Just ran across links to a couple of my favorite economics videos.
A little background … Hayek was a free market economist of the Austrian school and Keynes an interventionist. Their biggest argument was about the causes of business cycles and of the Depression in particular. So without further ado, here you go …
So what is inflation? Where does it come from? What does it actually do?
Whether it’s paper currency (fiat currency, that isn’t directly backed by anything of value), digital or even physical clams, it’s what we use for trading with other people when the economy is too big to do direct trades of I have what you want and you have what I want. It also allows us to store earnings for later spending or investment. If the clamshells are pretty enough, you can even wear them as is. Which, incidentally, works for Gold and Silver too, but that’s a topic for a different post.
So let’s set up a simple example. You have 100 people with an average of $100 each that have, on average, $95 worth of stuff (physical goods, services, etc) to sell. That works out pretty well. Everyone can pretty much get what they want with something left over for saving or investing in increased future productivity. But two of the people, let’s call them the Freds, realize that they can set up a printing press and get more money to spend without having to actually work for it or take it directly from the other 98. So off they go, and before you know it they’ve printed an additional $1000 worth of bills that you can’t tell from the original. Now they get to go on a buying spree.
Of course the amount of stuff available for sale hasn’t increased, or at least not by nearly as much as the money supply. Next thing you know people can’t get what they want because the Freds already bought it with all of their “extra” inflationary money. So the next time around, they realize if they want something they’re going to have to be willing to pay more for it. The prices start to go up. And up. Those who sell for more have more money to buy with though, so they’re not too bad off. Eventually it all settles out to where the prices and dollars available equal back out. Ah, but those Freds still have their printing presses.
Now, let’s look at something interesting. On first glance, it seems that it all comes out in the wash and nothing really changes. But that’s not what happens in reality because of the time it takes for that money to work it’s way through. Who really benefits the most from the inflated money supply? The Freds, of course. They got to do their buying at the pre-inflation prices. The people they bought from (usually big business) get the extra money when the prices haven’t gone up nearly as much as they eventually will. The big losers? The average Joe that has to pay the inflated prices long before the extra money cycles through the economy enough times to get to him. So the poor get poorer and the rich get richer.
The Ponzi scheme known as the Social Security Benefit system is running out of steam.
When it was first created, it was promoted as supplement to regular retirement savings for a few well-defined groups of people. Life expectancy was 63 and full benefits didn’t kick in until 65. During its first 40 or 50 years, for those who lived long enough to collect on it, it was the best and “safest” return on your money for retirement there was.
Far more money went into the so-called trust fund than was paid out. That “excess” was “invested” in “special” Treasury notes, in essence IOUs from the government to itself. That money then went into the general fund and was spent like all the rest. Since it was an internal debt it doesn’t even show up on the balance sheets or get counted as part of the debt.
Over the years, more and more people have been added and benefits increased to where many people expect Social Security benefits to take care of their minimum retirement needs. Life expectancy increased to 65, 67, 70, 72 years old or more. More people getting more money for a longer time with fewer and fewer people paying into the system. There was a major “patch” made in the 80’s when age for full retirement was boosted up and tax (excuse me, “contribution”) rates shot up.
As the demographics kept changing, there was less and less “excess” to tap. External borrowing had to take its place. Deficits began skyrocketing up.
Not one penny was paid out on those “securities” until just a few years ago.
It was all just funny money on cooked books. Nothing was being cashed in. Nothing taken out of revenues, only more put into the general fund and replaced by those IOUs. Treasuries are only as safe as the government’s power to take money from current taxpayers.
The Court has already ruled that you have no legal claim to Social Security benefits. There is absolutely NOTHING that guarantees that the retirement payments you expect will continue to be made or at what level or at what retirement age or with what COLA formula (if any) or any other change they want to make, after all, it’s just another law.
John Stossel, in today’s column, reminded me of a quote from economist Walter Williams that I particularly resonated with so I thought I’d share it today …
“I respect ordinary thieves more than I respect politicians. Ordinary thieves take my money without pretense. (They don’t) insult my intelligence by proclaiming that they’ll use the money that they steal from me to make my life better.”
So true 🙂
Free to try, free to succeed, and even free to fail. Your choices, your responsibility … unless you’re talking about free pizza for dinner. Just let me know when and where 🙂
Many years ago, my husband and I were at a local bar for dinner when some drunk at the bar dropped his gun on the floor and it went off. The bullet hit within about 6 inches of my foot.
Did it give me the shakes? A bit. But the thought never even crossed my mind that it should have been illegal for him (or anyone else) to have it there. Self defense is one of the most basic unalienable rights there can be.
If some robber breaks into my place I would have no hesitation in protecting myself or anyone else. Not that I have any desire to hurt or kill anyone, in fact, for a long time, when I was living in a place with stairs, (lots of commas there) my first action would have been to grab the shotgun and pump it. That sound is distinct enough that any intruder with two brain cells to rub together is going to decide that he might not have picked the best place to hit and that he probably better get out.
Given that the shotgun was a .410, not good for much beyond birding, that would get dropped and I’d pick up the .45. If someone was dumb enough or drugged up enough to not pay attention to the pump sound, I wanted a gun big enough to make sure that if he still came up the stairs, he would be going down and staying down.
I’ve recently moved and the requirements for concealed carry here are a bit more expensive than where I used to be, so I haven’t gotten the permit yet, but I will. In over 20 years of carrying, I’ve only even put my hand on my gun in my purse (not even drawing it) one time. Hopefully I’ll never need to. But I intend to have the option.
And your aim is better if your gun control is done with both hands 🙂
With primary elections underway across the country, I thought I’d throw in my two cents worth on the question of voting.
Like many other environmental saviors, the electric car is supposed to be a great way to help produce less CO2 and cause less pollution. However the facts of the matter turn out to be quite different when you look at the total lifetime costs in both CO2 and air pollution.
In this video by Bjorn Lomborg, he looks at all the parts that aren’t obvious when looking at only what comes out of the tailpipe and discovers that they really don’t help that much and may even cost more lives than they save.
I did an experiment once and bought two newspapers from cities over 100 miles apart, one very left leaning and one very right leaning then looked at stories that they published from the wire, i.e from a national reporting agency and only edited for the local paper. On almost every one of them you would think you were reading about two completely different happenings even though the original writing came from the exact same source.
It’s in the details that were thought relevant to the story and the subjective adjectives used to polarize the story in one direction or the other.
Say one of the stories involved a person who was high and had been out of work for 6 months committing a crime. One paper would say that he was on drugs and imply that’s why he committed the crime, but not mention that he had been out of work and the other would highlight the fact that he had been out of work and imply that he was desperate to feed his family, but not mentioning that he apparently had the money for drugs.
On adjectives, there are some that are objective … it was a “red” car, a “glass” bottle, things like that. Then you have the subjective adjectives … they were “needlessly” loud, it was an “outrageous” situation. Objective adjectives are simply facts, with no emotional bias one way or the other. Subjective adjectives arise from the beliefs of the writer and/or editor. Others leave a question open, such as my saying “that he ‘apparently’ had the money for drugs.” Which says that it looks like this is the case, but we’re not sure.
Then you have the purely economic fact that, like it or not, people are more interested in bad things happening than good and so news agencies give far more weight to negative and conflict laden stories and even create them if they weren’t bad enough to begin with. That’s what drives the ratings and that is what drives the profits. It is their JOB to make things sound as bad and divisive as possible and pound on them day after day.
In the online population it’s the comment trolls that perform that function. Gotta get those talking points out there. Anyone who disagrees with what they say is obviously a _______— (fill in the blank). They like trouble. They love feeling holier than thou by pointing out the evil in their opponents, regardless of any facts to the contrary.
It’s also interesting to see what I get called when I write something like this in comments. Depending on the audience and the comment it is in response to, (if any) I am just as likely to be called a “libtard” as a “winger” or other equivalent insults. I’m always curious to see what, if any, response it gets. It usually gives me a good chuckle.