The principal of supply and demand will never change, and that's the driving force behind inflation. The biggest difference between us and them is demand... As the world's reserve currency, we enjoy a lot of demand. But that can change.
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NEWS Is the pivot to China a bunch of bullshit?
- Thread starter ChuckMK23
- Start date
It was you who started my beef with that when you deleted my post for defending myself against Hotdog's personal attack. I'll be damned if I'm going to get attacked by assholes like you without defending myself, though. I dare you to one time find a thread where I was the first one to start the unprofessional personal attacks. How about you stop being a hypocrite and either allow personal attacks, or don't? I don't care either way, but it's absolute BS to hold me to a different standard than you do yourself, let alone the rest of your gang of pricks who can't debate me without stooping to that level.
My point exactly. The Mark was not a reserve currency, the gold standard was in effect, colonialism was still around, globalization wasn’t near what it is today, and we are not saddled with a reparations bill while rebuilding a country. Apples to oranges.
I do believe debt has to be managed, but it is a wicked problem that cannot be solved by policy sound bites from either side of the aisle that are horribly oversimplified and meant to do nothing more than fire up the base.
For perspective, how is our situation any different than a young family buying a median home on a median salary? Their debt to income is pretty high.
I do believe debt has to be managed, but it is a wicked problem that cannot be solved by policy sound bites from either side of the aisle that are horribly oversimplified and meant to do nothing more than fire up the base.
For perspective, how is our situation any different than a young family buying a median home on a median salary? Their debt to income is pretty high.
I deleted your post? Which one? I dont think that’s accurate. Also, have you considered switching to decaf?
The gold standard was absolutely not in effect in Weimar Germany. See my previous long post. I'm speaking to brick walls.
Hilarious you think the Weimar situation can teach us nothing because it's "apples to oranges", yet you compare our debt to that of a young family. I'm wasting my time.
Because we can print money out of thin air to pay off our debts, and the young family can't.
The debt-to-income ratio thing can be a bit misleading. You can have a high ratio and be pretty fine if your economy and currency are otherwise strong (e.g. Japan*). But if you have a weak economy and a currency that's of very debatable worth (e.g. Zimbabwe) then this has the ability to go pear-shaped very quickly. Those examples are extreme relative to each other, sure, but it highlights the difficulty of comparing companies using only the ratio.
* Yes yes, they had a forgotten decade#
# Ok it was more like two decades. But still!
(edited to add) This clip is from an Australian satiric comedy duo named Clarke & Dawe. It used to air at the end of The 7:30 Report every week, which was kind of like Australia's version of PBS Newshour.
The bald guy (John Clarke) always plays the guest, and the other guy (Bryan Dawe) always plays the interviewer. Their most famous video is the one where The Front Fell Off.
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First, let’s go to the actual beginning of this conversation. On Tuesday at 0943 you wrote;
” Looking ahead, lawmakers should chart a more stable, sustainable path for the federal budget that would alleviate the growing interest burden and help ensure that there is room in the budget for national priorities.”
Who, other than you, says they will not? This post is the foundation of everything else you cling to in the debate…your assumptions.
Now, on to the Weimar Republic. At first I asked what China, or anyone would do if the debt bomb exploded. You answered by restating the Weimar issue and asking for the math. Now, I think I see what you are thinking, so I offered the actual mathematical solutions to explain how how modern monetary exchange systems work…you tell us you are clever so maybe you get the math. You didn’t.
Knowing you couldn’t argue against the hard fact of mathematics you changed your tack again and asked for a child’s explanation of how it works. I gave you one that, to be honest, I didn’t invent - it is from a Harvard economics class to get freshmen to understand the difference between “fixed currency” like the Weimar Republic and/or your family budget AND how government fiscal policy works.
You responded…
Now that I see this logic roadblock I note…
THIS…this is the point where you decide to defend your assumptions, not the facts. I opened with a point that discusses a republic that lived a few short years and you countered with…wait for it… “The Germans eliminated the gold standard prior to the war. “ SO WHAT? The German government of 1914 did not exist in 1919 when the Weimar Republic was hit with war reparations. This is what historians call a “chronological error of fact.” One thing does not relate in any way to another. To make matters worse you posted an NPR article (again that you did not read) that basically agreed with what I wrote!
At this point you jump forward in time (first back…then forward) and post this…
You fail, continuously, to, respond to that. Here are the essential historical facts…
Once reparations were decided upon two avenues of discussion arose out of the war reparations question. The first is ‘the budgetary problem’, questioning whether Germany was fundamentally capable of paying the monetary sums demanded for reparations. The second is ‘the transfer problem,’ which reflects a concern over the conversion of the German money to foreign currency for payment to the Allies.
The Dawes Committee divided the payment of German reparations into two parts - into the Budgetary Problem of extracting the necessary sums of money out of the pockets of the German people and paying them into the account of the Agent-General, and the Transfer Problem of converting the German money so received into foreign currency - thus the rate of gold. After the French took control of the Rhur Germany lost any capacity to produce their way out of the debt they owed. A famous German economist, Helferrich, noted in a book titled “Geld” (Money) that the driving force of the post-war inflation originated from German workers attempting to maintain living standards at pre-war levels despite the destruction of German capital (the French occupation of the Ruhr) the drastic decline in labour productivity, and Allied reparations. As Helferrich noted, this resulted “in race between wages and prices such as we have witnessed in the last few years. The social and political position of Labour was sufficiently strong to enforce higher wages notwithstanding the fact that less work was being done. As the profits of capital had shrunk to a minimum, the higher wages could only be paid if higher prices could be obtained for the products. But higher prices raised the cost of living and brought about fresh demands for higher wages, which in turn led to a further rise in prices.” (Pg 597)
By 1924 the Weimar government changed course and raised interest rates or simply banned lending. Wages were lowered and certain workers laid off to cool down the economy thus gradually reducing the hyperinflation. This should sound familiar…it is what the fed has been doing for months now (except laying off workers…that should happen naturally in the next several months). It was the Great Depression - a global issue - that ended the Weimar Republic because now too many people were unemployed and deflation control policies were now unsustainable.
You ask us to trust Chairmam Powell…I do…but he would not be amused by your shifting and meaningless defense of your assumptions.
Let’s us first attack your unsupported assumption…”with no end in sight…” Says, other than you, who? As evidence you posted a very accurate study (but likely didn’t read it) that concludes with the following…Spekkio and you are both avoiding the actual question.
What Is the National Debt Costing Us?
Programs that millions of Americans depend on and care about may be feeling a squeeze from interest costs on our high and rising national debt.www.pgpf.org
How is it sustainable for us to be paying $870 billion this year on interest, twice that a decade from now, with no end to the ballooning in sight? And those are extremely conservative estimates that assume no recession, no wars, low interest rates, continued GDP growth, etc. Mathematically, how does that not end in either hyperinflation a la the Weimar Republic, or extremely dramatic cuts to the budget to get to a surplus for awhile and pay out down?
Saying, "well, people are still buying the debt" doesn't mean anything in the long run. To steal Jamie Dimon's analogy, it's like driving towards a cliff and saying, "well, we haven't fallen off yet!"
” Looking ahead, lawmakers should chart a more stable, sustainable path for the federal budget that would alleviate the growing interest burden and help ensure that there is room in the budget for national priorities.”
Who, other than you, says they will not? This post is the foundation of everything else you cling to in the debate…your assumptions.
Now, on to the Weimar Republic. At first I asked what China, or anyone would do if the debt bomb exploded. You answered by restating the Weimar issue and asking for the math. Now, I think I see what you are thinking, so I offered the actual mathematical solutions to explain how how modern monetary exchange systems work…you tell us you are clever so maybe you get the math. You didn’t.
Knowing you couldn’t argue against the hard fact of mathematics you changed your tack again and asked for a child’s explanation of how it works. I gave you one that, to be honest, I didn’t invent - it is from a Harvard economics class to get freshmen to understand the difference between “fixed currency” like the Weimar Republic and/or your family budget AND how government fiscal policy works.
You responded…
Now we are getting to the base of the problem…it is what you said before BUT you failed to acknowledge the actual, real, hard math that tells us there are other options beyond, to quote you exactly, “print dollars to pay the debt (like the Weimar Republic I cited), creating hyperinflation, or dramatically cut spending and raise taxes, greatly shrinking our economy and sending the world into a depression.” The options are explained in the math but more simply in the sticks…governments no longer live on “fixed currencies,” we operate in a global system.
Now that I see this logic roadblock I note…
THIS…this is the point where you decide to defend your assumptions, not the facts. I opened with a point that discusses a republic that lived a few short years and you countered with…wait for it… “The Germans eliminated the gold standard prior to the war. “ SO WHAT? The German government of 1914 did not exist in 1919 when the Weimar Republic was hit with war reparations. This is what historians call a “chronological error of fact.” One thing does not relate in any way to another. To make matters worse you posted an NPR article (again that you did not read) that basically agreed with what I wrote!
At this point you jump forward in time (first back…then forward) and post this…
Full circle…that is not what happened to the Weimar Republic. You post a Wiki article (but once more didn’t actually read it. What of the French occupation of the Ruhr? How did the Weimar Republic get ahold of the currencies of other nations to pay their debt?Yes, and then the Germans negotiated a work around, where the Allies accepted repayment in their own currencies. Which is why I said previously that the Germans "chose to repay their reparations by printing marks to buy foreign currency they could then use to pay the debt." This is common knowledge. Read the Wikipedia for crying out loud.
Hyperinflation in the Weimar Republic - Wikipedia
en.m.wikipedia.org
You fail, continuously, to, respond to that. Here are the essential historical facts…
Once reparations were decided upon two avenues of discussion arose out of the war reparations question. The first is ‘the budgetary problem’, questioning whether Germany was fundamentally capable of paying the monetary sums demanded for reparations. The second is ‘the transfer problem,’ which reflects a concern over the conversion of the German money to foreign currency for payment to the Allies.
The Dawes Committee divided the payment of German reparations into two parts - into the Budgetary Problem of extracting the necessary sums of money out of the pockets of the German people and paying them into the account of the Agent-General, and the Transfer Problem of converting the German money so received into foreign currency - thus the rate of gold. After the French took control of the Rhur Germany lost any capacity to produce their way out of the debt they owed. A famous German economist, Helferrich, noted in a book titled “Geld” (Money) that the driving force of the post-war inflation originated from German workers attempting to maintain living standards at pre-war levels despite the destruction of German capital (the French occupation of the Ruhr) the drastic decline in labour productivity, and Allied reparations. As Helferrich noted, this resulted “in race between wages and prices such as we have witnessed in the last few years. The social and political position of Labour was sufficiently strong to enforce higher wages notwithstanding the fact that less work was being done. As the profits of capital had shrunk to a minimum, the higher wages could only be paid if higher prices could be obtained for the products. But higher prices raised the cost of living and brought about fresh demands for higher wages, which in turn led to a further rise in prices.” (Pg 597)
By 1924 the Weimar government changed course and raised interest rates or simply banned lending. Wages were lowered and certain workers laid off to cool down the economy thus gradually reducing the hyperinflation. This should sound familiar…it is what the fed has been doing for months now (except laying off workers…that should happen naturally in the next several months). It was the Great Depression - a global issue - that ended the Weimar Republic because now too many people were unemployed and deflation control policies were now unsustainable.
You ask us to trust Chairmam Powell…I do…but he would not be amused by your shifting and meaningless defense of your assumptions.
Sorry guys…I’ll behave, you can rough up the kids, just leave my dog alone, he’s my source for good history.
Lots of tap dancing around the issue, and absolutely no substance. Let me know if you'd like to address the actual issue (if the hyperinflation was caused by fluctuating gold prices, as you originally claimed, or by printing, as indicated by all of the sources I posted). I am not convinced you are even reading my posts. The bolded bit above makes that obvious. I have answered that in nearly every post, including my last, where I said in bold that "Germany then printed marks to buy Allied currencies, then used their currencies to repay the debt". This is such a waste of time, I'm done.
This is why others get annoyed. Not sure how this isn’t a personal attack. And the gold standard was in effect for the global economy at the time and the family analogy was meant to compare GDP to debt, as someone else politely replied.
Once more…we’ll go simple.
Hyperinflation was not caused by printing more money…it was caused by unsustainable labor costs that were not related to industrial capacity and insufficient taxation. The critical factor in all of this is the price paid by the government for goods and services. If the government net spends when sufficient industrial (or functional labor) capacity exists at current prices, that spending is not inflationary. However, if additional spending can only be carried out at higher prices, that spending is per se an increase in the price level. Inflation is the result of the government competing with the private sector via the payment of continuously higher prices. If the state can buy resources at the going level of prices, its purchases will be noninflationary. However, at near full employment, if the state wants to shift resources from the private sector to itself, it will need to raise its offer price, which forces the currency downward. The modern response is to manage labor (unemployment), the public cost of borrowing money (interest rates), increased public revenue, and reduced (or at least stagnant) government spending. Germany printed more and more money hoping to keep everyone happy and the corresponding increases in import prices and the government’s payment of the higher prices both internal and external thus forced the value of the money down and costs up. Payments to contractors, and indirectly through organized private sector wage increases that allowed the domestic sector to pay the higher prices, was the source of hyperinflation in the German domestic price level. The “money” wasn’t the issue….the fiscal policy was.
BUT…all of the above really isn’t the point. The real point is that Germany was wallowing in war reparation debt and that was the straw that broke the camels back leading us to the BIGGER point…when people say there is no correlation between the Weimar Republic and the current U.S. debt situation THIS is why…the U.S. can manage their debt load free of invasion. No one is going to take our manufacturing centers from us…no one is going to force us to structure our debt based on their currency. This is why you need to open your mind and your willingness to accept alternative ideas.
