HDTenEightyP/NetNews huggingface dataset:
From: pcm@cs.brown.edu (Peter C. McCluskey)
Subject: Re: inflation vs employment
Keywords: how to choose?`
Organization: Club Med Antarctica
Date: Wed, 27 Jan 1993 01:26:04 GMT

In article <8432@tekig7.PEN.TEK.COM>, ssoar@tekig5.pen.tek.com (Steven E Soar) writes:
|> 
|> Here's an issue that I don`t see being discussed but seems pertinent to the
|> state of our economy today: the proper balance between inflation and
|> employment.
|> 
|> Economics seems dominated by two major philisophical camps with different
|> emphases and predictive powers but diametrically opposed outputs.
|> 
|> In one camp we find the Keynesians, who can reiliably stimulate growth, but at
|> the added expense of inflation.  Inflation is inefficient because at higher
|> levels, it confuses future price/cost levels in the market.
|> 
|> In the other camp we find non-Keynesians (Austrians, monetarists,
|> supply-siders) who can who can reliably  control inflation, but at a huge
|> expense of unemployment.  I believe that Blinder comments that if we ran the

 The claim that reducing inflation causes unemployment is a myth which
only the Keynesians still believe. A reduction in inflation influences
the timing of changes in unemployment in much the same way as when you
stop drinking alcohol influences when you will get a hangover, without
being the cause of the hangover.

----------------------------------------------------------------------
  >> Peter McCluskey >> pcm@cs.brown.edu >>   Reunite Gondwanaland!
----------------------------------------------------------------------
Newsgroups: sci.econ
From: cbbrowne@csi.uottawa.ca (Christopher Browne)
Subject: Re: Inflation
Organization: Dept. of Computer Science, University of Ottawa
Date: Fri, 22 Jan 93 04:05:07 GMT

In article <1993Jan21.211300.8065@athena.mit.edu> cmk@athena.mit.edu (Charles M Kozierok) writes:
>In article <2259@blue.cis.pitt.edu> wbdst+@pitt.edu (William B Dwinnell) writes:
>>Yes, some inflation is natural, and some is caused my economic policies
>>of the government. But why do you limit your explanation of inflation
>>to the eexxx effects of money, and supply and demand?  The reason for 
>>inflation happens before we even get to the market: the seller has 
>>forsaken some amount of value of the item in question, by waiting-
>>that is, by sliding through time. When the xxxx they finally get to
>>the market, supply and demand schedules have already moved, and the
>>seller has lost.  In truth, inflation of prices could occur in an economy
>>of hammers and banaanaxxxx bannanas. Remember supply and demand only
>>reflect underlying economic conditions, and the reason for inflation
>>is one of those conditions, not part of S/D.
>
>i really don't understand what you are trying to say here.
>inflation simply means an increase in prices. if the price of hammers
>in terms of bananas increases, then there is "price inflation"
>of hammers in terms of bananas. but that would only happen due to
>market effects. and when the number of bananas needed to buy a hammer
>increased, people would start making more hammers and growing fewer
>bananas. eventually an equilibrium, or at least a stable cycle
>would be reached. you wouldn't see the inflation continue endlessly.
>
>please explain the point you are trying to make here.

A) Inflation that happens due to "market effects" is still inflation.

B) You're assuming that there will be a final equilibrium.  In a
dynamic system, there's no certainty of any final equilibrium.

C) Currency as currency has no intrinsic value; it is only valuable
when it is actually used.  Fiat currencies have no other value;
commodity currencies may have some alternative valuation.

The point is that money that is hoarded isn't terribly USEFUL; it's
only valuable when you actually buy something with it.

Is it not a truism that it is better to get $1 today than it is to get
$1 tomorrow?  I'd rather get the buck today, REGARDLESS of any
inflation.  That preference will in fact create a certain amount of
inflation.

The extent to which people prefer to receive money now as opposed to
later will create a latent amount of inflation.  It is sometimes
described as the "real" interest rate, and I hear that it's considered
to be between 3% and 6%.  This might be considered a "floor" that
indicates some basic level of inflation.

-- 
Christopher Browne                |     PGP 2.0 key available
cbbrowne@csi.uottawa.ca           |======================================
University of Ottawa              | Genius may have its limitations, but
Master of System Science Program  | stupidity is not thus handicapped.
From: wbdst+@pitt.edu (William B Dwinnell)
Newsgroups: sci.econ
Subject: Re: applied micro-econ: a newcomer seeks help
Date: 24 Jan 93 18:15:02 GMT
Organization: University of Pittsburgh


Well, I am not familiar with the report you cite, nor what "linerization"
took place therein, but it is often assumed (especially for instructive
purposes), that supply and demand schedules are linear. In actuality,
they may curve, be bent, or step.
Xref: sparky sci.econ:9929 soc.culture.usa:10243 soc.culture.japan:14451 soc.culture.british:19602 soc.culture.canada:10524
From: irvine@uxh.cso.uiuc.edu (Brent Irvine)
Newsgroups: sci.econ,soc.culture.usa,soc.culture.japan,soc.culture.british,soc.culture.canada
Subject: Re: US as No. 1 (3 data books)
Date: 27 Jan 93 16:51:59 GMT
Article-I.D.: news.C1Iuun.Gn9
Organization: University of Illinois at Urbana-Champaign

In article <1993Jan26.114023.28748@adobe.com> cjackson@adobe.com (Curtis Jackson) writes:
>Well, certainly the "look, everyone wants to live here" bit of
>"logic" is a factor, but there are many more that are probably
>more important. In particular, the issue of individual freedom
>and choice (at least, until the drug war started in earnest).
>
>Americans look at other countries and see things by which
>Americans are not constrained:
>
>Official state religions
>Mandatory government/military service
>Mandatory separation of college-bound vs. trade-bound students
>in the early/mid teenage years
>Unreasonable (to Americans) search and seizure in the name of
>public safety
>Mandatory shop closing hours (a la Germany, Nederlands, etc.)
>Legislation without true representation (House of Lords)
>
>Add to the above the military might of the country, and you have
>a citizenry who feel they are powerful as a country and powerful
>as individuals. They can own as many guns as they like, they can
>drive an automobile with no instruction after passing the most
>absurdly minimal of tests, they can worship whomever they like
>publicly, and they can stand in front of the White House and call
>the President a horse's ass as long as they're not so loud as to
>be considered disturbing the peace.
>
>That kind of personal (and national) power breeds arrogance and
>contempt; it is human nature. I seem to recall that England
>herself had a rather healthy case of it a few hundred years back,
>and it ended up costing her The Empire.

I would say that American are not Arrogant as much as others say.
With all the self depricating done oin the media that people buy,
and base policy on, America is a nation that continuously feels
it is on the edge of failure.  While proud, i do not feel that 
there is a whoel lot of arrogance [esp. when immigration is a major
force making "American" a difficult-to-define term!].

I also think that "arrogance" was not the cause of England's
relative decline over the last 50 years.  There were a lot of
non-arrogance oriented events (WWII's debt) that did a far
"better" job than an assumed attitude...

>-- 
>Curtis Jackson			'91 Black Lab/Blue Heeler "Studley Doright"
>cjackson@mv.us.adobe.com	'92 Collie/Golden "George"
>DoD #721	KotB		'91 Hawk GT	'81 Maxim 650
>"I'd rather die while I'm living than live while I'm dead." -- J. Buffett


-- 
+-------------------------+--------------------------------+-----------------+
| Brent L. Irvine         | For a mere $50 these personal  | Ak! Its 1992 tax|
| irvine@uxh.cso.uiuc.edu | opinions can also be yours!    |  season! Yuck!  |
+-------------------------+--------------------------------+-----------------+
Newsgroups: sci.econ
From: cmk@athena.mit.edu (Charles M Kozierok)
Subject: Re: Inflation
Organization: Massachusetts Institute of Technology
Date: Thu, 21 Jan 1993 21:19:28 GMT

In article <24793@hacgate.SCG.HAC.COM> tucker@shiva.UUCP (George Tucker) writes:
>In article <38299@uflorida.cis.ufl.edu> jfh@beach.cis.ufl.edu (James F. Hranicky) writes:
>>Under a fiat money system, like the one we have now, inflation can proceed
>>indefinately, as evidence by the hyperinflations in South America, and 
>>of that in Germany in 1920-3. Governmental increases of the money supply
>>are *not* natural.
>
>Only recently it was thought that the Universe as we know it would 
>expand indefinitely, so the potential to do so does not seem particularly
>"unnatural".  So what is so "natural" about the gold standard?
>
>Does this mean you are "against" inflation?  Personally, I like a
>little bit of it.  Good for real estate values.

how is it good? it is rather simplistic to just look at the increasing
price of your house without also considering how the price of everything
else is also increasing, and the fact that the bottom tier of house
buyers is pushed out of the market.

>Gold mining causes enormous environmental damage.  At least an ivory
>standard or a rhinoceras horn standard would ensure a massive effort
>to save certain species.  However, it makes more economic sense in 
>my opinion to base the money supply on the amount of trade and
>production rather than some external variable like mining technology
>or rhinoceras ranching.  Can you explain why gold is more natural and
>superior, besides simplicity of assay and storage?

this was recently debated ad neauseum on alt.politics.libertarian.
gold is natural by definition, because that is what people choose to
use. currency is just a place-holder for wealth. and also, the points
that you say "besides" about above are quite important to a currency:
ease of assaying, storage, and particularly portability.

i believe that having an economy held ransom by gold miners is
problematic. but so is having an economy held ransom by boobs,
liars and thieves.

--
charles
From: wbdst+@pitt.edu (William B Dwinnell)
Newsgroups: sci.econ
Subject: Re: inflation vs employment
Date: 26 Jan 93 02:32:16 GMT
Distribution: na
Organization: University of Pittsburgh


Historically, it was believed at one time that you had your choice:
inflation of prices, or unemployment. When both came at the same
time, people were shocked at the resulting "stagflation".
From: wbdst+@pitt.edu (William B Dwinnell)
Newsgroups: sci.econ
Subject: Re: Inflation
Date: 22 Jan 93 23:30:25 GMT
Organization: University of Pittsburgh


Okay, first off: I said "'natural' inflation", not "inflation", in the
section of my message which you quoted. What I am saying is: there
is a thing called "inflation", which is a real (vs. nominal, for those
of you who don't understand) increase ionxxx in some price.  That is
all it is.  It is NOT a change in the money supply. It is an increase
in some real price.  Changes in money supply , population, and 
governexxxx government activity may cause some part of inflation
(perhaps even most of inflation, depending on the case). But, there
is some portion of inflation, which I referred to as "natural
inflation", which will cxxx occur, even if the government keeps its
hands to itself, the money supply doesn't change, and the population
sits still. It is this portion of inflation which I was referring to
in my own earlier message. My point was that whoever said that 
inflation is "wrong" must not understand that at least some portion
of the total amount of inflation is the portion, which I called
"natural inflation", which, it seems to me, is unavoidable. As for
governments share of blame- that is another matter.
    Why do I say that there will always be some inflation, no
matter what gov't., population, and money supply do? Simple: the
time value of money.  Inflation, when thought of as a real 
increase in price, can be directly translated to the cost of holding
onto your money (in your mattress, as opposed to in the bank, or in
some other investment which produces a return).  Even is xxxxx
Even if the other 3 sit still, someone will be working, thus, the
bank (for example) will be willing to give you interest on your
money. Let's say that the interest rate is 5%. If you hold onto your
dollar (mark, shilling, etc.), and don't deposit it in the bank,
it will be worthlessxxxxx worth less than a dollar, etc. which
is deposited, and earns that interest: inflation!
   All of this boring, rambling argument is why I say that it is
meaningless to attach some sort of "goodnerss" or "Badness" to 
that portion of inflation which will happen anyway. As for the rest,
well: that's another story.
From: cmk@athena.mit.edu (Charles M Kozierok)
Newsgroups: sci.econ
Subject: Re: Inflation
Date: 21 Jan 93 21:23:19 GMT
Organization: Massachusetts Institute of Technology

In article <2239@blue.cis.pitt.edu> wbdst+@pitt.edu (William B Dwinnell) writes:
>
>Are you saying that through the right sort of government activity
>(possibly inactivity), that inflation could be eliminated?

i really don't know if it could be eliminated; i'll let Jim
answer, he knows much more about this than i. but i believe
it could be drastically reduced.

--
charles
From: jfh@beach.cis.ufl.edu (James F. Hranicky)
Newsgroups: sci.econ
Subject: Re: Inflation
Date: 26 Jan 93 01:55:43 GMT
Organization: Univ. of Florida CIS Dept.

In article <2306@blue.cis.pitt.edu> wbdst+@pitt.edu (William B Dwinnell) writes:
>
>Okay, Charles, the point I am trying to make is that inflation would
>occur even in a free market without government intervention (the perpetual
>bad guy), and even without money. Yes, inflation of prices means "prices
>go up", but that doesn;t tell us much. Why do they go up? It seems
>to be the contention of some here that inflation occurs because 1.
>the government does things to cause it, 2. because we use money, or 3.
>both. I am claiming that inflation would occur without either the government
>or money, as "natural" inflation will raise prices, due to the fact that
>if you sit on something, you waste its useful value. If you still do
>not understand, let me know, and I'll run through it again.


In a healthy productive economy, where production has an edge over
consumption, there will be a tendency toward a gradual fall in prices.
This is what happened under the gold standard for both the U.S. and
Britain.

The gradual fall means that  1) production has overtaken the increase in 
				supply of money, or
			     
			     2) the costs of pruduction are falling.

Notice that #2 is an important factor in raising the standard of 
living for all, given that now more can be produced with the same
amount of labor, bringing a greater supply, and causing prices to 
fall subsequently.

A hard currency makes itself a formidable obstacle to the government's
attempt to increase the supply of money. In the nineteenth century,
however, the government issued fiat money during both the war of 1812
and the Civil War, and you can see the prices jump at these points.
However, these currencies were not redeemable in specie, and were outside
of the realm of the gold standard's check on the growth in the money
supply. The National Banking Act centralized reserves in a few banks
in New York, and they were able to inflate the money supply some, but
the gold standard kicked in, causing the panics of the late 19th and
early 20th century.

The next logical steps for the government, in its quest to 
inflate the money supply, would be to start a true central bank, and
get rid of the gold standard, which is exactly what happened.

Jim Hranicky (jfh@reef.cis.ufl.edu)

Newsgroups: sci.econ,soc.culture.usa,soc.culture.japan,soc.culture.british,soc.culture.canada
From: golchowy@alchemy.chem.utoronto.ca (Gerald Olchowy)
Subject: Re: US as No. 1 (3 data books)
Organization: University of Toronto Chemistry Department
Date: Sun, 24 Jan 1993 02:36:33 GMT

In article <C1BpGz.L20@news.iastate.edu> mjkugel@iastate.edu (Michael J Kugel) writes:
>In article <1993Jan23.000840.20867@alchemy.chem.utoronto.ca> golchowy@alchemy.chem.utoronto.ca (Gerald Olchowy) writes:
>>In article <1993Jan22.220321.8579@cbnewsl.cb.att.com> jlacey@cbnewsl.cb.att.com (james.w.lacey) writes:
>>>
>>>One reason, IMHO, why Americans have the "USA #1" attitude is
>>>the relative amount of immigration to American vs. other
>>>countries.  Most Americans are decendents of people who came
>>>here in the last 100 or 150 years.  Most Americans know,
>>>work with, and have friends that were born in other countries
>>>and immigrated to America.   
>>>
>>>The logic is thus, "since hundreds of thousands of people
>>>immigrate to America every year, and millions have immigrated
>>>here over the past century, this must be the best country
>>>in the world."
>>>
>>Canada has twice the immigration rate per capita than the United
>>States has.
>>
>
>Does this include illegal immigration?
>

No...but I have considerable margin for error...Canada has legal
immigration quotas of 250,000 per year, which I think includes
refugees...the 1991 World Almanac which I have suggests the
yearly immigration quota for the US is around 300,000 plus about
100,000 refugees...so at best legal immigration plus refugees
in the US per year is less than half-a-million per year.  

Now there is about a factor of ten difference in population, as
long as illegal immigration to the US is less than two million
per year, Canada has a higher per capita immigration rate...if
the US has an illegal immigrant for every legal one, say around
half-a-million illegals per year...even then Canada's immigration
rate still be over twice the rate per capita of the U.S.

Gerald
From: wbdst+@pitt.edu (William B Dwinnell)
Newsgroups: sci.econ
Subject: Re: Inflation
Date: 24 Jan 93 23:06:58 GMT
Organization: University of Pittsburgh


Okay, Norbert, let's say that we live in an economy where there is a bank
which is willing to pay 5% interest on money deposited. If anyone at
all deposits money in that bank, his nominal wealth will increase by
5% iunxx in one year, right?  Let's say someone else does not. The depositor
now has 5% more nominal wealth to play with than the non-depositor,
and is thus more able to compete in the market than he was before, whreas
the non-edpositor hasn't changed, in terms of nominal wealth. The
demand curve will shift, moving the quilibrium point, dragging prices
up with it. Thsixxx This is what I "know".  Where have I strayed?
Newsgroups: sci.econ
From: thf2@ellis.uchicago.edu (Ted Frank)
Subject: Re: Surviving Hyper-Inflation
Reply-To: thf2@midway.uchicago.edu
Organization: University of Chicago
Distribution: usa
Date: Fri, 22 Jan 1993 06:18:57 GMT

In article <1993Jan18.030536.27897@athena.mit.edu> cmk@athena.mit.edu (Charles M Kozierok) writes:
>In article <1993Jan18.004128.5655@midway.uchicago.edu> thf2@midway.uchicago.edu writes:
>>>still? it was over $250B in '91, and will be over $300B in '92.
>>
>>Are you including the $160 billion or so of debt that was monetized
>>away due to inflation?  If not, you're double-counting.
>
>please explain what you mean by this.
>
>thanks

Say that there's a $1 trillion debt, $100 billion deficit, and 5% inflation.

In year 0, the debt is $1 trillion.
In year 1, the debt is $1.1 trillion, but the *real* debt is only $1.05
   trillion, because a Year 1 dollar is worth less than a Year 0 dollar.

Or, if you prefer, you can rephrase the Year 0 debt as $1.05 trillion,
because $1 trillion in Year 0 = $1.05 trillion in Year 1.  The real
difference between the Year 0 deficit and the Year 1 deficit is approx.
equal to $50 billion, not $100 billion.

The "deficit" figure will include the interest for this inflation, but
it's not a real expense.  Hence, deficit figures will always look larger
than they really are.

In an era with 4% inflation and $4 trillion, inflation shrinks our national
debt by $160 billion every year.  Not including this shrinkage overstates
the actual harm done by the deficit.
-- 
ted frank                     | thf2@ellis.uchicago.edu 
standard disclaimers          | void where prohibited
the university of chicago law school, chicago, illinois 60637
Newsgroups: sci.econ
From: cmk@athena.mit.edu (Charles M Kozierok)
Subject: Re: Surviving Hyper-Inflation
Organization: Massachusetts Institute of Technology
Distribution: usa
Date: Sat, 23 Jan 1993 15:15:54 GMT

In article <1993Jan22.061857.22935@midway.uchicago.edu> thf2@midway.uchicago.edu writes:
>In an era with 4% inflation and $4 trillion, inflation shrinks our national
>debt by $160 billion every year.  Not including this shrinkage overstates
>the actual harm done by the deficit.

ok, i understand what monetizing the debt means (don't know why i
didn't get your previous point...).

of course, raising inflation is a good way to reduce the effect of debt.
was done to perfection by Germany in the 20's.

the problem is that we have to pay interest on this debt, and inflation
is stable enough that it is being incorporated into interest rates.
investors are also starting to demand a risk premium from the US gov't,
based on articles i have read looking at the yield curve.

the real point, however, is that the monetization of the debt is
going to happen independently of expenditures anyway. if we ran
a balanced budget for the next 100 years, the 4 trillion might be
insignificant at that time. but we continue to grow the debt at
a much higher rate than we can monetize it.

also, i think when all is said and done, the '92 deficit will be
much closer to $400B than anyone wants to admit now.

--
charles
From: ssoar@tekig5.pen.tek.com (Steven E Soar)
Newsgroups: sci.econ
Subject: inflation vs employment
Keywords: how to choose?`
Date: 25 Jan 93 16:11:35 GMT
Distribution: na


Here's an issue that I don`t see being discussed but seems pertinent to the
state of our economy today: the proper balance between inflation and
employment.

Economics seems dominated by two major philisophical camps with different
emphases and predictive powers but diametrically opposed outputs.

In one camp we find the Keynesians, who can reiliably stimulate growth, but at
the added expense of inflation.  Inflation is inefficient because at higher
levels, it confuses future price/cost levels in the market.

In the other camp we find non-Keynesians (Austrians, monetarists,
supply-siders) who can who can reliably  control inflation, but at a huge
expense of unemployment.  I believe that Blinder comments that if we ran the
economy at 5% unemployment rather than 7% for the last decade, we would have
produced approx $10K per capita more GNP.  This ignores the other significant
social costs (UI benefits, break-up of families, suicides, etc).  So high
levels of unemployment are also inefficient.

The exsistence of two confliciting curves implies simple math could find an
optimum operating point, if only we knew the shape of the curves.  At only 500K
jobs created in the last four years (all in the government sector) and 3%
inflation we must be far down the unemployment curve, implying stimulus would
be desireable.  Yet, as far as I can see, there is no consensus on this point.


This seems a rather basic question for economists to answer. (Yes I know about
the Phillips curve.  But what good is it if we can't know the shape of the darn
thing?  Furthermore, what about the shape of the other curve, the
inflationVSeffeciancy curve?  I've never even seen that one described
anywhere.)

Is there an answer?

steve soar