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Thread: Quantitative Easing Explained [viral youtube video]

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    Quantitative Easing Explained [viral youtube video]


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    [QUOTE=JetsCrazey;3820989]http://www.youtube.com/watch?v=PTUY1...layer_embedded
    brilliant[/QUOTE]

    Yes indeed!

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    this video glosses over some serious facts. For example deflation affects not just the price of goods but the price of labor... i.e. wages. If the money that buys everything in a consumer based economy goes down or stays flat that's a huge problem. Also if deflation is real then no one wants to buy anything big. Who would buy a car when the price of that car could be lower in 6 months? Deflation is far worse than inflation. We need inflation. When your job says they aren't giving out raises, they site a lack of inflation as the reason why. There's no cost of living increases when the cost of living goes down.

    also taxes are not higher than a year ago. It's a simple video... but not accurate.

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    Scary

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    Quote Originally Posted by bitonti View Post
    this video glosses over some serious facts. For example deflation affects not just the price of goods but the price of labor... i.e. wages. If the money that buys everything in a consumer based economy goes down or stays flat that's a huge problem. Also if deflation is real then no one wants to buy anything big. Who would buy a car when the price of that car could be lower in 6 months? Deflation is far worse than inflation. We need inflation. When your job says they aren't giving out raises, they site a lack of inflation as the reason why. There's no cost of living increases when the cost of living goes down.

    also taxes are not higher than a year ago. It's a simple video... but not accurate.
    Where's the deflation? Raw goods prices have all gone up considerably over the past 18 months. Inflation is a tax, so yes, taxes HAVE gone up.

    The % withheld from my paycheck has increased the past 18 months as well.

    You're wrong about employers giving out raises. They aren't doing it because there are other people willing to work for less. Regardless of inflation, as long as this is the case they won't give raises. Also, unions don't have the power they used to in this country (unless if you're UAW)

    We don't need inflation. Inflation does absolutely nothing to solve any of our problems. The wealth effect is a pipe dream when compared to the immense debt overhang this country faces that must be cleansed before we can move on.
    Last edited by JetsCrazey; 11-16-2010 at 11:32 AM.

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    Quote Originally Posted by JetsCrazey View Post
    Where's the deflation? Raw goods prices have all gone up considerably over the past 18 months.
    the producer price index has gone down. the cpi excludes food and energy, also gone down. Yes a couple areas like food have gone slightly up... but the numbers don't lie. There is no inflation right now, and that's bad news.

    Quote Originally Posted by JetsCrazey View Post
    Inflation is a tax, so yes, taxes HAVE gone up.
    There's just so much wrong with this little statement, but let's assume it's correct. Who enacts this tax, the inflation fairy?

    Quote Originally Posted by JetsCrazey View Post
    The % withheld from my paycheck has increased the past 18 months as well.
    How? why? There's been no laws passed to make this happen.

    Quote Originally Posted by JetsCrazey View Post
    You're wrong about employers giving out raises. They aren't doing it because there are other people willing to work for less.
    I can get my garbage man to do my taxes for less than my accountant. That doesn't make it a smart idea.

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    you're an idiot if you think there's no inflation. keep believing the government's handpicked statistics which exclude food and energy (as if people in this country don't eat food, put gas in their cars, and light up their homes)

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    In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money a loss of real value in the internal medium of exchange and unit of account in the economy.
    As an employed adult, who saves his money and has no debt to speak of, inflation does not do anything positive for me economicly. As such, I would not favor an increase in the inflation rate.

    I do not want the value of my savings/salary to go down, nor do I want the costs of the goods and services I need/want to go up.

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    Quote Originally Posted by Warfish View Post
    I do not want the value of my savings/salary to go down, nor do I want the costs of the goods and services I need/want to go up.
    do you want your salary to increase? If there is no inflation then wages don't rise.

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    Quote Originally Posted by JetsCrazey View Post
    you're an idiot if you think there's no inflation. keep believing the government's handpicked statistics which exclude food and energy (as if people in this country don't eat food, put gas in their cars, and light up their homes)
    where does the money come from to pay for all of that? Wages. Inflating the price of labor benefits everyone.

    put it another way, Food is a small part of everyone's budget. Wages are the budget.

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    Quote Originally Posted by bitonti View Post
    do you want your salary to increase? If there is no inflation then wages don't rise.
    Wages like toilet paper and orange juice are a commodity. They rise when labor is in high demand and supply is in short demand. Inflating the money supply decreases the value of the wages of people who have them.

    The only way inflation makes wages go up is if inflation sparks a buying spree to push up demand for goods that need labor to produce. This is what the Federal Reserve is banking on. The danger is with unemployment so high they are very liable to spark inflation that doesn't significantly increase the demand for jobs. With unemployement so high it's highly unlikely they will push labor demand to the point where wages are impacted at anywhere close to the core inflation rate including food and energy stuff we use all the time.

    The real consequence is stagnation, something we had in the 70's. High unemployment which kept wages low coupled with double digit inflation which destroyed the middle class worker.
    Last edited by Winstonbiggs; 11-16-2010 at 12:59 PM.

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    Quote Originally Posted by bitonti View Post
    do you want your salary to increase? If there is no inflation then wages don't rise.
    and here I was thinking like a fool that I can work towards getting a better job for a higher salary....apparantly the only way to increase your wage is through inflation...

    even if I got a salary increase due to inflation, I wouldn't be richer dumbass. My purchasing power remains the same...and on a macro level inflation is a regressive tax because it's the speculative class that gets 1st use of the newly created money

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    Quote Originally Posted by bitonti View Post
    do you want your salary to increase? If there is no inflation then wages don't rise.
    Inflation =/= mandated salary increases at my workplace.

    However, I've had raises in years with minimal inflation, due to other factors (like productivity/profitabillity/quality work/etc.)

    A salary increase given to cover the increase of inflation (i.e cola increases) does not result in an increase in value, often the contrary, where the cola % < inflation %.

    Is that the only motivation for me to support an increase in inflation, that may salary might rise a few percentage points less than inflation rises?

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    Bitonti's viewpoint is inherently anti-capitalist. He would rather have central planning than have worthy companies replace the unworthy ones. Liquidation is necessary for innovation. What the Federal Reserve is doing is central planning to save the establishment. Central planning is not a favorable alternative to deflation if you believe in capitalism and a free society.

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    people like to talk about the free market and the gold standard but conveniently forget how unstable the world was during times of true free-market policies.

    The Gold standard didn't stop booms and busts. they happened, every decade or so and they were awful. There were depressions, panics and all sorts of awful world events that were directly related to economic instability (Hitler's rise to power before WWII for example).

    What the fed does, what the World Bank does, is stabilize everything. What we give up in darwin-esque survival of the fittest we gain in peace.

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    Quote Originally Posted by Warfish View Post
    Inflation =/= mandated salary increases at my workplace.

    However, I've had raises in years with minimal inflation, due to other factors (like productivity/profitabillity/quality work/etc.)
    I never said they mandate salary increases but have you ever gotten a salary increase during a deflationary period? Considering we haven't had deflation in our lifetimes it's kind of a loaded question. But trust me they won't raise wages when the price of everything is falling.

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    Quote Originally Posted by bitonti View Post
    people like to talk about the free market and the gold standard but conveniently forget how unstable the world was during times of true free-market policies.
    A Post hoc ergo propter hoc fallacy argument.

    You have no proof of causality to back your argument that "times of true free-market policies" is what CAUSED "how unstable the world was".

    Quote Originally Posted by bitonti View Post
    But trust me they won't raise wages when the price of everything is falling.
    I do not trust you, because I believe you are factually incorrect. I know of no employer that ties merit pay increases to the inflation/deflation rate.

    If you can show me proof that an employer does, in fact, tie directly their merit pay system to inflation, that would be a good place to start.

    And outside of poorly run small businesses, your average employer has specific policies in place to determine merit pay eligibillity, availabillity and applicabillity.

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    the bottom line here, what we seem to be dancing around, is that deflation is a disaster, inflation is a mild irritant at worst, and something we want in certain cases. No one ever wants deflation. Inflation is the cost of doing business. Currency never stays static it either inflates or deflates. Given the choice we'd MUCH RATHER have it inflate.

    In a deflationary spiral, the prices of everything (including labor) falls, leading to reduced demand, leading to falling prices... and it takes forever to break the cycle. Japan entered deflation in the 90's and still hasn't recovered. the great depression was a deflationary spiral.

    this is a very informative wiki entry.

    http://en.wikipedia.org/wiki/Deflation

    I know people seem to think that we are in a 2nd great depression but the truth is that tepid growth, what we have now, is far better situation than what it was like in the 30s. I dont see any breadlines, do you?

    ps- My work froze raises last year and cited a lack of inflation. You can believe me or not believe me but that's exactly what happened.

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    Quote Originally Posted by bitonti View Post
    the bottom line here, what we seem to be dancing around, is that deflation is a disaster, inflation is a mild irritant at worst, and something we want in certain cases. No one ever wants deflation. Inflation is the cost of doing business. Currency never stays static it either inflates or deflates. Given the choice we'd MUCH RATHER have it inflate.

    In a deflationary spiral, the prices of everything (including labor) falls, leading to reduced demand, leading to falling prices... and it takes forever to break the cycle. Japan entered deflation in the 90's and still hasn't recovered. the great depression was a deflationary spiral.

    this is a very informative wiki entry.

    http://en.wikipedia.org/wiki/Deflation

    I know people seem to think that we are in a 2nd great depression but the truth is that tepid growth, what we have now, is far better situation than what it was like in the 30s. I dont see any breadlines, do you?

    ps- My work froze raises last year and cited a lack of inflation. You can believe me or not believe me but that's exactly what happened.
    I guess you missed the 70's and early 80's were double digit inflation destroyed much of the American middle class.

    As far as breadlines, I started adding in food banks to my charity list last year and have significantly increased my donations to these food banks. They are being overwhelmed all across the country.

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    Quote Originally Posted by bitonti View Post
    the bottom line here, what we seem to be dancing around, is that deflation is a disaster, inflation is a mild irritant at worst.
    the government can step in and provide for people instead of providing for Wall Street, as has been their response to the crisis. We need an orderly liquidiation of the banks which committed fraud.

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