.Which means you don't actually know enough. Inflation is when the purchasing power of a single $1 goes down. Printing more dollars does not NECESSARILy do this. In fact that's what we see TODAY. We see an increase in printed dollars AND AN INCREASE in BUYING POWER
When I was a child, a Snickers bar cost a dime. By the time I was 18, it was 50 cents. Today, it's a dollar. Purchasing power has gone down, even at the extremely low level of inflation that we've seen over the past two decades. Printing more money will improve this situation how? Stop, I can answer this question, it will not. We've not seen an increase in buying power, Degsme, we've seen a steady decrease since the 1970s, both in inflated and constant dollars.
That's not the only thing making it meaningless. There is this meaningless idea that somehow the government can "invest" in its own bonds, and then pay itself back with interest, while constantly having to go deeper in debt (this is the current pattern). If you believe this can be sustained indefinitely, well, I own this bridge in Brooklyn.Now to the extent that Government funds are held in Government Bonds, there is a 'trust fund". What makes it a meaningless "trust" is that the only thing regulating it, is the self-same authority that it takes to pass a budget.
I'm actually surprised Degs didn't step in to slap you down on this statement. He probably will, in great detail, later. Bottom line, the payroll tax is AN income tax, it is merely a regressive, rather than progressive version of an income tax and it falls under the same tax authority as any other tax levied by the federal government.But then when it comes to the currency and FICA taxes and the SS Trust Fund, items that are legal, you suddenly wax poetic. I'm not letting a lawyer get away with that. You want to revoke my poetic license for netherlands and then turn around and grant yourself poetic license for FICA taxes? FICA taxes are not income taxes, they are payroll taxes and there is a bigger difference between those two items than there is between hinterlands and netherlands.
The trustee, in this case, is the government. It has not "touched" the monies in the fund, as those moneys were invested in federal bonds. Now, I posed a question in the last panel that you have not bothered to answer -- what happens to the money (any money, from any source) that is used to purchase a federal bond?Social Security is ANOTHER government trust fund. AKA its a pension by nature. That's how it was set up, that's how it was supposed to operate. And you damn well better know that it is highly illegal for a Trustee to touch the monies in a trust fund.
As you didn't answer this question, I will. The money used to purchase a federal bond is used by the federal government for federal expenses. If you buy a $50 savings bond, you've loaned the federal government $50. If the federal government purchases a $2 million treasury bond -- it has LOANED ITSELF $2 million, and promises to pay itself back. That is the mechanism of the Social Security "trust fund."
You are conflating three different things. :When I was a child, a Snickers bar cost a dime. By the time I was 18, it was 50 cents. Today, it's a dollar. Purchasing power has gone down, even at the extremely low level of inflation that we've seen over the past two decades.
Simply not true as your own Snickers bar example demonstrates.Printing more money will improve this situation how? Stop, I can answer this question, it will not. We've not seen an increase in buying power, Degsme, we've seen a steady decrease since the 1970s, both in inflated and constant dollars.
Again, then what you are saying is you don't believe in Arithmetic.That's not the only thing making it meaningless. There is this meaningless idea that somehow the government can "invest" in its own bonds, and then pay itself back with interest, while constantly having to go deeper in debt (this is the current pattern). If you believe this can be sustained indefinitely, well, I own this bridge in Brooklyn.
It's a jobless recovery. To voters, it's a recession.No we are not IN a recession. We are in a recovery.
Speculate about this to your heart's content. Obama may win in November (the race is too close to call). It is clear he will not have coat-tails. That means who will get "beat black and blue" may be him, as Congress calls him out on every circumvention of the Constitution he does via executive order (or simply refuses to fund the actions of the executive orders -- well within Congressional power.And this time around Obama will beat Congress black and blue and will essentially use Executive orders to go around Congress. and that will leave Congress with the option of impeaching - which gets them unelected in 2014... or taking up Obama's Keynesian solutions - which ALSO gets them unelected in 2014
I have -- Obama stimulated higher-than normal turnout in two groups: African-Americans; 18-24 year olds. He had strong numbers among independents, but most polls today shows he's lost those numbers. He wins, if he can get the same sort of turnout among African-Americans and young people as he did last time, but there's no guarantee that will happen. The race is too close to call.Nope. Simply not true. Look at the demographic numbers.
The Ryan Budget takes loads of taxation out of the economy and puts the government on the road to sound management of it's budget. This last, controlling the debt and deficit, is extremely popular, Degs, in most polls.Name one. Sorry you cannot. They don't exist. The Ryan budget takes 6% of GDP out of the economy and not much else.
No -- Clinton balanced the books, very temporarily and mostly via projections. Carter broke the back of inflation? If he had, he'd have won in the landslide that he lost by. Dems in the 80s brought us to the current state of SS and Medicare in which their income is less than the benefits being paid (it is ludicrous to speak of them as solvent -- the agencies themselves will tell you they are not).Sorry they have. Clinton brought the deficit to essentially zero. Carter broke the back of inflation with Volker. Dems in the 80s adjusted SS and Medicare for solvency for the next 50 years.
Figures lie, and liars figure, Degs. A dollar is worth less now than it was in 1969, or 1980. Yes, people earn more dollars -- but the dollars they earn are worth less. Another way of looking at this is that it takes $19.77 per hour to have a return for your work that will purchase what could have been purchased for $2.60 in 1965. You say in 1965, it took "2 minutes of work" to buy a Snickers bar, and today it takes 3 minutes of work, I see that work has been devalued (or the money exchanged for the work has been inflated) by 33.3 percent.You are conflating three different things. :
- Purchasing power of a single dollar
- Purchasing power of the Typical hourly wage
- Purchasing power of the US Economy vs. ROW
A dollar is a medium of exchange, be it exchanged for work or a Snickers bar. In 1965, 1/10 of that medium would by the Snickers bar. Today, the entirety of that medium is the unit of exchange for the Snickers bar. The dollars/Snickers bar value relationship has then been modified by 90 percent -- the dollars-to-Snickers exchange rate has changed by 90 percent.So your claim that Purchasing power has gone down presumes that there is an inherent value in a dollar rather than the dollar simply being a storage unit of promised FUTURE work.
By the same token, in 1965, it took $35.12 to buy an ounce of gold. Today, it trades at $1,635 per ounce. Clearly, the dollar's value has fallen compared to the rate in 1965.
The average wage did not keep pace with inflation because of trade deals that moved the jobs offshore, Degs. You can blame that on supply-side economics until you're blue, but it won't change the fact that the jobs moved overseas to avoid higher U.S. salaries and the U.S. regulatory structure.Now its true that the AVERAGE WAGE has not kept pace with inflation.... SINCE THE SUPPLY SIDE POLICIES WENT INTO EFFECT UNDER REAGAN. and yes median household purchasing power has dropped. Another reason why YOU voting for Reagan in 1984, voted against your own best interests.
Sorry, but my Snickers bar example holds. Two minutes of work in 1965 is not the same as 3 minutes of work today. It is 30 percent (roughly) more work for the same amount of value (and don't even get me started on something essential like gasoline).Simply not true as your own Snickers bar example demonstrates.
I believe in arithmetic just fine. I know of know group of human beings that will allow a single creditor (even if that creditor is a great nation) to run indefinitely on credit. It doesn't matter how the math works, what matters is how the politics of the credit works. That's setting aside that even people who make only $20,000 wonder why the "geniuses" in government can't maintain a budget, when the $20K person has to. If if you think this can run in perpetuity, well again, I have this bridge.Again, then what you are saying is you don't believe in Arithmetic.
The treasury bonds in the trust funds are NOT traded, Degs, which throw the argument about NASDAQ, Kazhakstan or $25 in wampum beads into a cocked hat. The trust fund represents a legal obligation to Social Security program recipients and is considered "intra-governmental" debt, a component of the "public" or "national" debt. As of April 2012, the intragovernmental debt was $4.8 trillion of the $15.7 trillion national debt. There is not external trade to set a value. The securities in that fund can't be traded on a securities market, and current law requires the government to redeem those securities whenever there's a need (when revenues are exceeded by benefits). This means the government needs another revenue stream to pay for the redemption -- and that means cutting elsewhere in government, raising taxes, or borrowing more money.So sorry, there is no problem inherent with the government buying its own bonds. NONE. And that you have not sorted this out in your head means you don't really understand the issue.
That's a particularly apt way to describe your Snicker's bar cherry pick.Figures lie, and liars figure, Degs.
Wrong trap. They are essentially the same bonds that go on auction EVERY MONTH. And at any point in time can be sold as such.The treasury bonds in the trust funds are NOT traded, Degs
Wrong on BOTH trap. The USA has been in debt to creditors SINCE BEFORE ITS CREATION. That's about as "indefinately" as it gets. Nations have no life span nor terminus of earnings. As a result they CAN and DO receive indefinate credit.I believe in arithmetic just fine. I know of know group of human beings that will allow a single creditor (even if that creditor is a great nation) to run indefinitely on credit.
Really? So what has magically changed about the nature of time?Two minutes of work in 1965 is not the same as 3 minutes of work today.
And gold has no inherent value. And is largely driven by irrational Gold Buggery.By the same token, in 1965, it took $35.12 to buy an ounce of gold. Today, it trades at $1,635 per ounce. Clearly, the dollar's value has fallen compared to the rate in 1965.
Neither is true. We've had steady job increases month on month for 22 months in a row - http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mthIt's a jobless recovery. To voters, it's a recession.
No the data is pretty clear, even Intrade Money says he will win. As for Coat-tails - BEFORE the Ryan pick I would have agreed with you. WITH RYAN its too close to call.Speculate about this to your heart's content. Obama may win in November (the race is too close to call). It is clear he will not have coat-tails.
BY HOW MUCH? Come on - lets see your numeric analysis.I have -- Obama stimulated higher-than normal turnout in two groups: African-Americans; 18-24 year oldsNope. Simply not true. Look at the demographic numbers.
Not really http://pollingreport.com/prioriti.htm it is #2 on the list. And what's more, THE RYAN PLAN DOES NOT ACCOMPLISH CONTROLLING EITHER.. This last, controlling the debt and deficit, is extremely popular, Degs, in most polls.
I thought I did.... did I screw up my post?I'm actually surprised Degs didn't step in to slap you down on this statement.
\Neither is true. We've had steady job increases month on month for 22 months in a row - http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth
Those increases are STILL fewer than the number of people entering the workforce, meaning that there is net negative job growth -- it's a jobless recovery.
Consumer confidence merely means people have gotten used to the new normal, not that the economy has improved.And consumer confidence has been on a steady growth for the last year http://en.wikipedia.org/wiki/File:U.S._Consumer_Confidence_Index.png
It's too close to call. I'm not saying the president will lose. I'm saying he has a fight on his hands.No the data is pretty clear, even Intrade Money says he will win. As for Coat-tails - BEFORE the Ryan pick I would have agreed with you. WITH RYAN its too close to call.
Politically with whom? I predict that Romney/Ryan will receive more than 47 percent of the vote, even if they lose.The Ryan Plan is completely off the mark politically. And in terms of voter priorities, the Romney Campaign is LEADING WITH #3 or #4 now http://pollingreport.com/prioriti.htm That's a way to lose DOWN TICKET.
Pick a commodity, Degs, any commodity from gold to high-fructose corn syrup to human labor, and tell me that the dollar has the same purchasing power to acquire that commodity that it had 40 years ago. You won't be able to do this, because the dollar is worth less than it was 40 years ago.That's a particularly apt way to describe your Snicker's bar cherry pick.
1) a Snickers Bar price is driven more by sugar and cocoa import policy than by purchasing power of the dollar
2) it is a single product and not really representative of purchasing power or anything else
3) you basically are running on memory of what it cost, not actual pricing
4) And when the results don't come out to what you wanted, you complain that the results are wrongly figured
I should add that you are talking out of both sides of your mouth on this issue. When I raised the point that Medicare cost $3 billion a year on its debut, and was slated to cost $12 billion a year by 1990, and in actuality in 1990 it cost $125 billion a year, your argument was that I'd ignored the switch to fiat dollars and the devaluation of the dollar that happened as a result. Which is it, Degs. Does the dollar have less buying power now, or is it the same?
Not true. From the Social Security Administration website: "By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are 'special issues' of the United States Treasury. Such securities are available only to the trust funds." (Emphasis added) Information from the SSA FAQ website here:Wrong trap. They are essentially the same bonds that go on auction EVERY MONTH. And at any point in time can be sold as such.
https://www.socialsecurity.gov/OACT/ProgData/fundFAQ.html
The US was debt free as a result of actions by the Andrew Jackson administration. It has not always had a debt. Further, "nations" cannot receive infinite credit anymore than individuals can, vis, Greece, which had a complete credit failure and had to be bailed out by other nations.Wrong on BOTH trap. The USA has been in debt to creditors SINCE BEFORE ITS CREATION. That's about as "indefinately" as it gets. Nations have no life span nor terminus of earnings. As a result they CAN and DO receive indefinate credit.
And it is impossible, if you're borrowing to pay past loans. At some point, your interest payments alone will exceed your ability to raise revenues -- the U.S. isn't near that level today, but it isn't doing anything to keep from getting there, either.Secondly, YOUR CLAIM was that it is impossible to run a deficit Year On Year and not go bankrupt. Clearly you did not do the arithmetic because fairly simple arithmetic of the compounding of various variables involved says your claim is simply bullSh!t.
Oh, please. I was pointing out that the value you received for 3 minutes of work is not the same as the value received 40 years ago. You pointed out that in my Snickers bar example, it took 2 minutes of work to buy a Snickers bar in 1965, and it takes 3 minutes to buy one today. That's a devaluation of the time worked, by 30 percent (or looked at more rationally, it's a devaluation of the amount of money that the work is exchanged for by that amount, as compared to the commodity "Snickers bar." It has reduced more or less depending on the commodity chosen, but it has increased for almost none. About the only commodity price that has fallen steadily over the past 40 years is aluminum).Really? So what has magically changed about the nature of time?
Gold has been the "gold standard" on international markets basically as long as they've existed. It doesn't matter, anyway, what drives the gold/dollar exchange rate. What matters is that exchange rate, too, shows a steady devaluation of the dollar.And gold has no inherent value. And is largely driven by irrational Gold Buggery.
I'm not cherry picking any commodities. In fact, I picked "Snickers bar" to avoid doing that. If I wanted to cherry pick commodities I'd have used the prices of oil or steel.And by cherry picking your commodities you are doing just that.
Lets try it this way. Lets pretend for the moment that every year the currency is changed to something else. So in 1965 it was called The Dollar
then by 1979 it was called the Ooobly and today it is called the Yawbly.
How would you compare the "purchasing power" of the Dollar to the Ooobly and the Yawbly? Well since they don't have a set conversion rate you'd have to figure something out. Here's a couple of Alternatives
[li
You're "yawzer, oobly, dawbly, wobbly" approach is an interesting fiction. I prefer to look at things in the real world. In the real world, the dollar has reduced in value compared to anything you'd like to purchase with it. This happened, possibly inadvertently, after Nixon put us on the fiat dollar. It happened intentionally when Reagan slashed the value of the dollar to screw foreign investors (read, "the Japanese" -- I know you think I hero-worship Reagan but this was a plainly stupid thing to do).So the reality is that your "purchasing power" question is far more complex than you sought to make it out. YOUR BELIEF system of course drives you to a pre-determined conclusion and hence you cherry picked something from memory that SEEMED to you to reinforce your beliefs. But in reality you were picking a measure to meet your BELIEF rather than actually seeking an answer.
Bottom line, that $2.60 an hour middle income worker in 1965 had a middle-income life, and it now takes nearly 10 times the amount of dollars to provide him with the same life today. That's inflation, Degs. It's not Weimar level, but it isn't a good thing, either.
?OK I'll pick a commodity.
A computer with 128k of memory. and a 2.5 GByte hard drive. The hard drive cost about $90,000 in 1965 roughly $35/Mb. Today I can buy a a 1,000 Gb hard drive for $50 or 5 cents/Mb. Clearly purchasing power has gone up by a factor of 700...... But of course EVERYONE NEEDED a computer in 1970 like they do today right
Computers are not traded as commodities. Try milk, butterfat, corn, wheat, aluminum, gold, steel, etc.
A "dollar" is supposed to represent a unit of purchasing power, and sans inflation, it should retain its value across a span of years.See the problem is that you are making the FALSE equivilence that a "dollar" IS INTENDED to represent the same thing today as 40 years ago. IT IS NOT> 40 years ago $1 represented roughly 20 minutes of an average working life. So something that cost $1 was the same as 20 minutes of your life
Which means it represents far less in value than the same unit of exchange represented 40 years ago, as 40 years ago, $1 didn't represent 3 minutes of working life, but something like 30 minutes of working life.TODAY $1 represents 3 minutes of an average working life. So something that costs $1 is the same as 3 minutes of your life
No, the purchasing power of the dollar to purchase such things has gone down. To determine this, all you have to do is look at how much care $3,000 will buy today versus 1965.And under that rubrick, the purchasing power for things like computers, TVs, Cars HAS GONE UP DRAMATICALLY. That the name in which you store your PROMISE OF LABOR (because that's what currency is) has not changed HAS NO BEARING ON THIS.
Simply not true. It once took $35.12 to buy an ounce of gold. Now it takes $1,600 to buy an ounce of gold. By any measure, a dollar doesn't buy as much gold as it used to.As for gold. Gold valuation has not had a significant factor on currency purchasing power for about 100 years now. And no, the Gold/Dollar exchange rate does not show a "steady devaluation of the dollar".
But the topic at hand is whether or not inflation has affected the value of the dollar. You said it had not. Now you're making the argument that it has (in order to show the value of gold, you had to adjust for the inflation).In January of 1980 Gold was at $850/oz It then fell, and did not recover that price point for TWENTY EIGHT YEARS. IOW there was a 28 year STEADY INCREASE in "dollar/Gold" purchasing price. http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx (this is in non-adjusted dollars. If you inflation adjust there is a dramatic FALL in gold princes. Inflation Adjusted, the 1980 gold price is $2193/oz. About 20% higher than today's prices.
Well, that is indeed another way to look at it. I prefer the one you used before, however, where you pointed out that you had to adjust for the inflation that you earlier said didn't affect the value of the dollar. If it didn't affect the value of the dollar, it's purchasing power, you wouldn't have had to adjust for it.Another way to analyze this is to recognize that it took 136 hours of work for the average worker to buy a troy ounce of gold in 1980. IN 2008 it took 41 hours.
No. And if you believe that, you fundamentally do not understand monetary policy in any way shape or form.A "dollar" is supposed to represent a unit of purchasing power
Irrelevant - becuase that $35 took 13.5 hours of work to accumulate. And in 2008 it took about the same aoumt of work to get the $1600.Simply not true. It once took $35.12 to buy an ounce of gold. Now it takes $1,600 to buy an ounce of gold
No the question at hand is whether the PURCHASING POWER of the USA has been changed.But the topic at hand is whether or not inflation has affected the value of the dollar
Ahh but WHY do you prefer that? Again this issue of "purchasing power" is not as simplistic as you would PREFER to make it.Well, that is indeed another way to look at it. . I prefer the one you used before, however, where you pointed out that you had to adjust for the inflation that you earlier said didn't affect the value of the dollarAnother way to analyze this is to recognize that it took 136 hours of work for the average worker to buy a troy ounce of gold in 1980. IN 2008 it took 41 hours.
.No. And if you believe that, you fundamentally do not understand monetary policy in any way shape or form
If a dollar doesn't represent purchasing power, it isn't money. Money is something exchanged for other items or activities for value. Cigarettes are money -- in a prison. Bottle caps are money -- in certain Blizzard games. Dollars are money, in the United States and elsewhere. They represent units of exchange of a specific denomination and value.
That would mean an hourly rate of $118. Some people might make this, but it wouldn't exactly be the median.Irrelevant - becuase that $35 took 13.5 hours of work to accumulate. And in 2008 it took about the same aoumt of work to get the $1600.
The purchasing power has to change, if the value of the purchasing medium changes.No the question at hand is whether the PURCHASING POWER of the USA has been changed.