The wonder of inflation
Somehow magically the USG manages to report inflation significantly under 10% annualized, when all the reports that reach me from people actually on the ground indicate it's clearly above 20% annualized and might be as high as 50% this year. This has been going on for about five years if not ten by nowi. Well... how in the heck ?!
I mean obviously, on the meta level, teh empire be lieing, just like every other empire before it. Same story today as always : it's too hard to accept that "well that's that, we suck now" and much too difficult to meet the "legitimate" demands of the populace with a resounding "shut up and work more" and so therefore... lieing about it is seems the only way out. Tomes could be written on the laughable immaturity of the body politic today as two and no doubt five thousand years ago. We're advanced, supposedly ? We might be, in actual sciences, such as math and physics, and their applications, such as computer software and hardware.ii But in the pretend-sciences, in the pseudo-sciences, in the so called "humanities" we fail so hard we might get thrown off the planet. No music worth the name has been produced in a century, you should see what passes for poetry these days and generally speaking people are just as clueless & uncouth today as always. They may be "better" dressed, in the sense they've replaced natural fibers with synthetic and bearable colors with garish, they may be more "in touch" in the sense of less, they may be "making a difference" in the sense of not really but as far as their understanding of the world goes they closely match the crowds around Henry being promised a chicken every week and the mobile vulgus clamoring for further allocations form the public granaries.
Obviously. What made me curious was not exactly the why and wherefore as much as the how. And so I eventually broke down and read through the intricacies of nonsense, that complex craft of crazy that's regulation in a dieing empire. Here's it summarized for your convenience.
I. The official US inflation does not include food and energy costs. That's right. Indifferent of the fact that inflation has been decried in all times and in all places by those on fixed incomes as the dearnessiii of food and coal. Just like that, inflation has been completely taken out of inflation. By this measure no country in the world, including today's Venezuela or the Weimar Germany had any inflation. None at all!
II. The official US inflation allows substitution. Did the price of ribeye go up 500% ? Well not only does this not matter because of I above, but moreover if ground meat is now available at a 15% reduction in price the inflation will officially have gone down. This is because, the theory goes, customers can just move to the cheaper alternative.
I'll give you some empty space to collect yourselves off the floor.
So, yes, I'm not making this up : the empire doth not think inflation exists at all because you could always move on to a cheaper alternative. I suppose those in the audience that do not know what nechezol means are entitled to find out for themselves.
III. Substitution is allowed to dampen inflation. Have the prices for handhelds gone up 20% ? Awww, but meanwhile, has their processing power gone up 50% ? Well then there you have it, since the product is now "better"iv inflation is actually -30%.
This is the holy trifecta that allows inflation well over 20% and perhaps as high as 50% this year to be represented as whatever single digit fiction one wishes. Indeed it could be brought to -20% if need be. And then this imaginary number is what imaginary experts a la Krugman use to create their imaginary arguments about how the imperial finances should be managed. In other words,
If a small number of entities are issuing new coins, this is more resistant to state attack that with a single issuer, but the government regularly attacks financial networks, with the financial collapse ensuing from the most recent attack still under way as I write this.
Government sponsored enterprises enter the business, in due course bad behavior is made mandatory, and the evil financial network is bigger than the honest financial network, with the result that even though everyone knows what is happening, people continue to use the paper issued by the evil financial network, because of network effects - the big, main issuers, are the issuers you use if you want to do business.
Then knowledgeable people complain that the evil financial network is heading for disaster, that the government sponsored enterprises are about to cause a “collapse of the total financial system”, as Wallison and Alan Greenspan complained in 2005, the government debates shrinking the evil government sponsored enterprises, as with “S. 190 [109th]: Federal Housing Enterprise Regulatory Reform Act of 2005″ but they find easy money too seductive, and S. 190 goes down in flames before a horde of political activists chanting that easy money is sound, and opposing it is racist, nazi, ignorant, and generally hateful, the recent S. 190 debate on limiting portfolios (bond issue supporting dud mortgages) by government sponsored enterprises being a perfect reprise of the debates on limiting the issue of new assignats in the 1790s.
The big and easy government attacks on money target a single central money issuer, as with the first of the modern political attacks, the French Assignat of 1792, but in the late nineteenth century political attacks on financial networks began, as for example the Federal reserve act of 1913, the goal always being to wind up the network into a single too big to fail entity, and they have been getting progressively bigger, more serious, and more disastrous, as with the most recent one. Each attack is hugely successful, and after the cataclysm that the attack causes the attackers are hailed as saviors of the poor, the oppressed, and the nation generally, and the blame for the the bad consequences is dumped elsewhere, usually on Jews, greedy bankers, speculators, etc, because such attacks are difficult for ordinary people to understand. I have trouble understanding your proposal - ordinary users will be easily bamboozled by a government sponsored security update. Further, when the crisis hits, to disagree with the line, to doubt that the regulators are right, and the problem is the evil speculators, becomes political suicide, as it did in America in 2007, sometimes physical suicide, as in Weimar Germany.
My chief complaint with the US version of "progress" is exactly that : it consists of taking a county where a hundred people live in brick and concrete housing, dressed in cotton and wool and enjoying actual meat and actual potatoes on their table and replacing it with a county where two hundred people live in vinyl-siding "housing", dressed in nylon and polyester and enjoying ground hooves and chemical paste on their table. This is not progress, even if a county with 160 low information voters is more likely to toe the line and "not cause problems".
This is not progress, but apparently it is exactly what the USG is after, even down to its peculiar redefinition of what inflation means. As such being a part of the evil empire is today and remains as always a crime against humanity.
———- It's in no case something that can be represented as an invention of Obama. The man just continued what was there. You know, just like the PATRIOT or Guantanamo Bay etc. [↩]
- While the progress in physics is constant and undeniable, the advancement of math may be purely theoretical. An argument could be brought and indeed has been brought that there's not been any advance at all in all software for as long as two decades or maybe even three decades.
I only point this out to settle a dispute that's about two decade old by now. I had some mates in highschool you see, who mistakenly believed their science is just as good as mine. Heh. [↩]
- This term seems all but forgotten in American English. It's the antonym of cheapness. [↩]
- Which is to say just as good as it used to be as a relative situation, which is exactly what money is supposed to buy, but let's not get into this discussion again. [↩]
Wednesday, 10 July 2013
Stfu ur on bitcoin which iz antiamerican, anticonstitutional and terrorist. I hope the interpool will kick ur ass. AMERICA!
Wednesday, 10 July 2013
Care din ultimele tale 30 de comentarii pe Trilema a fost relativ, oarecum, macar putin util? Taci in plm odata.
Thursday, 11 July 2013
Daca le numeri e grav.
Thursday, 11 July 2013
Sure, you're right about the factors that make official CPI a poor inflation indicator, but it is not *that* bad - US is definitely not above 10%, not to mention 50%.
First of all, SGS estimates did not exceed 10% (http://www.shadowstats.com/alternate_data/inflation-charts), and they are relatively free from biases introduced by Boskin Commission in 1995 (roughly those you mention). They too seem a bit overstated though - it's mainly due to weighting empoyed. Also, GDP deflator, a slightly better inflation measure, is pretty low. Are these alternative measures also flawed?
If inflation was really above 10%, then given Nominal GDP growth of about 5% pre-2008 and less than 3% now, then real GDP would fall at pace exceeding 5% per annum. It means that in 5 years, US economy would shrink by at least 25% and more than 40% in ten years. Do you believe this is exactly what happens?
If not, you must also claim that GDP measures economic growth very inacurately AND explain what causes such inflation accompanied by rise in nominal growth. Even broadest monetary aggregates (eg. Divisia M4, independently calculated by Center for Financial Stability, http://www.centerforfinancialstability.org/amfm_data.php) do not rise at pace exceeding 10%, which means the demand for dollars should dramatically fall which is certainly not the case as it hase risen during the crisis.
If you believe in above 10% inflation, then you would also have to explain extraordinarily low nominal US interest rates, as compared to very high nominal interest rates in commonly accepted high inflation countries (Weimar Rep., Zimbabwe, Latin America etc.). The same goes for exchange rate - does almost every country in the world (including Romania) experience similar inflation levels?
US have many problems, but inflation is not one of them.
P.S. Sorry for duplicate comment, there was an editing error last time.
Thursday, 11 July 2013
The points you bring are valid, in the sense of self-coherence. I do not believe they are valid in the sense of reflective of reality, but this will be a very difficult point to establish, given that reality is a notoriously elusive strumpet.
There's two avenues I want to argue the point on, and while they're neither ultimately successful, they are reasonably persuasive. The first we could call "psychological". Take for instance the US giving up on publishing M3 a decade ago, as a matter of policy. The stated reason was that "it's not worth bothering", but for whom ? Obviously if you've decided to fudge the inflation data publishing the M3 isn't such a good idea. (I have absolutely no faith or trust in whatever Divisia implies).
The other is empirical. I believe the Chinese GDP measurements to be roughly correctly reported (within 1% or something like that). The relative weight of the US and China in the world economy (principally measured by trade) has changed substantially over the past 50 years. If you play with simulations you'll see that there's no way for the Chinese GDP as reported to be accurate within 1% and the US GDP to NOT shrink most years. So yes, indeed I do believe the US GDP has been shrinking in real terms, perhaps even for the past decade, and I imagine it will reach double digits this current year. But this aside, GDP does have an approximate relationship with inflation, I don't imagine you actually dispute this ?
The extraordinarily low US interest rates are extremely easy to explain : the US itself is printing money and buying them on the extremely cheap. This forces all naive purchasers (in the past, ie before 2000) to stick to their investments as they can't really sell them due to the very low yields. This is exactly a scam, in the sense that the Treasury is trying to keep the dirt sealed under the rug. If rates were to approach not the historical expectation nor reason but merely anything over a 0.5 fraction of that the flood of paper privately held being dumped would be heard from space.
The comparison with actually free countries (Zimbabwe, Latin America etc) is fundamentally flawed : the US is a highly organised, repressive regime. The Soviets' bonds never suffered from the problems you describe, or the market from "indiscipline", which as you imagine in the context would be chiefly defined as insubordonation to the government.
The exchange rate is actually under the exact pressure. I can tell you as a fact that Romania's CBG finds himself under a lot of pressure to maintain a low leu (exports) while not buying too much useless US paper. It's a nightmare. Most countries with an economy worth the mention find themselves in a very similar situation, which is why the US propaganda machine (ie, English language press) is so concerned with discussing the "avoidance of a currency devaluation war". It's no war, it's just trying to get everyone to prop the crumbling colossus.
In closing : whenever a poorly administered country has many problems, inflation is one of them. Always.
Thursday, 11 July 2013
ya'll argue about numbers and what is relevant. I'll tell you what's relevant! What's the cost of a quart of milk and a gallon of gas and how does that line up with the money I can make?
Perhaps no one will be taking cash to the store in wheelbarrows, they don't have that much and anyway it all fits so nicely on that little plastic card.
Fancy 'economic' theories can't hide it forever.
Thursday, 11 July 2013
Gas was ~1.4 a decade ago, about 3.5 now. Thats just a little under 10% annually for the interval. Milk is iffy.
Thursday, 11 July 2013
Milk is not even healthy and there's no real milk on the market. Why would you need gas, women can't drive.
Thursday, 11 July 2013
Actually I buy real milk often (not homogenized/pasteurized/skimmed). Its yummy, and very healthy. Course you are right about gas, but it effects the taxi prices.
Thursday, 11 July 2013
You sit next to the one who milks the cow? I don't trust neither those with refrigerated dispensers.
Lol at taxi.
Thursday, 11 July 2013
Mircea Popescu,
thanks for your reply.
Let me note that I pointed at a link to "the" reality, namely ShadowStats, which presents data calculated with two methodologies, pre-1995 and pre-1980. Pre-1980 methodology CPI exceedes 10% for brief periods in 2008 and 2010, pre-1995 never exceeds it. To repeat, I consider ShadowStats unreliable and vastly overstating inflation data, but even their estimates are much lower than yours.
What's more, I pointed to GDP deflator, which isn't a basket measure and is free from bias you mentioned. This all means that if you're nevertheless right about inflation, it is not due to the three factors you mentioned in your blog post.
But still, this inflation would have to come from demand, not from supply, as M3, before being discontinued in 2006 (not a decade ago), less than doubled in its last decade, which implies less than 7% growth. As it comes to divisia, its pre-2006 growth roughly corresponds to M3 and its methodology uses publicly available data and is publicly available as well: http://en.wikipedia.org/wiki/Divisia_monetary_aggregates_index
As it comes to China GDP: if you speak about real GDP, then given the steadily-falling USD/CNY exchange rate and supposed double-digit inflation, China should experience one as well, which is not true given China's cost of living dynamics.
If you speak about nominal GDP, then USD/CNY exchange rate would also imply negative interest rates in Renminbi, which is characteristic of a falling economy and it is definitely NOT China. Otherwise, if US real rates is -10% and China is growing, the trade is obvious - borrow dollars, invest in China, hedge.
Also, to conduct your simulation you need not only (crude) weights estimated from share in world trade, but also a reliable measure of world GDP. Calculations of US GDP made by institutions providing estimates of world GDP do not show US collapse.
Nominal GDP of course has a definite relationship with inflation as both are nominal variables, whereas real GDP's relationship with inflation is not as straightforward and much weaker.
And US low interest rates. Actually, they are extremely difficult to explain as an effect of loose monetary policy, as monetary policy cannot keep real rates low indefinitely. It is possible only in short term, and only when delivered monetary growth exceeds expectations. The case is the same as in case of loose monetary policy reducing long-term unemployment rate. It doesn't matter what Fed buys as much as what it pays with. Currently, Fed's demand for T-Bills is a tiny fraction of market demand which would definitely have been lower if T-Bills were not considered (for a time) a safe asset at reasonable price. Actually, close to zero nominal rates indicates excessively tight monetary policy in the past - Japan comes as an ideal example.
Thursday, 11 July 2013
http://sociedad.elpais.com/sociedad/2013/07/11/actualidad/1373560700_907912.html
I hope we'll eat new species of fish soon.
Thursday, 11 July 2013
@Mateusz Wywial You say,
The problem with this statement is that estimations of risk made by so called institutions a) failed to predict actual risk and b) were shown to be corrupt not in part but in whole, to the point of playing more the part of the shill in a game of three card monte than actual institutions in any way engaged with actual reality. And so we've had all sorts of junk rated A and above for purely political reasons. To top that, the recent collapse of the LIBOR system pretty much shows that the problems are universal, not just systemic.
Therefore, I think one's more likely to obtain any desired set of macroeconomic data by randomly generating numbers than by actually taking into consideration what an institution - any institution - claims the data points are.
I'm aware this stance renders any pretense of treating economy as a science impotent. I am however not a scientist, I am a practician, and I can't ignore the practical evidence. We simply can't trust any numbers, and if that makes reasoning too close to guesswork for comfort I'd at least sink on my own guesswork than float on whoever's manipulation.
It's not a matter of them being kept low indefinitely, we're barely through a decade as you well pointed out earlier.
Consider the exact mirror equivalent of what the US government is currently doing to that country's economy. In a closed system (such as for instance Bitcoin) an independent operator of a popular ponzi scheme (such as for instance pirateat40) can maintain the illusion that interesrt rates will be extremely high indefinitely for a finite but significant period. People with the pretentions of institutions were actually spewing forth nonsense such as "investing for returns under 7% per week doesn't make sense".
It's exactly the same thing : if I'm going to be issuing 2/3 of all debt being issued and then I'm going to buy all my own debt (and only my own debt) at 0.1% then that's the interest rate. Nobody can sell my own debt for more than what I sell it for and no one can buy it for less than what I paid. It's obviously an exercise in absurdity, but these days one'd be hard pressed to find any nook or cranny in the whole of the US economy that in fact isn't. From retailers that double as health insurance and welfare benefits conveyers to finance organisations with the principal (perhaps by now even sole) function of defrauding the public treasury (and, if at all possible, private assets along), there's really not a single one thing that's not wholly rotten.
Except you're only counting direct demand. Add in all the 2nd hand demand (give banks free money on the understanding they use it to buy tbills) and all of a sudden it's nowhere near tiny. In fact, there's pretty much nobody left in the market. That's the big thing here, it's not that the trade is X or the trade is Y : there's no trade. As long as you're involving dollars in any way shape or form you're no longer trading, you're exchanging baseball cards.
Friday, 12 July 2013
@Mircea Popescu,
Thanks once again for your detailed reply.
I think we misunderstood each other:
While I definitely agree that there are serious problems with rating agencies, which in turn is a symptom of a flawed financial system, I wasn't thinking about them when I mentioned institutions calculating world GDP. I was merely pointing to the fact that, if you infer that US economy is falling from rising China and its rising share in world trade, you have to trust world GDP calculations, which are done by those institutions that deny shrinking US GDP in real terms. If, as I assume, you do not trust their data, you have no basis to believe that US is falling from that specific (Chinese) premise.
As for data - well, I'm rather certain that your skepticism is misdirected, as you can trust vast amount of data, such as transaction data, cost of living estimates based on online offer prices and so on. Furthermore, even if national accounts are flawed, they are flawed in a stable way and nevertheless provide *some* information. Take official headline CPI - if it were rapidly inflating, even if you allowed for hedonic regression etc, you would get a rapid increase - it simple math. Even if you took 15% most rising prices away, you still would get result not exceeding the orginal by more than 2%. As an example, take polish inflation reports ( http://www.nbp.pl/homen.aspx?f=/en/statystyka/core.html )and check the difference between 15% trimmed mean inflation, inflation without food & energy and headline CPI - the differences are not bigger than 1%. These calculations are based on publicly available data, so there is little scope to discretionary manipulation.
As of Libor market, the manipulations were in basis points, which is certainly of great weight to banks, but of minor importance to any economic analysis of interest rates and inflation. Any manipulation close to, say, one percentage point would be too obvious to conduct!
Fed can influence real rates, as long as people expect it to be so. I indeed believe that Fed managed to lower market interest rates below their "natural" level in 2003-2006, but then the Fed funds rate subsequently went up, so that the monetary expansion did not prevent 2008 nominal GDP collapse - this hints that at the time rates went above natural level, as Fed can fully control behavior of nominal GDP by simply printing money.
If that's what happens, Fed would at the extrerme monetize Treasury debt, which would turn out to be inflationary, while unaffecting the real interest rate (as any nominal price paid by the fed would be ok, since it backs the govt expenditures that directly transmisses inflation). It doesn't happen, since Fed does not control T-Bills market. Note that massive collapse of tbills yield coincides with monetary tightening of 2008, which directly contradicts your claim. Only after QE did the yields rise again - again, contrary to what you say.
To get convinced about US monetary stance, compare the credit conditions in 2005 and 2009.
To sum up: inflation remains significantly lower than 10% despite CPI manipulations (which, I believe, understates actual inflation AD deflation by no more than 2 percentage points), nominal rates are low due to monetary tightening and not loosing, and US GDP is not continuously falling for the last decade.
P.S. Once again, sorry for duplicate (editing error)
Friday, 12 July 2013
Actually this is a most enjoyable exchange, so as they say, no, no, thank *you*.
In this we agree. From what I know of US bureaucrats (indeed not much different from their older Soviet counterparts), they would not in likeliness posses the intellectual might to falsify the whole story. This is why I'm not particularly concerned about the world GDP figures - they're not "politically sensitive" or whatever they call the stuff these days.
Note further that a collapsing US economy is in no way causing a drop in the world GDP. Save a major war, the world GDP is moving very little, as taking out one producer can only happen by him being replaced with another. In this sense, the global GDP is probably the most stable point available in all of macroeconomy. For many practical purposes it can just be taken as 1.
In my estimation they are not flawed in a stable way. Nevertheless they do indeed provide some information. It's just that the information they provide is political and in no case economical. (Ie, they can be used as a sidechannel, they're meta, they're anything you wish except what they purport to be).
The Polish example is however very good, and if you press it you might force me to split the notion of inflation in two types, which is to say "actual inflation", ie, the inflation that eats Joe's paycheck, and "macro inflation", ie, that theoretical construct calculated out of macroeconomic data and get mired into all that work I don't feel like doing, like for instance review how inflation distribution in a society is not equal by income or by wealth, just like the GDP itself does not equally distribute. Indeed I should if only there were the time.
This is an assumption we do not share. This is not to say it's wrong, or at least not yet.
Maybe it does, if you subscribe to the notion that money and economy are still connected. Maybe it doesn't at all, if you take that moment as simply the point where economy and finance became loose apart, with actual trade continuing with Tide or whatever as medium of exchange. Consider the case of a car wedged in mud. You push the gas but the wheels only slowly turn and the engine whines. Suddenly the car somehow upturns. Now the wheels are moving freely, which is directly contradicting my theory that the car is wedged in mud. Well... perhaps. At any rate, I'd like to introduce here a somewhat similar discussion, coming from a different approach : the bezzle.
I remain unconvinced, but I believe you've made a good argument for the POV.
Monday, 15 July 2013
Mircea Popescu,
I pleased to hear that!
Do you mean GDP *level* org GDP *growth*? It's pretty important, as I believe world GDP is rather steadily (save for recent recession) growing.
That's a great point! Not only does the inflation spill unequally across society, but across economy - in that sense, economy can experience relative inflation of asset prices, capital goods and factors of production, whereas output prices - consumer prices - can remain fairly stable. That was the case of boom of 1920s, that probably was the case of 2003-2006. Further development of this insight might lead to a sound theory of business cycles.
If it weren't, QE3 wouldn't manage to boost stock prices, as well as monetary stimulus in Japan wouldn't boost Nikkei AND upward revisions of Japan corporate earnings estimates, so that japanese Price/Earnings ratios actually fell.
Tuesday, 16 July 2013
Growing, in what terms ?
QE3 only boosts stock prices because there's absolutely nothing to do with the excess money. It;'s not like you can go out and actually buy a turkey or something for it.
Tuesday, 16 July 2013
As I believe, both nominal and real as well. Do you suspect we are stagnant or falling globally in real terms?
The post you point to highlights an important mechanism of boosting prices and is of course very adequate, especially in pre-crisis boom.
However, I'd like to introduce another mechanism, namely expectations of future monetary growth and reduction in money demand. Take Nikkei 225 index - it started to rapidly grow after the election of pro-inflationary Shinzo Abe and even more after Bank of Japan's commitment to higher official inflation - even before new money was actually injected. I suspect some portion of QE can be explained due to similar loose money expectations. This is visible in a spread between TIPS and T-Bills in US (a measure of expected official inflation), which for a large part of the recent so-called recession moved in tandem with the stock prices. Have look at this blog post: http://uneasymoney.com/2013/06/07/what-gives-has-the-market-stopped-loving-inflation/
Tuesday, 16 July 2013
Well, the problem with growing GDP is the definition of money. If by "real" money you mean, that equivalent of nominal monetary mass in available goods and services, then the GDP can't really grow in "real" terms. Suppose there's 10 pies and 10 lei. The GDP is 1. Suppose we bake 90 more pies. If we print 90 more leis to go with it, the GDP stays 1. If we don't print 90 more leis, the GDP nominally drops 90% but the "real" GDP stays 1. If we print 990 more leis, the GDP nominally increases 990% but the real GDP... stays 1.
Now obviously we could falsify the reality of that real and get various results that diverge from this basic schema, and for that matter I'm equivocating between GDP and "available goods and services", the two obviously not being the same. In the end my point could be pretty much distilled into "you can't discuss the GDP of everything, as the concept is only meaningful from outside".
The economics of expectation are perhaps sound, but something that I wholly fail to grasp. I think it's really a much more complex topic than anyone involved with it actually realises. So I dunno, maybe.
Monday, 22 July 2013
Sorry for delaying the reply for so long, hope you don't mind returning, at least for a while, to this nearly abandoned discussion.
I suppose this might have been the source of some misunderstanding. Of course, this is just the matter of definition, but I thought of real GDP as basically real production output per assumed unit of time. Using your example, if we start from a level of zero pies and somehow produce 90 more pies in a given period, we have a real GDP of 90 *pies*. I think this is closer to generally accepted notion of GDP as *final output* measured in real terms. Due to the complexity of real world we try to approximate this by measuring it in terms of money, adjusted by the changes in purchasing power of this money.
Now, the nominal GDP is the monetary value of money spent of those final products, but the purchasing power of money isn't determined only by final goods available, but by availability of all other goods and to the degree other people would liker to exchange them for money. In other words, it is much more bound to the volume of transactions and their magnitude and frequency in the whole economy than to the quantity of final products only. And of course, transactions usually include used goods, intermediade goods, assets and so on, which are excluded from both real and nominal GDP. That's why it is usually close to impossible to find the value of nominal GDP even in simple examples such as yours.
Ah, and both your example and national accounts do not say who produced these goods (govt or private economy) and how their prices are undistorted and these goods are wanted. That's why Soviet Union managed to have a double-digit official GDP growth - simply producing things by the govt doesn't mean people get better.
Maybe that wiil hint you why I thought that world and US GDP is growing in real terms and nominal as well. Simply, each year we produce more things :)
Monday, 22 July 2013
This blog's been around for half a decade or so, what's the rush. Occasionally people pop in to continue discussions we had in 2010.
Yes indeed, I'm pretty sure this has a lot to do with the disagreement. My estimation of this being the case is why I disclaimed early on as to my academic interests in the matter - this would be a typical academic outlook.
Perhaps you're familiar with the case of the engineer that resolved whatever practical problem of the cattle farm as long as the cow was spherical and lived in a vacuum. This is roughly the situation of the academic who earnestly believes and even convinces others that "thinks of real GDP as basically real pies but due to the complexity of real world...". In short, I don't think you're allowed to use (or claim to use) that definition on the strenght of how you proceed thenceforth.
Anyway, ideally (and I think to a large degree in civilised countries) the government produces nothing at all. It's not the job of the government to take part in the economy any more than it's the job of geostationary satellites to help spin the Earth. Indeed one of the reasons for this is that once the government gets in the economic game the temptation is much too great to "produce" on paper only, very much in the manner of the Soviet state or more recently the US Government.
The problem of "we produce more things" is a very thorny one. What more things do we produce ? Take for instance the top hat. It used to be one of the primary drivers of industry, about a hundred years ago. Can you find me a new one for sale ? But I do not mean a cheap immitation, I mean the actual item, made of hatter's plush.
Sure, we produce a lot more plastic things. This does not necessarily mean more things, unless you presume an infinite tolerance for plastic, which is to mean substitution. In other words, the paradigm you propose fundamentally rests on the same ideological basis as the practices the article incriminates. Should they one day come out with plastic cunt, will you consider every bill of sale of such item a marriage contract and therefore rejoice at the final resolution of the 20th century's marriage problem ?
Wednesday, 20 November 2013
Related: http://nypost.com/2013/11/18/census-faked-2012-election-jobs-report/
Wednesday, 20 November 2013
Ha!
I like how time vindicates.