Miscellaneous And Off Topic Subjects

[Hannibal]

Is there an actual argument for deflation? I get it in the immediate short term, but nobody wins long term. Calling it a tax cut seems like the ultimate way to cut off your nose to spite your face. But I haven't looked at deflation enough to know.

I think that there's an argument to be made that both deflation and inflation are simply numbers and neither one of them matters in a perfect world. In an imperfect world, they facilitate the redistribution of wealth and that is not a good thing, for the most part.

In a world where governments rack up huge debts and unfunded liabilities because they want to give out wealth without taking it from somebody else, printing money and devaluing the currency is a great way to pass a stealth tax. You simply devalue your debts.

History records both disastrous deflationary incidents and disastrous inflationary incidents. I'm not sure if one is more likely to cause misery and suffering than another. Since I don't have much in the way of debts and I am a salary-earner, I'll choose deflation.

[hack]

I don't know about that. Rent's supposed to be, what, a quarter to a third of your monthly? Saving on rent dents that, certainly. I don't know what you expect to get in return by saying that people without jobs are more likely to save than spend.

[froot loops]

There is no argument for deflation.

[hack]

In a world where governments rack up huge debts and unfunded liabilities because they want to give out wealth without taking it from somebody else, printing money and devaluing the currency is a great way to pass a stealth tax. You simply devalue your debts.


Yeah but that hasn't happened. Inflation's been low throughout the many concerns about QE. My experience with inflation is that it's a real-economy, supply-demand phenomenon that absolutely does matter. Most of my experience with inflation however is in places with big new oil/mining projects. Very removed from theory and very connected to on-the-ground factors.

[Hannibal]

In a world where governments rack up huge debts and unfunded liabilities because they want to give out wealth without taking it from somebody else, printing money and devaluing the currency is a great way to pass a stealth tax. You simply devalue your debts.


Yeah but that hasn't happened. Inflation's been low throughout the many concerns about QE. .

You looked at your food bill lately?

[Hannibal]

There is no argument for deflation.

I don't think that there's a good argument for either one, really. A little bit of inflation is traditionally associated with economic health, but I'm not sure how valid that is.

Suppose it takes me 100 pieces of paper to buy a good. Next year, it takes 105 pieces of paper to buy me that same good. How am I better off this way? If I got a 5% raise in the meantime then I'm exactly as well off as I was before. Unless I have savings, in which case I lost money. If I'm a huge debtor, then I got wealthier.

[hack]

Inflation has been below the Fed's 2% target since 2012.

[froot loops]

Yeah you don't want to be in deflation if you want job growth, inflation is essential. Your economy shrinks when it is in deflation. It is bad news period.

Take a look at Japan, they've been fighting off deflation for two decades.

If you like recessions and depressions then deflation is the ticket.

[Hannibal]

Cause vs. effect?

If you like recessions and depressions then deflation is the ticket.

Since the adoption of Keynesian economics in the US, we have seen multiple instances of inflation coinciding with recessions. There are pre-Keynes examples of inflation misery as well. Doubling the amount of (otherwise worthless) paper floating around in the economy does not create wealth. It simply alters the exchange rate of how much paper you have to give somebody in return for a good or service. What it does do is redistribute wealth from creditors to debtors and from people with savings & fixed incomes to people with hard assets.

[froot loops]

If you are going to use the 70s as an example, then there isn't much use talking. That was double digit inflation. Nobody is arguing for that. The US economy doesn't even get to 4 percent inflation. Volcker was right to raise the funds rate, but the 70s stagflation still cause scars, people are petrified of it.

Inflation does definitely cause growth and deflation causes the economy to shrink. In a deflationary economy there is no incentive to invest. We just spent the last 8 years fighting off deflation.

[Hannibal]

If you are going to use the 70s as an example, then there isn't much use talking. That was double digit inflation. Nobody is arguing for that.

If the US government ever adopts to strategy of devaluing the currency to erase our deficit and pay for all of our unfunded liablities then the double digit inflation of the late 1970s will seem like halcyon days.

[froot loops]

I guess I don't quite get what you are saying. Where do you think inflation comes from and how do you think currently devaluation occurs?

[Hannibal]

Stepping away from politics for a moment .. for something that really matters.

ESPN's John Saunders has died. He was only 61 years old. Way too young. Cause of death is not mentioned.

http://michigan.247sports.com/Bolt/A...at-61-46687410

In related news, the collective IQ of the people covering Disney's sports just got a few points lower.

[Dr. Strangelove]

I believe there's bias in hiring liberal professors. I also don't think there's a big body of conservatives out there dying for a chance to become a teacher and being denied. Most conservatives I know or have met have at least a mild degree of contempt for teachers at every level of education. And anyone denying that there isn't a strong strain of anti-intellectualism present in Trump-brand "populist" conservatism is kidding themselves. Education is seen as a flaw.

[hack]

I think there's a bias. Exposure to my wife's thesis advisor at UM, and her husband in the same department, was awfully discouraging. I think you are generally probably right overall, and would add that it's kinda the same in media -- it's so disparaged, and not exactly lucrative to start with, so most people end up lefties without any intent by anyone. But, still, I think there's some bias.

Arguable here, but it's not as if the conservatives there are are exactly forward thinking either. You could say the economics dept at the U of Chicago is one of the more famously conservative elements of academia. You'd think there could be some new ideas coming out of that group already, but it seems they are dedicated to just defending more of the same. But Geezer's point is that mixing them gives you the intellectual stimulation needed to get them all thinking harder about their own stuff, and that's a very valid point. Adding conservative echo chambers to the liberal ones isn't that.