[noemon]

Supply is the issue and not demand.

[Steve_American]

Supply is the issue and not demand.

One line posts can be hard to know that one understands what they meant.

That has been refuted and debunked by the events after the GFC/2008 in Europe. They tried the austerity policy and it didn't work. Later the IMF put out paper in which they admitted that they had been wrong.
. . . IIRC, the theory was that people would be so glad that their taxes would not need to be increased in a few years that they would spend down their savings or would borrow. However, banks don't lend to poor credit risks in a recession and people don't spend down their savings fast enough because they hoard their savings for later.
. . . Like I said, investors and corps don't increase production until there is an increase in demand.

[BlutoSays]

In a recession or period when the economy is slow, increasing the production of goods and services would be a great thing to do. However, capitalists will never do that in a recession, because there is not enough demand to absorb the current production. So, capitalists will never invest to increase production of a thing that they either can't sell or can only sell at a price less than the current price.

This why Keynes proposed deficit spending in a recession or depression. Only by the Gov. increasing demand directly by buying stuff or indirectly by providing money to people (by hiring them or giving them the cash) will capitalists increase production in a recession.

In the past, starting a war was a good excuse for a Gov. to start deficit spending and hiring men into the army.

Two days ago I saw a video where he said that Hitler in 1 year ended unemployment by massive deficit spending to build up the military for the coming war and he didn't have inflation because he kept wages and prices from increasing with laws or jawboning. He had enough power to jawbone effectively.
.

"Only by the Gov. increasing demand directly by buying stuff or indirectly by providing money to people (by hiring them or giving them the cash) will capitalists increase production in a recession."


That statement is false. It may not turn around at the rate that you would like, but economies DO "muddle through", which makes for a more sound recovery.

Businesses try different avenues, they economize, they drop less popular products, they change suppliers, they change different sales outlets, some strengthen, some go under and it takes time. The government (federal, state and local) also get signals to knock some of their stupid shit off through signals by consumers and quite frankly, the anger and ire of the public.... because government knuckleheads create rules and regulations that sound great on paper, but in the real world cause a lot of financial and economic damage, especially to the tax payers. Those policies are created by people who have no common sense (politicians and their bureaucrats) and have no experience in the private sector.

People (consumers and organizations) do the same dance and change their behavior. They switch products, go to other suppliers and look for substitutions, demand destruction takes place, the economy contracts, but things do turn around.

But the statement that your way is the only way is wrong. What I stated is settled science. Don't even try to argue with me.

[Steve_American]

"Only by the Gov. increasing demand directly by buying stuff or indirectly by providing money to people (by hiring them or giving them the cash) will capitalists increase production in a recession."


That statement is false. It may not turn around at the rate that you would like, but economies DO "muddle through", which makes for a more sound recovery.

Businesses try different avenues, they economize, they drop less popular products, they change suppliers, they change different sales outlets, some strengthen, some go under and it takes time. The government (federal, state and local) also get signals to knock some of their stupid shit off through signals by consumers and quite frankly, the anger and ire of the public.... because government knuckleheads create rules and regulations that sound great on paper, but in the real world cause a lot of financial and economic damage, especially to the tax payers. Those policies are created by people who have no common sense (politicians and their bureaucrats) and have no experience in the private sector.

People (consumers and organizations) do the same dance and change their behavior. They switch products, go to other suppliers and look for substitutions, demand destruction takes place, the economy contracts, but things do turn around.

But the statement that your way is the only way is wrong. What I stated is settled science. Don't even try to argue with me.

OK, I will not argue with you.
I'll just assert that you are wrong, in the sense that since FDR and Keynes and more so after the end of the gold standard, Gov. deficit spending has been shown to be the better way.
Austerity causes hardship for poor people,
People like you blame poor people for being poor, but having the Gov. do nothing in a depression proves why it is wrong to blame the poor.

[ckaihatsu]

"Only by the Gov. increasing demand directly by buying stuff or indirectly by providing money to people (by hiring them or giving them the cash) will capitalists increase production in a recession."


That statement is false. It may not turn around at the rate that you would like, but economies DO "muddle through", which makes for a more sound recovery.

Businesses try different avenues, they economize, they drop less popular products, they change suppliers, they change different sales outlets, some strengthen, some go under and it takes time. The government (federal, state and local) also get signals to knock some of their stupid shit off through signals by consumers and quite frankly, the anger and ire of the public.... because government knuckleheads create rules and regulations that sound great on paper, but in the real world cause a lot of financial and economic damage, especially to the tax payers. Those policies are created by people who have no common sense (politicians and their bureaucrats) and have no experience in the private sector.

People (consumers and organizations) do the same dance and change their behavior. They switch products, go to other suppliers and look for substitutions, demand destruction takes place, the economy contracts, but things do turn around.

But the statement that your way is the only way is wrong. What I stated is settled science. Don't even try to argue with me.

Anything to say about the *housing* market now, or *any* of the markets -- ?

[BlutoSays]

OK, I will not argue with you.
I'll just assert that you are wrong, in the sense that since FDR and Keynes and more so after the end of the gold standard, Gov. deficit spending has been shown to be the better way.
Austerity causes hardship for poor people,
People like you blame poor people for being poor, but having the Gov. do nothing in a depression proves why it is wrong to blame the poor.

The policies that you love create most of the poor.

[BlutoSays]

Anything to say about the *housing* market now, or *any* of the markets -- ?

-- ?

[ckaihatsu]

Anything to say about the *housing* market now, or *any* of the markets -- ?

-- ?

Now say the words 'abandoned shopping mall wasteland'. Thanks.

[noemon]

One line posts can be hard to know that one understands what they meant.

That has been refuted and debunked by the events after the GFC/2008 in Europe. They tried the austerity policy and it didn't work. Later the IMF put out paper in which they admitted that they had been wrong.
. . . IIRC, the theory was that people would be so glad that their taxes would not need to be increased in a few years that they would spend down their savings or would borrow. However, banks don't lend to poor credit risks in a recession and people don't spend down their savings fast enough because they hoard their savings for later.
. . . Like I said, investors and corps don't increase production until there is an increase in demand.

Again, demand is not our problem today. Supply is our problem. We increase interest rates today to decrease demand so that it can match supply.

I have written enormous posts already in this thread about it which if you want to challenge you need to argue against instead of posting irrelevant & abstract nonsense.

Austerity(cuts to public employees, pensions and benefits) also reduces demand which deflates inflation.

However, our policy makers are not engaging in austerity today, they are engaging in tax increases that also reduce demand.

Tax increases across the board is also 'austerity' and even more generalised than austerity that targets only those on payments from the public.

Instead of reducing demand and thus accepting a GDP loss(which will trash incomes 10 times worse than austerity and across the board instead of just for those reliant on government) at a lower crossing point between supply & demand, we should be increasing supply instead to avoid further contractions.

We need more workers to achieve that and we also need more workers to alleviate the wage-price spirals on our fully employed economies.

[SueDeNîmes]

You are talking to me, your entire paragraph is nonsensical from which no meaning can be discerned. If you have a point to make, please do so.

That's fine. I've simplified as much as I care to and it wasn't for your edification in particular.

Oh dear, they are not profiting because of inflation, they are causing inflation to profit

Both, and they are clear winners from it.

Their assets also get fucked from inflation just like everybody else's.

Their assets will almost certainly have appreciated as well.

As I said several times, some sectors will beat inflation, others will not, overall total wages will never beat inflation.

IOW zero sum with winners and losers, whereas you insisted that "there is no winner".

Rich countries deliberately

No, once again you have got the whole thing wrong. All economies reject deflation, in all the world in all of history.

If you think you can make a point, please do so. But simply throwing word-salads in the air in the hope some keywords will stick is just ridiculous, please.

I'm happy to stand by what I've said until I hear some counterargument other than argument from incredulity.

And before you mix this one as well. Deflating inflation is not a bad thing at all but deflation to negative territory is an ominous sign of an economic depression. To be avoided like the plague.

Most rich countries deliberately maintain a positive rate of inflation, not just because deflation is worse, but because it stimulates investment, consumption and employment.

[noemon]

Both, and they are clear winners from it.

First of all, your argument that high inflation makes winners and losers is false but also your rationale to separate people into winners and losers during an inflationary spiral is also false.

1) Inflation can go up while energy prices may go down. That is enough to prove your argument wrong.
2) Since some of our existing energy providers are indeed profiteering from higher energy prices we smack them with windfall taxes to prevent them from profiteering.
3) What is your point, if some energy company manages to win from high inflation? And? What?

IOW zero sum with winners and losers, whereas you insisted that "there is no winner".

There is no winner during an inflationary spiral. But as above, even if someone somewhere manages to win something during such a spiral, so what? We are talking about aggregates here, aggregate GDP, and aggregate inflation. Inflation does not make any aggregate better, they all go down. Everybody loses.

I'm happy to stand by what I've said until I hear some counterargument other than argument from incredulity.

That is quite hilarious, not only you made the statement that "only the rich countries deliberately cause positive inflation" but now you want me to prove the negative.

Show me a poor country that targets negative deflation, if you want to be taken seriously mate. And beyond that, speak openly about what your underlying point here is.

Most rich countries deliberately maintain a positive rate of inflation, not just because deflation is worse, but because it stimulates investment, consumption and employment.

As previously stated, inflation is a symptom of growth, deflation is a symptom of an economic depression.

High inflation is a symptom of a too-high money supply and/or of demand and supply going out of sync.

[BlutoSays]

Again, demand is not our problem today. Supply is our problem. We increase interest rates today to decrease demand so that it can match supply.

I have written enormous posts already in this thread about it which if you want to challenge you need to argue against instead of posting irrelevant & abstract nonsense.

Austerity(cuts to public employees, pensions and benefits) also reduces demand which deflates inflation.

However, our policy makers are not engaging in austerity today, they are engaging in tax increases that also reduce demand.

Tax increases across the board is also 'austerity' and even more generalised than austerity that targets only those on payments from the public.

Instead of reducing demand and thus accepting a GDP loss(which will trash incomes 10 times worse than austerity and across the board instead of just for those reliant on government) at a lower crossing point between supply & demand, we should be increasing supply instead to avoid further contractions.

We need more workers to achieve that and we also need more workers to alleviate the wage-price spirals on our fully employed economies.

I don't consider tax increases across the board full austerity, because in the U.S. we literally have more than half the population not paying income taxes at all (or even getting a subsidy after they file and pay zero taxes). Such is our tax code, which encourages voting by those who get handouts to vote themselves more largesse while the evil "rich" pay more and more (until they offshore themselves and reincorporate in foreign lands). It's actually an exercise in the redistribution of income while devaluing the dollar. When the economy turns around, then subsidies are already in place to lessen or even remove any new taxes on the "poor". It's a cycle that repeats.

That will really bite us during the next upswing when the Renminbi takes hold. Will the USD still be the world's reserve currency? I have my doubts. Math eventually catches up and the Manchurians have one thing we don't have: discipline. In fact, the savings rate for families in most Asian countries in general makes the U.S. look pitiful. We spend everything as it hits our hands, and then some.

[ingliz]

@noemon

As Mrs. Thatcher found, if you cut wages you lower demand

If you lower demand, job losses ensue.

Because benefits are far from generous, demand for goods and services falls further.

Unemployment rises, and you are in a deflationary death spiral.

Luckily for her, she had oil revenues to bail her out.

[noemon]

@noemon

As Mrs. Thatcher found, if you cut wages you lower demand

If you lower demand, job losses ensue.

Because benefits are far from generous, demand for goods and services falls further.

Unemployment rises, and you are in a deflationary death spiral.

Luckily for her, she had oil revenues to bail her out.

You are in a deflationary spiral when you target the productive forces like the Tories are doing in the UK today. It is also worse to target productive forces to redistribute their money to the unproductive ones as we are all currently doing. Increasing taxes for companies by a quarter while giving benefits, pensions and the NHS rises over 10% rises at the same time which is precisely what was announced yesterday.

[ingliz]

the productive forces

Who's going to buy what your productive forces produce?

[noemon]

Who's going to buy what your productive forces produce?

Who is going to pay for benefits when the productive forces collapse? How much do you think you can redistribute from the middle-classes to the people on benefits?

You sound unhappy stealing about a quarter of people's wealth and handing it over to benefit claimants & pensioners like yourself.

How much would you have rather stolen? And how long do you think it is going to be before the crunch?

How long do you think it's going to be before this generation realises that paying for your pension is no longer in their interests?

The Tories yesterday stole about 1/4 of the income of people at work and handed it over to benefit rises, pension rises and energy subsidies. You sound unhappy, would you have rather it were 100% of their income? Because 12% CPI inflation was not enough to destroy healthy companies, combined with a hefty 30-50% increase on wages across several sectors, nope we need to take out a further quarter from people's balance sheet to support people with no productive value because they are apparently the only consumers that matter.

[ingliz]

stealing

As you know, in an ideal world, I would steal 100%.

[noemon]

As you know, in an ideal world, I would steal 100%.

I knows.

[ingliz]

paying for your pension is no longer in their interests?

If that happened, I would cut out the middleman and rob the rich myself. Unfortunately for you, seeing as I am old and knackered and you young and fit, it's liable to be bloody as I put my toys to the use they were designed for.

[noemon]

If that happened, I would cut out the middleman and rob the rich myself. Unfortunately for you, seeing as I am old and knackered and you young and fit, it's liable to be bloody as I put my toys to the use they were designed for.

You are taking a British pension & spending it in Malta while arguing that unless you get a pension rise, "British" consumers like yourself will stop consuming, causing a recession in Britain.

Right?

And besides mate, it is not just "the young", but the vast majority of the population in Britain(well the entire working population) that is propping up benefits & pensions with extreme pain.

In 2,3 years time if someone reverses this policy of redistributing all that money from the working to the non-working, you will be screaming that "we 're taking from the poor to give to the rich" and not that "bitch, we are only reversing the money we have been giving you for free a mere 2 years ago and not even taking what's owed but simply stopping our prop".

The Tories are trying to upstage Labour in handouts to steal yet another election.