Slashdot Mirror

okay...
first link:
https://www.infoplease.com/us/...
just look at the bit between 1850 to 1900... the numbers go up.

This is the consumer price index
https://www.minneapolisfed.org...

Here is a book that goes through US wages from colonial times to 1928 or so:
https://fraser.stlouisfed.org/...

Go through it. No offense to you... but the idea you're pushing is wrong and you need to shine the light of objectivity on it. If you double down after it was proven wrong... well, that is on you.

Don't be that guy. Look over the information and then concede.

Nice work, you don't see too many people actually put in the research effort around here.

However, assuming that your numbers are correct, $2.25B for 280,618 full-time-equivalent students, adjusted for consumer price index is $11,550 per student in 2016 dollars. Compare that to $3.4B spent on 410,758 students works out to just $8,277 per student, a nearly 29% drop.

If, as you assert,

The real problem there is the same as many places, vastly more overpaid administrators, not enough spent on students and education.

then the problem is likely worse than it appears.

I am not sure how to get historical tuition costs (especially considering the 20+ campuses in the Cal State system), but it would make for an interesting comparison.

I hate to do this, mostly 'cause I like you, but that's simply not true - by precedent. To give two good examples:

1. Your home. If you're paid and current with your mortgage and the bank has not foreclosed and taken possession then the lending agency can not grant rights.
2. Your car, just like the above. The dealership or credit agency can not give the police permission to search your vehicle. Well, they can. It won't hold up in court.

So long as you're current then you have most every right you'd have with complete ownership. You own your house even while the bank owns it. You have the deed, they have a lien on the deed. The same thing for your car if it is not yet fully paid off. I'm not positive but I strongly suspect that if you're incarcerated and unable to make your payment then they still can't give permission to search.

You probably want to look up something called Contract for Deed.

So believe it or not, there are alternative processes where the deed is retained by another entity who is the owner.

How applicable this is to searches, I don't know, but you're not correct on the one part. And if you want to know about something truly deplorable, check out the cars seized when the owner let another person drive it, and that person got caught doing something unlawful.

The problem with Austrian School economics and the subsequent Chicago School is that they are a-historical, i.e. their theories bear little or no relation to what happens in reality. The Fed was set up as a response to the frequent financial panics that plagued the free market at the time: http://www.minneapolisfed.org/... Additionally, the foundational principle of Austrian/Chicago School economic theory, homo economicus http://en.wikipedia.org/wiki/H..., is just plain wrong (See Daniel Kahneman's Nobel Prize in Economics-winning work: http://en.wikipedia.org/wiki/D...). We're not rational, self-interested agents and we have over a century of conclusive cognitive psychology resarch that tells us otherwise.

Austrian/Chicago School economists, like Murray Rothbard, are just plain nuts.

Nope. You are only affected as much as you were involved with the banks â" being there customer or an employee, or dealing with other people, who were. But the recession was not the bank's fault â" rather it is that of the politicians, who forced banks (with the threat of "discrimination" lawsuits) to give money to unqualified borrowers.

1. The global recession caused millions of people to lose their jobs, for so long, that the government has been extending unemployment for years (up until recently)
2. You're trotting out the long debunked claim that the Community Reinvestment Act caused this
3. Your debunked claim is supported by... an essay from Orson Scott Card. I will rebut with the Minneapolis Federal Reserve Bank

[Citation Needed]

Here's some reading for you.
https://www.google.com/search?q=Goldman+sachs+subprime+fraud
https://www.google.com/search?q=credit+suisse+mortgage+fraud
https://www.google.com/search?q=Washington+Mutual+loan+fraud
https://www.google.com/search?q=Bank+of+America+racial+settlement
https://www.google.com/search?q=wells+fargo+racial+settlement
https://www.google.com/search?q=PNC+Financial+racial+settlement
https://www.google.com/search?q=suntrust+racial+settlement
https://www.google.com/search?q=robo+signing+settlement
https://www.google.com/search?q=JPMorgan+mortgage+fraud+settlement

This is a fun press release:
The Federal Reserve Board on Wednesday issued a consent cease and desist order and assessed an $85 million civil money penalty against Wells Fargo [...]. The order addresses allegations that Wells Fargo Financial employees steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications

If you noticed, I'm intentionally not rebutting you point by point,
because everything you've parroted has already been said and rejected a thousand times already.

Yeah, yeah. And if I don't agree with you, I must be stupid and incompetent.

And in yesterday's news: https://www.google.com/search?q=citigroup+mortgage+discrimination
I honestly don't know what alternate world of facts you're living in.
Going by your Orson Scott Card essay, Fark.com headlines are more informative than what you've been reading for the last 6 years.

Inflation is driven by the change in the supply of money against the demand for money.

Right. We're assuming the supply is fixed (as with Bitcoin in the long run), so inflation and deflation mainly reflect changes in the demand for money. In other words, a smaller or larger supply of goods and services available for purchase.

Deflation is often associated with recessions.

Not really. Deflation is often blamed, but the only real correlation is the American Great Depression. In other words, deflation caused by a sudden drop in the money supply due to a credit contraction. The contraction (which was evidence of previous malinvestment to begin with) was responsible for both the deflation and the recession. See also this study by the Federal Reserve Bank of Minneapolis.

No, the reason why you invest in a venture is because the projected risk adjusted returns are higher than your required return.

The only reason your "required return" is less than the average rate of return in the first place is the money supply is manipulated to avoid deflation. Remove that manipulation and we're saying the same thing.

There are obviously other factors besides short-term average returns which affect the demand for money; the desire for "safe" forms of saving in response to economic uncertainty would be one example. While these other factors are not as systemic, they are still important signals regarding the need for immediate consumption and investment vs. saving up resources for the future which we ignore or overrule at our peril.

A zero rate of inflation – or even a constant rate of inflation – is theoretically impossible. Those who have implemented it have destroyed their economies.

Where do people get this crap? Inflation in Switzerland has routinely touched zero had periods below zero (i.e. deflation) in recent times. Switzerland is one of the worlds wealthiest countries.

But you don't have to take my word for it. Professional economists have studied the link between deflation and depression and found it does not exist.

Fortunately I live in the US, which like most developed countries, where nobody has “first access to money”, so I don’t have to contend with that issue. And by money I assume you mean currency which, of course, is very different then money.

I think you'll find semantic distinctions between money and currency are pointless for anything except confusing people and making you feel like you won debates when actually you lost. Of course there are people who get first access to money in the USA - banks do, when they write it into your account and charge you interest for the privilege.

'the comments are where the real America is.'

There was this article recently on Yahoo! Finance about people giving Liberty to prevent a financial melt down.

Anyway, the article and many commentors parroted the argument that the Community Reinvestment Act of 1977 caused the financial meltdown. Many commentators and pundits have "reasoned" that the law caused the meltdown because it "forced" banks to lend to poor people who couldn't afford the loans. Did they have data to back up what they said?

Fuck no! Rush, Hannity, O'Rielly and all their clones pulled it out of their ass.

Here is what some economists found out

...the available evidence seems to run counter to the contention that the CRA contributed in any substantive way to the current mortgage crisis.

tl;dr; Most of "Real America" just mindlessly parrots what they see and hear in the media.

Which in 1913 was worth about $118,000 http://www.minneapolisfed.org/community_education/teacher/calc/hist1913.cfm

I can't find anything that would take that back to 1492 to see what it might have been equivalent to back then.

But the bottom line is compared to Columbus' journey, $50M current dollars is pocket change.

Let me tweak that idea for you a bit. Despite the childish selfishness of many of their ideas, a few of the memes the right wing is shopping are essentially correct.

Their "government shouldn't pick winners" mantra is well supported by the entirety of US history; what the government should be doing in the marketplace is identifying losers. Penalizing bad behavior that would otherwise be rewarded by a free market is one of government's primary functions - for example, murder-for-hire would be incredibly profitable if it weren't for laws that make it much less so. Theft and contract violation are legitimately penalized by government and not by armed vigilante action by businesses that have been harmed. I'll stop there but you can see the list is long!

Carbon taxes and sin taxes were once right-wing ideas - and good ones, too; taxation can be used to redress the externalization of costs by corporations and individuals. We currently punish people for working (income tax) and encourage successful companies to distort both the market and political governance (regulatory competition and so-called business inducements). A wiser course would be to eliminate income tax and outlaw state government "tax break and cash grant competitions" at the federal level, and finance federal government by taxing actors who physically harm the entire citizenry through air, water and ground pollution. If the only way to make something the people want entails high pollution, then the costs will be very high and profit margins slim - until human ingenuity, harnessed by greed if necessary, solves the problem. This is a market approach, but one where the government picks losers, based on quantifiable harm and not pie-in-the-sky techno-dreams of politicians whose sole scientific qualifications are an ability to read opinion polls.

If it's true that anti-vaxxers are harming society as a whole, make them pay for the harm. Tax them extra! Don't un-tax the winners, tax the losers; you can claim it's mathematically the same, but socially and psychologically it's entirely different. Let me pay a "nonvaccination tax" if I have some objection to preventing pandemics, and you'll cut the number of anti-vaxxers down to insignificance in a decade or less.

there is no empirical evidence of a link between deflation and depression.

never had to take Viagra have you?

As cool as bitcoin is, it has serious problems which will keep it from being used in day to day life.

Bitcoin does indeed have problems that make it hard to use in daily life, but "deflation" is not one of them. BitPay has reported that when the value of a Bitcoin rises their transaction rate goes up not down, as macro-economists would predict. Perhaps because holders of coins feel rich and start to splash out. This should not surprise us. The consumer electronics industry has been in a permanent state of economy-destroying inflation since pretty much forever yet even better and cheaper smartphones/mp3 players/etc continue to fly off the shelves. And in case you'd like observations more rigorous, there is no empirical evidence of a link between deflation and depression.

Anyway, obviously the goal is that nobody loses Bitcoins through carelessness - there are many strategies to help people back up their keys, and over time they will become widely implemented and used.

But the theory of the deflationary spiral was not actually studied to see if it matched historical data until 2004, and then when it finally was analyzed, it was discovered that the theory was wrong.

Heartwarming to see economists fitting straight lines to more or less circular data point clouds. The guys doing the physics ectures are just too stupid to do that.

Economics as a discipline isn't invalid, but you do have to take it with a huge pinch of salt especially at the macro level.

Here are a couple of facts that should make you think twice about macro-economic wisdom. One of the most basic tenets of science is to compare your theories against observable reality to see if they match, and if they don't, you come up with a better theory. But the theory of the deflationary spiral was not actually studied to see if it matched historical data until 2004, and then when it finally was analyzed, it was discovered that the theory was wrong. Should have been a pretty huge event, but no, Bernanke and his colleagues continue to act as if the study was simply never done.

If that theory is wrong, what other conventional wisdom might be wrong? Well, it turns out that economists have models of how the economy works. Of course they do. The state of the art in macro-economic modelling, widely used by central banks, are dynamic stochastic general equilibrium models (DSGE). Sounds sophisticated, right? Wrong. These models are so crude they do not include banks at all because the people who designed them thought that banks had no impact on economies. Worse still, as their name implies the models predict equilibrium rather than the boom/bust cycles that typify real economies. It might seem obvious to the man on the street that if your explanation of how the economy works ignores banks and predicts stability, then you have a pretty bad explanation ... but this is the quality of science on which central banks base their decisions.

Is it any wonder the world got so messed up? Maybe you should indeed exercise more skepticism towards the so-called "dismal science", and consider whether us Bitcoiners have got it right after all.

The good thing of inflation is that it keeps people from hoarding cash, as hoarding cash means you're losing value.

How is "hoarding cash" .... also known as saving .... equivalent to losing value? In a stable financial system saving money should be value neutral. In the financial systems we actually use, it's the opposite - inflation is the reason that savings lose value. This is not a good thing!

The design of Bitcoin is correct. It's the design of existing currencies that's hosed, though possibly calling the result of a few centuries of evolution "design" is overly generous.

Let me sum up our existing currencies for you in two paragraphs. Because pre-Bitcoin we lacked a way to globally synchronize everyones view of each others balances, we have to delegate this job to organisations called banks. We trust them to decrement one accounts balance when another is incremented and this is why people have to, you know, go to work and more or less live within their means. Naturally the trust we place in them for that is constantly abused, because the banks routinely increment peoples accounts without decrementing anyone elses. They charge interest for this "service". They especially love incrementing the governments accounts in this way, but the free money doesn't just go there, it sprays all over the place. This eventually leads to inflation.

Inflation is extremely convenient for governments because it lets them buy nice things for voters and pay for it using an invisible tax on savings. Because people would be naturally very angry at this taxation if it was done directly, economists and politicans came up with a brilliant theory as to why this is actually a good thing! Zero inflation, says them, would be terribly bad because if peoples savings aren't being constantly stolen at 2% per year or more then they lose all interest in profit. Given the choice of sitting on their money and getting no return, or making a safe 2%-per-year investment, those stupid citizens will choose to sit on it, and that will lead to economic collapse and anarchy and cats living together with dogs, which would never do.

There's a couple of problems with this theory. One is that it is contradicted by actual studies of historical data. The other is that it makes no sense. Capitalism is based on the assumption that people like profit. Normally, if someone is offered a low or even zero risk way to profit, they'll go for it unless they need the money right now. But when it comes to the (non existent, it turns out) "deflationary spiral" we're expected to suddenly stop believing that .... we're told that people will pass up good investment opportunities unless they're forced into it. That flatly contradicts how people actually work. The only kind of investment that becomes interesting solely due to inflation is the bad kind. You know, the kind that tends to be involved with asset bubbles.

By the way, Bitcoin is not intended to be deflationary. You assert that people will lose Bitcoins and sure, a tiny amount might disappear that way. But you'd better expect that easy and automatic backup will become common in future. All the incentives to properly solve that problem are there.

The idea that deflation leads to depression was proven to be false back in 2004. The "Bitcoin has a flawed economic design" argument is wrong and I will keep posting this study on Slashdot until it gets modded up and people read it.

However, the expansion curve was designed by somebody with utterly no understanding of economics, and the built-in deflation inherent that would come with expansion in BitCoin use guarantees they'll never become widespread for mainstream transactions because of widespread volatility in the exchange rate vs. stuff you actually want to buy.

This argument is both very common and wrong. So I'd like to address it here.

Firstly, let's put aside the appeal to authority. Conventional economic theory/monetary policy has led to an absolute clusterfuck - a worldwide recession that shows no signs of ending any time soon. If the current understanding of economics leads to this, then it's time to question that understanding from bottom to top.

Secondly, let's also set to one side the arguments that are contradicted by reality. Empirical evidence shows that deflation does not lead to depression. If the Minneapolis Feds study doesn't convince you, look at Bitcoin itself. Despite a dramatic increase in the value of the currency, the Bitcoin economy has grown equally dramatically. BitPay went from 1000 to 2000 merchants in the space of only a few months, and that's only a small subset of Bitcoin-accepting entities. So the system is, again, an existence proof that this common belief is mistaken. Likewise, Bitcoin has been remarkably non-volatile this year. It spent almost all of 2012 at one of two price points: $5 per coin in the first part of the year and somewhere between $10 and $13 per coin in the latter part. Hardly different to the volatility you'd expect from any other currency.

Thirdly, let's address the idea that credit is the lifeblood of the economy. Any economist will tell you that growth comes from innovation. Improvements in productivity, in technology, reductions in the cost of doing business. Wealth - the things we have around us, the quality of our food, our healthcare, the stability of our society ..... none of this comes from credit. It comes largely from technological innovation and good governance. If anything, history shows us that massive amounts of cheap credit has a destabilizing effect on the economy, that's why classical economics says that very low interest rates cause "overheating" and an increasing number of commentators place our current woes on many years of ultra-cheap credit. All that money had to go somewhere, and after the stock market bubble of the late 90s popped, it ended up flowing into real estate speculation. Now that bubble burst too, the only question is where all the cheap money is going now ...

Because you think Bernanke does? I don't think so.

Are deation and depression empirically linked? No, concludes a broad historical study of ination and real output growth rates. Deation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link.

What you think of as mainstream economic thought is all too often little more than dogma, beliefs based on neat arguments that are never exposed to the harsh light of data.

By the way, there's another term for what policymakers do with money printing. It's called a planned economy.

It's not disastrous. That's a modern myth. But you don't have to take my word for it, ask economists at the Federal Reserve.

This is also one of the main flaws in bitcoin. There are a set amount, therefore there must be deflation if it ever takes off. Deflation encourages hoarding because money is likely worth more tomorrow than today. Hoarding encourages further deflation, and we go round.

There are several flaws in your argument.

• The idea that deflation is inherently bad and leads to depressions is economic orthodoxy, but economics is not a particularly rigorous science. When this dogma has been investigated, as it was by economists at the Minnesota Fed, no evidence for it was found.
• Bitcoin is not deflationary. Deflation requires the amount of currency to drop. Right now Bitcoin is actually in a form of hyper-inflation. In 100+ years, the rate of inflation will be so low it'll be effectively zero. At this point Bitcoin is best described as stable rather than deflationary. It can only be described as deflationary if you assume that prices which fall in line with economic growth is a bad thing (more goods/services mapping to the same quantity of currency units). However that's a circular argument. If falling prices led to economic growth ceasing, the deflation would automatically stop.
• In practice, falling prices do not seem to lead to stagnation. There are plenty of examples of markets where prices have steadily fallen, due to technological progress, for long periods of time and they are thriving. Eg, mobile phones or computers in general.

In fact, the Bitcoin model makes a lot more sense than what we use today.

Today we have currencies that inflate at ridiculously high speeds. Even if you blindly trust the statistics put forth by western powers and assume a 2% inflation rate, that's a compound 2% remember. Over your lifetime the value of the currency will probably halve. In other countries the official inflation rates can be much worse. In Argentina it's more like 25%. In parts of Eastern Europe and Russia, 6% or higher. And as pointed out elsewhere, the definition of inflation keeps getting changed in the west.

This ruins societies because it makes it impossible to save for the future, and dealing with old age is one of societies most important problems. You cannot realistically put some money in a bank account and use that as your pension. So you have to "invest". Economists love this because they see "investment" as inherently a good thing. In reality what happens is that an entire society is desperately trying to outrun rampant inflation, resulting in huge waves of bogus, harmful and useless investment. Property bubbles are an obvious example in recent times, but there are others. A currency that stabilizes means that your savings increase in value exactly in line with the general rate of increase in prosperity. If you want to do better than the average, you can still invest, but you have to do it the old fashioned way - find something that deserves capital yet doesn't have it. There's no requirement to "invest" in a house on the assumption prices of property will constantly rise, or anything like that. It's a far more sane setup.

A stable currency cannot cause short-term inflation and deflation.

Right, which is why I said that gold was not stable historically. It was stable in dollar terms, because the dollar was defined in terms of gold. But compared to other commodities, it historically has been volatile on a short-term scale. Look at a chart of historic CPI (estimated, obviously). Can you really look at that data and say that we were better off with the gold standard? You have several swings up and down that exceed even the worst we've seen in the 70s.

That's exactly what happens when the goverment prints money, except of course they are not giving you the other pieces back of your now ripped in half dollars they are putting them in their own pockets.

Easily dealt with by not holding on to cash and instead treating it as a proxy for barter. Inflation discourages cash hoarding, which is a good thing. Hoarding leads to shortages. In the old days people would start hoarding cash at the first hint of a down economic cycle and then there wouldn't be enough circulating cash for the economy to function properly. Do that now and you risk losing money as it is "torn in half" as you say. In the last financial crisis, people hoarded cash anyway - but you know what? The government was able to pull as much money out of thin air as was necessary to keep the economy from shutting down.

Most things do not go up in price every year usually they go down

Manufactured goods? Sure, that's mostly true. Energy? Not really. We are using up the easiest-to-access sources of energy first, and it costs more to get a barrel of oil out of the ground than it used to. Since agriculture these days is so tied to petroleum, food cost goes up as well. Inflation on manufactured goods is so low as to be almost insignificant - most "inflation" these days is not inflation at all, but a slow rise in the price of petroleum that is very real. Here's a neat gold-oil price chart that shows how in recent times, we'd have an increasing oil price even if we were on a gold standard. The chart is a bit dated, but it should be sufficient to demonstrate my point.

Think about what that really means to your set amount of income now that most businesses are no longer giving "cost of living" increases every year.

Personally, I'd love an automatic raise every year. From an economic perspective, though, this seems like a bad idea. You don't want anything "automatic", because it spoils efficiency. In fact, one of the advantages of steady low inflation is that it allows real wages to go down - people don't normally react well to a wage decrease even when it is warranted.

In other words, people are not perfectly rational and so we should not expect our financial system to be, either. It has to be engineered to be compatible with the human psyche.

You would have been worse off :)

Well, something or someone has been screwing up the US's recovery from this recession for the last few years. I'd start by looking at stimulus packages that weren't actually stimulus.

Marriner S. Eccles, Chairman and Governor of the Federal Reserve Board

http://en.wikipedia.org/wiki/Marriner_Stoddard_Eccles

http://minneapolisfed.org/pubs/region/99-06/martin.cfm

I doubt there'd be many fractional reserve Bitcoin banks because they'd be very unstable (cannot be bailed out).

But anyway, you're going along with the economic orthodoxy - the kind of thinking that got us into this mess in the first place. Is a slow fall in prices inherently bad? Economics is not a science because you can't do experiments. Instead it's based on trying to explain history with theories. The US Fed did a study of deflation and depressions which concluded this:

Are deation and depression empirically linked? No, concludes a broad historical study of ination and real output growth rates. Deation and depression do seem to have been linked during the 1930s. But in the rest of the data for 17 countries and more than 100 years, there is virtually no evidence of such a link.

Don't be fooled by neat arguments that contradict real-world experience. Here's a simpler example if you don't want to read the paper: if you wait 6 months, it's almost guaranteed you can get a better mobile phone for the same money as today. In effect there is strong deflationary pressure in this market, hoarding "gets you more". However people still buy mobile phones, because the value of having a phone today is more than the value of a better phone tomorrow.

Anyway, Bitcoin is scheduled to inflate at least a little bit until about 2140. At that point if some growing economy had fully adopted it, there'd be a slow decline in prices as more trade and services got mapped to the same quantity of coins (they have enough resolution that this is unlikely to cause inconvenience). I actually think this would lead to a more stable economy, because in a world where everyone is forced to invest their savings by the mathematics of inflation you unsurprisingly get groupthink and waves of asset bubbles (ie, in housing). This can cause havoc with peoples retirements. Being able to effectively invest in the growth of the economy as a whole by simply keeping your money safe is likely to lead to a fairer, more stable society over the long run.

But what if borrowing leads to more growth that pays off the debt? What if cutting spending in a depression lowers economic activity and therefore tax revenues? What if interest rates are low enough to make it non-sensical to pay more than the bare minimum?

"If." What makes you think the current US government action falls in that category? As I see it, they've spent some amount over three trillion dollars (fed's "quantitative easing" plus TARP/ARRA plus whatever else that's been done over the past couple of years). There hasn't been any obvious economic boost from that. Instead, we see a much slower recovery than usual for a recession and high, prolonged unemployment much like the early 90s "jobless recovery".

Your model may work for a household, but not a government.

Why? I think this is a fundamental political issue in the US today. In particular, it seems a key assumption of the Tea Party movement that government interactions with its citizens should be like personal interactions. That is, there should be things like fiscal discipline, voluntary contracts (that is, government shouldn't be forcing you to do stuff), and of course, taxation with representation (you should have a say in what you pay for).

Against this, we have balanced the argument that government can't be treated this way, using Keynesian-like arguments. As I hint above, I don't see your argument having weight since the outcome hasn't been impressive. Sure, the US financial system hasn't fallen apart. But neither has it recovered. And a lot of the US government actions have run counter to recovery. For example, Obamacare (for example, extending employer-paid health benefits for recently laid off workers to 18 months from 6 months or the overall rise in health insurance costs as a consequence of the new law) or the attempts to halt off-shore drilling.

One wonders what would have happened, if the Fed hadn't continued to double down on its loan purchases from weak banks (will reach almost $3 trillion by the middle of the Summer!) and Bernanke had said something like:

During a boom, waste and inefficiency creep in naturally. It's hard not to believe that recession does a lot of business a lot of good.

Did you even read what you wrote? When you say "return to standards of living circa 1970", for a large portion of the populace, this wouldn't be a hardship since their standards of living haven't improved since then! Growth as a function of GDP is still increasing in the U.S. But, this growth is disproportionately being done by incomes that are in the top 1%. The middle and lower incomes have basically stagnated. For example, high school graduation rates have been at roughly 70% since 1970. Ideologues like yourself are very fond of quoting that life expectancy has continued to increase, but the reality is, life expectancy is only substantially increasing in the U.S. for people in the top half of incomes. Look at Table 4 in this study. Since 1977, life expectancy has risen 6 years for the top half of incomes, but only 1.3 years for the bottom half of incomes.

That video was made in what, 1985? And Windows sold for $99 according to the ad.

Today, Windows 7 (NOT AN UPGRADE) goes for $178.54 on Amazon and lists for $199. According to the Minneapolis Fed, $99 in 1985 is worth $200.21 in 2010 - in other Words, inflation adjusted, Microsoft hasn't raised the price of Windows. And if you include all of the programs that are included with Windows 7 that you would normally have had to have purchased separately back in '85 (compression, file management, image viewers, etc, etc...) Windows has gone down dramatically. Now, they've been labeled a monopoly in court, but they're pricing isn't that of a monopolist. Actually, they've given the consumer a really nice value.

Now, cue the MS haters who are going to accuse me of being an "apologist" and for being a "revisionist". Whatever. I just think it's an interesting micro economic case study.

BTW, get a life.

Yeah, the money multiplier theory of credit creation is a great theory and all, but it doesn't work that way in practice.

Banks create loans first, then you deposit it in another account. At the end of the day, the banks all look at their reserve and capital requirements, then go to the money markets and borrow enough money from each other, from foreigners and from the fed to back the new loans.

Still don't believe me? If the money multiplier theory was true, you'd expect any expansion of credit money to happen after expansions of government money. But this simply isn't the case, instead empirical evidence says that the reverse happens;

Kydland & Prescott, Business Cycles: Real Facts and a Monetary Myth, Federal Reserve Bank of Minneapolis Quarterly Review, Spring 1990.
"There is no evidence that either the monetary base or M1 leads the cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the cycle slightly." (p. 11)

The idea that the CRA caused the mortgage meltdown is flat wrong. There are plenty of other sources besides those 2, from all sorts of economists.

The other basic thing that you fail to acknowledge is that oligopolies are different from free markets. If the number of sellers in your market drop into the single-digits (which is true of a lot of markets right now), Adam Smith's work stops being half as useful as John Nash's. It's sort of like how Isaac Newton's physics works extremely well most of the time, but once you get into the realm of really big, really small, or really fast things it tends to fall apart.

But, that's what the economists say. They're also saying the economy is getting better and we should be happy.

It isn't that simple. See my response to the GP.

The Federal Gov'ts massive tinkering in 1993 and 1995 with the CRA created a secondary market that acted as a smoke screen. Specifically, your argument that the majority of the subprime loans were "made" by firms not even subject to the CRA is the red herring. "Originated" is the correct term, which means they acted as a broker between the borrower and the bank who actually financed the loan. Even the Minneapolis Fed report makes note of this, which is what the blog on Businessweek glosses over. While the originators of the loans weren't covered by the CRA, just about EVERY LOAN was sold to a bank covered by the CRA so those banks could meet their quotas for "loan diversity".

And I'm not blaming the "poor" or "minorities". The ALT-As also included many middle-class folks who simply were buying WAY too much house for their income stream. A couple making $50K + $35K / year have no business buying $300K+ homes.

I stand by my original evaluation that much of this mess was caused specifically by government, not regulating, but their ham-handed attempts at social and economic engineering.

My parents raised 4 kids on about half of what I make now (and no, inflation doesn't come close to counting for the difference, Born in '82).

Since the link was messed up, here it is: http://www.minneapolisfed.org/

Median income in the US in 2007 was $50,233.00. So, half of that is $25,116.50.

$25,116.50 of 1982 goods would cost $53,954.93 in 2007 according to the calculator.

You wouldn't need double the amount of money your parents made due to inflation to have the same standard of living your frugal parents had. You'd need 2.15 times!

My point is merely that gold is no different from the rest of these. It's all just "how much people pay for them".

You are right about this, but you are neglecting stability. The perceived value of gold has stayed relatively stable through time, which makes it a good commodity to back up a money system. The difference between gold and $20 bills is that it's a hell of a lot harder to reduce the scarcity of gold because you have to go out and find it and dig it up. It's not nearly as much of an endeavor to make $20s: cotton and ink, as you pointed out, are cheap, and the government already has the presses.

Anyway, if gold is as useless as you say it is, then lets just trade. I got 300 new 1 dollar bills. Just get me two gold bars for them and we'll leave it at that.

Let's do the reverse. If paper money is so worthless, why don't you give me enough $100 bills to fill a suitcase and I will give you an ounce of gold in return. I'm sure that the gold will be more than enough to pay for the cotton and ink.

You're both being a little ridiculous here because you are both saying, "X has little value, so I'll trade you a ton of it for some Y!" Both gold and dollars have value because people perceive them to have value. Dollars are just a hell of a lot more volatile, and more likely to be devalued because there are more and more of them popping into existence at (what should be) an alarming rate. (For a case study, see the Zimbabwe dollar, which was so inflated that, until redenomination in August, $100,000,000,000 bought you...three eggs. For another, the calculator on the MN Fed site says that $100 in 1913 was equivalent to $2093.94 in 2007.) People value gold because...well, because people have always valued gold. We're irrational but predictable. People value dollars because the government tells us that they are worth something. What happens when we (predictably) print too many and/or the world (predictably) loses faith in the US government's word?

Unlike a number of (small-l) libertarians, I don't think that the gold standard is the holy grail of currency backing, but it has a lot of benefits. In addition to its stability it has a convenient mass/value ratio, it's easy to check for purity, and it's nearly universally recognized, all of which combined make it a great reserve currency. I personally think that its lack of utility is also a plus because there is little competition from the manufacturing sector for its use. Still, it doesn't matter what we back paper money with, as long as it's backed with something greater than the word of a government that it is good.

According to the Consumer Price Index Calculator $360 in 1979 = $1069 today.

Their 2008 numbers are based on linear extension of the 2006 - 2007 data, so this might be off.

Right.. it all sounds good until you actually check your facts. If only those silly laws of economics didn't get in the way. Before making silly remarks to further your idiotic ideology check here (1995 & 2007) http://www.minneapolisfed.org/research/data/us/calc/ Also, you should take an intro to macroeconomics class too.. Broaden your horizons beyond sound bites.

I'll take it back further, using constant dollars, and the numbers just get worse. In '84, the price was about the same for a CP/M machine, with a 4 MHz Z80A, 64K of RAM, a pair of 5.25" floppies (394KB each, instead of the more standard 360KB each, IIRRC), and a dot matrix printer. I think that bad boy set me back right around $2700. According to Fedreal Reserve Bank CPI calculator at http://www.minneapolisfed.org/research/data/us/cal c/ that would be $5200 in today's dollars. The $2500 you spent in '82 would be $3600 today.

The reason is as you no doubt suspect. We don't know a helluva lot about how to create software. Object-oriented software was going to allow vast code re-use. Java, or another language du Jour was going to save the world. Every consultant and his/her mother has had a methodology to promote, and supporting tools to sell. The stream of 'paridigm shifts' that lead to agile programming don't seem to have done it, either.

You can even argue either way about whether code is getting better or worse. It gets into definitions, and some highly conflicting data sets. Also conflicting opinions from people that are widely recognized as pretty damned smart.

I'll add to my 'We don't know a helluva lot about how to create software.' statement. We're not getting better at any rapid pace--save in expanding to fill the vastly greater machine resources available. To preempt a few people--this isn't about open or closed source. Neither camp can claim any victory, when you do a straight-up comparison between how much better hardware has gotten, compared to software.

That's how I see it, anyway, and I've been in both camps, almost evenly divided over 30 years. Hardware has progressed much further than the buggy, difficult to maintain bloatware we run on it. What Edsger Dijkstra said many years ago is still true today:

I would therefore like to posit that computing's central challenge, viz. "How
not to make a mess of it," has /not/ been met.

I work exclusively on the software side today, and it's pretty freaking humbling. IMO, it's because the standards are higher in hardware. Committing to silicon costs *money*. In software, you can trot out any damned thing, and fix it later if the economics are right. Taking that approach in hardware, whether a chip, board, or system, is riskier simply because the product is less malleable. There's more of an imperative to get it right the first time, and more importantly learn *how* to get it right the first time.

I don't see a fix with all the consultants, development methodologies, etc., in the world, as we've been going. The only thing that I can see helping is doing away with 'absolve us of everything' software licenses. If your car's breaks fail, you have recourse, but if your OS spews your identity to the four corners of the earth, you have none. That's borked.

Before all the Linux guys (and I'm one of you) freak out, that wouldn't have to be the death of open source. Upstream, there would have to be some pretty rigorous testing. But closed source vendors would have the same responsibilities. My take is that Linux vendor's costs would increase, while Microsoft would find the challenge insurmountable, due to an inferior development model.

Poof, we win. So does the end user. Free distros don't have to go away. They'd simply be 'use at your own risk', which is the current state. Every copy that goes out is a potential bug report, driving costs down for the commercial distros. Microsoft could take the same approach, of course. That's a level playing field, and let the best system win.

It might even force the Linux vendors to get together on standards a bit more, so they could more easily pool testing, bug reports, etc. The differences in such basic things as filesystem layout that we have today are ridiculous. Maybe even systems administrators would win. OK. Never mind. That last bit was just crazy talk.

In fact, it's all crazy talk. No way will it ever happen. Not in my lifetime, anyway.

Well, according to the handy dandy calculator at the Federal Reserve Bank of Minneapolis, which sadly doesn't go back to 1908, if I'd bought a Model T for $850 in 1913 (the furthest back it goes), then it'd cost $17,643.94 . I can't imagine that it's too much higher than that, given the proximity. Indeed, from the CPI for 1800 on it shows that there's not all that huge a difference. Certainly not the difference you had expected. According to that page, even if I'd paid $850 as far back as 1850, I'd only pay $20,910 now.

Well, according to the handy dandy calculator at the Federal Reserve Bank of Minneapolis, which sadly doesn't go back to 1908, if I'd bought a Model T for $850 in 1913 (the furthest back it goes), then it'd cost $17,643.94 . I can't imagine that it's too much higher than that, given the proximity. Indeed, from the CPI for 1800 on it shows that there's not all that huge a difference. Certainly not the difference you had expected. According to that page, even if I'd paid $850 as far back as 1850, I'd only pay $20,910 now.

By coincidence I have the Federal Reserve Bank of Minneapolis website up on their Consumer Price Index page. If the 1996 price of CDs was $33.86 then the inflation adjusted price of 1983 would have been $21.49. If CDs were, as you remember, $13-$18 in 1983 then the inflation adjusted price for 1996 would be $20.48 - $28.36.

I'm not going to try and reconcile those numbers or read the article because I'm tired.

Read the section "the critics."

If you can come up with a reason why Paul Romer's critique is wrong, then you might have a leg to stand on. However, if Romer's critique is correct, as virtually everybody acknowledges that it is, then Boldrin and Levine's paper remains "clownshoes:" an academic exercise that may be "an eye opener" (or some other non-specific "praise" that the paper originally got), but without any basis in reality or applicability whatsoever. Simply put: you'd be damned hard pressed to find a person who actually believes that the doctrine of first sale actually could work.

It boggles my mind that you couldn't instantly see this problem with B&L's thesis if you actually read the paper.

Quite frankly, looking at it from a historical perspective, you are wrong. That's the history of the minimum wage and this is the historical statistics for inflation. Notice the extremely low level of correlation.

There is only a finite amount of stuff to own (no matter what monetary system you're using) - just by the fact that there are a finite number of atoms in the universe (and much fewer accessible to us on the Earth's surface). And the more stuff fewer people own, the less of it is available for everyone else to use (except by permission of the owners).

There is only a finite amount of stuff to own (no matter what monetary system you're using) - just by the fact that there are a finite number of atoms in the universe (and much fewer accessible to us on the Earth's surface). And the more stuff fewer people own, the less of it is available for everyone else to use (except by permission of the owners).

There is only a finite amount of stuff to own (no matter what monetary system you're using) - just by the fact that there are a finite number of atoms in the universe (and much fewer accessible to us on the Earth's surface). And the more stuff fewer people own, the less of it is available for everyone else to use (except by permission of the owners).

This is exactly the attitude i am talking about.

Anyone with wealth automatically exploited society to get it. Its not possible that someone actually earned their money. Not only that, but in order to keep everyone equal we must keep people from becoming rich. This is why socialism is dangerous and this is why the Soviet Union failed so spectacularly. This line of thinking actually does lead to equality, but it leads to everyone being equally poor. Those with skill and drive and talent are forced into mediocrity or at the very least are left without an incentive to perform. The author of the parent post implies that inequality is a bad thing. He fails to recognize that people really are not equal. He cannot see that some people work harder or are more talented and that is why they are successful.

The goal should be to raise everyone's standard of living, not to destroy those who are successful. Of the vast increase in the well being of hundreds of millions of people that has occurred in the 200 year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people through redistribution is nothing compared to the apparently limitless potential of increasing production. Anyone interested in learning more about this line of thinking should read The Industrial Revolution - Past and Future, a paper by Nobel Prize winning economist Robert Lucas.

Anyway, the Republicans have never and will never talk about redistribution of wealth.

Redistribution of wealth is the least effective mechanism for combating poverty. Robert Lucas put it this way:

"...of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production."

If you're interested in the plight of the poor, you should stop listening to those who would swindle you into believing that redistribution of wealth will work. You might need another metaphor

The second source didn't show up. here it is.

A slightly alternative and more precise examination of the economic study of social behavior can be found in the works of Nobel Prize-winning economist Gary Becker.

You can read an interview with him here, or examine his book Social Economics: Market Behavior in a Social Environment, or check out his Nobel Prize speech.

We found a box of records (those flat black discs that play music when you scratch them with a needle) that hadn't been listened to in years. Some of them were still in the original wrapping. One of them had a 1961 copyright on the package, with a price tag of $1.69.

According to the inflation calculator located here, that would cost $10.38 today.

's close to $12.98, I guess. Not bad for 42 years of progress. I'd still rather pay $7 or under for a CD, though, 'cuz I'm cheap.

What ever happened to the $9.99 sale price for new CD releases? I remember back in 1994 I could walk into a Circuit City (on a Friday in Tallahassee, FL) and get a new release for only $9.99 on sale.

Well, for one, there's this thing called inflation. Inflation-adjusted, according to this website (which uses CPI), $9.99 in 1994 is $12.38 in 2003.