Suppose there is $100 total in circulation (total sum of every single dollar that has ever been made - there exists a finite # of USD in all bank accounts). An established value has been pegged to various units of this currency. People (the market) decides X item costs $Y. One day another $1B is just added to the pool and distributed very selectively by a central institution. The intrinsic value of each unit of currency has now been halved. The buying power of $1 had a value of a 1% piece in this economy. In an economy injected with another $100, each $1 is now valued at a 0.5% piece of the economy.

Ideally, banks will get all of this extra money and start loaning more out to businesses to stimulate growth (and make more $$ on loans). Businesses will expand their production in hopes of generating more profit, thus hiring more workers to do so. Employment increases and productivity improves. The economy is saved. However, in the process, the price of goods and services has gone up in nominal value. With more cash in the system, and a static population size, prices begin to rise in both good and services as a result of ambitious business over-expansion (failures), which occur due to the fresh supply of funds available to be loaned out.

However, that has not worked yet. Maybe the third time will be a charm. Logically, if you introduce double (for example) the amount of units into a monetary system, you halve the value of each unit as it was previously based on simple supply and demand. Imagine the fairest QE: each person receiving the same amount of units equally. If you owned a grocery store and knew everyone, including yourself, was getting X amount of cash, would you adjust your prices?

When new units of currency are essentially created out of nothing, each existing unit is devalued in purchasing power. Prices will rise - people are smart and realize there are more dollars floating around than before and they aren't worth much. Currency is a unit of exchange built on a structure of scarcity - if you alter the scarcity of each unit, you alter the value. Let's hypothetically say the entire money supply of USD has doubled in the past 10 years. Are jobs that paid $50k in 2002 paying $100k now?

What do you define as hyperinflation?

Estimates have the Fed increasing the money supply by over double in the past 5 years. That is quite a lot.

It is in fact more complicated than just saying money supply doubles so my dollar is now worth half. You have to factor in COLA, prices on shelves, and the area you live in compared to other area of the country.

In all the time it took you to type that out.....couldn't you figure out that it's obv false? The value of an ounce of gold in units of ounces of silver is simply not equal to a constant times the total amount of gold divided by the total amount of silver. It should be totally obvious that a valuation of anything (currency, good, commodity) is not simply a linear function of supply. That was known well before the word "economics" even existed.

The truth hurts, I know.

If you assert it and word it in such a way as to trigger people emotionally in your favor, it must be true!

Supporting KKK members calling people racial epithets is not the same as supporting an individual's right to free association.

Yeah, except that he apparently only cares about taking away power from federal courts when it comes to the gheys. So give me a break about states rights.

Here is another example. There is a small island nation (actually the smallest island nation) out in the South Pacific with 9000 people on it called Nauru. It has 90% unemployment and major health problems. Lets get the government to help us so you say. The presidents remind me a lot of Obama and Krugman. Before watching, make up your mind how you would help Nauru.

http://www.youtube.com/watch?v=pRl5ctx-S1M

Here is the prime minister talking about more government investment in Nauru.

http://www.youtube.com/watch?v=MKc_GyTarKU

And wants the economy to return to that era.

Your post confused me. To recap - Phil said 'Ron Paul is perfectly fine with civil rights abuses provided it is states and not the fed doing them'. You responded by comparing a 'states right' to discriminate with freedom of speech for the KKK. My point was simply that this analogy is invalid. Unlike freedom of speech the net effect of 'We the People' and suchlike would be a net decrease in liberty.

I wonder what the reaction in this forum would be if it were Santorum or Gingridge pushing this legislation? Probably not positive, but if you do want to argue in favour of it, why not address the issue directly rather than using irrelevant analogies?

[ ] Understood that logic chain.

I tried to clarify in my post one above yours. I do not see how AlexM's freedom of speech analogy is relevant. Feel free to explain.

We The People Act is the perfect example of how you can not be a libertarian. What the **** kind of libertarian wants to dismantle the checks and balances of the Federal and State system created by the foundering fathers in the constitution in the US with the sole aim of removing rights from women and minorities?

Also what kind of libertarian advocates a state's ability to legislate what sex people can legally have despite the equal protection clause of the constitution?

Ron Paul just plain isnt a libertarian in the sense that virtually everyone but Ron Paul and his misguided supporters would define one. He is a states rights small government conservative and always has been (and that is the kind version that ignores his conspiratarding).

The supply of gold and silver is not constant...new metal is mined all the time. The supply of gold and silver changes.

The difference between paper money that is not pegged to anything (besides the USD, which is pegged to nothing) and paper money pegged to a commodity is the "creation" of wealth. In a commodity based economy, new wealth or "new money" enters the system as more of that particular commodity does. You can only spend what actually "exists" in a literal sense.


For those who advocate the fiat system, can you please answer the following? I enjoy these discussion and would appreciate someone responded with a thought-out answer.

1) What is the point of saving money in a system where inflation outpaces savings interest rates?

2) How do individuals deal with rising prices of goods and services when their wages do not increase in proportion?

3) How is QE any different than playing a game of monopoly with a few friends and every once in a while, the banker gives you an extra $2000 to play with?

Thank you.

Paul Krugman would destroy your arguments, he's an economic genius, he puts ACists to shame, he's just so amazing. God, I love Paul Krugman so much I just wanna suck his **** because he's just so god damn good at destroying "austrian" economics, lol they actually think there shouldn't be a central bank, welcome to the 21st century ******s! Did I mention that I LOVE Paul Krugman?

Austrian economics is good at destroying austrian economics. Look at where tax cuts got us lol.

tax cutz= austrian economics


good to know

The moral of the story the once richest country is now the poorest. The phosphate revenues were given to the government and they blew it on schools and investments. The schools taught them nothing except dancing and weightlifting. Yes, it still seems like a happy place. The schools could have taught them investing and business. The people could have kept the phosphate revenues and invested themselves overseas. Now they are dependent on welfare of mainly Australia (which they broke away to keep the phosphate revenue themselves). Government planners don't work. Obama, Reich, and Krugman don't work. Lower the corporate tax (or at least distribute to everyone equally), end the capital gains/dividend tax, and consider bond interest as an expense.

he wants to put ya'll BACK in chains!

STEELHOUSE.

Tax cuts coupled with an increase in government expenditures will not end well. If you look at government as a business, they are basically cutting their cash intake and increasing their spending. In a business sense, this is unprofitable. This is not Austrian.

Someone has to pay for government - where does the money come from? The people via taxes.

I know. Do you think the daily price changes in gold and silver is solely because of people mining more of one vs the other?

You don't have to save money at rates below inflation.


The same way you always deal with economic pressures. Work more/buy less.

The daily price of gold and silver is determined in USD - which is a floating currency. Looking at the nominal value of something in one currency clouds the rest of the picture. Gold has conversion values in other currencies too, all of which are not connected proportionally to the USD (at least immediately).

You don't "have" to save at rates below inflation, but realistically...what other options exist? Yes stocks, bonds, mutual funds, and other investments are available. These all carry significant risk vs. regular-old 'guaranteed' savings accounts and CDs. Also, you need a significant amount of capital to invest in many of these products. Savings accounts usually only require a small opening balance. Inflation is usually thrown out as 2-3% annually - what investments currently exist that guarantee a return (or as close to guarantee as possible) at this level?

The problem with the work more/buy less solution is the assumption that everyone can just "work more" - where do these opportunities come from? Also, what if there is absolutely no way to reduce expenditures? There are fixed costs in even the lowest socio-economic class - rent, food, utilities, transportation to work, etc.

I realize that.

But between Austrians and Keynesians, at least Keynesians appear to be forward thinkers. Where as Austrians appear to be happy with reverting to an old system that most likely would not work out considering how far past we are from the gold standard. Though tbh I am not sure if all Austrians are supporting the gold standard thing. But I thought I saw at least 2 on youtube advocating it.

Gold standard is a bad idea.

Also, haters confirmed furious.