Dollar debasement, Yankees and Cowboys, high school "essential books,"
dumbing down of America, inflation/deflation and more
(week of January 7, 2007)
For more stimulating ideas, please visit the Of Two Minds blog and Readers Journal.
If I am reading your argument correctly in your latest post entitled “Inflation/Deflation
and Purchasing Power”, you are confusing price changes due to supply/demand and price
changes due to changes in the money supply (inflation). Both contribute to price and
they are semi-independent. From a psychological perspective I think of the money supply
issue as… the easier credit (debt) is to obtain, the less concern a person has with how
much they have to spend and so prices go up.
Good points on inflation. Let’s consider an extreme example. If all the money in the
country disappeared, would everything be free? If bread cost $1 a loaf and gas cost $3
a gallon, and money no longer existed, could you obtain all you wanted at no charge? No,
you would have to barter. The way I like to see things measured, and you can find some
comparisons, is what the cost in hours of labor are for goods and services. If you had to
work one hour to buy a loaf of bread ten years ago, and now you work a half an hour for
that bread, are you better off? Doing such comparisons would probably reveal that some items
got "cheaper" in terms of labor and some did not. This method ignores the concept of money
supply. Just something else to think about.
"To pronounce "inflation" or "deflation" based on money supply rather than measuring
purchasing power is to define an absurdity."
I guess that I don't follow your arguments. I used to define "inflation" the way you're arguing but, as you know, Bernake noted that "those who get new credit innovations first benefit the most."
explanation: I'm not much of an economist but I'm thinking that maybe the "multiplier effect" is the reason behind Bernake's comment since "those who get it first" get to purchase the most capitol while, "after the multiplier effect happens," prices are driven up and "those who get it next" have to pay more for less capitol.
anyway, that's my understanding of why economists define the word "inflation" based on "money supply." they also have another word "speculation" which implies that the market is driving up prices based on assumptions about future pricing levels.
to drive inflation, both the "fractional reserve" requirment and cheap interest rates are seemingly needed to enhance the mulitplier effect.
Certainly, I understand how you're using the word "inflation," the way that people use the word Kleenex for "tissue" and QTip for "cotton swap."
However, "inflationary monetary policy" seems to be a bit more than just higher prices since, at times, it's more about money being redistributed (proportionally) from the old to the young, etc... and "stagflation" happens when inflationary monetary policy is ineffective at redistributing wealth.
well, that's my ignorant two cents!
chas., trying to write something both cogent and succinct on today's post. it ain't easy.
a) you and harun are both far more educated than i am, but i keep feeling that when you try
to write harun's thots the mark somehow gets missed.
b) charts can lie with the ease of a president- or candidate. i.e. take the gold chart
back to the $850 high of a few years ago and we see an item that has been in a swoon and is
just now getting back. not a good investment - right?
show this chart in inflation adjusted terms, not the nomimal terms of today's actual dollar
figure but what your purchasing power would look like today compared to yesterday, and you
see that gold is nowhere near reach its previous high, which would be around $2300 in todays nominal dollars. gee! a very bad investment! you have lost 2/3 of your money. aiieeee!!
show just the runup in gold since the dotcom bust and you see gold tripling plus, in nominal
dollars. wow! that was a great investment!
c) what is my point? charts must be viewed with some historical perspective. they only
show what you 'ask' them to show in many cases. and you must, absolutely MUST look at
prices in both nominal and inflation adjusted terms. the idea that he who loses the least
is the winner is a favorite of russell's. he has a point. in nominal terms some of us
are making money - i certainly have been in gold for several years, but adjusted for
inflation i may only have lost a lot less than the rest of you... you simply have to
try and find the long wave, the bull that is real, and then ride it. i, of course, think
in this swamp of malfeasance we presently inhabit gold has it hands down. i may be wrong.
When I was in high school, the local library, Bremerton, Washington, tried to ban
Tarzan books because Tarzan and Jane were living together and weren’t married.
I liked today's article
Can a Fragmented Culture Find Common Ground?
(32 recommended books for high school students nationwide)
but that's probably because I was born in the mid 40's. I try to
imagine a TV generation person ( 1965 plus ) who is used to today's special affects
reading about two people floating down a big slow river while discussing some thing that
actually requires thought.
We are what we are.
"Things are the way they are because they got that way."
I believe 1965 is the year we moved to a total TV oriented country. You and I got our
formative thoughts about the world from reading and we continued our reading through our
lives. I would guess that about one half of one percent of Americans actually read today.
Most of those are contributors to oftwominds.
My only conclusion, I like sitting quietly and reading.
Our leaders will have spent their formative years watching TV. If your not really
paranoid you're in trouble.
Hello! Just a quick note to say thank you so much for today's post. The topic of literature
and common cultural ground is extremely important; unfortunately, the great push to
"celebrate" individuality and diversity kicked the whole notion of American culture to the
curb. This didn't have to be the end result.
Our self-rightous "all or nothing" way of
looking at the world (You're either with us or the terrorists, etc.) reflects how we treat
issues on a more local level, particularly in education: Huck Finn has the N-word in it so
it must be racist! (what many school districts really mean is they don't trust that the
children or parents are smart enough to do some close reading) or Let's ban Harry Potter
because it promotes witchcraft! (ignoring that the themes of Harry Potter would make any
good christian proud--love, loyalty, friendship, integrity, etc.)
I do understand the
pressures, both economic and social, that constantly plague ou r local school board,
but this doesn't change the fact that even in a good school district some serious
dumbing down is going on. Like many parents, I'm realizing that it is my responsibility
for sons' true education.
Thanks for the list! I agree with you about Hemingway/Fitzgerald, too. Nothing like the
Great Gatsby (which, I'm sad to say, is no longer required reading at the local high
Thanks also for the consistently good work on your site. I read it daily!
My opinion is that fragmentation is good; That's what makes DNA so powerful because