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Jeff
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Re: A Tale of Two Socialisms
Reply #120 - May 16th, 2019 at 3:25pm
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BobK71 wrote on May 16th, 2019 at 2:00pm:
Inflation is generally the least favorite among the elites' options.  To the extent they can get away with them, the more preferable ones are default/deflation, exporting the pain to other countries (with military force if necessary,) and financial repression.
In fact Bob, they love inflation, which is why they all do it. They create fiat money and enact legal tender laws specifically so they can inflate the supply of money.

Inflation benefits governments in so many ways, but all it does for the commoners is constantly erode their wealth while it raises them into ever higher tax brackets.
  

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Re: A Tale of Two Socialisms
Reply #121 - May 16th, 2019 at 4:23pm
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BobK71 wrote on May 16th, 2019 at 2:00pm:
The 2% wealth tax would be inflationary


The 2% tax would be punative.  The rich if they paid it would be working for no money, only to maintain what they have.  They of course aren't that stupid.  They would put all their effort into moving their wealth offshore out of the hands of the greedy leftists.  That would cause our economy to implode.  "Inflation" would be the least of our problems.

That is the goal of the left.  To have a tax rate of over 100%


BobK71 wrote on May 16th, 2019 at 2:00pm:
whether the money is thrown out to the plebes on the street or spent via programs.  In the pockets of the rich, the same money would only drive up asset prices and not chase goods and services


That makes no sense.  Can you translate it from gobbledygook to English?
  

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Jeff
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Re: A Tale of Two Socialisms
Reply #122 - May 16th, 2019 at 7:54pm
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kaz wrote on May 16th, 2019 at 4:23pm:
That makes no sense.  Can you translate it from gobbledygook to English?
That is English kaz, its a genre of the English language called "nonsense".
  

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BobK71
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Re: A Tale of Two Socialisms
Reply #123 - May 17th, 2019 at 4:43pm
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Jeff wrote on May 16th, 2019 at 3:25pm:
In fact Bob, they love inflation, which is why they all do it. They create fiat money and enact legal tender laws specifically so they can inflate the supply of money.

Inflation benefits governments in so many ways, but all it does for the commoners is constantly erode their wealth while it raises them into ever higher tax brackets.


This is totally understandable and used to be my thinking, too.  The dollar has easily lost 90%+ of its purchasing power since the Fed was founded in 1913.

I have come to believe that inflation happens only when the elites can't help it.  (That inflation since 1913 happened in spite of their best efforts, not because of them.)  Fiat money makes it easier for them to inflate money, true, but fiat money was instituted only when silver and gold standards had finally failed in even the weakest form, from runs on the precious metals.  Again, change happened in spite of, not because of, the elites' wishes.

The easiest way to look at it is: the elites can have inflation any time they want.  Always.  Just print money (even under a metallic standard -- they could always devalue state paper money against gold or silver and still have as much stability as they wanted, for the time being, depending on the degree of devaluation.)

If this option is available all the time, why go through all the trouble to pursue post-crisis austerity, 'tapering,' 'balance sheet normalization,' foreign policies and wars designed to prop up the dollar, suppression of gold 'market' prices, etc.?  Most of these are not popular policies, and much pressure has to be put on politicians and central bankers to make them go along.

The answer is that the top elites prefer these to inflation.  In fact, that's the only possible answer, given this history.  There's no quicker way to destroy their power base than a fast and obvious debasement of their money.  (Think of the French revolutionary, or Weimar paper money.)  So inflation, at least at the center of the system (UK, then US,) has been gradual and only noticeable over the long term.

From the early 20th century, the growth of labor unions and democracy (universal suffrage was not practiced even in the UK and US before then) have made these unpopular alternatives to inflation even more politically difficult.  Lo and behold, the early to mid 20th century also 'happened' to be the time when the gold standard was destroyed, one step at a time.

The elites will minimize inflation, and maximize the other responses to financial inflation, to the extent the people allow them to.
  
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BobK71
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Re: A Tale of Two Socialisms
Reply #124 - May 17th, 2019 at 5:12pm
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kaz wrote on May 16th, 2019 at 4:23pm:
The 2% tax would be punative.  The rich if they paid it would be working for no money, only to maintain what they have.  They of course aren't that stupid.  They would put all their effort into moving their wealth offshore out of the hands of the greedy leftists.  That would cause our economy to implode.  "Inflation" would be the least of our problems.

That is the goal of the left.  To have a tax rate of over 100%


I would agree that the capital flight scenario would be the last thing the elites or most Americans want.  It would be complicated to assess its likelihood, but I'm sure those pushing this tax assume it away.  If you do that, then inflation becomes the main issue.

I wrote, "whether the money is thrown out to the plebes on the street or spent via programs.  In the pockets of the rich, the same money would only drive up asset prices and not chase goods and services."
kaz wrote on May 16th, 2019 at 4:23pm:
That makes no sense.  Can you translate it from gobbledygook to English?


The same thousand dollars in the hands of a millionaire 50 times over is likely to go into stocks, bonds, or real estate, since the man has bought all the goods and services he wants, but is likely to go into buying food, better housing, vacations, etc. in the hands of ordinary people (whether recipients of 'universal basic income' or low-level bureaucrats who are hired into new programs enabled by this money.)  Thus this transfer of wealth tends to drive up the cost of goods and services.
  
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Jeff
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Re: A Tale of Two Socialisms
Reply #125 - May 17th, 2019 at 6:23pm
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BobK71 wrote on May 17th, 2019 at 4:43pm:
I have come to believe that inflation happens only when the elites can't help it.
What gives you an idea like that, completely unrelated to reality?
  

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Jeff
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Re: A Tale of Two Socialisms
Reply #126 - May 17th, 2019 at 6:23pm
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BobK71 wrote on May 17th, 2019 at 4:43pm:
I have come to believe that inflation happens only when the elites can't help it.
Sorry, some sort of glitch.

  

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Re: A Tale of Two Socialisms
Reply #127 - May 18th, 2019 at 7:34am
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BobK71 wrote on May 17th, 2019 at 5:12pm:
I would agree that the capital flight scenario would be the last thing the elites or most Americans want.  It would be complicated to assess its likelihood


Well here's a handy dandy reference for you.

If the government starts taxing "wealth," it's 100%


BobK71 wrote on May 17th, 2019 at 5:12pm:
but I'm sure those pushing this tax assume it away.  If you do that, then inflation becomes the main issue


The main issue would be the poverty caused by our economy imploding.  The Democrats want to achieve Venezuela here, and they're going to get it.  It's only a matter of time

BobK71 wrote on May 17th, 2019 at 5:12pm:
I wrote, "whether the money is thrown out to the plebes on the street or spent via programs.  In the pockets of the rich, the same money would only drive up asset prices and not chase goods and services."

The same thousand dollars in the hands of a millionaire 50 times over is likely to go into stocks, bonds, or real estate, since the man has bought all the goods and services he wants, but is likely to go into buying food, better housing, vacations, etc. in the hands of ordinary people (whether recipients of 'universal basic income' or low-level bureaucrats who are hired into new programs enabled by this money.)  Thus this transfer of wealth tends to drive up the cost of goods and services.


I see, so you think when money is invested, it goes into a different economy than if it's spent.  Sort of like the NFL and the NBA.

Actually, there is only one economy
  

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BobK71
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Re: A Tale of Two Socialisms
Reply #128 - May 20th, 2019 at 9:07am
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kaz wrote on May 18th, 2019 at 7:34am:
Actually, there is only one economy


There may be one economy, but there are two Americas (or, more precisely, two worlds in a globalized economy.)

There are people who work in the new knowledge economy, trying out all kinds of experiments that hope to revolutionize productivity.  Then there are those in the traditional businesses who produce the commodities that have always supported life.  (These include developing countries churning out cheap 'stuff' to fill our shops.)

And in a company like Uber, you have both worlds side by side!  (With each group treated accordingly, nicely or not so much.)

The MO of the elites of the last few decades was to keep goods and services pricing down by fostering deflation and competition in the second world, but getting a lot of speculative money poured into the first world.  The cheapness of commodities maintains faith in the money they issue, while, if and when big successes come from the first world, the growth helps rescue them from the chronic condition of financial socialism -- many more claims to wealth have been issued than there is actual wealth, at current prices.

'At current prices' is the key phrase.  Such a world is inherently unequal and unstable (based on the elites picking winners and losers rather than free market dynamics.)  At a certain point, when not enough successes come out of the first world, the elites have to contemplate inflation in the second world to stabilize their system and keep their power.  This is only a last resort, but it looks like we're getting there now.
  
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kaz
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Re: A Tale of Two Socialisms
Reply #129 - May 20th, 2019 at 9:16am
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BobK71 wrote on May 20th, 2019 at 9:07am:
There may be one economy, but there are two Americas (or, more precisely, two worlds in a globalized economy.)

There are people who work in the new knowledge economy, trying out all kinds of experiments that hope to revolutionize productivity.  Then there are those in the traditional businesses who produce the commodities that have always supported life.  (These include developing countries churning out cheap 'stuff' to fill our shops.)

And in a company like Uber, you have both worlds side by side!  (With each group treated accordingly, nicely or not so much.)

The MO of the elites of the last few decades was to keep goods and services pricing down by fostering deflation and competition in the second world, but getting a lot of speculative money poured into the first world.  The cheapness of commodities maintains faith in the money they issue, while, if and when big successes come from the first world, the growth helps rescue them from the chronic condition of financial socialism -- many more claims to wealth have been issued than there is actual wealth, at current prices.

'At current prices' is the key phrase.  Such a world is inherently unequal and unstable (based on the elites picking winners and losers rather than free market dynamics.)  At a certain point, when not enough successes come out of the first world, the elites have to contemplate inflation in the second world to stabilize their system and keep their power.  This is only a last resort, but it looks like we're getting there now.


Gotcha, Karl.  The bourgeois is oppressing the proletariat.  The bastards
  

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