tag:blogger.com,1999:blog-17232051.post127176755869810989..comments2024-03-18T22:32:52.802-04:00Comments on Noahpinion: The cruel trick played by history on Milton FriedmanNoah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger129125tag:blogger.com,1999:blog-17232051.post-18238701453040180872017-02-20T08:43:15.703-05:002017-02-20T08:43:15.703-05:00Milton Friedman wanted to ABOLISH the Federal Rese...Milton Friedman wanted to ABOLISH the Federal Reserve and Friedrich Hayek was for the Federal Reserve. So this doesn't make sense. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-8621916047118208072013-08-22T11:36:00.901-04:002013-08-22T11:36:00.901-04:00He [the economically illiterate politician] observ...He [the economically illiterate politician] observes that people get food, clothes, and all sorts of objects simply by presenting pieces of paper called checks—and he observes that skyscrapers and gigantic factories spring out of the ground at the command of very rich men, whose bookkeepers keep switching magic figures from the ledgers of one to those of another and another and another. This seems to be done faster than he can follow, so he concludes that speed is the secret of the magic power of paper—and that everyone will work and produce and prosper, so long as those checks are passed from hand to hand fast enough. If that savage breaks into print with his discovery, he will find that he has been anticipated by John Maynard Keynes.<br /><br />-Rand "Philosophy, Who Needs It?"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-50139030485472242122013-08-20T12:23:03.970-04:002013-08-20T12:23:03.970-04:00Historically, the exact opposite of what you just ...Historically, the exact opposite of what you just said has tended to happen.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87126237452834228352013-08-20T10:35:00.507-04:002013-08-20T10:35:00.507-04:00And as the quantity of money increases the less pe...And as the quantity of money increases the less people will want to hold on to it thus causing velocity to increase.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48674166373500225472013-08-19T12:05:07.907-04:002013-08-19T12:05:07.907-04:00In the end, it won't be money that matters mos...In the end, it won't be money that matters most.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-13459684981698828002013-08-19T10:34:08.495-04:002013-08-19T10:34:08.495-04:00Quantity theory of money says MV=PY. That's wh...Quantity theory of money says MV=PY. That's what I was referring to. It's just true by definition. If M goes up and V goes down, PY doesn't change. Simple, right?<br /><br />What banks can affect is not M1, but M2. See Wikipedia for more.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47983142798207693152013-08-19T08:45:27.047-04:002013-08-19T08:45:27.047-04:00So you do not believe in the quantity theory of mo...So you do not believe in the quantity theory of money? Prices should always be dropping as business and capital goods gets more efficient. I think your point 1 proves what i am saying. I do not know about your point 2. Has the m1 increased and how does the private banks decrease the money supply?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5871676784691893312013-08-18T23:24:30.191-04:002013-08-18T23:24:30.191-04:00"that there is such a thing as a free lunch.&..."that there is such a thing as a free lunch."<br /><br />The thing is, there was such a thing as the free lunch. Saloons offered it in order to get people (well, men) onto the empty stools at lunchtime. Often they didn't even require you to buy a beer, and the price of beer at lunchtime was the same as after work. Most customers did buy a beer, and a few bought two. And the lunch they served was cheap. As long as the price of a beer and a lunch was a penny more than the cost of the beer and food - even with nothing for the bartender, rent, light, heat - it added profits to the bottom line. And the customer got a genuine free lunch.<br /><br />The true story of the free lunch is that when there are un-utilized assets that can easily be put to work - empty saloons and bored bartenders, or unemployed workers and idle machinery- you can get something for nothing.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-59982436980208161362013-08-18T20:03:52.054-04:002013-08-18T20:03:52.054-04:00Different anonymous here-
Don't words just me...Different anonymous here-<br /><br />Don't words just mean what they are commonly understood to mean? So if people want to use derp as a noun, and most everyone understands what is signified, how would that be a misuse of the word?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-25858302886336516552013-08-18T18:21:10.111-04:002013-08-18T18:21:10.111-04:00Where is the flaw in this ointment?
A lot of folk...Where is the flaw in this ointment?<br /><br />A lot of folks hate the Fed. Why is that? What harm has it done? I think the story goes something like this: Imagine how an entertainment promoter makes money. He hires a great band to preform. He rents a great venue, and pays for both upfront. Then he sells tickets at the right price – the highest price that almost fills the available seats. Then he sells the rest at a discount. I assume at this point that you the reader are not feeling outraged at the promoter’s behavior - free enterprise and all that. Now suppose the promoter keeps on selling tickets, at even greater discounts, until tickets outnumber seats ten to one. At show time a huge crowd gathers and to prevent chaos the ticket takers propose to require ten tickets each to enter. A riot ensues and the show is canceled. <br /><br />Isn’t this like what the Fed is doing when it prints money? No. Suppose the federal government decides to build a bridge using borrowed money. The Treasury prints T-bills, and exchanges them with the Fed for Federal Reserve Notes. Then it uses the notes to pay a private contractor to build the bridge. Now the public has a new asset – the bridge, and a new government debt, namely the T-bills held by the Fed. The Fed has new assets (the T-Bills) and new liabilities (the printed dollars). The contractor has new dollars to spend, and the money supply has increased by the cost of the bridge. <br /><br />However, the T-bills need to be repaid with interest. The Fed is sitting pretty. It doesn’t have to pay interest on the dollars it printed, but it is owed interest on the T-bills that it holds. What happens next? Suppose the government repays the loan from the Fed with interest. The government has the option of taking another loan by printing more T-bills, or by collecting dollars in taxes to repay. <br /><br />In the first case the Treasury issues new T-bills to cover the interest. Then the Fed prints dollars to buy the new T-Bills. Next the Fed pays its expenses. Then it gives all the remaining profit in dollars back to the Federal Government! Then the Treasury uses these dollars to buy back some T-bills. The net cost to the Treasury is the cost of running the Fed. This is tiny in the grand scheme of things. Note that the rate of interest paid on T-bills doesn’t matter in this transaction!<br /><br />In the second case, the Treasury (via the IRS) collects taxes and pays back the Fed for the T-bills plus interest. After expenses the Fed sends the remaining dollars of interest back to the Treasury. The net cost is the same as before. <br /><br />The end result is that the public has a new bridge. The contractor has new money. In the first case the Treasury has a larger debt, consisting of the original debt plus the cost of running the Fed. In the second case the debt is paid by the taxpayer, together with the cost of running the Fed. <br /><br />Notice that the cost of government borrowing is only the cost of running the Fed. This is due to the Fed returning all the net interest that it collects back to the Treasury. Instead of borrowing from the Fed, suppose that the Treasury borrows from the private sector by selling it T-bills. When the bills come due, all the interest is paid to the private sector, and the interest rate then matters.<br /> <br />When the federal debt is “monetized” or turned into dollars, this is a good thing. The government gets an interest free loan. The private sector gets convenient risk-free tokens to exchange for goods and services such as hamburgers and haircuts. <br />Bob from Boulderhttps://www.blogger.com/profile/10545250542867456669noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-73475468038556332032013-08-18T03:41:15.738-04:002013-08-18T03:41:15.738-04:00Oh yeah, I forgot number 3.
3. If the government...Oh yeah, I forgot number 3. <br /><br />3. <i>If the government was not printing money prices would be lower and you would have increased purchasing power.</i><br /><br />That's not necessarily true, for the reasons listed above.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-75869233833292641992013-08-18T03:32:46.538-04:002013-08-18T03:32:46.538-04:00Three points:
1. It's not right to define inf...Three points:<br /><br />1. It's not right to define inflation as an increase in the quantity of money. This is because if the rate at which money circulates (velocity) changes, a larger quantity of money can be consistent with lower prices. This happened in Japan. <br /><br />Prices don't just depend on the quantity of money. They depend on how fast the money circulates.<br /><br />2. The Fed printing money does not necessarily increase the quantity of money in the economy. Private banks also influence the money supply. In fact, despite all the money the Fed has been printing in the last few years, the total amount of money in the U.S. economy has gone down, because of the actions of private banks.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48184196447044837132013-08-18T03:03:07.463-04:002013-08-18T03:03:07.463-04:00Saving money is not hoarding, all saving is future...Saving money is not hoarding, all saving is future spending. If the chinese were not saving so much where do you think america would borrow money from? When you go to the bank and ask for a loan where do you think that money comes fromAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-2668957913149527902013-08-18T02:56:02.681-04:002013-08-18T02:56:02.681-04:00If you define inflation as a increase in the quant...If you define inflation as a increase in the quantity of money then it would be. If the government was not printing money prices would be lower and you would have increased purchasing power.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46391807128095608022013-08-17T23:16:50.383-04:002013-08-17T23:16:50.383-04:00Do you think the money is dead because it is in a ...Do you think the money is dead because it is in a foreign bank? Money in the bank is not dead it is leant out by the bank to people and business so as they can buy things they could not not buy with one weeks of money. All saving is the source of spending all money lent out by a bank has to have been saved by someone.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87048283219848770362013-08-17T13:46:42.470-04:002013-08-17T13:46:42.470-04:00The good thing about inflation is that is bleeds &...The good thing about inflation is that is bleeds "dead" money. "Dead" money is money in foreign bank accounts that is not part of any productive economy. Hopefully, higher inflation will force this "dead" money back into the productive economy. Peter Johnhttps://www.blogger.com/profile/01251035181405337913noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-50717233896718140042013-08-17T12:55:01.933-04:002013-08-17T12:55:01.933-04:00Printing money is here to stay because government ...Printing money is here to stay because government cronies benefit from it at the expense of everyone else and especially the poor.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-39453985606230108492013-08-17T12:11:47.615-04:002013-08-17T12:11:47.615-04:00Keynes and Friedman were just apologists for big g...Keynes and Friedman were just apologists for big government and that printing money was the cure for all our woes. Keynes thought taxing the productive people of society and printing money money to build pyramids was a great idea. The state mucking around in the economy is what causes recessions then people call for more of the same. Printing money cause inflation which hurts the poor the most and then people like Krugman calls for more inflation.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-72302929343316934062013-08-17T11:40:26.841-04:002013-08-17T11:40:26.841-04:00It doesn't seem to produce even that...It doesn't seem to produce even that...Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67457497762142198942013-08-17T11:26:00.011-04:002013-08-17T11:26:00.011-04:00Does anyone here think printing money produces any...Does anyone here think printing money produces anything except inflation?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67518262661504253642013-08-17T10:09:24.759-04:002013-08-17T10:09:24.759-04:00Our full time working population shift from 69.2% ...Our full time working population shift from 69.2% in 2006 to 44.7% (current) has NEVER recovered. This invalidates ALL past popular economic theories. We'd be best to look at Japan's experience and throw out the current models that have been fully invalidated. <br /><br />Garbage in garbage out - these models are primarily used by the power elite to justify economic theft from the working class.<br /><br />We've been in a labor depression for a very long time. Anonymoushttps://www.blogger.com/profile/15959148575975821434noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-73294111510627900972013-08-16T11:44:29.759-04:002013-08-16T11:44:29.759-04:00The U.S. has a printing press, so there will never...<i>The U.S. has a printing press, so there will never be a formal default, threats of some politicians notwithstanding.</i><br /><br />You don't believe Congress has the power to default on US debt?<br /><br /><i>You should really stop thinking that there is a good side and a bad side in American politics.</i><br /><br />How do you know what I am thinking? I certainly didn't write that.<br /><br /><i>They both have the same agenda, and they arrive at that agenda by taking opposing views in the extreme and then pretend to meet in the middle.</i><br /><br />How on earth did you reach this conclusion? I do not think you arrived at that by patiently observing the real world.<br /><br />mattskihttps://www.blogger.com/profile/07936264188400397646noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-87381074405465986012013-08-16T09:51:10.910-04:002013-08-16T09:51:10.910-04:00http://research.stlouisfed.org/fred2/series/TWEXB
...http://research.stlouisfed.org/fred2/series/TWEXB<br /><br />"which has already begun" <br /><br />derp<br /><br />Make sure you're isolating the change in value from other exogenous factors, btw. Jefftopiahttps://www.blogger.com/profile/05005211633248766565noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-21041086986338353862013-08-16T09:46:17.750-04:002013-08-16T09:46:17.750-04:00derp
*bows head in shame*derp<br /><br />*bows head in shame*Jefftopiahttps://www.blogger.com/profile/05005211633248766565noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-42084842650757841312013-08-16T09:30:52.724-04:002013-08-16T09:30:52.724-04:00This is Neil. I don't take sides in political...This is Neil. I don't take sides in political theater, especially when it comes to acts like the debt ceiling. The only reason the ceiling even exists is so they can put on these side shows for the public. The U.S. has a printing press, so there will never be a formal default, threats of some politicians notwithstanding. The U.S. will informally default by diluting the purchasing power of its currency, a process which has already begun but the effects of which have not yet been realized by the public. There are a lot of political advantages to an informal default. It is covert, gives you more time to live beyond your means, and enables you to blame someone else for the higher prices of goods. Speculators, retailers and large corporations are the best scapegoats. You should really stop thinking that there is a good side and a bad side in American politics. They both have the same agenda, and they arrive at that agenda by taking opposing views in the extreme and then pretend to meet in the middle. Anonymousnoreply@blogger.com