Krugman's very very simple solution to end this depression

[The Rabbi]

Look a little harder.



Of course. How is this hard to understand? Some inflation comes from money growth, which raises nominal incomes. Some inflation comes from supply shocks (like the oil shocks of the 70s), and raises prices without raising income.

Here's why it should be super obvious to you: if inflation through excessive money growth could raise prices without a corresponding raise in wages, then monetary policy can permanently change the real wage. There's your first hint, since it violates the classical dichotomy. Your second hint is that this results in a permanent Phillips curve trade-off. Through setting the rate of inflation at an appropriate level the central bank can permanently affect the real wage such that no unemployment happens. They can permanently keep the economy at full employment by accepting more inflation. This was the theory that 70s stagflation disproved.

To summarize, this is what you need to address: 1) Monetary inflation must necessarily raise incomes in the same proportion as prices otherwise the Phillips curve holds. 2) Wages will not keep up with "inflation" when that inflation comes from supply shocks rather than demand shocks.

1) That is a non sequitur. Inflation affects different wages and different prices differently. There is nothng uniform about it.

Well no, because again that violates the classical dichotomy. Even so, it's still not non-sequitur. If prices can increase from monetary inflation without wages increases, then monetary policy can permanently change the real wage. It follows that the Phillips curve must hold.

2) The source of the "shock" is irrelevant as the source of inflation is monetary. If the money supply is constant then a rise in the price of one input will be off set by a fall in demand. That is supposed to be what happens.

You think following a price rise, demand falls and brings the price back to normal? Is that what you're saying? Because that's ridiculous. The quantity demanded, distinct from the demand schedule, will fall endogenously, but the price will still be higher.

Say the supply of money is constant. If there is a supply shock, a shock that reduces the quantity of output we can produce, prices must rise as the natural reaction to increased scarcity. The quantity of money is the same, output has fallen, so output is now more scarce relative to money than before.

Seriously, just think about the quantity theory of money for half a second. MV = PY, V = constant. If we set M constant, MV is constant. PY isn't constant though. Y, real output, isn't constant. If Y grows, P must fall. If Y falls, P must rise.

Yeah, if you raise the price of something you sell less of it. It's kinda basic.
Put away the textbook until you actually understand what you're writing.

 

[EdwardBaiamonte]

You failed to actually respond to any of the points raised. It's all too clear who the real moron is.

The points you've raised have been responded to and refuted. You have not raised any additional points. You merely repeat your error over and over.
Inflation is too many dollars chasing too few goods. That is a monetary phenomenon.

Exactly. Libturds will never admit that because they love inflation.

This is true; inflation and fiscal spending are beloved to a liberal since they don't involve actually paying taxes, they involve the mythical liberal free lunch!!

 

[EdwardBaiamonte]

He says very very clearly in his book that the government should spend money exactly like it did when WW II started to end this current depression the way it ended the Great Depression.

Does any liberal dare to think that by producing about 100 million planes tanks ships heavy weapons and tanks that it would help rather than hurt our economy??

Certainly you don't think he meant actually building weapons, do you?

Yes. Yes, he does.

Krugman also proposes that we pretend there is an alien invasion to trick everybody into suporting massive military programs that would end this depression now, just as weapons ended FDRs Great liberal Depression.

Is there even one liberal who will support Krugman's idea that a million laser space weapons or a million Solyndra bridges to no where will end this depression rather make it worse.

 

[ilia25]

1) That is a non sequitur. Inflation affects different wages and different prices differently. There is nothng uniform about it.

And why is that? If inflation is caused by too much money chasing too few goods, then why it affects some prices more than other?

The fact is that it doesn't. Increase in money supply drives up the wages just as fast as the price of gas.

2) The source of the "shock" is irrelevant as the source of inflation is monetary.

No -- if price of oil is rising faster than wages, then the source of that inflation is NOT monetary.

If the money supply is constant then a rise in the price of one input will be off set by a fall in demand. That is supposed to be what happens.

Demand for many goods is not elastic. If the price of gas is rising, people do not stop driving. They pay higher price and spend less on something else.

 

[The Rabbi]

1) That is a non sequitur. Inflation affects different wages and different prices differently. There is nothng uniform about it.

And why is that? If inflation is caused by too much money chasing too few goods, then why it affects some prices more than other?

The fact is that it doesn't. Increase in money supply drives up the wages just as fast as the price of gas.

2) The source of the "shock" is irrelevant as the source of inflation is monetary.

No -- if price of oil is rising faster than wages, then the source of that inflation is NOT monetary.

If the money supply is constant then a rise in the price of one input will be off set by a fall in demand. That is supposed to be what happens.

Demand for many goods is not elastic. If the price of gas is rising, people do not stop driving. They pay higher price and spend less on something else.

Geezus are you an ignoramus.

 

[starcraftzzz]

Ron Paul would slash spending by 2 trillion first year to insure immediate surplus.

That would also make private sector and taxes boom thus further decreasing deficit.

Econ 101- we got from stone age to here through private innovation, with 2 trillion more in the private sector the economy would grow and innovate in a sustainable way, taxes would increase, unemployment would disappear. Over your head??

yea look how well it doing in europe u douche

it????
show me a country that slashed spending by $2 trillion and I'll pay you $10,000. Bet??

2trillion is around 40% of govt spending, greece, latvia estonia portugal all cut that much. now give me ur moms money

 

[starcraftzzz]

Higher inflation can´t work. It would only create stagflation because oil would again become to expensive for growth.

america, japan and the uk in the 30s and 40s, and argentina in the 00s prove u wrong

 

[starcraftzzz]

You've clearly demonstrated you are a moron.
I wrote Germany did not experience the inflation we did. That stands as a true statement.
Despite your fantasies, inflation is a monetary phenomenon.

he proved you wrong making u the moron

 

[starcraftzzz]

Despite your fantasies, inflation is a monetary phenomenon.

Wages not keeping up with commodity prices is NOT a monetary phenomenon. Inflation is a monetary phenomenon only to the extent that it is driven by rising wages -- and that is why monetary inflation is never a problem (as long as inflation does not become too high, i.e. remains below, say, 10%).

even it being above 10% isnt going to kill an economy latin american countries have inflation of 20% and have lots of growth

 

[starcraftzzz]

...Spain cut spending this year, they immediately went into a recession. Greece cut spending twice, both times, they went into a recession...

--and over the past 70 years the US has cut spending nine times and not once did it cause a recession. Must not be spending cuts that cause recessions.

Then again Spain, Greece, and the US elected socialist governments and all three have crippled economies. Must be socialism.

spending cuts in depressed economies cause/worsen reccesions

 

[starcraftzzz]

What trillion dollars? Here is the total government spending:

Fiscal stimulus means running a huge budget deficit, between government expenditures (G), and tax revenues (T), such that (G >> T). Your plot only looks at the spending side (G), but a Fiscal stimulus requires a big deficit (G-T >> 0), not merely big spending (G >> 0).

stimulus is an increase in deficits

 

[starcraftzzz]

The truth is boring and repetitive sometimes.

But you could easily make your case by pointing to a case where a government economic stimulus solved a recession.

Stimulus is not for solving recessions. It is only needed in a depressed economy when central bank is unwilling to help. This depression is the first one since 30s. Then WWII provided big enough stimulus to end the depression. This time there was no meaningful stimulus, so we are still in depression.

A trillion dollars is not meaningful?
And Japan shows you are wrong. They have zero interest rates and stimulus after stimulus and the country has never recovered.
Fail.

recover from what? 4% unemployment
japan had no lost decade and grew at the same rate as america however americas workforce boomed while japans shrunk
Is Japan's Lost Decade Not Really Lost? | Mother Jones

 

[ilia25]

1) That is a non sequitur. Inflation affects different wages and different prices differently. There is nothng uniform about it.

And why is that? If inflation is caused by too much money chasing too few goods, then why it affects some prices more than other?

The fact is that it doesn't. Increase in money supply drives up the wages just as fast as the price of gas.



No -- if price of oil is rising faster than wages, then the source of that inflation is NOT monetary.

If the money supply is constant then a rise in the price of one input will be off set by a fall in demand. That is supposed to be what happens.

Demand for many goods is not elastic. If the price of gas is rising, people do not stop driving. They pay higher price and spend less on something else.

Geezus are you an ignoramus.

Beat that, DSGE Making a troll go ballistic with a single post.

 

[expat_panama]

...spending cuts in depressed economies cause/worsen reccesions

Spending was cut from 2009 to 2010 and again from 2011 to 2012. Would you say the economy went from "depressed" to "worsened" those two times?

 

[DSGE]

1) That is a non sequitur. Inflation affects different wages and different prices differently. There is nothng uniform about it.

Well no, because again that violates the classical dichotomy. Even so, it's still not non-sequitur. If prices can increase from monetary inflation without wages increases, then monetary policy can permanently change the real wage. It follows that the Phillips curve must hold.

2) The source of the "shock" is irrelevant as the source of inflation is monetary. If the money supply is constant then a rise in the price of one input will be off set by a fall in demand. That is supposed to be what happens.

You think following a price rise, demand falls and brings the price back to normal? Is that what you're saying? Because that's ridiculous. The quantity demanded, distinct from the demand schedule, will fall endogenously, but the price will still be higher.

Say the supply of money is constant. If there is a supply shock, a shock that reduces the quantity of output we can produce, prices must rise as the natural reaction to increased scarcity. The quantity of money is the same, output has fallen, so output is now more scarce relative to money than before.

Seriously, just think about the quantity theory of money for half a second. MV = PY, V = constant. If we set M constant, MV is constant. PY isn't constant though. Y, real output, isn't constant. If Y grows, P must fall. If Y falls, P must rise.

Yeah, if you raise the price of something you sell less of it. It's kinda basic.
Put away the textbook until you actually understand what you're writing.

Other way round. If you can't produce as much of something the price has to rise. You're right, it is very basic. Yet again, you fail to understand it. If you feel there's a problem with my logic, pick the part of my argument where you think I've gone wrong and tell me why. If you want to continue just insulting me, that only shows you don't have sufficient understanding to grasp these concepts. If you can't see these things as intuitively obvious, maybe you should pick up a textbook?

 

[DSGE]

And why is that? If inflation is caused by too much money chasing too few goods, then why it affects some prices more than other?

The fact is that it doesn't. Increase in money supply drives up the wages just as fast as the price of gas.



No -- if price of oil is rising faster than wages, then the source of that inflation is NOT monetary.



Demand for many goods is not elastic. If the price of gas is rising, people do not stop driving. They pay higher price and spend less on something else.

Geezus are you an ignoramus.

Beat that, DSGE Making a troll go ballistic with a single post.

I guess I'll have to try harder.

 

[The Rabbi]

Well no, because again that violates the classical dichotomy. Even so, it's still not non-sequitur. If prices can increase from monetary inflation without wages increases, then monetary policy can permanently change the real wage. It follows that the Phillips curve must hold.



You think following a price rise, demand falls and brings the price back to normal? Is that what you're saying? Because that's ridiculous. The quantity demanded, distinct from the demand schedule, will fall endogenously, but the price will still be higher.

Say the supply of money is constant. If there is a supply shock, a shock that reduces the quantity of output we can produce, prices must rise as the natural reaction to increased scarcity. The quantity of money is the same, output has fallen, so output is now more scarce relative to money than before.

Seriously, just think about the quantity theory of money for half a second. MV = PY, V = constant. If we set M constant, MV is constant. PY isn't constant though. Y, real output, isn't constant. If Y grows, P must fall. If Y falls, P must rise.

Yeah, if you raise the price of something you sell less of it. It's kinda basic.
Put away the textbook until you actually understand what you're writing.

Other way round. If you can't produce as much of something the price has to rise. You're right, it is very basic. Yet again, you fail to understand it. If you feel there's a problem with my logic, pick the part of my argument where you think I've gone wrong and tell me why. If you want to continue just insulting me, that only shows you don't have sufficient understanding to grasp these concepts. If you can't see these things as intuitively obvious, maybe you should pick up a textbook?

I've picked apart every single post of yours, noting the absurdities, unsound arguments, and logical fallacies.
And you still don't get it.

 

[ilia25]

What trillion dollars? Here is the total government spending:

Fiscal stimulus means running a huge budget deficit, between government expenditures (G), and tax revenues (T), such that (G >> T). Your plot only looks at the spending side (G), but a Fiscal stimulus requires a big deficit (G-T >> 0), not merely big spending (G >> 0).

stimulus is an increase in deficits

Nope -- deficits skyrocketed because of falling revenue. Stimulus is an increase in outlays in order to offset a fall of private sector spending.

 

[DSGE]

Yeah, if you raise the price of something you sell less of it. It's kinda basic.
Put away the textbook until you actually understand what you're writing.

Other way round. If you can't produce as much of something the price has to rise. You're right, it is very basic. Yet again, you fail to understand it. If you feel there's a problem with my logic, pick the part of my argument where you think I've gone wrong and tell me why. If you want to continue just insulting me, that only shows you don't have sufficient understanding to grasp these concepts. If you can't see these things as intuitively obvious, maybe you should pick up a textbook?

I've picked apart every single post of yours, noting the absurdities, unsound arguments, and logical fallacies.
And you still don't get it.

No you haven't. You've responded with insults and statements which fail to address the bulk of what I'm saying. I've even made the effort to break it down into concise numbered parts. You've made no effort to understand anything I'm saying. I don't mind so much that you're dumb, I have patience, it's just that you're so fucking arrogant about it that's annoying.

 

[starcraftzzz]

Other way round. If you can't produce as much of something the price has to rise. You're right, it is very basic. Yet again, you fail to understand it. If you feel there's a problem with my logic, pick the part of my argument where you think I've gone wrong and tell me why. If you want to continue just insulting me, that only shows you don't have sufficient understanding to grasp these concepts. If you can't see these things as intuitively obvious, maybe you should pick up a textbook?

I've picked apart every single post of yours, noting the absurdities, unsound arguments, and logical fallacies.
And you still don't get it.

No you haven't. You've responded with insults and statements which fail to address the bulk of what I'm saying. I've even made the effort to break it down into concise numbered parts. You've made no effort to understand anything I'm saying. I don't mind so much that you're dumb, I have patience, it's just that you're so fucking arrogant about it that's annoying.

it is because she is such a pathedic person that even realizing shes is wrong one more time would driver her to suicide