Best Thread Keynes Vs. Hayek

Increase in demand and reduced supply.

Popullation increases and dwindling energy supplies.


Why do you think energy and commodity prices are rising if not for the reasons above?

Priced in Gold:

Food

The UN Food and Agriculture Office tracks prices of food around the world, converts local prices to US Dollars, and calculates an index with 100 being the average for 2002-2004. Prices for meats, cereals, oils/fats, dairy and sugar make up the components of the index, which is updated monthly.

Of course all the currencies used to quote these prices are being depreciated by their governments, just as the US dollar is. And as this depreciation accelerates, so do the apparent "rises" in the cost of food. But is food really getting more expensive? Of course not!

Technology and capital are being applied to reduce the cost of growing and shipping food everywhere in the world, every day. As pests are controlled, machinery makes agriculture more efficient, and world markets make more bounty available to everyone, prices fall naturally. Of course bad weather, bad government policy and other problems can create short term shortages, but over all, prices have been falling for a long time, and show no signs of reversing. As you can see on the chart below, they have just bounced off their record lows!

What is happening though, is that governments are destroying the purchasing power of money, making prices appear to rise, and making it hard for families to gather enough of the rapidly depreciating stuff to buy the food they need. Expect this trend to continue for years to come.


Crude Oil

Oil is a volatile commodity, with it's price swinging wildly in a range from less than 1 gram per barrel to almost 5 grams per barrel. But this chart also shows that these oscillations are part of a sideways price movement centered around 2.5 grams per barrel. Crude's current price around 2 grams is a bit below it's long term average.

Of course, the fluctuating value of the dollar makes it very hard to gauge whether oil prices themselves are rising or falling… Oil today at 2 grams, is about the same as it was in the early 1950s; but if you measure the price in US dollars, you would get the impression that it is about 30 times more expensive today!

Natural Gas

From 1998 through 2008, natural gas prices were very volatile, but they rarely dipped below 200 mg per million BTU. In mid-January 2009, however, support at 200 was broken, and no rally since has managed to get above the 170 mg level. A record low of 77.2 mg was set on October 25, 2010. At the end of May, the price was about 95 mg, 22% above the all time low.


US Home Prices

The Case Shiller home price index in US Dollars and in grams of gold. Both indices use the price of a home in January, 2000 as 100. Prices in gold and dollars tracked pretty well until 2001, when the dollar began to collapse, taking the true value of homes down with it.

At first, the drop in the dollar simply offset the apparent rise in home prices, and prices in gold worked sideways until 2006. But when home prices began to fall in dollar terms, and dollars were themselves falling in value, the double-whammy pushed true home prices down to levels not seen since the late 1980s. In fact, they set a new record, the lowest level since the index was first published. This means that most homes purchased in the last 20 years are now worth less than the original purchase price, even if they show gains of 100%, 200%, or more, in dollar terms.

You should also notice that the most recent uptick in dollar prices is more than offset by the decline in the value of the dollar, the unavoidable side-effect of government bailouts and interest rate price fixing by the Fed.

The last chart shows a synthetic index built from several different sets of home price data complied by Shiller for his book Irrational Exuberance. Looking back to 1890, we can see that home prices today are lower than they were during the Great Depression, and are approachng their all-time lows.

US Wages

Although production worker's wages are at the highest levels ever, as quoted in US Dollars, they have fallen in gold terms to the levels of the early 1980s. The same is true for Federal Minimum Wages. It's no wonder that households need multiple earners, and are still struggling to make their mortgage payments and keep food on the table!




But of course Atilla, as usual, you will try to explain it away with some other esoteric phenomena, understood only by you.
 
Priced in Gold:

Food

The UN Food and Agriculture Office tracks prices of food around the world, converts local prices to US Dollars, and calculates an index with 100 being the average for 2002-2004. Prices for meats, cereals, oils/fats, dairy and sugar make up the components of the index, which is updated monthly.

Of course all the currencies used to quote these prices are being depreciated by their governments, just as the US dollar is. And as this depreciation accelerates, so do the apparent "rises" in the cost of food. But is food really getting more expensive? Of course not!

Technology and capital are being applied to reduce the cost of growing and shipping food everywhere in the world, every day. As pests are controlled, machinery makes agriculture more efficient, and world markets make more bounty available to everyone, prices fall naturally. Of course bad weather, bad government policy and other problems can create short term shortages, but over all, prices have been falling for a long time, and show no signs of reversing. As you can see on the chart below, they have just bounced off their record lows!

What is happening though, is that governments are destroying the purchasing power of money, making prices appear to rise, and making it hard for families to gather enough of the rapidly depreciating stuff to buy the food they need. Expect this trend to continue for years to come.


Crude Oil

Oil is a volatile commodity, with it's price swinging wildly in a range from less than 1 gram per barrel to almost 5 grams per barrel. But this chart also shows that these oscillations are part of a sideways price movement centered around 2.5 grams per barrel. Crude's current price around 2 grams is a bit below it's long term average.

Of course, the fluctuating value of the dollar makes it very hard to gauge whether oil prices themselves are rising or falling… Oil today at 2 grams, is about the same as it was in the early 1950s; but if you measure the price in US dollars, you would get the impression that it is about 30 times more expensive today!

Natural Gas

From 1998 through 2008, natural gas prices were very volatile, but they rarely dipped below 200 mg per million BTU. In mid-January 2009, however, support at 200 was broken, and no rally since has managed to get above the 170 mg level. A record low of 77.2 mg was set on October 25, 2010. At the end of May, the price was about 95 mg, 22% above the all time low.


US Home Prices

The Case Shiller home price index in US Dollars and in grams of gold. Both indices use the price of a home in January, 2000 as 100. Prices in gold and dollars tracked pretty well until 2001, when the dollar began to collapse, taking the true value of homes down with it.

At first, the drop in the dollar simply offset the apparent rise in home prices, and prices in gold worked sideways until 2006. But when home prices began to fall in dollar terms, and dollars were themselves falling in value, the double-whammy pushed true home prices down to levels not seen since the late 1980s. In fact, they set a new record, the lowest level since the index was first published. This means that most homes purchased in the last 20 years are now worth less than the original purchase price, even if they show gains of 100%, 200%, or more, in dollar terms.

You should also notice that the most recent uptick in dollar prices is more than offset by the decline in the value of the dollar, the unavoidable side-effect of government bailouts and interest rate price fixing by the Fed.

The last chart shows a synthetic index built from several different sets of home price data complied by Shiller for his book Irrational Exuberance. Looking back to 1890, we can see that home prices today are lower than they were during the Great Depression, and are approachng their all-time lows.

US Wages

Although production worker's wages are at the highest levels ever, as quoted in US Dollars, they have fallen in gold terms to the levels of the early 1980s. The same is true for Federal Minimum Wages. It's no wonder that households need multiple earners, and are still struggling to make their mortgage payments and keep food on the table!




But of course Atilla, as usual, you will try to explain it away with some other esoteric phenomena, understood only by you.


On paper this is all theory...

We may have sufficient food but production is not where the hungry mouths are.

To get S of food to where the people D is one requires transportation which requires energy.

Fuel is more expensive as there are now many more cars than 20 years ago. Also higher demand for gas and electricity than ever before so theory doesn't match practice what is happening on the ground.

Moreover, we have higher levels of production - greater demand for plastic, copper, paper & packaging etc.

R&D component has fallen in price due to economies of scale and more widely available technology but that's only part of the picture.



Can you explain in lay mans terms please. :eek:
 
their are so may problems where do we start.
the problem we have when we make all decisions in life is that we can only take one path and we never know for sure if the other paths were the correct one's either.
the problems we have today is too much debt and too many bad loans.
their are so many holes in the tax system which will no get closed because governments and the rich benefit most from them.
the top 10% are 50% overpaid for what they do.
we buy to much and don't make enough. 33.3bn imports 25.5 bn exports 7.8bn trade deficit.
to many people not working, 2.6m incapacity benefit 2.5m unemployment benefit.
a very weak currency which is lower than all but 4 world currencies since 2007, which has caused inflation to be to high.
sky high property prices and rents which are taking up too high a percentage of everyone take home pay.

i believe all our problems originate from overpriced housing and oversized debt from mortgages. a house is the biggest purchase we will make in our lives. at this moment in time too many people are having to spend to much of their pay on mortgages and rent. most if not all off bank losses are from mortgages or mortgage related bets. going forward we need to right off debt everyone needs to pay their fair share via the tax system close all loop holes, stop house prices rising for the next 10 to 20 years. so the next gereration never has to face what we are going to have to go through in the next 5 to 10 years.
ways we could this are 10% down payment minimum on all mortgages this should have always been the case.
scrap interest only mortgages after 25 years everyone should own their house 100% payed for. 25 years is the max time for a mortgage to be payed, no 30,40,50 year mortgages like Japan.
buy to let 30% down payment minimum maybe higher
2nd buy to let 50% down payment minimum
3rd buy to let 70% down payment minimum
no subsidy for house builders
no more of this part buy part rent crap
stamp duty on all house purchases and higher stamp duty if you do not live in the country.
if these mimimum down payments had been in place we would never have to go through a debt crises ever.
 
i believe all our problems originate from overpriced housing and oversized debt from mortgages.

This, omg this.

Unfortunately arguable the biggest problem with our financial system is rather unsolvable as it stems from the psychology of the agents in the economy believing a house is an asset not a consumption good. now how the hell do you change beliefs in economic agents? and before some smart ass comments, i said BELIEFS not EXPECTATIONS, expectations can be managed and are managed quite effectively by policy makers
 
This, omg this.

Unfortunately arguable the biggest problem with our financial system is rather unsolvable as it stems from the psychology of the agents in the economy believing a house is an asset not a consumption good. now how the hell do you change beliefs in economic agents? and before some smart ass comments, i said BELIEFS not EXPECTATIONS, expectations can be managed and are managed quite effectively by policy makers


What rubbish.

A house is an asset and a liability.

It can generate income and capital gains.

Yes one can live in it too. If that is what you mean by consumption.
 
BBC News - UK CPI inflation rate rises to 5.2% in September

Business rates to rocket as RPI inflation hits 5.6pc - Telegraph


Ron Paul, the GOLD STANDARD in Politics and economics has been dead right on everything.

He has the brains not to subscribe to the inflationist BULL5HIT peddled by morons who have been dead wrong on everything.




Ron Paul Message to Occupy Wall Street- LETS END THE FED! - YouTube



Write a letter to the UN and get the security council to vote on implementing your view of the world... :LOL:
 
Ron Paul and Peter Schiff have been spot on the reasons why we`re in this mess. The problem is that what libertarians require of what can be called a financial purgatory, where only the trully righteous would survive, may seem a bit too extreme for the time being.
 
I have respect for you so please don't take this as an affront to your intelligence.

Comparitive statics is just the usual way of analyzing economic phenomena. you look at each effect in isolation as you move through the policy mix/shock assuming there's some infinitismal period between each one so that you can look at the net effect rather than end up getting lost in the mumbo jumbo of dynamics etc because seriously looking at every single movement in the variables is just ridiculous.

Real Interest rate cuts will raise inflation yes. If done through expansionary monetary policy (be that open market transactions or quantitative easing) the effect is more obvious, in the medium run monetary policy is neutral and only causes inflation (because output returns to it's natural rate) - assuming the real interest rate cuts don't result in firms investing more in infrastructure which would lift the natural rate of output.

Of course interest rate cuts induce firms to increase investment (though for simplicity's sake not in infrastructure) and consumers to spend and exporters face increased demand for their products. So that pushes up short run income which then leads to inflationary pressure on prices through a decrease in unemployment (increasing workers ability to demand higher wages pushing costs and thus prices up).

VAT actually won't stay in inflation for very long, NZ increased GST (basically VAT) and it's estimated that the effects of the increase will only show up in inflation for a few quarters. I'd focus more on the effects of a VAT increase as an increase in taxes rather than inflation. Of course it does affect purchasing power for a short time can't deny that.

More directed towards NT: i'm not sure why you're so against policy makers intervening with real interest rate cuts, in the face of what is the worst financial crisis since the depression (and more widespread) I think a bit of (medium run) inflation is a small sacrifice to ensure that in the short run income is kept at a level such that unemployment doesn't skyrocket.

Imagine the extent of social unrest if policymakers didn't cut real interest rates, unemployment sitting at (for argument's sake) 30% and 80% among youth/unskilled workers.

And e'rryone should just stop with the capitalism bashing, the fact that we're not all forced to work on massive farms and eating the exact same portion of rations each day is testament to the fact that we've finally got it right.

Don't like banks getting bailed out and don't like "golden handshakes"? to thee is say in the words of Barack Obama "eat yo' peas..."
I take nothing as an affront to my intelligence, but I appreciate it nonetheless.

And yeah, I am aware of the methodology that you describe. It's partial derivatives we're talking about.

As to the effect of cuts, I do agree with you that, all else being equal, cuts are, in theory, supposed to increase inflation. However, my point is precisely that we can't be operating under an assumption of "all else being equal". The specific circumstances we're in matter very much. And yes, VAT is likely to show up in inflation for a short time, but that could be exactly what we're seeing right now.

Finally, I, for one, am not bashing capitalism. As I keep saying, it's important to realize two fundamental points:
a) capitalism is currently the best, most sustainable arrangement we have for organizing economic activity;
b) In spite of the above, capitalism has important flaws that need to be dealt with.
 
I take nothing as an affront to my intelligence, but I appreciate it nonetheless.

And yeah, I am aware of the methodology that you describe. It's partial derivatives we're talking about.

As to the effect of cuts, I do agree with you that, all else being equal, cuts are, in theory, supposed to increase inflation. However, my point is precisely that we can't be operating under an assumption of "all else being equal". The specific circumstances we're in matter very much. And yes, VAT is likely to show up in inflation for a short time, but that could be exactly what we're seeing right now.

Finally, I, for one, am not bashing capitalism. As I keep saying, it's important to realize two fundamental points:
a) capitalism is currently the best, most sustainable arrangement we have for organizing economic activity;
b) In spite of the above, capitalism has important flaws that need to be dealt with.

Strongly agree.

Didn't know where to put this but I thought this thread seems appropriate enough.

I hope to have my lunch tomorrow at Finsbury Sq to lend my support to this organisation.


Also listening to LBC radio this evening, support from all sections of people seem to be really growing for this movement. I would not under estimate it. Support is from all classes and in particular the well educated and spoken people.

+1 yours trully ofcourse...



Occupy the London Stock Exchange
 
Strongly agree.

Didn't know where to put this but I thought this thread seems appropriate enough.

I hope to have my lunch tomorrow at Finsbury Sq to lend my support to this organisation.


Also listening to LBC radio this evening, support from all sections of people seem to be really growing for this movement. I would not under estimate it. Support is from all classes and in particular the well educated and spoken people.

+1 yours trully ofcourse...



Occupy the London Stock Exchange

The retardation has spread to London... rofl, they even started doing that crap in Aotea square (Auckland NZ). Blind hypocrisy because guess what little hippies... the rugby world cup was run by an "evil corporation".

According to the "Occupy ... Street" movement wealth distribution should not depend on economic fundamentals such as incentives, productivity, risk, education, intelligence, well thought out plans ETC. But rather on arbitrary beliefs that equality is equitable.

I'm busy preparing for exams in 3 days so I won't research the true figures, but, the "evil CEOs" earn a salary proportional to their productivity (and other factors mentioned above) in the workplace, as do the "downtrodden hippies". Also without the factors possessed by the "evil CEOs" (risk, intelligence etc mentioned above) there'd be very little wealth to share anyway (be that equally or equitably) and the hippies wouldn't have doctors to help them fight the cancer their precious weed smoking has given them.

As a proud member of the middle class who's working my ass off so I can bring up my children in the upper class I say the "Occupy ... Street" movement should be deported to North Korea, there they can have their perfectly equal wealth distribution.

What they don't grasp is that no one becomes rich by policy makers legislating to ensure wealth distribution is equitable because that's impossible, legislation can only make it more equal. I'm using 'legislation' in its widest possible meaning, be that Bills Acts, or merely the whims of a monarch.

No, instead countries and their populations grow rich through productivity gains which for humans usually come as a result of technological growth, for example the industrial revolution (also the multiple green revolutions - more productive crops).

Keynes would be rolling in his grave...

I think i'll regret posting this here *shudders in wait for the great flame of 2011*

rant

And BTW thanks Britainland (Britishland, United states of Britash, Land'o'Brit) for making your borders harder for the citizens of your colonies to get through based on xenophobia and retarded beliefs that immigrants "steal" jobs.

/rant
 
The retardation has spread to London... rofl, they even started doing that crap in Aotea square (Auckland NZ). Blind hypocrisy because guess what little hippies... the rugby world cup was run by an "evil corporation".

According to the "Occupy ... Street" movement wealth distribution should not depend on economic fundamentals such as incentives, productivity, risk, education, intelligence, well thought out plans ETC. But rather on arbitrary beliefs that equality is equitable.

I'm busy preparing for exams in 3 days so I won't research the true figures, but, the "evil CEOs" earn a salary proportional to their productivity (and other factors mentioned above) in the workplace, as do the "downtrodden hippies". Also without the factors possessed by the "evil CEOs" (risk, intelligence etc mentioned above) there'd be very little wealth to share anyway (be that equally or equitably) and the hippies wouldn't have doctors to help them fight the cancer their precious weed smoking has given them.

As a proud member of the middle class who's working my ass off so I can bring up my children in the upper class I say the "Occupy ... Street" movement should be deported to North Korea, there they can have their perfectly equal wealth distribution.

What they don't grasp is that no one becomes rich by policy makers legislating to ensure wealth distribution is equitable because that's impossible, legislation can only make it more equal. I'm using 'legislation' in its widest possible meaning, be that Bills Acts, or merely the whims of a monarch.

No, instead countries and their populations grow rich through productivity gains which for humans usually come as a result of technological growth, for example the industrial revolution (also the multiple green revolutions - more productive crops).

Keynes would be rolling in his grave...

I think i'll regret posting this here *shudders in wait for the great flame of 2011*

rant

And BTW thanks Britainland (Britishland, United states of Britash, Land'o'Brit) for making your borders harder for the citizens of your colonies to get through based on xenophobia and retarded beliefs that immigrants "steal" jobs.

/rant

Unfortunately, like some people here, the majority of the "occupy X" movement don't know the difference between fascism and capitalism. They probably organise their campaigns using devices that wouldn't exist if it wasn't for the efforts of a hard working entrepreneurs and capitalists...and what do they do in return...paint some pretty little signs that say "We deserve your money"...idiots.
 
The retardation has spread to London... rofl, they even started doing that crap in Aotea square (Auckland NZ). Blind hypocrisy because guess what little hippies... the rugby world cup was run by an "evil corporation".

According to the "Occupy ... Street" movement wealth distribution should not depend on economic fundamentals such as incentives, productivity, risk, education, intelligence, well thought out plans ETC. But rather on arbitrary beliefs that equality is equitable.
This is rubbish. You obviously do not understand the message. No body is talking about equality. It is about a fair level playing system. The arguement is no longer about equality but equity. Move on dude.

I'm busy preparing for exams in 3 days so I won't research the true figures, but, the "evil CEOs" earn a salary proportional to their productivity What utter crap! If Bob Diamond left Barclays there are 100s of equally suitable bodies to take his place at half his salary. (and other factors mentioned above like what?) in the workplace, as do the "downtrodden hippies". Also without the factors possessed by the "evil CEOs" (risk, intelligence etc mentioned above Stupidity just doesn't say it. Risk and Intelligence playing with whose money? ) there'd be very little wealth to share anyway There is no wealth being shared. What sharing you talking about you daft mad cow? (be that equally or equitably) and the hippies wouldn't have doctors to help them fight the cancer their precious weed smoking has given them. Here we go it's us v them hippies. You ignorant dork. Outside of your level of comprehension. They are far more eloquent than you in expressing them selves.

As a proud member of the middle class who's working my ass off so I can bring up my children in the upper classMate once you've designated your own class you are a pleb. Height of a chav is to think he has class. You are soooo funny I say the "Occupy ... Street" movement should be deported to North Korea, there they can have their perfectly equal wealth distribution. Once again nobody is talking about equality. We are talking about a level playing field. Hellooooooooooooo anybody in there?

What they don't grasp is that no one becomes rich by policy makers legislating to ensure wealth distribution is equitable because that's impossible, legislation can only make it more equal. Hellooooooooooooo anybody in there? Nobody is talking about equality you plonker. I'm using 'legislation' in its widest possible meaning, be that Bills Acts, or merely the whims of a monarch.

No, instead countries and their populations grow rich through productivity gains which for humans usually come as a result of technological growth, for example the industrial revolution (also the multiple green revolutions - more productive crops).

Keynes would be rolling in his grave...

I think i'll regret posting this here *shudders in wait for the great flame of 2011*

rant

And BTW thanks Britainland (Britishland, United states of Britash, Land'o'Brit) for making your borders harder for the citizens of your colonies to get through based on xenophobia and retarded beliefs that immigrants "steal" jobs.

/rant




#OccupyLSX – Initial statement
Posted on October 16, 2011 by occupylsx
274

At today’s assembly of over 500 people on the steps of St Paul’s, #occupylsx collectively agreed the initial statement below. Please note, like all forms of direct democracy, the statement will always be a work in progress.

1 The current system is unsustainable. It is undemocratic and unjust. We need alternatives; this is where we work towards them.

2 We are of all ethnicities, backgrounds, genders, generations, sexualities dis/abilities and faiths. We stand together with occupations all over the world.

3 We refuse to pay for the banks’ crisis.

4 We do not accept the cuts as either necessary or inevitable. We demand an end to global tax injustice and our democracy representing corporations instead of the people.

5 We want regulators to be genuinely independent of the industries they regulate.

6 We support the strike on the 30th November and the student action on the 9th November, and actions to defend our health services, welfare, education and employment, and to stop wars and arms dealing.

7 We want structural change towards authentic global equality. The world’s resources must go towards caring for people and the planet, not the military, corporate profits or the rich. I take it from your rant on equality this is what you disagree with. The thinking intellectual you and NT clearly are! NOT :)

8 We stand in solidarity with the global oppressed and we call for an end to the actions of our government and others in causing this oppression. Admirable quality if you ask me.

9 This is what democracy looks like. Come and join us!



I did - I went their and checked them out. Very well organised. I suggested to them that they need to have a figure head and key well thought points that can be debated and be understood and embraced by the people.

They'll soon have a representitive for the next elections. Watch this space... :)
 
Atilla, grow a brain will you! It's clear from your replies that you haven't understood a thing I've written from the start, and it seems that anything I say will never penetrate your thick uncomprehending skull. So I would appreciate if you stop mentioning me in your idiotic posts. I don't want to engage in any debate with you anymore. You are too erratic, inconsistent and illogical.
 
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