Everything we know about economics is wrong

[Brucethethinker]

We don't need to take Printing $2000 and taxing $2000 is identical in its effect. This is Econ 101 class one day one. Do you want a reading list to get up to speed?

If the government would print $2,000, instead of making me pay a $2,000 tax, I'd still have my $2,000. What am I missing here?

 

[EdwardBaiamonte]

We don't need to take Printing $2000 and taxing $2000 is identical in its effect. This is Econ 101 class one day one. Do you want a reading list to get up to speed?

If the government would print $2,000, instead of making me pay a $2,000 tax, I'd still have my $2,000. What am I missing here?

too stupid of course. Printing $2000 and taxing $2000 is identical in its effect. This is Econ 101 class one day one. Do you want a reading list to get up to speed?

 

[Brucethethinker]

Printing $200ce0 and taxing $2000 is identical in its effect.

Taxing me $2,000 causes my bank account to be $2,000 less. Printing $2,000 does not change my bank account. Because those are different things, the effect is NOT identical. This is the last time I'll try to explain this simple concept.

 

[EdwardBaiamonte]

Printing $200ce0 and taxing $2000 is identical in its effect.

Taxing me $2,000 causes my bank account to be $2,000 less. Printing $2,000 does not change my bank account. Because those are different things, the effect is NOT identical. This is the last time I'll try to explain this simple concept.

you idiot! printing $2000 raises prices $2000 so either way you are out $2000. Econ 101.

 

[Brucethethinker]

printing $2000 raises prices $2000 so either way you are out $2000. Econ 101.

I don't understand how printing $2,000 raises prices. If I sell something, I decide how much I'll ask for it. I don't need to know if $2,000 was printed last week.

I think I understand the source of your confusion. Many years ago, when production was limited, having more money available would enable bidders to bid more for those limited items, causing the price to go up. This is no longer the case. It's never really been the case. Take milk for example. If the price of milk were to suddenly get cut in half, it wouldn't cause people to buy more. People only want a certain amount of milk. I have enough money in my bank account to buy what I need. If I had $2,000 more, I wouldn't buy anything else, I'd just leave the money in the account.

Which is why I say everything you think you know about economics is wrong.

 

[ShackledNation]

What is a job? Most think a job is an arrangement between 2 people, whereby one of them works for the other and is paid wages. Another definition is that a job is a piece of work that needs to be done. Suppose you’re part of an Amish family. There are lots of jobs on the farm that need doing, and everyone does them. If the head of the family announces that today there are no jobs that need to be done, would that be a bad thing, or a good thing? If a job is work that needs doing, then high unemployment is a good thing, because it means it takes fewer of us to produce everything we need. People don’t want jobs, what they want are paychecks. If there’s nothing for them to do, that’s ok, just give them a paycheck.

You may will ask where the money will come from. To ask that question implies that money actually is something. Real money, such as gold and silver, actually exists. Fiat money, which is what we have, doesn’t really exist. Because we were so recently on the gold standard, and because we used real silver in coins until 1964, people are confused by fiat money.

We can pretend we have any amount of money we want. We can give everyone fiat money to buy food, and pay farmers fiat money to grow food. We don’t need taxes. We may want some taxes, such as cigarette taxes, to influence behavior, but we don’t need them to generate revenue for the government.

Suppose you, and the government, both want to buy a Harley Davidson motorcycle. The government taxes you so they can buy it, and since you now don’t have the money, you can’t buy it. With our technology today, Harley Davidson can make all the motorcycles they want. If they have to hire more people, that’s ok, there are plenty of people who want to work there.

The law of supply and demand no longer applies. If there’s a huge demand for something, the price goes down, not up. Of course this doesn’t apply to things that are limited, such as rare coins, but is does apply to everything that is unlimited. Today, we can produce virtually unlimited amounts of anything.

So, I propose an end to most taxes, except for where its purpose is to influence behavior. The money “received” from these taxes is just ignored. The federal government can issue money to local governments. Everyone is issued a food stamp card. It’s probably cheaper to give a food stamp card to everyone who wants one than it is to hire people to make sure the recipients are qualified to get free food. Make social security the same for everyone, even if they never worked for wages. Give everyone a mobile home. The reason housing is so expensive is because the government makes it that way. Homeowners want to protect their investment, so they make mobile homes and high rise apartments illegal. I claim that someone’s right to affordable housing trumps someone else’s right to make money on the housing shortage. So mobile homes should be allowed everywhere.

Last, I propose unlimited unemployment benefits. Some people will get on it at 25 and stay on it all their lives, but so what? Do we want these types to be working, or looking for work, or doing something else to get money to live on? There are plenty of people who want to work to do all the work that needs to be done.

It would work. Unfortunately, it will never be implemented.

Looks like someone never comprehended the concept of scarcity.

 

[ShackledNation]

dear, does that somehow mean in your twisted world that if you take $2000 from me to pay for some guys welfare I should not care?

Did you read my original post? I know it was somewhat long. I propose no taxes, except when we want to affect behavior, like the tax on cigarettes. We don't need to take $2,000 from anyone, we just print it, create it out of thin air, declare it to exist.

Creating paper notes out of thin air does not simultaneously create real wealth. You are delusional and sorely misguided. I suggest you study Zimbabwe and the Weimar Republic for starters.

Also look at what happened to prices in towns where gold was found in the 19th century Western United States, a time when gold circulated as money.

 

[ShackledNation]

printing $2000 raises prices $2000 so either way you are out $2000. Econ 101.

I don't understand how printing $2,000 raises prices. If I sell something, I decide how much I'll ask for it. I don't need to know if $2,000 was printed last week.

I think I understand the source of your confusion. Many years ago, when production was limited, having more money available would enable bidders to bid more for those limited items, causing the price to go up. This is no longer the case. It's never really been the case. Take milk for example. If the price of milk were to suddenly get cut in half, it wouldn't cause people to buy more. People only want a certain amount of milk. I have enough money in my bank account to buy what I need. If I had $2,000 more, I wouldn't buy anything else, I'd just leave the money in the account.

Which is why I say everything you think you know about economics is wrong.

How do you know the amount of milk that people want? How do you know people will not buy more? Where are you getting this information? If you had $2,000 more in your account eventually you would spend it or invest it. If not, when you die, someone else will. The reality is that if every American were given $2,000, they would likely spend most if not all of it.

 

[Brucethethinker]

Looks like someone never comprehended the concept of scarcity.

My point is that today we have no scarcity. Whatever we want, we can produce. It used to take a certain number of man hours to produce something. Today, if there is enough demand, we can produce virtually limitless amounts of virtually everything.

How do you know the amount of milk that people want? How do you know people will not buy more? Where are you getting this information?

I studied economics in college. Milk is an example used in class for inflexible demand. If the price of milk were to double, people would still buy it. After all, they have children who need it. Lowering the price will increase consumption to a point, but someone who normally buys 1 gallon of milk / week isn't going to start buying 10 gallons if the price is really cheap. I got my information in Econ 101 (literally).

If you had $2,000 more in your account eventually you would spend it or invest it. If not, when you die, someone else will. The reality is that if every American were given $2,000, they would likely spend most if not all of it.

There's another possibility. Fiat currencies eventually fail. I suspect that is what will happen to a lot of fiat money. In extreme need people will spend whatever they have to. For example, you run out of gas and walk to the nearest gas station. If there is no other gas station nearby, you'll pay whatever they ask for gas. If they want more than you have, you'll use your credit cards. My point is you won't make your buying decision based on your financial situation.

 

[ShackledNation]

Looks like someone never comprehended the concept of scarcity.

My point is that today we have no scarcity. Whatever we want, we can produce. It used to take a certain number of man hours to produce something. Today, if there is enough demand, we can produce virtually limitless amounts of virtually everything.

False. Today we do have scarcity. Anyone who says we don't does not understand the concept of scarcity in the first place. I suggest you define scarcity. That may reveal a lot about what you actually know.

How do you know the amount of milk that people want? How do you know people will not buy more? Where are you getting this information?

I studied economics in college. Milk is an example used in class for inflexible demand. If the price of milk were to double, people would still buy it. After all, they have children who need it. Lowering the price will increase consumption to a point, but someone who normally buys 1 gallon of milk / week isn't going to start buying 10 gallons if the price is really cheap. I got my information in Econ 101 (literally).

I laughed out loud at that one. You know the precise amount of milk that needs to be sold because you studied economics in college? Really? You honestly think that? No. You have also limited your understanding of who buys milk to families. Restaurants may buy more milk for their dishes, and the cheaper price will allow them in turn to reduce prices. The result is cheaper restaurant meals, encouraging more people to go to restaurants. There are so many possibilities that you cannot possibly say what would happen.

Now it is possible that milk could be overproduced beyond what people want, but that is what markets are for. If there is a huge excess of unsold milk, prices for milk will be so low they might discourage production. Producers might even cut back. Prices would then rise again. Typical free market activity.

The point is you can't possibly know what the ideal supply of milk is. No human being possesses that knowledge, nor can they.

There's another possibility. Fiat currencies eventually fail. I suspect that is what will happen to a lot of fiat money. In extreme need people will spend whatever they have to. For example, you run out of gas and walk to the nearest gas station. If there is no other gas station nearby, you'll pay whatever they ask for gas. If they want more than you have, you'll use your credit cards. My point is you won't make your buying decision based on your financial situation.

So first you say that people will save $2,000, but now you say they will spend beyond what they have and ignore their financial situation? You are talking out of both sides of your mouth. And both sides are total BS.

Look, you may think you know a lot about economics because you took some classes in college, but clearly you either had bad professors, didn't pay enough attention, or took the wrong classes. Your thinking on economics is irrational, nonsensical, and plainly wrong. Considering most posters have told you the same, perhaps you should do some self reflection.

 

[ShackledNation]

Printing $200ce0 and taxing $2000 is identical in its effect.

Taxing me $2,000 causes my bank account to be $2,000 less. Printing $2,000 does not change my bank account. Because those are different things, the effect is NOT identical. This is the last time I'll try to explain this simple concept.

Printing $2,000 changes the real value of your bank account. If the money supply doubles, increasing faster than economic growth, and that supply circulates throughout the economy, prices will rise. If your bank account is the same nominal value, since prices are higher in real terms it will be able to buy less. In other words, virtually the same effect of taxation, just far more indirect.

Wealth does not come out of thin air.

 

[EdwardBaiamonte]

Printing $200ce0 and taxing $2000 is identical in its effect.

Taxing me $2,000 causes my bank account to be $2,000 less. Printing $2,000 does not change my bank account. Because those are different things, the effect is NOT identical. This is the last time I'll try to explain this simple concept.

Printing $2,000 changes the real value of your bank account. If the money supply doubles, increasing faster than economic growth, and that supply circulates throughout the economy, prices will rise. If your bank account is the same nominal value, since prices are higher in real terms it will be able to buy less. In other words, virtually the same effect of taxation, just far more indirect.

Wealth does not come out of thin air.

I don't think we'll hear from Bruce the non thinker any more.

 

[Brucethethinker]

I suggest you define scarcity.

Scarcity: insufficiency or shortness of supply

Today we do have scarcity.

Other than intelligent thought, please tell me what is scarce today. What is so scarce that the price is rising, and will keep rising even more if more money is created via printing.

Now it is possible that milk could be overproduced beyond what people want, but that is what markets are for.

The reason I used milk as an example is because I recall seeing it used as an example in a college class. Actually, milk is unique, in that we have a program called the milk price supports. There is no free market for milk in the USA. Back in the great depression, a news reel was made that showed farmers pouring milk into the street, because they said the price was so low that they couldn't afford to drive it to market. To counter the negative publicity, Roosevelt instituted the milk price support program, by which dairy farmers are assured the government will buy excess production at a set price. This is where the government cheese originated.

Look, you may think you know a lot about economics because you took some classes in college, but clearly you either had bad professors, didn't pay enough attention, or took the wrong classes. Your thinking on economics is irrational, nonsensical, and plainly wrong. Considering most posters have told you the same, perhaps you should do some self reflection.

I also have an uncle who is a PHD in economics and a full professor. I've talked with him as well. The fact that most posters don't agree with me concerns me not. I can also prove god exists, but very few agree with me.

 

[EdwardBaiamonte]

The fact that most posters don't agree with me concerns me not..

that because you don't value thought or reason. Printing money causes inflation, nothing more yet you think it creates real wealth or is some sort of free lunch. 100% stupid as amy child would know.

 

[ShackledNation]

I suggest you define scarcity.

Scarcity: insufficiency or shortness of supply

False. That is the definition of a shortage. Scarcity is the most fundamental problem of economics, which basically states that resources are limited. Scarcity always exists. Time, for example, is a scarce resource. Say I am only able to work 20 hours per day, otherwise sleep deprivation will take over. I cannot possibly do tasks that require more than 20 hours because time is scarce.

A shortage is when supply is insufficient or short compared to demand. Your conflation of the concept of a shortage, which originates at a given market price, and scarcity, which is a natural reality, is the root of your bizarre and irrational confusion about economics.

Today we do have scarcity.

Other than intelligent thought, please tell me what is scarce today. What is so scarce that the price is rising, and will keep rising even more if more money is created via printing.

Nearly all resources are scarce. Again, you have conflated the terms "shortage" and "scarcity." There are next to no shortages anymore today due to highly advanced markets. That does not mean scarcity does not exist. Human beings have just became very good at allocating scarce resources in ways that do not result in shortages.

Now it is possible that milk could be overproduced beyond what people want, but that is what markets are for.

The reason I used milk as an example is because I recall seeing it used as an example in a college class. Actually, milk is unique, in that we have a program called the milk price supports. There is no free market for milk in the USA. Back in the great depression, a news reel was made that showed farmers pouring milk into the street, because they said the price was so low that they couldn't afford to drive it to market. To counter the negative publicity, Roosevelt instituted the milk price support program, by which dairy farmers are assured the government will buy excess production at a set price. This is where the government cheese originated.

Milk is often used to describe the concepts of elasticity/inelasticity, not scarcity. Also, to say there is no free market for milk in the US is not accurate. There is government intervention in the milk industry, mainly price floors, but to say therefore no free market exists is not true.

Look, you may think you know a lot about economics because you took some classes in college, but clearly you either had bad professors, didn't pay enough attention, or took the wrong classes. Your thinking on economics is irrational, nonsensical, and plainly wrong. Considering most posters have told you the same, perhaps you should do some self reflection.

I also have an uncle who is a PHD in economics and a full professor. I've talked with him as well. The fact that most posters don't agree with me concerns me not. I can also prove god exists, but very few agree with me.

Okay, and I have an uncle who won a nobel prize in economics. Maybe that's true, maybe its not. But the fact that you may have spoken with a relative (which nobody can prove, so it is an irrelevant point by the way) does not mean you or your uncle is correct.

 

[Brucethethinker]

The fact that most posters don't agree with me concerns me not..

that because you don't value thought or reason. Printing money causes inflation, nothing more yet you think it creates real wealth or is some sort of free lunch. 100% stupid as amy child would know.

If printing money causes inflation, why has inflation been so low the last few years, while the printing presses have been going full bore? Please explain.

I suggest you define scarcity.

Scarcity: insufficiency or shortness of supply.

False. That is the definition of a shortage.

To quote dictionary.com:

scarcity
[skair-si-tee] Spell Syllables
Synonyms Examples Word Origin
noun, plural scarcities.
1. insufficiency or shortness of supply; dearth.
2. rarity; infrequency.

shortage
[shawr-tij] Spell Syllables
Synonyms Examples Word Origin
noun
1. a deficiency in quantity:
a shortage of cash.
2. the amount of such deficiency.

Scarcity is the most fundamental problem of economics, which basically states that resources are limited. Scarcity always exists.

Which is why I titled this thread "everything we know about economics is wrong".

Time, for example, is a scarce resource. Say I am only able to work 20 hours per day, otherwise sleep deprivation will take over. I cannot possibly do tasks that require more than 20 hours because time is scarce.

The man my father bought his farm from started out farming with horses. It takes a man 20 hours to farm an acre with horses. The man who farms it now can farm 10 acres in 8 hours. So, he can do tasks that require more than 20 hours, in fact 200 hours, in one day, and not be working very hard.

Nearly all resources are scarce.

You failed miserably with your first example (time), so please give me another example of a "limited resource".

Also, to say there is no free market for milk in the US is not accurate. There is government intervention in the milk industry, mainly price floors, but to say therefore no free market exists is not true.

What charastics of the free market apply to milk in the US? I suppose it is hypothetically possible that there could suddenly be a huge demand that would raise the price, but that has never happened, because it can't really happen. You've agreed that there is a floor, so what about the milk market in the US is free?

Okay, and I have an uncle who won a nobel prize in economics. Maybe that's true, maybe its not. But the fact that you may have spoken with a relative (which nobody can prove, so it is an irrelevant point by the way) does not mean you or your uncle is correct.

I only mentioned it to describe the evolution of my theories, not to prove them, which it doesn't. Winning a nobel prize doesn't prove anything.

 

[ShackledNation]

If printing money causes inflation, why has inflation been so low the last few years, while the printing presses have been going full bore? Please explain.

Well let's review my actual argument, the key qualifiers of which you left out:

"If the money supply doubles, increasing faster than economic growth, and that supply circulates throughout the economy, prices will rise. "

So why has inflation been low? Well there has been economic growth, but hardly enough to balance out a massive increase in the money supply. The second point has the answer. The money is not circulating in the economy. The banks are just holding it in the form of excess reserves, which are higher than they have ever been in history. Furthermore, the Fed has ended quantitative easing, and is signalling it will raise interest rates. These factors also counteract inflationary effects.

Another thing worth mentioning is that the US dollar has gained ground on other currencies. Thus the demand for the dollar has increased, putting downward pressure on prices.

It is not as simple as "more money=inflation." But then again, that was never the argument.

False. That is the definition of a shortage.

To quote dictionary.com:

scarcity
[skair-si-tee] Spell Syllables
Synonyms Examples Word Origin
noun, plural scarcities.
1. insufficiency or shortness of supply; dearth.
2. rarity; infrequency.

shortage
[shawr-tij] Spell Syllables
Synonyms Examples Word Origin
noun
1. a deficiency in quantity:
a shortage of cash.
2. the amount of such deficiency.

You do realize that in the field of economics those are not the definitions used? Let's try this: explain the difference between the concepts of scarcity and shortages with respect to the study of economics.

Scarcity is the most fundamental problem of economics, which basically states that resources are limited. Scarcity always exists.

Which is why I titled this thread "everything we know about economics is wrong".

Yes, I get why your title is what it is. Unfortunately, what you think everyone knows about economics isn't even accurate, as you have a faulty understanding of what scarcity it.

Time, for example, is a scarce resource. Say I am only able to work 20 hours per day, otherwise sleep deprivation will take over. I cannot possibly do tasks that require more than 20 hours because time is scarce.

The man my father bought his farm from started out farming with horses. It takes a man 20 hours to farm an acre with horses. The man who farms it now can farm 10 acres in 8 hours. So, he can do tasks that require more than 20 hours, in fact 200 hours, in one day, and not be working very hard.

Why are you adding horses? That is totally irrelevant. Using time more productively does not make time less scarce.The man can still only work 20 hours per day. Whether or not he is farming using horses or not is irrelevant. If he spends 20 hours farming he cannot spend any time doing something else. You completely missed the point of the example

Nearly all resources are scarce.

You failed miserably with your first example (time), so please give me another example of a "limited resource".

No I didn't, you simply failed to grasp the simple point of the example and made the error of conflating productivity with time.

Also, to say there is no free market for milk in the US is not accurate. There is government intervention in the milk industry, mainly price floors, but to say therefore no free market exists is not true.

What charastics of the free market apply to milk in the US? I suppose it is hypothetically possible that there could suddenly be a huge demand that would raise the price, but that has never happened, because it can't really happen. You've agreed that there is a floor, so what about the milk market in the US is free?

There are a variety of competing milk products, sold in competing stores, at various prices, and milk is produced on the free market not by public government run entities. The price floors on milk are also quite low, so low in fact that the government does not actually have to buy milk to prop the price up. So really, the policy has very little effect at all. If you think a price floor is enough to completely remove a free market, then you really are confused.

Okay, and I have an uncle who won a nobel prize in economics. Maybe that's true, maybe its not. But the fact that you may have spoken with a relative (which nobody can prove, so it is an irrelevant point by the way) does not mean you or your uncle is correct.

I only mentioned it to describe the evolution of my theories, not to prove them, which it doesn't. Winning a nobel prize doesn't prove anything.

I don't have an uncle who won a nobel prize. I was pointing out how pointless it was to mention some uncle of yours on an online forum. But, like a lot of other things, that seems to have gone over your head.

 

[Politico]

After reading the last six pages. I dunno what you're bringing. But it ain't thinking.

 

[Brucethethinker]

After reading the last six pages. I dunno what you're bringing. But it ain't thinking.

At least I bring complete sentences.

 

[Brucethethinker]

Printing money causes inflation, nothing more yet you think it creates real wealth or is some sort of free lunch. 100% stupid as amy child would know.

It is not as simple as "more money=inflation." But then again, that was never the argument.

It sounds like you're saying printing money causes inflation, except when it doesn't.

I'm saying printing money doesn't cause inflation, because everything we think we know about economics is wrong.

Let's try this: explain the difference between the concepts of scarcity and shortages with respect to the study of economics.

Since everything we know about economics is wrong, that would serve no purpose. But ok, I get it, shortage is short term and scarcity is long term. It doesn't make any difference. Virtually nothing is scarce long term.

Using time more productively does not make time less scarce.The man can still only work 20 hours per day. Whether or not he is farming using horses or not is irrelevant. If he spends 20 hours farming he cannot spend any time doing something else. You completely missed the point of the example

What IS the point of your example? Let me restate my point and maybe it will help you. For a farmer, there is enough time in a day to farm as many acres as he wants. That makes time not scarce.

If you think a price floor is enough to completely remove a free market, then you really are confused.

A dairy farmer is not worried about the price of milk. A hog farmer is worried about the price of corn and the price of hogs, (the old corn / hog ratio) but just having that price floor causes dairy farmers to go full bore, and produce all they can with reckless abandon.

Now try again tell me a resource that is scarce.