Very disturbing charts on the wealth imbalance in USA

[QUOTE=-playmaker-][IMG]http://www.dollarsandsense.org/archives/2009/Inflation500x312.gif[/IMG]


^^^ see that, we were deflating there for a while during that recession, meaning that the dollar gained value...people are hungry for money


but that is a BAD THING ALSO...obviously

for the economy to remain healthy, 5% inflation is needed...inflation like that let's our property rise and gain value...

you buy a house 15 years ago, and you are still making payments on it based on what the dollar was valued BACK THEN!!!

so inflation is good for home owners...you see?

if we were to inflate to the point that 1,000 is nothing, then suddenly my morgage payments are nothing...(extreme example, obviously that would be a bad thing if 1,000 was nothing)

but can you see how a little inflation helps the economy?...it raises the value of what we own...[/QUOTE]

It's clear that we come from different ways of economic thinking. That's fine, there are many different ways of looking at and studying economics. However..

I don't believe inflation is a good thing ever. And we may also be using different definitions of what inflation is. How do you define inflation?

My definition of inflation is an increase of the money supply. Plain and simple. Every time a new dollar is created, there's inflation. And all it does is decrease the value of every dollar we hold. If you take out a 3,000 loan in 2010, by 2015 that 3,000 loan may be easier to pay, because you hold more dollars on average. But everything else will be more expensive. Remember when milk was like 2 bucks a gallon? It's not that the price of milk actually went UP. It's that the value of the dollar went DOWN. That's because of inflation.

And by that definition of inflation, the dollar is constantly being inflated. The fed pumps more money into the system all the time. That's why you make the same amount of money today that you did a few years ago, but it seems like it buys so much less.

Inflation doesn't raise the value of our houses. If you buy a house for $50,000 today.. inflation may very well make the price go up to $60,000 in a few years. But you didn't gain any value, it's just that the dollars you received back are all worth a little less than they were a few years ago. It takes 60,000 to pay for something that used to cost 50,000. Just like gas used to be X price and now it's X+inflation. Same with milk, with cars. Why do you think prices keep going up?

What causes houses to gain value is markets. Is there a high demand for houses in a particular area? Do you have a nice house, that you've made good renovations on, etc? That's what gets you more money back for your house than what you paid.

Inflation does no such thing. You might get back more dollars total. But they'll be worth less.

[quote=RedBlackAttack]
However, I do think it is pretty ridiculous that our marginal tax rate stops at around $300,000. So, a person who makes $1 billion a year is paying the same taxes as a family who brings in $300,000 a year.
[/quote]

I've never understood this. My household income is usually $250,000-$300,000 so I am considered "rich" even though the truly rich make 1000x my income. Yet we are taxed at the same rate.:confusedshrug:

imo as bad as the housing market, deficit, etc. are the real depressing figures are in the job market. It's not just the unskilled that are getting screwed. RBA mentioned how hard it is for a young graduate saddled with debt but I've also seen middle aged people in the prime of their careers get the shaft. Imagine having worked for 20 years in a good job with benefits, got a mortgage, kids in college, and one day you're told your job has been eliminated. Who is going to hire you? If you were the HR person at a company and you have the choice of hiring someone young and single, who you can work all hours at an entry level salary, or the 50 yr. old that is used to a comfortable lifestyle and income, vacations, etc., who would you hire?

[QUOTE=joe]It's clear that we come from different ways of economic thinking. That's fine, there are many different ways of looking at and studying economics. However..

I don't believe inflation is a good thing ever. And we may also be using different definitions of what inflation is. How do you define inflation?

My definition of inflation is an increase of the money supply. Plain and simple. Every time a new dollar is created, there's inflation. And all it does is decrease the value of every dollar we hold. If you take out a 3,000 loan in 2010, by 2015 that 3,000 loan may be easier to pay, because you hold more dollars on average. But everything else will be more expensive. Remember when milk was like 2 bucks a gallon? It's not that the price of milk actually went UP. It's that the value of the dollar went DOWN. That's because of inflation.

And by that definition of inflation, the dollar is constantly being inflated. The fed pumps more money into the system all the time. That's why you make the same amount of money today that you did a few years ago, but it seems like it buys so much less.

Inflation doesn't raise the value of our houses. If you buy a house for $50,000 today.. inflation may very well make the price go up to $60,000 in a few years. But you didn't gain any value, it's just that the dollars you received back are all worth a little less than they were a few years ago. It takes 60,000 to pay for something that used to cost 50,000. Just like gas used to be X price and now it's X+inflation. Same with milk, with cars. Why do you think prices keep going up?

What causes houses to gain value is markets. Is there a high demand for houses in a particular area? Do you have a nice house, that you've made good renovations on, etc? That's what gets you more money back for your house than what you paid.

Inflation does no such thing. You might get back more dollars total. But they'll be worth less.[/QUOTE]


:facepalm :facepalm

we got a teabagger amongst us. Let me guess the people you trust on economics is ron paul, rothbard and von mises.

your view against increase in the money supply is an oversimplified one that does not take into consideration rational expectation, which is crucial in determining the actual effect of said increase.

furthermore, you realize that china's money supply has increased at far greater rate than us right? in fact their growth bubble is partly due to the hike in money supply. so this is not some US phenomenal.

[QUOTE=STATUTORY]:facepalm :facepalm

we got a teabagger amongst us. Let me guess the people you trust on economics is ron paul, rothbard and von mises.

your view against increase in the money supply is an oversimplified one that does not take into consideration rational expectation, which is crucial in determining the actual effect of said increase.

furthermore, you realize that china's money supply has increased at far greater rate than us right? in fact their growth bubble is partly due to the hike in money supply. so this is not some US phenomenal.[/QUOTE]

Ron Paul is the only current politician that can point out the reasons for our recession. All Obama and other dems say is, "Bush f[COLOR="Black"]u[/COLOR]cked it up" and the other republicans say,
"Now it's Obama's fault."

Ron Paul makes a lot of sense if you just listen to what he has to say.

[QUOTE=joe]It's clear that we come from different ways of economic thinking. That's fine, there are many different ways of looking at and studying economics. However..

I don't believe inflation is a good thing ever. And we may also be using different definitions of what inflation is. How do you define inflation?

My definition of inflation is an increase of the money supply. Plain and simple. Every time a new dollar is created, there's inflation. And all it does is decrease the value of every dollar we hold. If you take out a 3,000 loan in 2010, by 2015 that 3,000 loan may be easier to pay, because you hold more dollars on average. But everything else will be more expensive. Remember when milk was like 2 bucks a gallon? It's not that the price of milk actually went UP. It's that the value of the dollar went DOWN. That's because of inflation.

And by that definition of inflation, the dollar is constantly being inflated. The fed pumps more money into the system all the time. That's why you make the same amount of money today that you did a few years ago, but it seems like it buys so much less.

Inflation doesn't raise the value of our houses. If you buy a house for $50,000 today.. inflation may very well make the price go up to $60,000 in a few years. But you didn't gain any value, it's just that the dollars you received back are all worth a little less than they were a few years ago. It takes 60,000 to pay for something that used to cost 50,000. Just like gas used to be X price and now it's X+inflation. Same with milk, with cars. Why do you think prices keep going up?

What causes houses to gain value is markets. Is there a high demand for houses in a particular area? Do you have a nice house, that you've made good renovations on, etc? That's what gets you more money back for your house than what you paid.

Inflation does no such thing. You might get back more dollars total. But they'll be worth less.[/QUOTE]

I've read all your posts in this thread and, while some of your statements are somewhat acceptable, most of your economic "analysis" (for a lack of a better word) is seriously incorrect. You're trying to analyze very complex economic questions without, apparently, much knowledge of what your talking about. You're oversimplifying to the point you're leaving very relevants effects and causes out of the equation, only to present your biased point of view in a false light of coherence.

Your definition of inflation is wrong. Inflation is the general rise in the price of goods and services over a period of time. It is not only inherent to a capitalistic economy, but it's also necessary (a healthy inflation rate, that is). What you presented as a definition of inflation is actually called "expasionary monetary policy" and it's implemented in order to modify interest rates and, eventually, inflation rates. However, inflation rates will not always increase as a result of an expansionary monetary policy, they will increase or decrease depending on many factors (likely it will in most developed economies, but it's not a given), characteristic of that economy in particular.

I won't even get in depth about your opinions on the Federal Reserve and how good it'd be to go back to the gold standard because I don't know a lot about the first and the latter speaks for itself (and not in a good way).

I appreciate you trying to contribute to the debate here, but most of what you said is way, way off.

This is for RBA:

[quote]
[B]ExxonMobil CEO Really Hurt That College Student Is Talking About Him Right Now[/B]

February 28, 2011 | [URL="http://www.insidehoops.com/issue/4709/"][COLOR=#333333]ISSUE 47

I love that article.

"F[COLOR="Black"]u[/COLOR]ck ExxonMobil."

*Drives to gas station to fill up SUV*

[QUOTE]we got a teabagger amongst us. Let me guess the people you trust on economics is ron paul, rothbard and von mises.

your view against increase in the money supply is an oversimplified one that does not take into consideration rational expectation, which is crucial in determining the actual effect of said increase.

furthermore, you realize that china's money supply has increased at far greater rate than us right? in fact their growth bubble is partly due to the hike in money supply. so this is not some US phenomenal.[/QUOTE]
[QUOTE]I've read all your posts in this thread and, while some of your statements are somewhat acceptable, most of your economic "analysis" (for a lack of a better word) is seriously incorrect. You're trying to analyze very complex economic questions without, apparently, much knowledge of what your talking about. [B]You're oversimplifying to the point you're leaving very relevants effects and causes out of the equation, only to present your biased point of view in a false light of coherence.[/B]

Your definition of inflation is wrong. Inflation is the general rise in the price of goods and services over a period of time. It is not only inherent to a capitalistic economy, but it's also necessary (a healthy inflation rate, that is). What you presented as a definition of inflation is actually called "expasionary monetary policy" and it's implemented in order to modify interest rates and, eventually, inflation rates. However, inflation rates will not always increase as a result of an expansionary monetary policy, they will increase or decrease depending on many factors (likely it will in most developed economies, but it's not a given), characteristic of that economy in particular.

I won't even get in depth about your opinions on the Federal Reserve and how good it'd be to go back to the gold standard because I don't know a lot about the first and the latter speaks for itself (and not in a good way).

I appreciate you trying to contribute to the debate here, but most of what you said is way, way off.[/QUOTE]
:)

thanks for the responses fellas. i was thinking of attempting a rebut, but most of what i could come up with revolved around the fact that the American fiat dollar has been 'inflating' since its inception, mostly for the simple reason that it had to reflect GDP (and other measures, i'm sure) growth during economic boom eras. otherwise money circulation wouldn't be anywhere near widespread enough to satisfy the economy's activity. though i've got to admit, i get the feeling that last sentence smacks of the same gross oversimplification to which Lebowsky referred.

this is exactly what i was talking about in my argument with -prime- a few weeks ago though, and Leb really did put it perfectly. it's actually quite easy to rationalize incorrect explanations of the economy in very coherent and understandable terms. what these explanations lack is a full account of every factor involved, instead revolving around heavily politicized economic players; e.g. the fed. criticism of entities like that are much easier for the public to digest, and because the arguments maintain their coherent structure, only a well-informed economics study is well enough equipped to poke holes.

the bottom line is this: the sort of economic argument that joe made isn't illogical, but it is incomplete on a vast scale, thus nullifying any conclusions at which it settles.

Joe, I didn't mean it let's our property rise in actual value, I am sure you knew that though...I ment inflation cheapens our debt...(our personal debts, which is also part of the national debt)

if you owe $100k over 30 years, and there is a 5% inflation over that time...that $100k you owe becomes cheaper and cheaper...at the end of the 30 years it will be much less than the start, and the monitary value of your property will have gone up to reflect inflation...you WIN just like Charlie Sheen...inflation has done a great survice to you, and that reflects well on the overall economy...

in defense of Joe, the monetarist notion of inflation is not some fabricated thought. it's one that's backed by people like Milton Friedman. "inflation is always and everywhere a monetary phenonmenon." But even Friedman would agree that monetary contraction, aka the deflationary cycle, is much more haphazard than inflation, see his take on great depression. and deflation was very much a real worry following 2008.

economics is often deemed the dismal science because there's very little tools actually available to the government to regulate it. many austrian economists believe that it's better to do nothing than to engage in keynesian stimuluses. But if you look at Thatcher era Britain or Fed policy from late 70s to 80s that seemed hardly to work.

didn't Thatcherism work out pretty much as expected? massive civil unrest and downturn for the average folks to start, but once the weaknesses were weeded out by the more pure form of capitalism, they moved into an upturn. that was my understanding, semi-confirmed by a Wiki fact check. then i guess eventual failings caught up with GB, coinciding with just about everybody else, along with the fall of the Iron Curtain.

i barely understand your first paragraph and it's a bit late here for me to give comprehension a go. hopefully Leb will be back with a response.

[QUOTE=RidonKs]

i barely understand your first paragraph and it's a bit late here for me to give comprehension a go. hopefully Leb will be back with a response.[/QUOTE]


my point was simply joe didn't make up a definition for inflation randomly by himself. Economists, prominent ones like Friedman, sometimes equate inflation with monetary expansion. Although Friedman states it more like inflation is the likely result of monetary expansion.

[QUOTE=heyhey]in defense of Joe, the monetarist notion of inflation is not some fabricated thought. it's one that's backed by people like Milton Friedman. "inflation is always and everywhere a monetary phenonmenon." But even Friedman would agree that monetary contraction, aka the deflationary cycle, is much more haphazard than inflation, see his take on great depression. and deflation was very much a real worry following 2008.

economics is often deemed the dismal science because there's very little tools actually available to the government to regulate it. many austrian economists believe that it's better to do nothing than to engage in keynesian stimuluses. But if you look at Thatcher era Britain or Fed policy from late 70s to 80s that seemed hardly to work.[/QUOTE]

The monetary side of inflation is only part of the question of inflation itself.

[QUOTE=heyhey]my point was simply joe didn't make up a definition for inflation randomly by himself. Economists, prominent ones like Friedman, sometimes equate inflation with monetary expansion. Although Friedman states it more like inflation is the likely result of monetary expansion.[/QUOTE]

They equate inflation with monetary expansion when discussing economic policies because monetary expansion/contraction is by far the most used way mean of influencing inflation rates. So basically, they identify inflation with monetary expansion not because they're one and the same in nature, but rather because monetary expansion results in inflation in some models, ceteris paribus and ignoring the effect of the rest of variables relevant to the model. That is a huge simplification, good for divulgation books, giving conferences or teaching purposes, but far from reality.

[QUOTE=Lebowsky]They equate inflation with monetary expansion when discussing economic policies because monetary expansion/contraction is by far the most used way mean of influencing inflation rates. So basically, they identify inflation with monetary expansion not because they're one and the same in nature, but rather because monetary expansion results in inflation in some models, ceteris paribus and ignoring the effect of the rest of variables relevant to the model. That is a huge simplification, good for divulgation books, giving conferences or teaching purposes, but far from reality.[/QUOTE]

Monetary expansion always gives inflation. Like I said, we're using two different definitions of inflation. You say that inflation is when prices go up, I say it's when new money is created. Money being created will always create a weaker dollar. That's not a debatable point.. Forget economics for a second, its' just a very logical thought. If you have 10 of something that people want, then create 10 more... each one will have less value.

[QUOTE]
in defense of Joe, the monetarist notion of inflation is not some fabricated thought. it's one that's backed by people like Milton Friedman. "inflation is always and everywhere a monetary phenonmenon." But even Friedman would agree that monetary contraction, aka the deflationary cycle, is much more haphazard than inflation, see his take on great depression. and deflation was very much a real worry following 2008.

economics is often deemed the dismal science because there's very little tools actually available to the government to regulate it. many austrian economists believe that it's better to do nothing than to engage in keynesian stimuluses. But if you look at Thatcher era Britain or Fed policy from late 70s to 80s that seemed hardly to work.[/QUOTE]

exactly, Austrian economics is what I'm talking about.