Originally Posted by tnrtinr

Thank you for not answering my questions.

Originally Posted by NoDrama

I wasn't aware you had asked me any questions.

Originally Posted by NoDrama

The reason your example seems to make sense is because the whole fish/bread thing is oversimplified. In your scenario we are increasing the population instantly and at the same time we are printing an equal amount of cash to keep the ratio the same. The problem is that it takes 18-22 years for a human being to actually become a self sufficient consumer that becomes part of aggregate demand. We can print 100 trillion dollars in 1/1000th of a second. We don't actually "print" the money as it is just digital and the Fed has an infinite account from which to draw from.

Originally Posted by NoDrama

The bubble came because the Fed reserve screwed with the interest rates so much that it became stupid to save money, it was way more sensible to rack up the credit by purchasing an asset (home) and then watch as it appreciated. The Fed can set an interest rate however they want, but they cannot make it too low for too long before the bond market drives those interest rates back up. The rates as of now are being driven up by lack of demand for poor performing T-Bonds. Thats why you never saw the Bernanke 3.9% Mortgages he promised would happen.

Originally Posted by jeff f

tnt, inflation is the fastest way to kill anything good in an economy. these arent new concepts and there are plenty of examples in recent history to understand what happens. argentina in the early 80's comes to mind and most recently a country in africa (rowanda?) suffered hyper inflation. people were literally using wheelbarrows to carry cash to buy basic groceries.

think about it like this, if i gave everyone a million dollars and you wanted to sell something normally valued at 10 bucks, you would ask more because you know people have a million dollars now. you did nothing to increase the value of your product, hence its inflated and the value of money is deflated. the whole balance is now distorted. a very very very dangerous situation.

now apply that to a global economy, your money is worth nothing and another country not suffering inflation can buy your stuff for little money. history on the subject is well written. inflation = people suffering terribly

Originally Posted by tnrtinr

I believe you are talking about Zimbabwe. This is exactly what I am saying. If you are paying for bread with a $100 million, that 5 thousand dollar debt that you have is a drop in the bucket (since your debt is not adjusted upwards when inflation is added to the economy). You could pay off all debt EASILY.

The price specie flow explains what happens next.

Originally Posted by tnrtinr

When a sentence that is directed at you ends in a "?" that means that it is a question. It is customary to supply an answer for each question that you know or think to be true.

It is impossible to continue to reply to you when I do so in a straightforward manner which I answer all of your questions and respond to all of your suppositions and you respond with new topics.



Hey, it is your model. I have added 1 (one) variable to your model and you have not answered a single question yet. It makes sense because it makes sense - if there are 2 products or 1 billion products you cannot keep the MS fixed forever for fear of inflation. In fact it becomes more obvious as you add products and services that eventually you will need to increase the money supply to meet the demands of the exponentially growing population with increasing demands.


In the long run inflation makes debt easier to pay off, but in the short run you lose everything because your wages cannot keep up with the amount of inflation to keep yourself fed and paying off all the loans. Your heating/electric bills also go up too. Only LONG term loans are really made easier. Things like MORTGAGES or long term leases, but not car loans or personal loans.


Again, we were not talking about this - you brought your fictional story to me and I went with it. Please TRY to stay on topic.

Originally Posted by tnrtinr

First I want to say that this is my first time posting a thread in this forum. I have been lurking for quite some time and I am amazed at the thoughtfulness of all of your responses. I respect all of your responses.

So here it goes.

Old numbers - but you get the idea.
http://www.gather.com/viewArticle.ac...81474976753606

"According to USA Today and bankrate.com, the average debt of the American household is $84,454 and one out of every 73 of those households had to file for bankruptcy protection in 2003. The average credit card debt is around nine thousand dollars, triple what it was in 1990."

"For instance, medical debt is the cause of one in every 20 bankruptcies. The average medical debt for someone that files bankruptcy for that reason is around $25,000."

"If you knew that a $1,000 charge on a credit card would take almost 22 years to pay off, and would cost over $2,300 in interest in you only made the minimum payments would you only make the minimum payments? Most people do."

http://moneycentral.msn.com/content/...ebt/P70581.asp

"Consumers owe nearly $2 trillion
American consumers owed a grand total of $1.9773 trillion in October 2003, according to the latest statistics on consumer credit from the Federal Reserve. Thats about $18,654 per household, a figure that doesnt include mortgage debt. The number is up more than 41% from the $1.3999 trillion consumers owed in 1998."

The average American is in debt. And we hear that inflation is bad and how the fed and their wild printing presses are going to cause inflation. But is it bad for the average American? Inflation kills the value of savings but debt is the best hedge against against inflation. Could inflation actually ease the burden of the average American by effective reducing the percentage of debt to income ration?

http://truthfullending.com/debt-hedg...nst-inflation/

Hope I did a good job for my first thread in this forum. Please discuss.