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Microsoft Corporation Message Board

  • hawcreek12 hawcreek12 Jan 3, 2013 10:49 PM Flag

    CFury has dodged this question for days, he cannot confront it and answer

     

    CFury contends printing money does not cause inflation, only excess demand causes inflation.

    It's important because it reveals how totally out of his league he is while discussing any monetary policy, as are all Obama supporters.

    In 1932 an ounce of gold was worth slightly more than $20 an ounce and it had been the same for many years. Then one could take a $20 Greenback bill to the treasury and exchange it for a $20 Double Eagle that contained about 0.97 ounces.

    Today it takes roughly 85 of those $20 bills to acquire the same coin. The actual coin can still buy as much or more than it could in 1932 in likewise limited commodities like real estate.

    8500% inflation in 80 years for printed play money, and Obama is financing a significant portion of the debt with the printing presses rather than borrowing. IMO hyper inflation coming at some point.

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    • "as are all Obama supporters"

      all are not in your league, you're in a league of one. There are millions of Obama supporters in better league than you

      This is just another years old election talking point you drug up to enable yourself another flury of Obama bashing.

      For me I have work at hand to do and could care less about this. Demand causes inflation.

      Why do you think we intrude on cfury's right to post or not post, and care. That's the title of your revelation here, who cares, it's his business.

      Quote from Forbes article by Harvey:

      "It is conventional wisdom that printing more money causes inflation. This is why we are seeing so many warnings today of how Quantitative Easing I and II and the federal government’s deficit are about to lead to skyrocketing prices. The only problem is, it’s not true. That’s not how inflation works. Hence, this is yet another of the false alarms being raised (along with the need to balance the budget) that is preventing us from doing what we need to do to recover from the worse recession since the Great Depression.

      Explaining inflation would be much simpler if not for the need to first spend so much time debunking the popular view. But, that’s the way it is. And so, let me start with the “money growth == inflation” view. This is based on the equation of exchange:

      MV = Py

      where M is equal to the supply of money, V the velocity of money (or the average number of times each dollar bill is spent), P the average price of goods and services, and y the total quantity of all goods and services sold during the time period in question. Thus, if there were 100 goods and services that sold for $10 each (on average), then that means a total of $1000-worth of transactions took place. Were there 200 one-dollar bills in this economy, then it must be that each was used 5 times (hence the “velocity” of money, or how fast they were spent again).

      MV = Py
      200 x 5 = 10 x 100

      It is important to note here that the above is not the least bit controversial. No economist disagrees with the basic equation MV=Py. The arguments arise when additional assumptions are made regarding the nature of the individual variables. For example, this is what is assumed in the “money growth== inflation” view:


      M: That which is money is easily defined and identified and only the central bank can affect it’s supply, which it can do with autonomy and precision.

      V: The velocity of money is related to people’s habits and the structure of the financial system. It is, therefore, relatively constant.

      P: The economy is so competitive that neither firms nor workers are free to change what they charge for their goods and services without there having been a change in the underlying forces driving supply and demand in their market.

      y: The economy automatically tends towards full employment and thus y (the existing volume of goods and services) is as large as it can be at any given moment (although it grows over time).

      Now let’s go through an example, recalling the mathematical example from above:

      MV = Py
      200 x 5 = 10 x 100

      Consider the assumptions made regarding each of the variables. P can’t change on it’s own, y is already as large as it can possibly be given current technology and resources, and V is constant. Only M can change in the short run and it must therefore logically be the starting point of any fluctuation we introduce. Furthermore, according to our assumptions, the central bank has the power to (for example) double the money supply at will. In Milton Friedman’s example from “The Optimum Quantity of Money,” a helicopter is used to accomplish this. Now what happens?"

      Sentiment: Buy

    • "CFury contends printing money does not cause inflation"

      He's almost right, it doesn't CAUSE inflation, it IS inflation. A general rise in prices is not inflation, it is an inevitable and invariable CONSEQUENCE of inflation, so in the public mind it is often confused with inflation.

    • Cfury really needs to read up on hyper inflation in south America countries so he would quit acting so STUPID.
      Here is an example of how inflation works: and can be searched on bing.

      Imagine for a moment that the total money supply in the United States was only $1 Million Dollars. And imagine you owned 10% of it, which is $100,000.00 - that would mean you would be extremely wealthy correct?

      Now imagine if tomorrow the money supply increased by 10 trillion... how much would your $100,000 be worth in that instance? You would no longer be wealthy. And unfortunately, this has already happened in over 30 other countries in the past 90 years.

      That in a nut shell is the effect of inflation, and how devastating it can be if the money supply expands rapidly. The dollar has expanded publicly by over $2.68 trillion dollars since 2009 alone. If this aggressive trend continues, imagine how worthless your dollars will become.

    • I could also say you haven't explained how printing money causes prices to rise.

      Prices certainly do not rise unless the money is in the pockets of purchasers. Investment by the wealthy does not automatically result in this event.

      Once again you take the kool aid simple minded route that you have been taught and cannot evaluate critically.

      My answer would be that of course there must have been times of labor scarcity that brought up wages but this is secondary.

 
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