US Inflation Explained

Generali

Quite an interesting video on inflation. I can't say I agree with everything they say but it's quite entertaining if you like that sort of thing.

Which I do.

http://www.youtube.com/watch?v=VL7V9BnJXO8&feature=player_embedded

About 7 minutes long.

lvader

Does it mention gold or silver?

Generali

lvader wrote: »

Does it mention gold or silver?

No:j....................

ninky_2

love those xtranormal animations.....

just wondering if quantitative easing is really compatible with the notion of a free market economy.....i'm thinking no.

Generali

ninky wrote: »

love those xtranormal animations.....

just wondering if quantitative easing is really compatible with the notion of a free market economy.....i'm thinking no.

Tricky one to answer IMO. Everyone (by which I mean bond investors) knows that printing money is an option to Governments in a fiat money system. That's why lending money to Governments in their own currency is 'risk free' as ultimately they can print money to repay you.

In this case, things are a bit different as money is being printed to bail out private companies (eg auto makers, insurance companies and banks). That's scandalous IMO and there is a very interesting piece in Rolling Stone magazine that I will look out if someone else doesn't do it first about The Fed lending to some quite surprising people.

Cleaver

That video freaks me out a little bit. Like listening to Stephen Hawking and Hal 9000 telling me about economics.

Cleaver

I like this one by the same guy:

http://www.youtube.com/watch?v=PTUY16CkS-k&feature=related

It makes me feel like I'm high.

ninky_2

Generali wrote: »

Tricky one to answer IMO. Everyone (by which I mean bond investors) knows that printing money is an option to Governments in a fiat money system. That's why lending money to Governments in their own currency is 'risk free' as ultimately they can print money to repay you.

In this case, things are a bit different as money is being printed to bail out private companies (eg auto makers, insurance companies and banks). That's scandalous IMO and there is a very interesting piece in Rolling Stone magazine that I will look out if someone else doesn't do it first about The Fed lending to some quite surprising people.

what in any way shape or form is there to respect in a system where this happens? i'm embarrassingly ignorant on many mechanisms of economics but intuitively it feels as if the only way this stuff wouldn't make people really really angry en masse is that there's enough smoke and mirrors and confusing economic lingo going on that most people generally haven't a clue what is happening.

HAMISH_MCTAVISH

ninky wrote: »

just wondering if quantitative easing is really compatible with the notion of a free market economy.....i'm thinking no.

Why?

Money is merely a method of exchange. An exchange token.

A free market economy needs liquidity of those exchange tokens to function. Without liquidity, ie, sufficient tokens of exchange in circulation for transactions to happen, the whole system freezes up.

QE is nothing more or less than an increase in liquidity.

ninky_2

HAMISH_MCTAVISH wrote: »

Why?

Money is merely a method of exchange. An exchange token.

A free market economy needs liquidity of those exchange tokens to function. Without liquidity, ie, sufficient tokens of exchange in circulation for transactions to happen, the whole system freezes up.

QE is nothing more or less than an increase in liquidity.

i'm not sure i see it like that. isn't it actually serious state intervention? particularly when you take into account what gen says about it being to bail out specific sectors.

michaels

In the long run the market for labour should clear, in the short term the dislocation of a major financial disruption can lead to huge amounts of real suffering. GM (just like the banks) had failed to recognise the boom leading up to 2007 as a bubble and so come the crash (with an oil price hike and liquidity crunch thrown in) the company would have gone broke. This would have taken down the suppliers, possibly other manufactureres and had a huge knock on effect in overall demand with both large direst effects and also indirect effects with no other workers feeling safe. The US govt providing the liquidity for GM to trade through the crunch has no doubt prevented huge amounts of personal suffering, the company has still been restructured and will restructure further and is paying back the US govt for the loans provided. How is this intervention a mistake (in the real world of people and jobs not the Gideon Osbourne theoretical world of efficient markets)?