at all. why dont you point to specifics? how about pointing to specifics of wheere you apparently assume false ideas of mine?

Last edited by Zygote; 10-09-2010 at 10:43 AM.
10-09-2010 , 11:35 AM
after this first quote's reply this was supposed to be added at the end but i must've deleted it by accident when editing. anyways, just insert this at the end of my first reply.

the new money can become impotent if all sellers refuse to sell their items at prices which allow the inflated money receiver to purchase at any real benefit. If this keeps happening as the money flows no one besides the initial money expander will benefit. this is the only sense prices can adjust to new money and take away the benefits. in practice the anticipation of new moneys circulation is uncertain and there are sticky factors to prices that pretty much never allow this to fully happen. also if this does happen, the inflated money receiver still benefits relative to everyone else because he can afford the new inflated prices becuase of his inflated balance. everyone else cannot, since their balances are not inflated relative to the rise in prices. until the money flows through all the sellers, the early receivers are in a better position than everyone else.

another option is sellers can obviously abandon acceptance of the currency at all which can take away the benefits for good.

Last edited by Zygote; 10-09-2010 at 11:45 AM.

      
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