Who else resents USAians for causing this finanical crisis?

[Unimatrix11]

Originally posted by KrazyHorse


No, I'm saying that NOMINAL UNIT LABOUR COSTS did not change greatly over the last couple of years as NOMINAL COMMODITY PRICES shot through the ****ing roof...

Which means real income did not rise (but shrink).

[KrazyHorse]

But to counter your counter: If the private banks expand their active business (e.g. expand the value of the ´giral money´ on their accounts by lending (what they dont have)), they need to cover it at the CB with a certain minimum of CB-money. What if they have to much giral-money (or other money-substitues) for their backing ? Well, i guess, we all know now... In the end, a given ammount of giral money should correspond to an according supply of CB-money.

a) WTF is "giral money"?
b) Certain depository institutions need to maintain reserves of a certain amount. I was being more general. There are borrowers and there are lenders. The creation of money supply requires lenders to lend more. If the CB does something like explicitly (or implicitly through regulatory change!) reducing the real interest rate that they, as ultimate lenders charge, then at the end of the chain (where a consumer or business borrows money) a constant real interest rate increases the profit to the intermediaries, meaning that to regain equilibrium the real interest rate charged to end borrowers drops and the quantity of lending (the money supply!) increases. If the CB does NOT do anything then in order to increase the money supply lenders have to be convinced that their lending is more profitable WITHOUT a change in the interest charges from the CB. This means that the real interest rate (as anticipated by intermediaries) charged to end borrowers must increase. However, end borrowers will not borrow more if the real interest rate (as they anticipate it) charged by intermediaries increase unless the marginal product of capital in the real economy increases. The two anticipations can drift out of touch for a while, but will come back to balance at some point, so without a change in production function, money velocity or CB position long-run inflation cannot change simply due to a change in expectations.
c) Therefore my point is that in the long run inflation is determined by central bank actions as well as changes in the production function and money velocity, not by expectations.

Your (b) as listed is therefore simply a transitory phenomenon.

[KrazyHorse]

Originally posted by Unimatrix11


Which means real income did not rise (but shrink).

Of COURSE. And therefore the rise in commodity prices comes from the real economy, not inflation.

[KrazyHorse]

Studies have shown that the circulation speed of money is pretty much constant btw

That's what I said.

[Unimatrix11]

Giral money is the ´money´ that has not been created by the CB, but by the private banks via lending. Legally, if i have a debt to pay, the person i owe money, MUST accept my Euro-bills (in the Euro-zone only of course), while he may decline a cheque. The first one is real money (base money), the other is not. As in: The CB would not accept a cheque to cover a bank´s active business.

Thanks for switching to mode 3 btw. Now i have no issue anymore, to admit, that obviously you ´know´ (´´ not personal, but due to my overall scepticism on economics) a lot more about the topic at hand than i do. And apparently, about most things concerning it, we do not even disagree too much. And didnt HL say advocate a demand-pull as the major source for inflation as well ?

[KrazyHorse]

He was making a load of nonsense claims. Among them:

1) Deflation would be a good idea
2) Inflation rates are far higher than admitted by statistical bureaus (specifically the US dept. of Labour/Bureau of Labour statistics in CPI)
3) The runup in commodity prices was caused by a huge increase in the money supply

3 is patently ridiculous based on simple principles. 2 is ridiculous as anybody who pays bills can see if they think about it for a bit. 1 is ridiculous, but is a slightly deeper question about monetary policy.

[KrazyHorse]

I hold a huge amount of skepticism regarding economics. But I know what criticisms are ridiculous and which are not.

[Agathon]

Originally posted by KrazyHorse
I hold a huge amount of skepticism regarding economics.

Why wouldn't it be total? The only ones who aren't complete berks are the behavioural economists.

Wasn't there some study that demonstrated that the only people who think like economists were sociopaths, or something like that?

[KrazyHorse]

I hold far less contempt for economics than I do for philosophy.

[Agathon]

Originally posted by KrazyHorse
I hold far less contempt for economics than I do for philosophy.

But, as you have proved over and over again on this forum, you know virtually nothing about the latter, so your opinion is worthless. Wake me up when you know what you're talking about.