4T? What 4T?

[Ragnarök_62]

Mikebert Wrote:[My problem with Austrians is that what they offer is not science. Theory is not an explanation for observed reality that improves by comparison of theoretical prediction with reality, as is done in science.  Austrian theory is derived independently of evidence: “anterior to the experience of particular historical episodes.” I have a problem with their "praxeology", in which they derive a theory of what makes humans tick from "self evident" facts. To me this resembles a proven inadequate path to knowledge.  Replace praxeology with theology and you get Thomism, whose "scientia" was supplanted centuries ago by modern science.

Yes, no school of economics has an all encompassing view of the real economy.  However the Austrian school is the only one that seems  capable of detecting asset bubbles for what they are. Asset inflation is no different than price inflation. You know, like when there is an increase in money + credit  is the definition of inflation. The items which go up in price do not have to always be the stuff that's included in the flawed CPI.

Galen Wrote:The problem is that you can't run repeatable experiments in the field of economics.  Deducing what is happening from what is known about human behavior is the best that you can do.  All that we have is logic, what can be observed about the human condition and the historical record.  You might also want to note that the mainstream economists never seem to be able to spot a bubble until it blows up.

Yes. Uh, you forgot the shit for brains cabal at the Fed as well. Like I said before, they obviously can't spot a bubble if it smacked their inflated ego brains.  Also, again the Fed should be abolished because the aforementioned shit for brains cabal thinks it can set the proper interest rate. Centrally planned price of money [interest rate] is impossible.

Of course Rags ain't no smarty pants so he has no idea what "praxeology" , "Thomism", or "scientia" means.

Scientia looks close to sciatica  which I suppose scientia means "pain in the ass".
praxeology looks a lot like proctology, so that means the process of stuffing assorted things up your ass.
Thomism looks like Tom Thumb, so that's sucking your thumb with a blue blanket which yields Linus quotes.

[Galen]

(05-29-2016, 01:06 AM)Ragnarök_62 Wrote: Yes. Uh, you forgot the shit for brains cabal at the Fed as well. Like I said before, they obviously can't spot a bubble if it smacked their inflated ego brains.  Also, again the Fed should be abolished because the aforementioned shit for brains cabal thinks it can set the proper interest rate. Centrally planned price of money [interest rate] is impossible.

Of course Rags ain't no smarty pants so he has no idea what "praxeology" , "Thomism", or "scientia" means.

Scientia looks close to sciatica  which I suppose scientia means "pain in the ass".

No, I didn't.  All of the Fed people are exactly what I would expect a mainstream economist to be.  Getting rid of the Fed and going to commodity money is really the only way to keep this kind of crap from happening.

[Kinser79]

(05-28-2016, 07:49 PM)Mikebert Wrote: Kinser. I don't think you have a good grasp on what the gold standard is and how it is done.  Your emphasis on representational currency implies the simplistic idea that the paper money was "backed" by gold in the sense that an ordinary person who exchange their certificates for specie at will.  This is a simplistic view and not really tenable in the real world.  In actual practice, the gold standard simply refers to how monetary policy is set. The mechanism is exactly the same as today, interest rates are adjusted upwards or downward to achieve price stability. The difference  is the rule used to decide how to change interest rates.  That is all.

No, Mike, here's the problem. You're nuking the gold standard, or any other metalic standard--silver or both would work just as well. One can either exchange their paper for gold or they cannot. That is how silver and gold certificates worked

[Mikebert]

Galen:  The problem is that you can't run repeatable experiments in the field of economics.  Deducing what is happening from what is known about human behavior is the best that you can do. 

Mike: You can't run repeatable experiments in astronomy either, yet that field of study is still a very successful science.

Laboratory experiments are the easiest way to obtain results in science.  But one cannot always do things in the lab.  Another approach is the natural experiment. 

For example  guy named Lott did a study of the effect of right to carry laws on crime rates. He took a huge data set of county-level crime data and put it into a statistical model which attempted to explain crime rate using a variety of social variables thought by criminologists to have an impact on crime, including the presence or absence of right-to-carry laws (RTC). He found a very statistically significant effect of the presence of guns and wrote a book about it called "more guns less crime.  This study is perfect example of how not to do social science.

I read an article about the study and thought, that's not the way to do this, one should do a perturbation study.  So I did one.  I identified a set of states that changed their laws over a narrow period, and another set of states that did not change their laws over the entire period of interest.  I then constructed a data series of crime rates for both groups and plotted them out.  What you have here are two systems, one of which receives RTC and the other that does not. What I found is the two systems show the same basic behavior: both show rising crime rates in the 1980's and declining rates in the 1990's.  RTC was added over the 1987-90 period for this set of states. If we look at the degree of change in the rate from the pre-1990 to post-1990 period the crime reduction was larger in the control group, but this result was not statistically significant. There was no evidence that right to carry laws had any favorable impact on crime, if anything the effect was the opposite. 

Now if you analyzed all these together as one mass of data (as Lott did) and compared the one quarter of the data in which right-to-carry laws are present (which falls into the 1990's period when crime are rates are falling) you would get a result of falling crime when right to carry is present.  In contrast the 3/4's of the data that occurs in periods without right to carry laws (two-thirds of which comes from the 1980's when crime was rising) would show an average result of rising crime. So you get a result of rising crime in the absence of right to carry and falling crime when right to carry is present, giving an apparent result of "more guns less crime", which is wrong.  Its an artifact of the fact that the dominant factor (whether it was before or after 1990) was not included in the initial regression model.

The natural experiment is a technique that works to study systems in which laboratory experiments are not possible.  It is not as good as the true experiment because one cannot employ randomization to break the lurking variable effects (why correlation is not causation) but it is still very useful.  There are also a variety of sophisticated statistical tools evolutionary biologists and ecologists have developed that allow for controlled case studies approaches to be used in social science (Peter Turchin's work is an example).  Even among economists there are economic historians who have both feet planted in empirical reality (e.g. Kindleberger, Minsky) who have produced useful descriptive and theoretical models for economic events.

[Mikebert]

[kinser]You're nuking the gold standard, or any other metalic standard--silver or both would work just as well.  One can either exchange their paper for gold or they cannot. That is how silver and gold certificates worked

[Mike]Exactly what are you saying?  Are you saying that a citizen who had a $10 silver certificate could walk into his local bank and obtain ten silver dollars for his his certificate?

[Kinser79]

(05-29-2016, 02:30 PM)Mikebert Wrote: [kinser]You're nuking the gold standard, or any other metalic standard--silver or both would work just as well.  One can either exchange their paper for gold or they cannot. That is how silver and gold certificates worked

[Mike]Exactly what are you saying?  Are you saying that a citizen who had a $10 silver certificate could walk into his local bank and obtain ten silver dollars for his his certificate?

If one has a silver certificate for 10 dollars then yes you can go to the bank and get 10 dollars worth of silver. Pretty simple really. Naturally of course we'd have to have a redefinition in terms of silver (or gold for that matter) what a dollar actually is.

Historically a Dollar was defined as 371.25 grains (27g) pure silver. Or roughly 3/4 a troy ounce of silver. Given that the spot price of silver has been hovering in the 16 dollars per troy ounce range for months, that means that if the dollar was revalued the new dollars would be worth around 10 bucks of current dollars.

That being said, one has to recognize that there hasn't been silver coinage in this country since 1964. I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes). Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.

[Galen]

(05-30-2016, 11:12 PM)Kinser79 Wrote: That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.

I have always found it interesting that those who are so public about supporting the poor will not recognize the harm that inflation does.  Then again, a commodity money would limit government spending and it is inconceivable that anyone would want to starve the god of liberals and progressives.  It is more important to them then any consequences to the poor.

[pbrower2a]

(05-30-2016, 11:30 PM)Galen Wrote:

(05-30-2016, 11:12 PM)Kinser79 Wrote: That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.

I have always found it interesting that those who are so public about supporting the poor will not recognize the harm that inflation does.  Then again, a commodity money would limit government spending and it is inconceivable that anyone would want to starve the god of liberals and progressives.  It is more important to them then any consequences to the poor.

[pbrower2a]

(05-31-2016, 01:55 AM)pbrower2a Wrote:

(05-30-2016, 11:30 PM)Galen Wrote:

(05-30-2016, 11:12 PM)Kinser79 Wrote: That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.

I have always found it interesting that those who are so public about supporting the poor will not recognize the harm that inflation does.  Then again, a commodity money would limit government spending and it is inconceivable that anyone would want to starve the god of liberals and progressives.  It is more important to them then any consequences to the poor.

Sure, but the electronics are more sophisticated, the food choices are wider, the cars are better, and the highways are safer.

[Kinser79]

(05-31-2016, 01:57 AM)pbrower2a Wrote:

(05-31-2016, 01:55 AM)pbrower2a Wrote:

(05-30-2016, 11:30 PM)Galen Wrote:

(05-30-2016, 11:12 PM)Kinser79 Wrote: That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.

I have always found it interesting that those who are so public about supporting the poor will not recognize the harm that inflation does.  Then again, a commodity money would limit government spending and it is inconceivable that anyone would want to starve the god of liberals and progressives.  It is more important to them then any consequences to the poor.

Sure, but the electronics are more sophisticated, the food choices are wider, the cars are better, and the highways are safer.

Implying that improvements in technology, nutrition and etc are impossible under commodity money which of course history disproves.

[Kinser79]

(05-30-2016, 11:30 PM)Galen Wrote:

(05-30-2016, 11:12 PM)Kinser79 Wrote: That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.

I have always found it interesting that those who are so public about supporting the poor will not recognize the harm that inflation does.  Then again, a commodity money would limit government spending and it is inconceivable that anyone would want to starve the god of liberals and progressives.  It is more important to them then any consequences to the poor.

I would also say that the very same people think that capital materializes from thin air, when capital is derivative from savings. Inflation not only harms the poor by preventing their consumption through the erosion of the currency's value but it also disincentiveizes savings for those who are not poor making capital harder to accumulate and eventually leading to economic stagnation which also harms the poor.

In short, it seems to me that if one wants to actually help the poor the first step is to abandon funny money and adopt either hard currency or a currency that is defined and convertible into specie.

[Galen]

(05-31-2016, 09:07 AM)Kinser79 Wrote: I would also say that the very same people think that capital materializes from thin air, when capital is derivative from savings.  Inflation not only harms the poor by preventing their consumption through the erosion of the currency's value but it also disincentiveizes savings for those who are not poor making capital harder to accumulate and eventually leading to economic stagnation which also harms the poor.

In short, it seems to me that if one wants to actually help the poor the first step is to abandon funny money and adopt either hard currency or a currency that is defined and convertible into specie.

From an economic point of view this is correct but then it would admit that the god of the liberals and progressives has limits.  That is blasphemy in the religion of the liberals and progressives.

[pbrower2a]

(06-01-2016, 04:29 AM)Galen Wrote:

(05-31-2016, 09:07 AM)Kinser79 Wrote: I would also say that the very same people think that capital materializes from thin air, when capital is derivative from savings.  Inflation not only harms the poor by preventing their consumption through the erosion of the currency's value but it also disincentiveizes savings for those who are not poor making capital harder to accumulate and eventually leading to economic stagnation which also harms the poor.

In short, it seems to me that if one wants to actually help the poor the first step is to abandon funny money and adopt either hard currency or a currency that is defined and convertible into specie.

From an economic point of view this is correct but then it would admit that the god of the liberals and progressives has limits.  That is blasphemy in the religion of the liberals and progressives.

Capital can also result from gross exploitation -- sweating the workers while they get only the barest of sustenance necessary to keep them from dying. Savings are obviously impossible among people so grossly exploited.

It's work that creates capital, and money is only a means of measurement. Also -- it is well worth knowing whether the people who really do the work get fair rewards, which is often a matter of who gets the rewards.

[Kinser79]

(06-01-2016, 09:06 AM)pbrower2a Wrote: Capital can also result from gross exploitation -- sweating the workers while they get only the barest of sustenance necessary to keep them from dying. Savings are obviously impossible among people so grossly exploited.

First that is not accurate. Capital only comes from savings--the deferral of consumption. Let us suppose we have a class which sweats workers whilst providing them only compensation enough to maintain the reproduction of their labor power (IE subsistence plus enough to reproduce). Are you going to argue that saving is impossible with a situation where the buying power of currency rises 2% a year rather than falls 2% per year? If you do then you have failed mathmatics because at a rate of appreication of 2%/year it takes only 50 years for the value of the currency double. In short if we say that we're using a commodity based currency (we'll call it the dollar which is based on X amount of silver [or gold if you prefer]) If a loaf of bread costs $1 today in 50 years it should cost 50 cents.

Quote:It's work that creates capital, and money is only a means of measurement. Also -- it is well worth knowing whether the people who really do the work get fair rewards, which is often a matter of who gets the rewards.

Sounds like an argument for having a fair measurement then, because the current measurement allows for massive inflation in the paper currency which wipes out the savings and capital of the lower classes but ultimately does not effect the billionaire classes or the state.

As I pointed out above, if we were still using a commodity based currency like when quarters still had silver in them in 1963, and the minimum wage was set at 1.25 per hour, then the value in today's terms would be right around 15 current dollars. Inflation has eroded the value of not only capital but also work--which you claim is the ultimate source of capital to start with.

[Mikebert]

[Kinser] If one has a silver certificate for 10 dollars then yes you can go to the bank and get 10 dollars worth of silver.  Pretty simple really.
[Mike] Um no, you could not go to your local bank, “the silver certificates could only be redeemed in person at the New York or San Francisco Assay Offices”.
 
Individual citizens redemption of currency for specie was not a major route through which the gold standard worked.  Most of the action was by institutions and occurred at the Federal Reserve level.

[Galen]

(06-01-2016, 09:06 AM)pbrower2a Wrote:

(06-01-2016, 04:29 AM)Galen Wrote:

(05-31-2016, 09:07 AM)Kinser79 Wrote: I would also say that the very same people think that capital materializes from thin air, when capital is derivative from savings.  Inflation not only harms the poor by preventing their consumption through the erosion of the currency's value but it also disincentiveizes savings for those who are not poor making capital harder to accumulate and eventually leading to economic stagnation which also harms the poor.

In short, it seems to me that if one wants to actually help the poor the first step is to abandon funny money and adopt either hard currency or a currency that is defined and convertible into specie.

From an economic point of view this is correct but then it would admit that the god of the liberals and progressives has limits.  That is blasphemy in the religion of the liberals and progressives.

Capital can also result from gross exploitation -- sweating the workers while they get only the barest of sustenance necessary to keep them from dying. Savings are obviously impossible among people so grossly exploited.

It's work that creates capital, and money is only a means of measurement. Also -- it is well worth knowing whether the people who really do the work get fair rewards, which is often a matter of who gets the rewards.

No it does not.  Employers do not routinely exploit their employees.  I have worked for employers that I didn't like but not for very long.

Money, not the Fed funny money, is also a store of value.  You are also not taking into account the risks, particularly now, that employers take all of the time.  Without a considerable reward for taking such risks, no one would do so and there would be no jobs.

[Mikebert]

[Kinser]That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.
 
[Mike]What would a wage of 1.25 silver dollars look like over the 1970-2015 period based on current silver prices adjusted to today’s dollars. Obviously no employer in 1980 was going to pay the equivalent today of $46 wages to unskilled workers.  Clearly the minimum wage would have to be abolished or reduced.  Suppose it was lowered to 0.30 silver dollars per hour ($11.2 in today’s money) and then kept there.  After 1989 wages would fluctuate between $1.60 and $4.70 in today’s money. Can you see how the huge volatility of the silver market makes this untenable?
 
1964   $9.54
1970      10.4
1975      19.4
1980      46.5→11.2
1985      3.1
1990      2.6
1995      1.9
2000      1.6
2005      2.0
2010      4.7
2015      3.7

[Mikebert]

The extreme fluctuations in wages shown above reflect the extreme fluctuation in the market price of silver. We aren’t on a metallic standard anymore and so precious metals like gold  and silver has no use as money any more.  There historical use as money means that their historical prices were far greater than their values as a commodity.  Because of this history, both metals are objects of speculation, particularly gold. If we take the price of gold in 1914 (the last year of the classic gold standard) and put it in terms of today’s money, it would be about $500.  Thus, had the gold standard been maintained, an ounce of gold ($20.70 1914 dollars) would buy a bundle of goods that would take about $500 to buy.  But gold currently sells for way more than $500.  The difference is the speculative premium resulting from gold enthusiasts willingness to pay more for gold.  Since 1971, gold has sold at a premium except for a brief period at the end of the 1990's.

What this means is one cannot use the market price for gold and silver since the time they were money to try to estimate their value were they still being used as monetary standards. When used as a monetary standard there is no "specie market".  No chance for speculation, it would be like buying and selling dollars (they are always going to be worth a dollar).  The best estimate of what prices would look like under a gold standard would be real prices and wages.  These have fallen since the 1960's for fundamental reasons having nothing to do with monetary effects.  Had we been on a gold standard, the minimum wage would likely have remained at the $0.25 initially established by FDR, which would be about $4.20 today.

You should read about the Greenback party, the populists and the free silver movement.  All of these were little guys, who actually lived under a gold standard. They wished for fiat money or at least silver (the more inflationary monetary standard).  If inflation is really so good for the little guy why did they press for the opposite? Might it not be that they knew more about the gold standard than you?

[Mikebert]

[Galen]I have always found it interesting that those who are so public about supporting the poor will not recognize the harm that inflation does.

[Mike]The reason is history. One can read about the positions on money during the gold standard and see which policy each side favored.  Inevitably, the banksters were all huge gold standard fans, while the various populist parties were opposed.  People are not stupid.  If you have money, inflation is enemy #1, given a choice between inflation and confiscatory taxation, wealth holder will chose the latter,  Why else did President Hoover and the Congressional Republicans choose to raise the top tax rate from 25% to 60% in the early 1930's?  Also anyone who lived through the 1970's can tell you how inflation was hell on investments.  America got its first billionaries in the 1930's.  By 1980 all the billionaires were gone despite the fact the dollar was worth much less than it had been less the richest men simply were absolutely richer in 1940 than in 1980. It was inflation over 1940-1980 that killed them. Didn't hurt working people.

Since 1980 it has been hell on working people just like it had been hell on their bosses in the forty years earlier.  The reason, the capitalists have had the upper hand since 1980 whereas labor and their political allies had had the upper hand before then.

[Kinser79]

(06-01-2016, 12:31 PM)Mikebert Wrote: [Kinser] If one has a silver certificate for 10 dollars then yes you can go to the bank and get 10 dollars worth of silver.  Pretty simple really.
[Mike] Um no, you could not go to your local bank, “the silver certificates could only be redeemed in person at the New York or San Francisco Assay Offices”.
 
Individual citizens redemption of currency for specie was not a major route through which the gold standard worked.  Most of the action was by institutions and occurred at the Federal Reserve level.

Immaterial. The fact is that one could take their silver certificate and get silver for it. You're not seeing the forest for the goddamned trees as usual Mike.

(06-01-2016, 02:33 PM)Mikebert Wrote: [Kinser]That being said, one has to recognize that there hasn't been silver coinage in this country since 1964.  I find it interesting though that if one takes the minimum wage from 1964 ($1.25 per hour) or 5 silver quarters, one would come out with just slightly less than a troy ounce of silver (all silver coinage is debased with some content of copper for wear purposes).  Furthermore that this would be in the 15 dollar range, the very wage so many seem to be demanding for minimum wage workers.
 
[Mike]What would a wage of 1.25 silver dollars look like over the 1970-2015 period based on current silver prices adjusted to today’s dollars. Obviously no employer in 1980 was going to pay the equivalent today of $46 wages to unskilled workers.  Clearly the minimum wage would have to be abolished or reduced.  Suppose it was lowered to 0.30 silver dollars per hour ($11.2 in today’s money) and then kept there.  After 1989 wages would fluctuate between $1.60 and $4.70 in today’s money. Can you see how the huge volatility of the silver market makes this untenable?

The volatility in the silver market is due to the fact that currency is not defined in terms of silver. When the Dollar was defined as 3/4ths of a troy ounce of silver the dollar was worth exactly that. 27g of silver would always be a dollar. You're interpreting speculation based in fiat currency for the value of money based on a commodity.