In response to economic illiteracy

Before 1974 and after. Inflation is always a monetary phenomenon.

Inflation is the decrease in the price of money, which manifests as an increase in the price of all other goods and services (often referred to as "the price level" or "general prices"). Inflation can only occur in a monetary (non-barter) economy. Thus it must be an exclusively monetary phenomenon.

 

That's like saying that all car crashes are caused because people are driving too fast since, in order for there to be a crash, by definition, you have to be moving thus any speed at which a crash occurs must, therefore, be too fast.

Not a very useful statement even if technically it's true.

What we're really interested in is the cause of inflation. It is completely useless to point out that inflation results because there is money. It's like saying drowning happens because there is water implying that the solution to drowning is eliminating water.

 

He didn't say there is inflation because there is money he said there is inflation because the supply of money goes up relative to the supply of goods and services.

 

The cause is easy to explain. Supply and demand. As the supply of money goes up, its price goes down. Just as with every good.

 

And yet it's possible to have price inflation without "monetary inflation", ruling out monetary inflation as the cause of price inflation.

 

Let me guess, you are a Trump fan.

 

why don't you you tell us if you agree with his excellent summary of capitalism or not rather than waste your time guessing if he's a Trump fan???

 

No. It's not.

Unless you'd like to explain how inflation can occur in a non-monetary (i.e. barter) economy.

 

how is that possible?

 

It's not.

 

Okay I read and typed a reply to everything you said, and when I was finishing I saw the red fallacious line through all of it so I'm just going to start my response from scratch to be more coherent, I will number my points but they won't correspond with the order you replied to me.

1) The government has that much "revenue" because it literally STEALS it through taxation. It is not like the government is providing a service that consumers can voluntarily take advantage of. And if you are going to compare the US government to a business, then why aren't you mentioning the gigantic deficit the US has? In fact, if the US government were a company it would have have the biggest annual loss AND biggest debt of any company on the planet. If the US government didn't have guns they'd be bankrupt in less than a day.

2) The US patent office is profitable because it has a monopoly on patents which is reinforces by making the courts not recognise patents given out by private businesses. They are once again using FORCE to make a profit. Why aren't you mentioning any companies the US government doesn't have a monopoly on, like the US mail service? Oh wait that's right, because those companies are all out competed by their free market counterparts like UPS which are quicker, more reliable and cheaper.

3) Just like the genocide is systematic murder, taxation and inflation are systematic theft. Just because something is done by government doesn't mean it's magically moral. I've said it a million times before and I'll say it a millions time more: Taxation is theft, inflation is treason, you are not entitled to another man's labour no matter how much you think you need it.

4) The government has that much "revenue" because it literally STEALS it through taxation. It is not like the government is providing a service that consumers can voluntarily take advantage of. And if you are going to compare the US government to a business, then why aren't you mentioning the gigantic deficit the US has? In fact, if the US government were a company it would have have the biggest annual loss AND biggest debt of any company on the planet. If the US government didn't have guns they'd be bankrupt in less than a day.

5) The US patent office is profitable because it has a monopoly on patents which it reinforces by making the courts not recognise patents given out by private businesses. They are once again using FORCE to make a profit. Why aren't you mentioning any companies the US government doesn't have a monopoly on, like the US mail service? Oh wait that's right, because those companies are all out competed by their free market counterparts like UPS which are quicker, more reliable and cheaper.

6) I know big multinationals are doing a shitty job, that's because the government keeps giving them money and bailing them out regardless of how good the service they provide is. Corporatism is socialism for the rich, capitalists are against that too. Get your facts straight.

7) Companies in a free market society(not in a corporatist society) go bankrupt if they don't act efficiently, and are therefore insentivised to not be horribly inefficient. That's how capitalism works.
Governments on the other hand can simply increase taxes if they're wasting money. Do you understand the difference?

8 ) I don't care how many "hard working people" there are in the government, they are working for an institution that is inherently evil nonetheless.


9) The claim I made was that there are two ways of obtaining things from other people: Force and trade

However you are so obsessed with the technicalities of HOW things are acquired by force or trade, that you fail to see that they fall into one of the two categories.

If the government prints more money, and then taxes to fight back the inflation, then it used force twice. Once by printing more of a fiat currency(If you know as much about economics as you think you do, then you know that a fiat currency is literally a currency backed by force), and once by literally forcing people to give up some of that fiat currency that they own. You can add all the technicalities you want, but that doesn't change the fact that the government used force to obtain the wealth to pay for something.

You are so focused on the trees that you do not see the forest.

10) You do not understand what wealth is.

If a country has a "good" economy because everyone is working jobs at weapon factories, which they indirectly pay for themselves through taxation or inflation, then that country is not wealthy.

11) All the great merits of taxation you have given me are only solutions to problems the government caused in the first place. If the government prints a bunch of money causing inflation, and then steals that money

12) The federal reserve is not an autonomous arm of the US government, it is not even part of the US government. It is a private bank owned by the Rothschild family, like all Central Banks on the planet with the exception of three. And my government does pay interest over their accumulated debt, and so does the US government. The US government pays 6% interest every year, in 2014 that amounted to 221 billion dollars. At least get your facts straight when you try to correct someone.

13) To remind you once again: My claim is that taxation and inflation are wrong and bad for the economy. Do you have any counter arguments to that?

 

So far crickets from @Econ4Every1

 

His reasoning is so absurd I had to draft my reply to him three times....

I think he has read a lot of facts about economics but is incapable of seeing the big picture that ties those facts together. That's why everything he says sounds so incoherent.

Like he understands that the government inflates the currency, and then taxes the people to fight that inflation, but he does not seem to understand how that affects the purchasing power of the consumer, and how that affects the economy as a whole.

 

you are correct!! we got from stone age to here through innovation. Govt does not innovate so any money they tax out of the economy slows down innovative progress.

inflation is bad because it distorts price signals and thus wastes resources.( this is one is too complicated for liberals to understand)

 

The argument if they guy I was talking with seems to be that the government taxes people to fight against the inflation the government caused itself, and that it therefore doesn't affect the purchasing power. It's the most nonsensical argument I've read in over a month.. Oh well, liberals be liberals haha.

 

Aweee...It's sweet that you guys miss me. I started a new job this week and have been very busy. I haven't even read Kenny's reply yet but I'm sure I'll have something to add. Hang in there friends. I'll be back!

 

First, let me address your claim with respect to the use of force.

I think, like most Libertarians, you are a bit dramatic when you say "forced at the point of a gun", however, I don't deny that the fiat money system that we have is a system that is at least semi-compulsory and failure to comply can, in extreme cases result in having your property and even your freedom is taken from you, but rarely "at the point of a gun".

I say semi-compulsory because you aren't "forced" to do anything that you aren't made aware of, that you don't know the consequences of before you do it. So if you work and earn money, you know that you have to pay taxes. You made the choice to earn money and you were free to avoid that choice, though, I admit, avoiding it would be pretty difficult.

If you don't want to work you don't have to. You want to leave, you can. However, if you wish to be a productive member of society, then yes, I will agree that you are compelled to pay taxes and abide by the law. So I am fully aware of the compulsory system we have and I am, for the most, supportive of it.

You could have saved yourself a ton of writing if you had just summed up your claim. "Taxation is theft".

So my first question is, with respect to US dollars (only US dollars), what came first, taxing dollars or spending them? If you skip this question I'll just ignore your reply and ask again until you do. It's pivotal to understanding how our economy works.

Ignoring the reasons why it works best this way, I take your point.

Again, I take your point here and even agree to some extent, but everything risk and benefits, something we'd have to evaluate more closely before we could make a definitive determination.

Sounds like the "no true Scotsman" fallacy.

You don't understand taxing in a fiat system, something we'll cover in our conversation.

Is all government evil? If not, what is it that makes government "evil"?

There are subtle variations. If I sell water I have an incentive to make people thirsty because the value of the water I sell increases the thirstier people get. If I can use my influence, power or resources to create a situation that creates the situation that makes my product more valuable without directly "forcing" anyone, is that not manipulation and can't manipulation be considered a form of force?

I don't deny that. Nor am I making the claim that it is right or wrong, I'm simply pointing out how it works. Yes, the dollar's value comes, at least in part from the fact that failure to pay taxes can result in the loss of property or freedom. But the alternitive is worse.

Now, if you'd like to convince me that the system we have now is wrong, not in a moral sense, but in a more practical sense (nations that don't use force, are they more successful than nations that do?). Examples?

Funny, I'd say the same of you. You are so focused on the moral aspect you haven't stopped to consider that the best system might be one that balances compulsory aspects with complete freedom.

Morality is completely subjective, however, don't confuse subjective with arbitrary. Is it wrong to make children work? It depends on the environment in which that child lives. Sometimes it is the right thing to make children work if failing to make them work would lead to the harm of the society they live in.

Wealth is subjective. Is gold wealth? If you lived on a desert island and had 50 tons of gold and no water, would you be wealthy? Only if you could use the gold to trade for water. If not, the answer is no, you would not be wealthy.

Since 1901 the government has created $77.189 trillion dollars and taxed $66.583 trillion, meaning that the government has purchased $13.4 trillion worth of goods without taxing anyone. People have acquired that money though work and used it to acquire wealth.

LOL....

Evidence? And please, don't take me back to the Napoleonic wars.....Nothing to do with today's money system.


And my government does pay interestover their accumulated debt, and so does the US government. The US government pays 6% interest every year, in 2014 that amounted to 221 billion dollars. At least get your facts straight when you try to correct someone.[/quote]

That 6% is the government's money, not the Feds. The Post Office operates exactly the same way. It makes money, it hands back its profit and it keeps some for operating costs.

Would you prefer the Fed hand back 100% and then the Congress set aside $221 billion for operations? See? It's exactly the same.

Now stop and ask yourself, who earns that 6%, the Rothchilds...LOL!!

We'll get there one we resolve the very first question I asked in this post.

Cheers

 

Yay! I can't wait for you to explain how inflation can occur in a non-monetary economy.

(Congrats on the new job, btw!)

 

If there are 1000 and $1000 dollars and next year there are 2000 people and $2000 dollars, does that mean there's inflation?

 

Yes. If the supply of dollars doubles then the price of dollars will, ceteris paribus, halve. Inflation is a decrease in the price of a dollar with a commensurate relative price increase of all other goods relative to the dollar.

 

Look, the conversation about non-monetary economies was fun, but it's irrelevant to the economy we have today.

Oh and thank you!

 

It's proof that inflation is entirely a monetary phenomenon. Unless you can demonstrate how inflation can occur in the absence of money?

 

That's really not the point. Do you think all car accidents are the result of going too fast?

 

No. I don't make that claim. I think you have made that claim.

But I do make the claim that inflation is entirely a monetary phenomenon. Inflation cannot occur in a non-monetary economy, thus it must be an exclusively monetary phenomenon.

 

No, I don't believe that....

So if I said that the cause of all crashes are a phenomenon of motion you'd disagree even though for a car to crash it has to be in motion?