Quote :

"The value of money should go up over time, as production and value are added to the economy. This is not deflation in the sense that the money supply contracts - the money supply should actually increase. However, when production of other goods and services outpaces the supply of gold/silver/whatever, purchasing power goes up."

So what happens if, say, population doubles or more?

8/29/2011 6:05:29 PM

That depends on a number of factors, like the time that it takes for the population to double. You can certainly image how there is an economic aspect of population growth - people should recognize that children represent a substantial financial burden, which is the way that the "free market" would control population growth.

If we hold this dangerous idea that everyone should be able to have as many kids as they want and that all of those kids should be educated/fed/cared for "for free," then problems are guaranteed to arise. Think Idiocracy, where those most able to care for children are the least likely to have them and vice versa.

8/29/2011 6:33:09 PM

Not the question I'm asking. I'm saying, suppose the population doubles. Then what?

8/29/2011 7:48:20 PM

I understand the question, but the population doesn't just double overnight - it takes time. The amount of time matters.

The general answer is that the currency will fluctuate based on what those new people end up doing. You could expect moderate price deflation with a population increase, as there are a greater number of people vying for a relatively stable money supply. However, they're also contributing goods and labor, so that also increases the total amount of value being added to the economy.

8/29/2011 7:58:43 PM

Quote :

"I understand the question, but the population doesn't just double overnight - it takes time. The amount of time matters."

Ok let's take the population growth from ... let's say, 1700 to 1900.

8/29/2011 8:02:23 PM

Quote :

"I maintain that this is a completely immoral act, as it reduces the value (in real terms) of cash savings. "

Who's stopping them from keeping their savings in gold or millefiori?

8/30/2011 11:04:26 AM

Quote :

"Ok let's take the population growth from ... let's say, 1700 to 1900."

In North America or what? The population of New England/British settlements in North America went from a few hundred thousand to probably over 25 million from 1700 to 1900, which is a lot more than double.

In that time, the money supply fluctuated based on what is commonly known as "Gresham's Law." Wikipedia defines it as follows: "[Gresham's law] states that when government compulsorily overvalues one money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation."

There were many phases of inflationary policy throughout 1700-1900. Usually, it was specie that was undervalued and paper money (credit, bank notes, government bonds) that was overvalued. As a result, the money supply would decrease as coinage flowed out of the country. There were other times where the money supply would increase - for instance, during the 1800s, silver flowed into the States from Mexico due to inflationary experiments (debasement of the copper coinage) primarily occurring in the Santa Anna regime.

As far as how population plugs in there, I don't know. The value of money and the money supply has just as much to do with the monetary policies of surrounding territories as it has to do with population growth or monetary policy in the country where value is being measured. I would expect that, all things equal, population growth increase will result in higher than normal deflation, though history doesn't show that deflation is all that bad unless it is "contraction" deflation resulting from prior expansion of credit.

Quote :

"Who's stopping them from keeping their savings in gold or millefiori?"

Nothing, and many people are doing that - if you had been doing that since the 90s, or even starting any time since the 90s, you'd be a lot better off than putting your money in a savings account.

Conventional wisdom certainly isn't nudging people in that direction, though. The TV finance pundits tell their watchers to "buy and hold" - stocks will eventually pay off. Of course, that's a lie which the pundits are literally paid to tell.

[Edited on August 30, 2011 at 12:24 PM. Reason : ]

8/30/2011 12:12:40 PM

Quote :

"Moderate? Surely you jest. And even as far as cooperation goes, they agree with us out of one side of their mouths and keep pouring money into radical religious institutions that breed terrorists out of the other. "

I mean, there's the Saudi religious police and all that. I'm not talking about any religious leaders. The princes and stuff are notorious playboys--some of them have caught some flak for it at home. Many are Western educated.

...and yeah, even some of the royals have played both sides, but they have given us more than lip service, for sure.

I'm not saying that Saudi Arabia is a moderate country--definitely not. I'm saying that most of the royal family is pretty moderate in many ways.

8/31/2011 12:35:44 PM

d3stroyer has derailed another thread onto monetary policy. If he has evidence that the "fed is to blame" for any significant portion of rising food prices, he would be the first.

The simple fact is that if food prices were rising as a result of monetary policy, we would expect to see food prices rising along with the prices of other goods (hence the name "general" price inflation). Of course, when we go to the data we see that is not the case. In the US, food prices (CPIUFDNS) were rising at an increasing rate compared to non-food prices (CPIULFSL) for the full year leading up to the Arab Spring.

http://research.stlouisfed.org/fred2/graph/?g=1UG

This suggests that factors exclusive to the food market were driving up prices. Like, say, I don't know, the Russian Heat Wave of 2010 that sent the country's wheat production crashing?
http://www.dailyfinance.com/2010/08/03/russian-heatwave-drives-wheat-prices-to-22-month-high/

That isn't to mention similar natural supply shocks or rising demand for food from emerging countries. But this is all very qualitative. To get a more accurate answer, we'll have to wait until more data is collected/analyzed/and published by ppl better trained than us. Until then, I don't think there is simply no evidence to support the claim "Bernanke has blood on his hands" (via Larry Kudlow).

[Edited on August 31, 2011 at 1:32 PM. Reason : ``]

8/31/2011 1:22:23 PM

Quote :

"Nothing, and many people are doing that - if you had been doing that since the 90s, or even starting any time since the 90s, you'd be a lot better off than putting your money in a savings account."

yes it's called "speculation"

Quote :

"Conventional wisdom certainly isn't nudging people in that direction, though. The TV finance pundits tell their watchers to "buy and hold" - stocks will eventually pay off. Of course, that's a lie which the pundits are literally paid to tell."

yes but the army of paid spokesmen flogging idiots to buy gold with their life savings, that's different

[Edited on August 31, 2011 at 1:25 PM. Reason : .]

8/31/2011 1:24:25 PM

Quote :

"yes but the army of paid spokesmen flogging idiots to buy gold with their life savings, that's different"

Where should they put their money? Can't wait to hear this.

8/31/2011 3:20:59 PM

Quote :

"Where should they put their money? Can't wait to hear this."

up peter schiff's duff of course

8/31/2011 4:18:17 PM

Getting back to the topic. I am not sure the US should support a reboot in the Mideast. It isn't clear these mass uprisings will yield govts that support it's interests.

As Duke notes, one of the most cooperative states there (the Saudis) is not very representative of it's populace. Who says more Democracy will lead to more friends?

8/31/2011 6:04:26 PM

More democracy is more important than more friends. What kind of country opposes democratic revolutions because they were on friendly terms with the outgoing oppressors? I'll answer that: contemptible ones.

That said, democracy has proven to be a stabilizing force in the world. Democracies almost never fight each other, are more likely to trade with each other, and tend not to provide a breeding ground for extremist groups who use authoritarian regimes (and their American backers) as recruiting propaganda.

Supporting democratic movements is in our long-term national interest. It's also the right thing to do, though I realize such moral considerations have become passé (if they were even fashion to begin with).

8/31/2011 7:51:47 PM

8/31/2011 7:54:39 PM

Clever.

8/31/2011 8:26:26 PM

I don't need to repeat my own support for Arab Spring. I was referring exclusively to the question Duke raised in the OP, which (to me) presupposes that these uprisings will in one way or another serve American interests. It isn't clear to me they will.

First, we are not sure what type of government they will yield in most cases. Second, if they do yield something like a democratic government, it isn't clear it would serve America's short-term or long-term interests. Or, honestly, the interests of their citizens. You can ask Germans how the Weimar Republic ended for them.

Quote :

"That said, democracy has proven to be a stabilizing force in the world. Democracies almost never fight each other, are more likely to trade with each other, and tend not to provide a breeding ground for extremist groups who use authoritarian regimes (and their American backers) as recruiting propaganda. "

On what evidence are these sweeping assertions being made? 20 years of relative peace in the post-cold war world and we can already see it will be sunshine and daises between democracies forever.

The democratic governments that dominate the west are a very recent development in the world's political history. Best not to forget that when saying how stabilizing democracies can be.

8/31/2011 9:10:31 PM

If your point is that we should be only cautiously optimistic, then sure. I'm not going to argue with that. If the Islamists were to seize power, that would be a bad thing for the US and Arabs alike.

But I think I can be a bit more firm on the point that, as a country, it would be reprehensible for us to take the position that democracy and human rights are only worth supporting to the extent that they serve our short-term national interests. To the extent that a national identity is worth having, I think it would be shameful to adopt such a selfish, cynical, anti-liberal worldview. That we should support things like democracy and human rights as a matter of principle should, I think, be a given.

[Edited on September 2, 2011 at 1:15 AM. Reason : caution: drunk while posting]

9/2/2011 1:15:14 AM

Rolling back on track . . .

I'm in line with Grumpy on this one. Why would the CIA create a power vacuum in North Africa by toppling two of our longest standing allies in the GWOT? That is question one. Nation states generally prefer stability not chaos.


Also, for the very same reasons that I would argue that central economic planning is bound to fail, I would argue that centralized revolutionary planning is bound to fail. Yes, you might find a group of people willing to overthrow the government for you, but by the very nature of clandestine operations, you would have to keep that group small. You would also have to make sure you picked the right leaders at the outset and hope that they maintained their credibility throughout the revolution and into the transition. ALL of this is contingent on the public actually being willing to revolt. I suspect the CIA got on board rather rapidly after the revolutions began to co-opt them, but I do not think that they created them.


Also QE2 is a monetary bubble inducing reaction to a collapse in the economy brought about by a housing bubble inducing reaction to a tech-industry bubble that burst the year before September 11th. For QE2 to be a CIA plot would require a remarkable amount of consistency.


I think the CIA is certainly capable of fomenting small level government take-overs or capitalizing on large ones, but I think that arguing that the Arab Spring is something deliberately planned and plotted is a bit of a stretch.


Speaking of, this is pretty good article here on the power of ideas within the context of the Arab Spring from TNR: http://www.tnr.com/article/books-and-arts/magazine/94145/september-11-do-ideas-matter

9/2/2011 4:57:27 AM

Quote :

"No, I'm not saying that...I'm saying that I wonder if we saw a few dominos wobbling, gave them a little bump, and then the rest unfolded from there, with our continuing to nudge or resist covertly as able, depending on the country."

Quote :

"Of course--that much is obvious. I'm not suggesting that the CIA manufactured the entire Arab Spring out of thin air or had any sort of omnipotent control over the collective situation, either to start it, stop it, or fully direct it. I'm just suggesting that it could have be fueled and shaped in a meaningful way in concert with diplomatic and military efforts over the last decade, as part of a broader, longer-term (like 50+ year horizon), better orchestrated policy than appears at first glance."

Quote :

" Shit, I have no problem believing that there was a CIA or State Department push for QE2 (though there's no way that QE2 was simply a CIA plot) for that reason"

9/2/2011 10:26:19 AM

Quote :

"I have long held to the view that at least part of the reason for invading Iraq on '03 was that it represented a chance to geopolitically neuter Iran, by surrounding them with U.S. occupied countries, client states/proxies, and relatively pro-western countries (Afghanistan, Pakistan, Iraq, Saudi Arabia, Kuwait, Turkey, Qatar, UAE)."

...and here we are, just a week or two after the announcement of effectively total U.S. withdrawal from Iraq, and President Obama comes out and says that we will be deploying more forces to the region to deal with Iran.

10/30/2011 12:47:09 PM