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Dude, M1 went up almost 3 _times_ during the last 4 years ( http://research.stlouisfed.org...). Do you see 250% inflation? I certainly don't. Nor does Billion Prices Project which monitors the cost of "Actual Groceries"(tm)(r).

And I don't care if you define inflation per millisecond or whatever. The end result is the same - there has been no hyperinflation episodes recently, exactly because central banks got quite good at lowering inflation.

Companies are sitting on an historically mammoth pile of cash (in general) :
https://www.stlouisfed.org/pub...
http://www.dailyfinance.com/on...
http://bgr.com/2013/10/02/appl...
http://www.theatlantic.com/bus...

Why are they being so stingy?

They have realized that it is far more profitable to invest in CONGRESSMEN, than it is to invest in their own labor-pool.

the US federal government, a body worth $66.07 trillion

The U.S. federal government has a negative net worth (specifically, of -$10.6 billion). The number you quoted represents the net worth of U.S. households and nonprofits (currently at $77.2 billion). That is not money that the federal government would have an easy time getting its hands on.

Bitcoin, which is backed by mathematics and some currency speculators.

As opposed to the U.S. dollar, which is backed only by currency speculators? The "full faith and credit" of the U.S. government just means that the government will always accept its own money. It doesn't give anything of value in exchange for them, so really the entire currency is predicated on other people's willingness to accept the U.S. dollar as a medium of exchange.

the US federal government, a body worth $66.07 trillion

The U.S. federal government has a negative net worth (specifically, of -$10.6 billion). The number you quoted represents the net worth of U.S. households and nonprofits (currently at $77.2 billion). That is not money that the federal government would have an easy time getting its hands on.

Bitcoin, which is backed by mathematics and some currency speculators.

As opposed to the U.S. dollar, which is backed only by currency speculators? The "full faith and credit" of the U.S. government just means that the government will always accept its own money. It doesn't give anything of value in exchange for them, so really the entire currency is predicated on other people's willingness to accept the U.S. dollar as a medium of exchange.

There is no limit to the total amount of possible "work" to be done.

This is the crucial point. Remember right now we have people whose entire career is devoted, not to pushing a pointy ball across a line, but cheering for people who push a pointy ball across the line. And they work hard at it.

We have people who spend their entire lives painting other people's fingernails.
We have people who make a good living by painting art, not great, but good enough that people are willing to buy it at fairs.
We have people who live by playing live music
There are people who live by teaching chess lessons. And people who make a living playing Starcraft.

Since the computer was invented, and started taking over human jobs, the number of jobs in the US has more than tripled, absorbing a huge number of immigrants and women coming into the workforce. Where did all the jobs come from? If you can't answer that, then you'll have trouble predicting the job market over the next 20 years.

I think you might be missing the point. He's saying that the new information/digital economy requires less people to run it and is therefore reducing the overall number of jobs.

The emprical evidence for this claim is extremely weak, to say the least. The total number of hours worked is pretty much on par with population growth, so despite the enormous increase in automatization in recent decades, the workforce as a whole appears to be able to adapt to it quite well.

You may want to compare your article's data with FRED's Nonfarm Business Sector: Real Compensation Per Hour (COMPRNFB) which shows a 35% increase over 40 years.

The article says it is using data from only production/nonsupervisory workers in the private sector and comparing it to productivity is for the total economy. If it could compare productivity just for production/nonsupervisory workers then there might be a case, but how could you even do that without firing all non-production and supervisory workers? I've had some great bosses that really improved my productivity by guiding my work. This is the same mistake as trying to compare a MINIMUM wage with AVERAGE productivity.

FRED only puts out a nominal Average Hourly Earnings of Production and Nonsupervisory Employees: Total Private (AHETPI), not an inflation adjusted series, but suffice it to say that over 40 years, AHETPI has gone from $3/hr to $20/hr. Based on the BLS CPI calculator, $3/hr in 1973 is $15.75/hr today, so there has been real gains. Also it is not clear to me that the productivity data mentioned has been inflation adjusted.

You may want to look at BLS Nonfarm Business Sector: Labor Share (PRS85006173) which is labor compensation divided by value added. It certainly has been going down, but very slowly.

It should also be kept in mind that a 52% of americans hold equity capital positions, so most people are benefiting from the return to capital.

Also over 40 years, the US has acquired 30 million foreign born people from immigration, most of them lower skilled, but almost all of them making more for their labor in the US than they would in their home country.

You may want to compare your article's data with FRED's Nonfarm Business Sector: Real Compensation Per Hour (COMPRNFB) which shows a 35% increase over 40 years.

The article says it is using data from only production/nonsupervisory workers in the private sector and comparing it to productivity is for the total economy. If it could compare productivity just for production/nonsupervisory workers then there might be a case, but how could you even do that without firing all non-production and supervisory workers? I've had some great bosses that really improved my productivity by guiding my work. This is the same mistake as trying to compare a MINIMUM wage with AVERAGE productivity.

FRED only puts out a nominal Average Hourly Earnings of Production and Nonsupervisory Employees: Total Private (AHETPI), not an inflation adjusted series, but suffice it to say that over 40 years, AHETPI has gone from $3/hr to $20/hr. Based on the BLS CPI calculator, $3/hr in 1973 is $15.75/hr today, so there has been real gains. Also it is not clear to me that the productivity data mentioned has been inflation adjusted.

You may want to look at BLS Nonfarm Business Sector: Labor Share (PRS85006173) which is labor compensation divided by value added. It certainly has been going down, but very slowly.

It should also be kept in mind that a 52% of americans hold equity capital positions, so most people are benefiting from the return to capital.

Also over 40 years, the US has acquired 30 million foreign born people from immigration, most of them lower skilled, but almost all of them making more for their labor in the US than they would in their home country.

You may want to compare your article's data with FRED's Nonfarm Business Sector: Real Compensation Per Hour (COMPRNFB) which shows a 35% increase over 40 years.

The article says it is using data from only production/nonsupervisory workers in the private sector and comparing it to productivity is for the total economy. If it could compare productivity just for production/nonsupervisory workers then there might be a case, but how could you even do that without firing all non-production and supervisory workers? I've had some great bosses that really improved my productivity by guiding my work. This is the same mistake as trying to compare a MINIMUM wage with AVERAGE productivity.

FRED only puts out a nominal Average Hourly Earnings of Production and Nonsupervisory Employees: Total Private (AHETPI), not an inflation adjusted series, but suffice it to say that over 40 years, AHETPI has gone from $3/hr to $20/hr. Based on the BLS CPI calculator, $3/hr in 1973 is $15.75/hr today, so there has been real gains. Also it is not clear to me that the productivity data mentioned has been inflation adjusted.

You may want to look at BLS Nonfarm Business Sector: Labor Share (PRS85006173) which is labor compensation divided by value added. It certainly has been going down, but very slowly.

It should also be kept in mind that a 52% of americans hold equity capital positions, so most people are benefiting from the return to capital.

Also over 40 years, the US has acquired 30 million foreign born people from immigration, most of them lower skilled, but almost all of them making more for their labor in the US than they would in their home country.

Let's look at some data, shall we?

http://research.stlouisfed.org/fred2/graph/?g=qip shows that the Fed was in disciplinary mode, raising interest rates, before both the dot-com and the real-estate crash. Greenspan's "irrational exuberance" attitude was what killed dot-com, because, I think, he's an old fool who didn't understand the potential of technology to make obsolete his feudal economic models.

Regarding velocity of money: http://research.stlouisfed.org/fred2/graph/?g=qiq
If velocity of money leads to inflation, why wasn't there high inflation during the 1960s, 1990s, and 2000s?

Regarding the money supply: http://research.stlouisfed.org/fred2/graph/?g=qir
(Taking M2 because, as investopedia says, "economists like to include the more broadly defined definition for M2 when discussing the money supply, because modern economies often involve transfers between different account types. For example, a business may transfer $10,000 from a money market account to its checking account. This transfer would increase M1, which doesn’t include money market funds, while keeping M2 stable, since M2 contains money market accounts.")

Why does the money supply increase at an almost constant, exponential rate, with no devastating inflation?

Let's look at some data, shall we?

http://research.stlouisfed.org/fred2/graph/?g=qip shows that the Fed was in disciplinary mode, raising interest rates, before both the dot-com and the real-estate crash. Greenspan's "irrational exuberance" attitude was what killed dot-com, because, I think, he's an old fool who didn't understand the potential of technology to make obsolete his feudal economic models.

Regarding velocity of money: http://research.stlouisfed.org/fred2/graph/?g=qiq
If velocity of money leads to inflation, why wasn't there high inflation during the 1960s, 1990s, and 2000s?

Regarding the money supply: http://research.stlouisfed.org/fred2/graph/?g=qir
(Taking M2 because, as investopedia says, "economists like to include the more broadly defined definition for M2 when discussing the money supply, because modern economies often involve transfers between different account types. For example, a business may transfer $10,000 from a money market account to its checking account. This transfer would increase M1, which doesn’t include money market funds, while keeping M2 stable, since M2 contains money market accounts.")

Why does the money supply increase at an almost constant, exponential rate, with no devastating inflation?

Let's look at some data, shall we?

http://research.stlouisfed.org/fred2/graph/?g=qip shows that the Fed was in disciplinary mode, raising interest rates, before both the dot-com and the real-estate crash. Greenspan's "irrational exuberance" attitude was what killed dot-com, because, I think, he's an old fool who didn't understand the potential of technology to make obsolete his feudal economic models.

Regarding velocity of money: http://research.stlouisfed.org/fred2/graph/?g=qiq
If velocity of money leads to inflation, why wasn't there high inflation during the 1960s, 1990s, and 2000s?

Regarding the money supply: http://research.stlouisfed.org/fred2/graph/?g=qir
(Taking M2 because, as investopedia says, "economists like to include the more broadly defined definition for M2 when discussing the money supply, because modern economies often involve transfers between different account types. For example, a business may transfer $10,000 from a money market account to its checking account. This transfer would increase M1, which doesn’t include money market funds, while keeping M2 stable, since M2 contains money market accounts.")

Why does the money supply increase at an almost constant, exponential rate, with no devastating inflation?

Can you say "hyperbolic paranoia", before you start hyperventilating?

The US has never had hyperinflation, despite printing greenbacks and an exponential increase in the money supply.

The inflation rate is psychological, influenced by things such as war or OPEC political decisions rather than the money supply. Why else would the US have experienced its highest rates of inflation when the money supply was increasing at its slowest rate in the past 100 years?

Why haven't we had hyperinflation despite the doubling or tripling of the Fed's balance sheet in the past few years? Why did housing prices increase despite the Fed's raising interest rates in the mid-2000s?

Clearly, your quantity theory of money is more faith than fact.

Although this chart is the one that should really cause you to ask questions, like "so are they planning to default on all US debt?" and/or "So then the banks are being over-capitalized by the Fed because they know they're horribly over-leveraged in light of an asset crash they see coming?": http://research.stlouisfed.org/fred2/series/EXCRESNS

The monetary base is defined as the portion of the commercial banks' reserves that are maintained in accounts with their central bank plus the total currency circulating in the public (which includes the currency, also known as vault cash, that is physically held in the banks' vault).

The money supply generally far exceeds the monetary base and of the total currency circulating in the public plus the non-bank deposits with commercial banks.

The two are disjoint sets. They are related to each other through something known as the money multiplier. The money multiplier crashed during the recent economic crisis.

http://research.stlouisfed.org/fred2/series/MULT

Since at present the value of the money multiplier is low, and excess reserves are high the US Fed has little ability to cause the money supply to increase. All it can do is decrease the money supply.

This is why the current contractionary fiscal policy is so bad. The Fed has shot all it's arrows, and the government is cutting spending.

The Fed isn't "printing money," they are conducting asset swaps in which the private sector exchanges one government debt instrument for another with a lower interest rate.

Are you talking about Operation Twist? That began in September, 2011 and ended in December, 2012, and that was always in addition to QE. QE, or quantitative easing, is when the Fed buys fixed-income securities on the open market. So, you are correct that the Fed is swapping assets, if you mean they are swapping "newly printed money" in exchange for "mortgage-backed securities/U.S. Treasuries".

Anyway, have you seen what has been happening to the monetary base since 2008? If that is not "rapidly printing money", then what is?

Prior to the financial crisis, private credit expansion (facilitated but not initiated by Greenspan) led to inflation.

Greenspan caused interest rates to fall by printing money. Low interest rate, in a system rife with government-created moral hazard (FDIC, Freddie Mac, Fannie Mae, etc.), is a recipe for disaster. The Fed is really less of a firefighter and more of a pyromaniac.

Of course, all of this money printing hasn't led to a big spike in consumer prices, nor has it been able to push the unemployment rate below 7% for almost 5 years now. But, we'll have to see what happens when the Fed starts tapering. My guess is that the economy will start tanking, and then it will be time for QE4. And, much like a drug addict, we'll need a larger dose if we want to stay high. How many doses do we need before stagflation begins? I'm not sure, but I know we'll find out.

It's certainly better than minimum wage

Color me unimpressed. Adjusted for inflation the 1968 minimum wage would be $10.50, and that doesn't even take into account that the US inflation adjusted GDP per capita has doubled since 1968. Doesn't seem to me like that money is trickling down.

or a true "factory" job (in terms of safety)

The 19th century is over. Most factory jobs aren't all that dangerous.

The main reason for HFT is to "front run" the market, to game the traditional customers of the price discovery mechanism, and make a risk-less profit. This dis-incentivises the market for everyone else, who see it as corruption and move their money elsewhere.

The big picture though is one of a big liquidity event, in which the velocity of money is rapidly falling as everyone tries to save up enough cash to ride out the oncoming greater depression. The rapid printing of money is showing up in the 17% growth of the M3 Money Supply, but is getting hoarded up by banks and corporations as rapidly as it's getting created. This is the only thing keeping inflation from at bay, for now.

Once the Tsunami of dollars starts to find its way to main street, and chasing goods and services, an inflationary wave will hit us all, and we'll learn to get used to $10/gallon gasoline, and they start to remember it fondly not much later.

Fatal flaw with your logic: If people anticipated prices going up, then prices would already be that high, minus the price of time. This is a mathematical theorem. Likewise, if people know that Bitcoin will achieve mass adoption in the future, they will buy the currency and hold it, until they believe it reaches its peak, at which point they spend it. This is how new money effectively enters circulation, or to be more accurate, this is how price levels remain stable, regardless of the method of money allocation (the reason that central bank inflation is wrong is, even if predictable, the created money effectively steals from the existing base of savings to be given to creditors, banks, and the politically well-connected -- the so-called inflation tax). If Bitcoin's price is far below this level, this is due to the perceived risk: People holding Bitcoin will be greatly rewarded if it does achieve adoption, at the risk that they lose everything.

Another way to put it is: The total amount of natural resources at our disposal isn't increasing, why should the money supply?

Before a US central bank oversaw the money supply, prices largely remained stable, the price of commodities remained stable or went down (as manufacturing methods improved). Post-gold-standard, though? Prices go through the roof.

Your description of prices suggests that they somehow form a positive feedback loop. They most certainly do not. The only aspect of prices that could be spoken of in this form is speculation, and since there are limited resources to speculate with, bubbles always burst.

It's interesting to hear people talk about "productivity of the economy going up while employees who grow the productivity aren't ripping the reward, instead the owners do".

They are reaping the reward. Check out the graph.

I will agree that the US labor force participation rate maxed out in 1999 at 67%, and is now back to 1980 levels at 63.5%. There are lots of issues going on there (including rising college enrollment rates and baby boomers retiring), but you are correct that recent increases in unemployment did not hold back GDP growth much.

It is possible that the newly unemployed contributed so little to GDP that it did not matter much that they were no longer working.

It could have been that there were "efficiencies left on the table" that companies were forced into adopting, and that as these workers come back into the workforce, they will be able to make use of those efficiencies.

The Civilian Labor Force Participation Rate (CIVPART) which is currently ~63%

They're careers will be systematically destroyed.

This was published in September of 2012 by the St. Louis Fed, when can I expect to see their careers systematically destroyed? Does that take longer than five months to walk someone out of such a highly visible position? Even Richard Stallman cited this when he responded to one of my questions.

Not to mention what they say, even if perfect in its documentation and rationality, will just be ignored.

After reading much of the report, I don't think it is "perfect in its documentation and rationality." While it brings up great examples of serious problems with the US Patent System (like software patents, the poster child for all that is wrong with patents), it does not examine examples where the patent system has worked. It seems to pretend like patents have never done anyone any good ever. Nor does it discuss how we would have to revert to trade secrets and lying awake at night wondering if one of our employees had just brought a bunch of documents over to our competitor for an undisclosed sum -- which employee would you charge with corporate espionage? All that fun stuff is completely ignored so I would consider the report lacking in thoroughness. They also spend a lot of time discrediting studies that claimed patents are beneficial which is all well and good. It doesn't follow that patents are completely bad, however.

Economists that don't toe the corporate line of thinking get booted.

I don't think that's true. I think it's true that economists who attack corporations for the sake of attacking corporations get booted ... but that's just because they let personal biases get in the way of research. It's odd, Blodrin and Levine actually cite a bunch of cases where the big corporations got bit in the ass (like the Motorola, Samsung, Apple, etc cell phone patent fiascos). So, you know, I think that patent reform (and maybe abolition) is actually starting to look beneficial for many corporations that want to expand even further.

Most inflation-adjusted compensation over the last 10-15 years has been in nontaxed benefits, not wages, especially health insurance.

Look at Nonfarm Business Sector: Real Compensation Per Hour (COMPRNFB).

Yeah, there sounds like a lot of bullshit in this...

"“What was once a multi-billion dollar industry in our country, employing almost 5% of our population has now shrunk to virtually nothing,” Antigua’s High Commissioner to London, Carl Roberts, said previously."

So, 5% of their population was in a "multi-billion dollar industry, when they have an estimated labor force of 30,000 and a total GDP of $1.6B. Riiiighht. So, where was that extra few billion in the GDP reports? http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=PPPGDPAGA619NUPN

Antigua's growing financial industry wasn't based on online gaming, it was based on money laundering and lax banking rules (see "Stanford International Bank" to see what that allows). Now they are pissed because their shady banking industry was more or less shut down, and they want to pretend it's all gambling industry losses.

Until you take out the food industry we do not get an accurate picture.

All food production counts for only 8.75% of the industrial production total (source).

You might be happier to look at New Orders for Durable Goods (DGORDER).

Even though American manufacturing is in decline, America is still the world's largest manufacturer

How is American manufacturing "in decline"? We are producing about 7% more than in 2000, and are just 2.8% down from the all-time industrial production high in 2007 (coming up from a 15% drop from 2007 during the recession). (data)

58 percent of the households in the lowest income quintile in 1996 moved to a higher category by 2005.(data here). I don't see the problem.

I make a ton more than my father, and was born around 1970.

I think you missed the importance of the word 'net'. If someone is barely making the mortgage on a million dollar house, they most certainly don't have a net worth of $1 million. If the house is worth $1 million and the mortgage is for $900,000, the net worth is, at best, $100,000.

Except if they've been in the house for 20 years or so, in which case they're still paying the exact same payment, but their net worth is around a million. Why do you seem to think that everyone with high net worth has all kinds of disposable liquid cash? Hell, median net worth of the average 55 year old is 1 million (and I guarantee they're not all swelling with gobs of disposable income): http://research.stlouisfed.org/publications/review/97/07/9707jw.pdf

Interestingly the fight in Wisconsin lead to Wisconsin being distanced by the rest of the USA in what concerns job performance. See this graph which shows the total number of nonfarm employees in Wisconsin (blue) vs. the entire US (red). Note how in early 2011, when Wisconsin's job creation policies were enacted Wisconsin stopped following the upwards trend of the country. (Details: the graph is normalized to the 2009 numbers, any other pre-2011 normalization wouldn't change the picture; nonfarm to not be distorted by seasonal variations; employment numbers instead of unemployment to accoutn for people leaving the state).

I don't know how much of Wisonsin's policies Ryan could claim for himself, but it certainly looks like he shouldn't at all.

"We can't possibly compete with a company in Asia that's willing to forgo environmental rights, worker rights, and human rights"

Then why is US manufacturing output near an all-time high?

It turns out that only low value-added manufacturing can be done by counties with low-skilled workers in bad conditions.

China is working up the scale of value-add, by their workers rising in skills, conditions, and wages, just like South Korea, Japan, and Singapore did.

Sorry, I meant to link to this page where you can actually modify the plot :-)

Here is CPI with and without food and gas included. It's not like the people providing the data didn't think about that. You can also plot the rate of change or whatever, but this plot shows that except for short-term fluctuations the CPI all items and the CPI less food and energy agree, something that is hard to read from a rate of change alone.

Now the gold price is a measure of inflation? A metal with no inherent value whose price can be easily influenced by a few people buying it? Anyway, 1600 from 19 in 100 years that's an inflation of exp(log(1600/19.) / 100) - 100% = 4.5% -- doesn't sound like hyperinflation to me, especially compared to the growth in disposable income per capita http://research.stlouisfed.org/fredgraph.png?g=7Wt which grew from 10000$ to 30000$ over the past 30 years which gives me 3.7% annual growth (which for the record is above CPI growth). People are being robbed sloooooooowly it seems.

So where is this inflation that you are seeing right now? Consumer Price Index certainly doesn't show it. According to the St Louis fed the monetary base nearly tripled in late 2008 while inflation remained unchanged (I plotted change in CPI times 100 in order to fit both plots on the same graph. So where's the 1970ies-like inflation to go along with it?

Maybe your view of the world is a tiny bit too simplistic.

The Fed engaging in "quantitative easing" (printing/creating more money from thin air) has caused the value of the money to drop dramatically, thus requiring more money to purchase the same value in goods and services/labor. This effectively robs everyone holding that currency of the value of the goods or services/labor they exchanged for that money.

It's theft on a really grand scale with everyone holding US dollars as the victims.

Every time the Fed does another "quantitative easing", your salary/pay is effectively cut.

Strat

The argument that the value of money is dropping is just false. I even took the time to make a graph!

A graph illustrating my point.

The graph begins in January of 2000 and runs until the present. All of the measures are indexed to Jan. 2000 as well and graphed as a monthly average. The dark bars indicate recessions. For those of you who are unaware, using an index makes it easier to compare different things over time. So if the index for the exchange rate is 100 in 2000, and 110 in 2001 then the exchange rate has increased by 10 percent compared to the value in 2000. Essentially, just think of the index as a percentage.

So now to let us look at all the shiny lines. The bottom most black line is the exchange rate, which is the value of the US dollar compared to other currencies. If this index is higher then the US dollar has gotten stronger and can buy more stuff abroad. If the index is lower that means the US dollar buys less stuff abroad.

Next is the dashed "Personal Consumption Expenditure" line. This is essentially a measure of inflation. And before anyone complains - yes this version contains food and energy. The differences between the Consumer Price Index (CPI) and the PCE are academic but they're pretty similar.

Next up is the red line M2. M2 is broadly speaking the amount of money in circulation. Savings accounts, Checking accounts, currency and a few other things are lumped in here.

And finally the green line which is the Monetary Base(MB). This line is what people are talking about when they say quantitative easing. The Fed began quantitative easing in November of 2008, right where you see the Monetary Base start to spike. Policy tweaks since then are also reflected.

If in fact the value of money is decreasing due to QE as you suggest then one would expect to see one or more of the following things: A decrease in the value of money might be reflected by a rise in inflation. Instead you see inflation actually falling slightly where the PCE and MB intersect. If the value of money were truly decreasing by some method other than inflation, then one would think that other individuals and countries would notice. Once they do notice the fall in the value of the dollar, you'd expect to see the exchange rate fall, since it has less worth than other currencies. Instead you see a slight increase in the value of the dollar, followed by a move back to an index of around 80 as has been the case since 2007.

In short, if what you say is true we would expect some response in the graph.Given that massive spike in MB I'd expect a large one. But none of those variables even hints at the reaction to QE that you suggest has occurred.

There's a lot of truth in what you say. The bottom 50% of households don't earn much so not a lot of taxes to be collected there. True. The bottom 20% are mostly college students, retirees, disabled people, etc. (though not "children", because households rarely consist of just children). True. If you have a full-time job you are not in the bottom 20%. There is really no good argument that the federal government should be collecting more revenue from households in the bottom two income quinitles.

And yet it's talked about far too much, as if it were meaningful, yet they leave out the details, like the actual income, except when they can spin it to seem bad.

Notice how it's so often not talked about in terms of actual value.

But actually, the numbers do include children, since they're part of the population, and it's rarely just households in the numbers. Or it's those who are barely more than children, but count independently in those household measurements.

Here you're definitely confused. Austerity means reducing their deficits in order to be allowed to keep borrowing at reasonable interest rates. The alternative is effectively bankruptcy ("screw this"). This would require them to balance their budget overnight, because few would be willing to lend to them. That is "screw this" would require much deeper spending cuts than "austerity". That's why Greece has chosen "austerity" over "screw this".

That's because you don't realize that they're going to suffer just as much under this austerity, but the money is going to the people telling them to starve, and it's going to buy them a nice prime cut of meat.

Yeah, it'd be painful, and they probably couldn't survive it without cost, but at least they wouldn't be feeding the dog that bit them.

Maybe you don't realize that, but somebody's going to profit off these measures, and it won't be the Greeks.

It may be tough for the average citizen to get a grasp on what the debt level means. Sure $51,000 per man, woman, and child ($204,000 for a family of four) may sound like a lot, but is it really a problem? Well, the people who have the best grasp on the state of the U.S. economy and the Federal budget almost unanimously agree that it is essential that we bring the debt under control to ensure future economic stability. The CBO and the Fed have both consistently made statements favoring policies that would move deficits to stable and low levels (say 2% of GDP).

And the economists didn't mess up already when it came to the whole Housing crisis. Why are we listening to them anymore? Besides, the biggest point is they don't rely on the numbers people who want you to believe there is an imminent debt crisis throw out, as if that kind of hysterical ranting was anything but hyperbole, and I'm pretty sure the "experts" recommend the changes that the same people braying about those large numbers want either.

I can understand prudence. But more people would have radical wholesale changes overnight, as if the proper response to a disaster in the making is acting precipitously.

There's a reason firemen don't run into a building.

In 2011 about two-thirds of the Federal budget (excluding interest on the debt) went to transfer programs: Social Security(726bn), Medicare(574bn), Medicaid(268bn), Other Income Security Programs(352bn), Other Discretionary Outlays for Health, Income Security, and Education(~200bn). You could argue that a lot of that money doesn't go to the poor per se.

Or you could admit that it does. OR that Social Security and Medicare are not funded from general tax revenues. Or that outlays for education include funding to companies for services, not payouts to the poor? Or that Medicaid doesn't go to the person, but

There's a lot of truth in what you say. The bottom 50% of households don't earn much so not a lot of taxes to be collected there. True. The bottom 20% are mostly college students, retirees, disabled people, etc. (though not "children", because households rarely consist of just children). True. If you have a full-time job you are not in the bottom 20%. There is really no good argument that the federal government should be collecting more revenue from households in the bottom two income quinitles.

"Yeah, ask Greece how they feel about the international bankers dictating their national policy. If they were really smart, they'd say "Screw this" and cut themselves off from the foreign system."

Here you're definitely confused. Austerity means reducing their deficits in order to be allowed to keep borrowing at reasonable interest rates. The alternative is effectively bankruptcy ("screw this"). This would require them to balance their budget overnight, because few would be willing to lend to them. That is "screw this" would require much deeper spending cuts than "austerity". That's why Greece has chosen "austerity" over "screw this".

"Stop buying into the fallacy of large numbers, it looks scary to you the individual"

It may be tough for the average citizen to get a grasp on what the debt level means. Sure $51,000 per man, woman, and child ($204,000 for a family of four) may sound like a lot, but is it really a problem? Well, the people who have the best grasp on the state of the U.S. economy and the Federal budget almost unanimously agree that it is essential that we bring the debt under control to ensure future economic stability. The CBO and the Fed have both consistently made statements favoring policies that would move deficits to stable and low levels (say 2% of GDP).

"Too bad you don't realize where the real money is going. The sums that go to the poor are not the majority share of government spending on special interests, they aren't even a plurality. They're a drop in the bucket."

In 2011 about two-thirds of the Federal budget (excluding interest on the debt) went to transfer programs: Social Security(726bn), Medicare(574bn), Medicaid(268bn), Other Income Security Programs(352bn), Other Discretionary Outlays for Health, Income Security, and Education(~200bn). You could argue that a lot of that money doesn't go to the poor per se. But the intent of all of those programs is to transfer money from people with higher incomes to those with lower. I know a dollar isn't what it used to be, but two trillion of them seem to be more than a drop in the bucket.

Discussions of fiscal sustainability should not be polarized polemical disputes that end with references to killing people. Bringing the budget under control is not a liberal or conservative thing. It's in all of our best interests. If you want to have transfer programs, fine. Then fund transfer programs. Figure out how to sustainably finance your programs for the poor. Because if you just run up debts until interest payments on the federal debt are squeezing the growth out of the economy, those programs will be substantially reduced (out of necessity). Greece is showing us that no amount of protest can make new goods and services appear out of thin air. We can only solve this problem with serious discussion and a willingness to make tough decisions. We need to sort out our priorities and then make plan to pay for them. But anyone who says "screw fiscal responsibility" is charting a road to disaster.

You know, if I had a dollar for every time people asked me to read up on a fringe theory, I would be a rich man now. You seem reasonable enough that I read the criticism section, which convinced the theory was not solid.

I know. Who knows, two years ago I might have reacted in the same way that you do. Telling apart the fringe theories that have merit from those that don't is a difficult problem. I appreciate you checking out the Wikipedia Criticism section. You'll note that the points mentioned there have been addressed by MMT academics. I'm really not trying to sound paternalistic or something, but try putting yourself in my shoes. What if MMT really had some merits? What could possibly convince you?

If the government covers a deficit by printing money, it will increase inflation, because greater supply leads to lower prices. This also applies to money.

No, it doesn't, at least not in the way that you think. Here's why: in regular goods markets, both demand and supply are essentially flows. Producers produce a certain amount of goods per time unit, whence the supply. Consumers demand a certain amount of good per time unit, whence the demand - both can be functions of price or whatever, but the point about flows is important. Prices change on the margin.

The "money supply" is a stock. It is something like the sum of all deposits, depending on the definition. How could that possibly affect inflation directly? Inflation is a measure of average price increases, so e.g. increase of prices set by supermarket bureaucrats. But the people who make decisions about how to set prices in supermarkets only see the flow of customer demand. They do not see the size of the stock of money. So how can their decision possibly depend on the latter?

You could argue that there is some relationship between the stock of money and the flows of money, i.e. that increasing the stock of money will also increase the flow of money. In terms of Quantity Theory of Money, this is the claim that V (the "velocity" of money) is constant. Empirically, this claim is false, and V varies all over the place. So now you have two choices: one is to insist on using the stock of money to explain inflation, in which case you have to complicate your models to account for changes of the velocity of money. Or you cut through the bullshit, forget about the stocks, and just concentrate on the flow of money. The latter is why I put an emphasis on aggregate demand, because that's one way to look at such flows.

Conversely, when the government issues more bonds than it deficit spends, the interest rate goes up.

Which interest rate, exactly? And once you tell me this, could you outline why the (market) interest rate would increase?

The interbank interest rate is most directly affected. When the government issues more bonds than it deficit spends, this means that the total amount of reserves held by banks shrinks. This increases the demand for reserves for refinancing purposes, which means that those banks who hold excess reserves can lend them out at higher interest rates. Of course, the lending rate (or discount rate in the US) of the central bank is an upper bound to how high this interest rate can rise.

This is why the central bank, as an arm of government, acts to sell and buy bonds on the open market to control the interest rate. Note how the interest rate is a policy target of the central bank, whereas the total amount of reserves is a policy tool: by buying and selling bonds (or doing repo agreements or whatever), the central bank holds the level of reserves at a level that is compatible with its interest rate target. In particular, the central bank cannot target both interest rate and level of reserves.

Tell the Greeks that

Sorry for the delay - getting my car ready for sale...

I haven't had time to dig up the direct stats, but will later today - but it isn't speculation on my part. Here's at least some data: between 2001 and Sept 2007, over $350 billion worth of credit card debt was transferred to home equity loans (which, interestingly, gets the borrower a tax break, because mortgage interest in the US is deductible). That's according to the Rochester Institute of Technology, altho I could only find it quoted, not the direct data yet. Home equity loans rose from $153 billion in 1990 to $317 billion in 1998 http://www.allcountries.org/uscensus/812_estimated_home_equity_debt_outstanding_by.html - I'll find data that takes us up to 2011. See too this link: http://research.stlouisfed.org/fred2/series/ALSREACB?cid=100 courtesy the St. Louis Fed, for loans secured by real estate - obviously this doesn't distinguish between mortgages and home equity loans, but it serves to give you a sense of the trending leading up to the economic downturn.

Sorry for not being more thorough - lots on the go at the moment!

Um... so obviously you haven't seen the graph of gold prices. From 2007 to present gold has gone from $640 an ounce to the present $1600+ an ounce (though the real price of physical gold is /much/ higher, it is only paper gold being sold, don't believe me? try buying physical bullion, you will find that the premiums are much higher now than it was back when silver was $40 and gold was $1850). At the same time, the US dollar is being debased at an alarming rate (see http://research.stlouisfed.org/fred2/data/BASE_Max_630_378.png ) the only reason it is becoming "stronger" is because China keeps its currency devalued and the Euro is on brink of collapsing. If there was "way too much gold supply" on the market surely someone would be selling massive amounts of it to take advantage of it being overpriced. But instead, no one is doing it. Why? Because gold is still undervalued (and the dollar is overvalued). Silver is even more convincing of a case.

Physical commodities are the only thing that won't be fully affected by the impending collapse of fiat currency. Historically every single fiat currency has failed. Historically, people owning precious metals or non-debased coins have been much better off than those storing their wealth in fiat currency or debased coins. I tend to side with history.

When dollars are created at the rate of a few billion per day, why anyone is surprised that they get diluted?

Yes, that would explain the record high inflation we've had since the start of the recession:

https://research.stlouisfed.org/fred2/graph/?graph_id=50467&category_id=0

Err, wait. OK, but surely exchange rates went off a cliff? Um, OK, I'm not turning up much there either....

Can you open a small business and sell goods to China?

Googling.... From http://www.cato.org/testimony/ct-dg06132007.html, "In 2003, the most recent year for figures, a total 16,874 U.S. SMEs exported to China." Too lazy to find something more up-to-date.

And if you want to help exports, you could worrying about the dollar being to *low* against foreign currencies....

taxes are high

Compared to other countries: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

Historical revenues for US: http://en.wikipedia.org/wiki/File:Revenue_and_Expense_to_GDP_Chart_1993_-_2008.png

Even better, look at at the trade weighted exchange index maintained by the Federal Reserve. Or the ICE dollar index.

The Federal Reserve branches disagree: http://research.stlouisfed.org/fred2/series/BASE

Stable: I live in the US, so this doesn't do much for me. The dollar has had a relatively low inflation rate for decades now

You've been living in a dream world. Here's your wake up call.

Unions are not in the business of employing as many people as possible, since having lots of people competing for the same job depresses wages. If you can limit the number of people allowed to apply, you can force wages up. This is called a "closed shop", and it sucks for anyone not on the union roll.

Although wages have been falling, total compensation is up. This is entirely due to our tax structure - it's cheaper to give an employee an extra $1 of health insurance than it is to put that same $1 in their pocket. So, employers have been increasing benefits faster than they've been increasing wages, which are both facing inflation.

You also won't cure unemployment by slashing everyone's hours, especially if it's difficult to fire people. France has been experimenting with this since at least 1981, and it hasn't magically eliminated unemployment. If you're more worried about your hours than unemployment, quit the video game industry.

This.

You annihilated all the gold-bug arguments in one simple paragraph.

Fact is that the average citizen can buy ten times more loaves of bread than 200 years ago, financed by one year's honest work. They can also buy infinitely more cars, computers - and get guaranteed health care as a citizen's right in most modern countries.

That the absolute numbers printed on the price sticker are increasing slightly every year does not matter much as long as the numbers coming in from your weekly pay-check have numbers increasing by at least as much .

If you check those two numbers over time, then you'll see that indeed the purchasing power of the average US citizen is increasing. (+9% over the last 8 years depicted by that graph - but the trend is very similar 50, 100 or 200 years back as well.)

proved that inflation was 76% since 2003 counted in US dollars.

In that thread you've told yet another lie: that inflation is somehow coupled to the current gold price bubble. That is not how inflation is defined, but nice try :-)

In reality, despite two commodities bubbles food prices increased by only 20-25% since 2003 (not 76%) - and the second bubble is at its peak right now.

Note that from the graph you can see that since early 2009 (since post-financial-crisis 'money printing' began) up to late 2010 food prices have changed very little: the effects of deflationary forces. Even the commodities bubble of late 2010 and early 2011 has increased prices only by 5%.

That puts another nail into the coffin of your "an increasing monetary base means hyperinflation" hard-money economic theory.

You need to start proving your points with real data and real arguments and you need to stop coming up with new lies if you do not like being called a liar.

I hope you liked the recent 2% drop in the price of gold and the resulting 2% reduction in your purchasing power

- I hope you don't find your 76% reduction of purchasing power since 2003 too destructive for your life's decisions.

Liar.

Here's the purchasing power of the dollar, versus per capita real disposable income.

Purchasing power of one USD went down by 19.5%, but personal income (measured in dollars) went up by 28.5% - so the per capita purchasing power of the average US citizen went up by about 9% in the time-frame you stated.

Herman Cain (GOP presidential candidate): Master of Arts degree in computer science from Purdue University in 1971.

The trouble with engineers who don't get Liberty is that they come up with very clever solutions. I used to be one of them. I loved the FairTax, for instance. What an excellent engineering solution to an economic problem - if you don't mind putting the entire country on welfare and Constitutionally getting the Feds involved in intrastate commerce.

Herman Cain is an example of this - he's a former head of a Federal Reserve Bank, the system which has caused so much of America's current problems, and he advocates for the system despite its obvious problems.

That said, many of my very best liberty friends here in New Hampshire are engineers. The Free State Project is teeming with them, and several of the most brilliant minds I work with in the New Hampshire Liberty Alliance are engineers. We're lucky to have several pro-Liberty engineers currently serving in our House of Representatives. They know how to attack problems, work a process, and create solutions.

Interested engineers might want to start here.