🎓 Dr. Freemo 🇳🇱 @freemo@social.cleverlibre.org

@Pat

FYI I forgot to mention it at the time but the phenomenon of water breaking up in the stream is called Plateau–Rayleigh instability

https://en.wikipedia.org/wiki/Plateau%E2%80%93Rayleigh_instability

@robryk

@frank87

For starters its not "my model", it is literally just the definition for how to measure money velocity.

We are talking about all money when we talk about inflation, specifically called MZM. When not talking about inflaction other types of money supply like M1 or M2 might be used but those give different meanings and wouldnt apply here.

@shoshin

@swiley

From my personal stance I dont entierly disagree. I feel regulation should be minimized as much as possible. But my point is even to enforce an unregulated system requires that to be forced on people otherwise you have monopolies grow that "regulate" the system harmfully in their favor which is just as much a type of control as if the government did it.

@valleyforge

@swiley

You can not not force your ideas on someone really. Either I can make a law/right that tries to remedy social inequalities (that is forcing something on people), or I can make a law/right for those inequalities to be allowed, and thus forcing the inequalities on the group.

Either way the government needs to make a decision. If the decision you side with happens to look like freedom to you, great, but it wont to the other side, whatever that is. Lack of affirmative action looks like systemic racism and oppression of the majority on the minority. Affirmative action on the other hand looks like favoritism of minorities from the other end. Both feel the other is "forcing" something on them.

@valleyforge

@swiley

I wouldnt say all that left vs right can be very interesting. It is just important to be specific about what left/right you are refering to (libertarian vs authoritarian are rarely considered to be definitions of left and right).

@valleyforge

@frank87

Literally the definition of the velocity of money is related to the price level (a change in which is inflation) and the money supply. Those are the three major values in that equation. To claim the money supply has little to do with it is at odds with literally the most basic and accepted notions of how money works.

Yes your example only had two financial transactions and left out what happens over time. Thus why it doesnt reflect real life. In real life a farmer with more money and plenty of sales breeds more cows (increases their wealth) and that is essential to understanding why as the velocity of money increases **over time** it results in deflation not inflation.

@shoshin

@swiley

Except that the left has never in any accepted text been defined as "utilitarian" that I am aware of. Its really not even all that helpful to refer to "the left" since there are different lefts with some pretty different definitions.

@valleyforge

@frank87

Because our farmer isnt the only farmer in town. Cows are still being sold just at such a slow rate he as an individual isnt getting any sales.

Your example fails because it forgets the fact that as the farmer sells cows he will breed more. So the more people buy cows the more cows are produced over time, deflation occurs.

I am not saying this to be condescending but as someone who has worked professionally modeling economic systems you have a **lot** of reading to do on the subject. We are discussing pretty fundamental concepts in the field here long since proven/established. Economies over time generate wealth.

If you wish to learn about the subject the technical term is "The velocity of money" and is a fancy way of saying "how much money are people spending relative to how much they have". There are equations dictating the immediate and long term effects. Short term (before new wealth has a chance to generate) you will see price levels increase, but long term those prices levels decrease as the wealth generation increases from the money flow. In other words as the assets/wealth increase the velocity of money will increase to follow it and the price levels will decrease in response according to the V_t=PT/M equation.

Also the fact that you think wealth is stationary suggests to me you may not understand what wealth really is. It is neither stationary nor fixed. Wealth grows at tremendous rates year after year and is quite mobile.

@shoshin

@frank87

The best way to demonstrate in a simple example why spending money does not cause inflation but rather deflation is to look at the common example using a farmer.

A farmer has 3 cows. To hold onto those cows costs the farmer feed and no feed for the cows. He is the only cow farmer in town. If he does nothing and no one buys his cows then they will slowly die off and the number of cows in town will decrease and thus the cost for cows will go up. So everyone sitting on their savings and buying few cows over time causes the price of cows to rise, if we see this with all the goods in the market this is inflation.

Now in the scenario where everyone is emptying their bank accounts to buy cows now the farmer sells one cow and has enough money to buy plenty of feed for the two remaining cows. In fact he has extra feed now so he can even start breeding them. Over time he now has 10 cows. The overall wealth has increased 3.33 fold starting with 3 cows and going to 10. There is more wealth. The amount of money remains fixed. Since there are more cows than before cows are now cheaper as a result of the increase in wealth. Therefore deflation has occurred.

Spending over time increases wealth in a population. If the money supply remains fixed while a populations total wealth supply increases that results in deflation.

@shoshin

@frank87

Those two are the same thing, or to put it another way have a cause effect relationship. Wealth is the value of your assets, for example the number of cows a farm has is part of its wealth. How much physical money you need to equate to a certain amount of wealth is effectively the price level of objects.

If I spend my money and buy things the reason prices dont rise is because by buying things you allow more things to be manufactured as well, so while the act of buying things increases the supply it also increases the demand, and therefore do not necessarily have inflation.

You are also incorrect about stating that the earlier QE didnt cause inflation. It not just caused inflation but caused one of the highest rates of inflation we had seen at around 5.5%. Thankfully we stopped the QE and after a bit of time the inflation rate dropped back to normal until Trump's QE caused it to surge again.

@shoshin

@frank87

Thats not really how inflation works. Spendingyour savings on someone else just makes it their savings. The total amount of money people have in savings or in general is unchanged.

In fact for most transactions you generate wealth while keeping the total amount of money the same therefore on its own this causes deflation not inflation, even if its bad for an economy overall.

You seem to be falling into the general fallacy that anything bad for an economy creates inflation, this is simply not the case.

@shoshin

@frank87

Yup, exactly my point. For years now the 2008 QE was no longer driving inflation like it was int he years immediately following it. We were doing good and inflation was no longer a concern. Then when CV hit and Trump relied on massive CE of a nature and magnitude never before seen now we are are seeing, as expected, unprecedented inflation rates again as a direct result in the wake of that QE. This will likely continue for another year or two before the QE will be far enough behind us to no longer be driving the inflation.

@shoshin

@icedquinn Could do:

Positive Insights & Sane Solutions

@frank87

the nature and volumn of Trumps QE well exceeded that of 2008. That said the inflation that resulted from 2008 already come and went, it doesnt last forever, so a moot point either way.

@shoshin

@frank87

QE causes inflation, QE delays and under the right circumstances might prevent depression.

So while the inflation is absolutely much worse due to Trump's QE, and therefore he deserves a lot of blame for it, the truth is if we didnt have QE we wouldnt have inflation sure, but we would be in a very serious financial depression right now. That might solve the inflation issue but that isnt much better a situation to be in.

@shoshin

@robryk indeed it is, yea. Thanks. I will address it in the next code update.

@robryk yea thats the cross-domain script error I was referring to.