Trump: U.S. will never default 'because you print the money'

[pdog]

...
The cost of labor goes accordingly to the intersection of the graph of the supply of the cost at which labor will provide its labor and the demand at which businesses will pay for labor. A higher cost demanded by labor, for example. will skew the intersection of the labor supply and business demand curves causing businesses to demand a lower amount of the labor at that price. Consequently, if businesses demand more labor, the intersection of the cost of labor curve by labor and demand for labor curve by businesses will skew to a higher intersection price for labor that businesses are willing to pay. Note: the federal government doesn't have any such inclination of preferred or disallowed price intersections of the supply and demand curves of individuals or companies. Politicians have a demand curve that coincides with the politics of the issue.[/QUOTEI didn't get into any motivations why buyers would want to demand more because of shortages. That would be a totally different demand curve, as you know. The demand (and supply) curves are snapshots in time. In essence, your post is correct. It doesn't disprove my post, though.

Econ 101

Then why didn't you answer the question. What is stopping supply from shifting?

 

[Gimmesometruth]

no its the fact that prices change when demand increases.. and production does not increase. Happens all the time.

This, coming from...a "doctor". The irony. The price of medicine has been driven in large measure by specialist salaries, and in this case yer correct, supply is not compensating. But your commodity argument....is a comedy.

 

[cabse5]

Then why didn't you answer the question. What is stopping supply from shifting?

A choking of supply will shift the demand curve to accept higher amounts of a product at higher prices. Consequently, a choking of supply will shift the supply curve so provider's prices will be higher at each amount of goods provided. Suppliers can raise the price all they want but if the price isn't what demanders are willing to pay, the goods won't be sold. You don't get this? I thought you knew economics.

And I did answer it before. I said

...
The cost of labor goes accordingly to the intersection of the graph of the supply of the cost at which labor will provide its labor and the demand at which businesses will pay for labor. A higher cost demanded by labor, for example. will skew the intersection of the labor supply and business demand curves causing businesses to demand a lower amount of the labor at that price. Consequently, if businesses demand more labor, the intersection of the cost of labor curve by labor and demand for labor curve by businesses will skew to a higher intersection price for labor that businesses are willing to pay. Note: the federal government doesn't have any such inclination of preferred or disallowed price intersections of the supply and demand curves of individuals or companies. Politicians have a demand curve that coincides with the politics of the issue.[/QUOTEI didn't get into any motivations why buyers would want to demand more because of shortages. That would be a totally different demand curve, as you know. The demand (and supply) curves are snapshots in time. In essence, your post is correct. It doesn't disprove my post, though.

Econ 101

 

[pdog]

A choking of supply will shift the demand curve to accept higher amounts of a product at higher prices. Consequently, a choking of supply will shift the supply curve so provider's prices will be higher at each amount of goods provided. Suppliers can raise the price all they want but if the price isn't what demanders are willing to pay, the goods won't be sold. You don't get this? I thought you knew economics.

And I did answer it before. I said

One, a snapshot is a tool. It is not reality. Time doesn't stop. And you're moving the goalposts by changing the senario to "choked" supply. That is the very question....why is supply "choked"?

 

[pdog]

So you are admitting that you were wrong, followed by a "not really".

I made a mistake in terms of the debate, not in terms of the assertion. I made that clear with the question I asked of you that you chose to ignore....if this is enough to support jaegers assertion, if I come up with counter examples will you also support my assertion. Makes sense right?

 

[Mr Person]

This was explained earlier in the thread.

Although it is technically true that it is "not impossible" to default by virtue of our ability to print money, printing money is not a realistic option to avoid default because you torpedo your currency with rampant inflation and a complete loss of borrower confidence.

Simple, really.

First, define "printing money." Then explain how it leads to rampant inflation.

To put it in the most simplistic way possible, MV = PY.

Things get a little hairy when you get down to specifics, but any (and every) economist will explain to you that a rapid increase in the money supply yields hyperinflation. See Weimar Germany, Zimbabwe, etc., as historical examples.

Whether you're talking about expanding M by a trillion+ to deal with one year's budget (to avoid default) or paying off all your debt (19 trillion), you're talking about a rapid and huge increase in M. That's a suicidal maneuver as far as our overall economy goes.



Of course, you shouldn't need to be an economist to understand this, but it helps.





If you still don't understand, I'd suggest googling something like: "Printing money" inflation

and then reading the first five results.

 

[pdog]

To put it in the most simplistic way possible, MV = PY.

Things get a little hairy when you get down to specifics, but any (and every) economist will explain to you that a rapid increase in the money supply yields hyperinflation. See Weimar Germany, Zimbabwe, etc., as historical examples.

Whether you're talking about expanding M by a trillion+ to deal with one year's budget (to avoid default) or paying off all your debt (19 trillion), you're talking about a rapid and huge increase in M. That's a suicidal maneuver as far as our overall economy goes.



Of course, you shouldn't need to be an economist to understand this, but it helps.





If you still don't understand, I'd suggest googling something like: "Printing money" inflation

and then reading the first five results.

So tell me, why did they increase the money supply in the first place in your examples?

In order to get a change in p by increasing m, y would need to be held constant right. Why would y be constant?

That said couldn't p go up because y went down?

 

[JohnfrmClevelan]

To put it in the most simplistic way possible, MV = PY.

Things get a little hairy when you get down to specifics, but any (and every) economist will explain to you that a rapid increase in the money supply yields hyperinflation. See Weimar Germany, Zimbabwe, etc., as historical examples.

Whether you're talking about expanding M by a trillion+ to deal with one year's budget (to avoid default) or paying off all your debt (19 trillion), you're talking about a rapid and huge increase in M. That's a suicidal maneuver as far as our overall economy goes.

I asked you to define "printing money" because the generally accepted definition is when the Fed buys U.S. bonds and not the public. This results in dollars, not bonds, being added to the private sector. Some people think it makes a difference; I don't. Either way, deficit spending results in an increase in financial assets for the private sector, and an increase in liabilities for the government. (I count the Fed as part of the government.)

"Paying off" the debt would simply mean exchanging dollars for bonds. If you are a bondholder, does this really change your situation? One day, you hold $1 million in bonds, the next day you hold $1 million in dollars. The tiny bit of interest you were earning from bonds probably wasn't enough to keep you from spending your money if there was something you wanted to buy, and it probably wasn't enough to keep you from investing in something riskier but more lucrative. So were the debt to be converted to dollars, it's not like everybody's pockets are suddenly full of new money that they are going to rush out and spend. If you had $1 million in bonds before, you could have liquidated and spent your million with minimal trouble, but you didn't.

*********

The biggest problem with MV=PY is that Y changes. The other problem is that V is a derived figure, not a measured one. The assumptions necessary to make an increase in M => a corresponding increase in P make the equation worthless in the real world. Y doesn't stay constant, and V isn't constant, either.

Most examples of hyperinflation can be traced to a large drop in production and/or excessive foreign debt. The Germans not only had their productive capacity damaged by WWI, they had war reparations to pay for. We took their gold, and we took too much of their production. So they purposely started paying the victors with printed money. That is not a normal situation.

Zimbabwe dismantled their big, productive farms and redistributed them to people who had no idea how to farm. So their production went way down, and they went from exporting food to importing food. Their problems didn't come about because they decided to print a bunch of money - that came later.

A rapid increase in the money supply would not result in inflation unless demand outstripped the economy's ability to meet that demand. So you first have to ask, how are we increasing the money supply, and who is getting all of this money? It might get spent on food, or it might all end up in the stock market. Or, depending on what you count as the money supply, it might just sit around as reserves and do nothing at all.

 

[jaeger19]

Sure, because nothing else has happened in the field of oil production that might make prices go up and down. :roll:

I have explained to you a number of times that inflation (and deflation) happen for a bunch of reasons, yet you have chosen to ignore that perfectly valid answer. You keep on insisting that the 2% annual inflation that we have is proof that my claim is wrong, but you have to completely ignore every other reason for inflation to get there. You have made that particular BS argument dozens of times, at least. So screw you, I am far more tired of dealing with your intellectual tunnel vision than you could imagine.

Poop. You make wide statements as if they are always the case. YOU are the one that has tunnel vision. You don't see the bigger picture that the economy is. How many times have I had to point out to you that economics is about behavior.. and not accounting?..

The real irony is this.. I mean this is really hilarious...

but you have to completely ignore every other reason for inflation to get there

THATS the huge irony. I have been trying to get you to understand that there are multiple reasons for prices to increase.

Oh.. but not you.. no you make statements like " prices don't rise because production increases"... when that simply is not the case.. otherwise prices would not go up.

This assumption is why your premise regarding deficit spending and inflation is all wrong. YOU keep stating that we don't have to worry about deficit spending causing inflation.

And why? Because you assume that the ONLY way to get inflation/price increases is when there is "more money than production can produce products for people to buy"... and that simply is not the case.

That's the irony. You are the one that has tunnel vision and makes these assertions. Oh sure.. when your feet are held to the fire..you will then grudgingly admit that there are other reasons for inflation. Wait.. actually that's not quite true.. after you assert that prices don't go up because production increases... and I point out.. not true... then you accuse me of having "tunnel visions" and ignoring every other reason for inflation.

 

[jaeger19]

Not that anyone is going to get you to be specific on a time period, or expect you to back your claim, the price of milk has declined in real terms since 1975, bread is barely up, gasoline is down. We know why healthcare is up....and "toys"?

And looking back at yer "18 cents gas in 1950", the nominal 1950 price was 26 cents, or $2.59 in 2015 dollars.

gas/oil is a really lousy example, since it is manipulated by opec and other producers, as we are currently witnessing. Their productivity has been accelerated to counter fracking producers in the US, to recapture market share.

sorry as John and Pdog claim.. its simply not possible for prices to change because production will always increase or decrease to keep prices exactly as they are.

 

[jaeger19]

as others have pointed out I may have made a mistake by not qualifying my request. My fault. However, if I now submit products that have stayed the same or fallen in price with increasing demand will you accept the counterpoint as well?

What counterpoint? If you will admit that prices do in fact change then you have made my point.

That's it.

 

[iguanaman]

Poop. You make wide statements as if they are always the case. YOU are the one that has tunnel vision. You don't see the bigger picture that the economy is. How many times have I had to point out to you that economics is about behavior.. and not accounting?..

The real irony is this.. I mean this is really hilarious...



THATS the huge irony. I have been trying to get you to understand that there are multiple reasons for prices to increase.

Oh.. but not you.. no you make statements like " prices don't rise because production increases"... when that simply is not the case.. otherwise prices would not go up.

This assumption is why your premise regarding deficit spending and inflation is all wrong. YOU keep stating that we don't have to worry about deficit spending causing inflation.

And why? Because you assume that the ONLY way to get inflation/price increases is when there is "more money than production can produce products for people to buy"... and that simply is not the case.

That's the irony. You are the one that has tunnel vision and makes these assertions. Oh sure.. when your feet are held to the fire..you will then grudgingly admit that there are other reasons for inflation. Wait.. actually that's not quite true.. after you assert that prices don't go up because production increases... and I point out.. not true... then you accuse me of having "tunnel visions" and ignoring every other reason for inflation.

Do you deny that a shortage of supply will cause prices to rise? Why is the opposite not true? As long as supply meets demand there will be no increase in prices. The only exception I can think of is when a cartel conspires to artificially raise prices like OPEC did in the 1970's. When the price of oil was tripled the prices of everything went up as the increased costs trickled down the supply chain. When the Fed tried to stop those increases with interest rate boosts they failed miserably and put us into recession to boot.

 

[Gimmesometruth]

sorry as John and Pdog claim.. its simply not possible for prices to change because production will always increase or decrease to keep prices exactly as they are.

You claimed those items had increased in price, I just showed they decreased in real terms, your counter argument doesn't hold, so you need to re-submit a new argument that holds up to minor scrutiny.

 

[jaeger19]

Probably not, because Jaeger doesn't accept points when he loses them, he just sidesteps them and keeps arguing as if they never happened. Like here, where he seems to believe that the one and only reason behind prices going up is due to increased demand. In his world, it explains everything. Until it doesn't, and then he will conveniently forget that he ever held that position.

Ummmm John.

you are the one that's not admitting that you lost a point. I NEVER EVER EVER stated that the one and only reason behind prices going up is due to increased demand. NEVER NEVER NEVER.. would I claim that because I know its not true.


It was you that won;t admit that prices do in fact change. It was YOU that stated that prices do not go up because production increases.

 

[jaeger19]

You claimed those items had increased in price, I just showed they decreased in real terms, your counter argument doesn't hold, so you need to re-submit a new argument that holds up to minor scrutiny.

they still increased in price. "real terms" is a function of inflation.. which is another example of prices increasing.

sorry but point still holds up.

nice try though.

 

[jaeger19]

Do you deny that a shortage of supply will cause prices to rise? Why is the opposite not true? As long as supply meets demand there will be no increase in prices.

not at all... a shortage of supply will obviously cause prices to rise. That's the the point.. production will not always keep up with demand. Especially when an industry does not think the demand is going to be sustained enough to justify the costs of increased production.

And the opposite can be true as well.

However, it is NOT true that "as long as supply meets demand there will be no increase in price"..

THAT is certainly not true. That's because prices are not simply a function of supply.

That's easy enough to see when it comes to healthcare. the supply of healthcare services has exploded with building new facilities, clinics popping up all over. Many hospitals have whole vacant wings because of over supply of beds and yet the price of healthcare has risen dramatically. ..

 

[pdog]

But what if I find things that stay the same price? are you going to concede that isn't always true and be open to the idea that production can increase without a rise in price?

 

[JohnfrmClevelan]

However, it is NOT true that "as long as supply meets demand there will be no increase in price"..

"as long as supply meets demand there will be no increase in price"...DUE TO THE INCREASED DEMAND!

This is the intellectual tunnel vision I am talking about. Either you are incapable of following a train of argument, or you are purposely jumping off the tracks.

 

[jaeger19]

But what if I find things that stay the same price? are you going to concede that isn't always true and be open to the idea that production can increase without a rise in price?

Sure.. of course it can.. who ever stated that it cannot? I cannot concede a point I never argued against. in fact production can increase to the point of oversupply and decrease prices. Look to the coal industry and natural gas industry.

I pointed out.. factually that the statement that "prices won;t rise because production will increase".. is not accurate.

Not really sure where you are coming up with positions I never ever took.

 

[jaeger19]

"as long as supply meets demand there will be no increase in price"...DUE TO THE INCREASED DEMAND!

This is the intellectual tunnel vision I am talking about. Either you are incapable of following a train of argument, or you are purposely jumping off the tracks.

No John.. there is no increased demand versus supply. Supply of beds in hospitals has outstripped the demand... hence empty beds in hospitals. Yet prices are increased.

the price increase is not due to demand increasing relative to supply.

.

 

[pdog]

Sure.. of course it can.. who ever stated that it cannot? I cannot concede a point I never argued against. in fact production can increase to the point of oversupply and decrease prices. Look to the coal industry and natural gas industry.

I pointed out.. factually that the statement that "prices won;t rise because production will increase".. is not accurate.

Not really sure where you are coming up with positions I never ever took.

Ok. Now what if I say the increased production was triggered by an increase in demand?

 

[pdog]

No John.. there is no increased demand versus supply. Supply of beds in hospitals has outstripped the demand... hence empty beds in hospitals. Yet prices are increased.

the price increase is not due to demand increasing relative to supply.

.

Can we stop referring to the entire medical industry as a product?. There are hundreds of products in that industry that you could choose from. Bedpans? Ultrasound machines? Anything.

 

[Gimmesometruth]

No John.. there is no increased demand versus supply. Supply of beds in hospitals has outstripped the demand... hence empty beds in hospitals. Yet prices are increased.

the price increase is not due to demand increasing relative to supply.

.

i didn't know hospitals sold beds, i thought they were primarily a service provider.

 

[Gimmesometruth]

they still increased in price. "real terms" is a function of inflation.. which is another example of prices increasing.

sorry but point still holds up.

nice try though.

I'm still trying to understand yer argument, a gallon of gas in real terms has decreased in price since 1950. Why are you demanding that a prices never increase in nominal amounts? That would require zero inflation, zero population growth, zero money growth, the means to totally control supply/production of gasoline...a whole host of inputs never changing.

 

[jaeger19]

Ok. Now what if I say the increased production was triggered by an increase in demand?

An increase in demand can certainly increase production.

But an increase in demand will not necessarily cause an increase in production.

So one can not claim that "prices will not rise because production will increase to meet demand"
And a lot depends on how you define "demand" as well.. but I don't think I want to go down this rabbit hole.