How do you stop Hyperinflation in a Nation? In history, I learned that the Weimar Republic had hyperinflation as a consequence of leading and striving war during World War I and placed a new currency named German Rentenmark which would be about 1 trillion German Mark to stabilize the purchasing power. Would it be therefore that more money will not be printed, just put worthless money in another currency to then reboot the purchasing power of real currency? How does someone actually get out of Hyperinflation and do Hyperinflation have any, really any positive factors as in the Weimar Case the Economy boosted later on?
Note: I am new to economics and I'm grateful for any contribution to this question whether long or short and accept if the question is taken down when not with guidelines of Economics SE or other specific reasons.
https://www.spiegel.de/geschichte/hyperinflation-1923-a-948427.html

You can generally stop hyperinflation in very similar way as any inflation. It is generally accepted by economic profession that price level $P$ (change in which is by definition inflation) in an economy is determined by money market equilibrium. In turn a simplified model of money market equilibrium can be given by the following equation of exchange (see Mankiw; Principles of Macroeconomics pp 87):
$$P= MV/Y $$
where $M$ is the money supply, $V$ velocity of money (i.e. how much one unit of currency is used on average) and $Y$ real output (also note this is a simplified version - more complex ones depend also on expectations of these quantities, but given that you are non-economist I think it is better to stick to this simple one - in case you would be really interested in the more complex versions Romer Advanced Macroeconomics is a leading macro handbook).
Next, hyperinflation does not have exact definition, but typically people consider inflation higher than $50\%-100\%$ per month a hyperinflation (e.g. see Sachs, 1987). Consequently, to stop hyperinflation you just need to make sure that the (expected) change in the right hand side $\Delta(MV/Y)$ is less than $50\%$ per month.
Government issuing its own fiat currency has complete control over $M$ so one option would to decrease the rate at which new money is created. Government can also to a certain degree affect velocity of money $V$ since it does depend on nominal interest rate (increasing nominal interest rates will lower $V$). In addition government has also some control over real output to the extend it can make some structural reforms that help economy grow or various policies that can expand $Y$. In addition as mentioned in the second paragraph this model is simplification and in real life expectations matter as well. This is why often countries that try to combat hyperinflation resort to monetary reform where they replace their currency with new one (this is meant to signal to the public government is serious about the issue thereby lowering their inflation expectation). Naturally, some combination of the above is always an option. Of course, this is just very broad and brief explanation. One could write whole tome on this issue, but exhaustive review would be too long for SE (for more in depth treatment you can have look at above mentioned Romer and Mankiw textbooks as well as  Sachs (1987, Kiguel (1989), Reinhart & Savastano (2003)   - in addition Cagan (1989) has whole book on hyperinflation - and sources cited therein).
Regarding whether there are any benefits of hyperinflation, there are generally only very few. One big benefit is that it can help country to inflate away public debt. Also, hyperinflation actually does not help economy to grow.  Regular inflation can help economy grow, but when it comes to hyperinflation, it is generally agreed that its effect on output is on net negative as any benefit that it has in terms of boosting export through exchange rate, or through removing nominal friction are smaller than the negative effects on output which are caused by uncertainty it creates, and due to other costs of inflation, as well as due to the fact that hyperinflation often leads to people abandoning the currency altogether, in worst cases resorting to barter which is very inefficient form of exchange (see the sources recommended in previous paragraph for discussion on this).

Inflation is exactly no more and no less than the law of supply and demand applied to money.
Print funny money to enlarge the supply then the value of all money will be less.
Hyperinflation occurs when it is done to extreme and people are finally concerned about it enough to act.
The only way to stop it is with a balanced budget.  That means tax people as much as the government spends to take goods from the marketplace or pay its 'workers'.
The problem is when you can print money, or now create it with computer bits there is nothing to stop a government from just printing money instead of trying to take it in taxes like they should.
Without a guarantee of gold in exchange for paper money there is nothing to constrain government and most of them end  up spending until there is runaway hyperinflation.   Some manage to slow things down but they all have inflation, the only question is how much at this point in time and will it every explode until their economy collapses.
Economists have identified a point that is like the tipping point when it is too late to pull back and avoid runaway inflation.  As I recall it is about when the GDP is exceeded by inflation by a small amount. That last may be wrong.


Fair voting procedure when there are many issues When several people have to decide about a single yes/no issue*, the natural decision rule to use is the majority rule.

But when there are many issues to decide upon, the majority rule is "unfair" in the following sense: it is possible that the majority's opinion will be accepted on all topics and the minority's opinion will not be accepted on any topic. As an extreme example, it is possible that 51% of the population will decide about 100% of the issues.

I am looking for a decision rule which prevents this unfairness.

Formally, define a "uniform group" as a group of people who always vote in the same way. Define the "acceptance rate" of a uniform group as the percentage of issues on which the opinion of the uniform group got accepted.

Define a "fair decision rule" as a rule for which, for every uniform group containing X percent of the population, the acceptance rate tends to X when the number of issues tends to infinity.

MY QUESTION IS: Does there exist a fair division rule as defined above?

(* I restrict the question to yes/no issues, since when the issues are not binary the problems are much more complicated).

That's interesting: the flavor of the frequentist approach to probability used for a socio-political fairness criterion: if my measure as a population group is $0<p<1$, and known, then my opinion should be accepted by the whole at the same measure, as number of issues goes to infinity. In other words, current observed acceptance rate should be a consistent estimator of theoretical acceptance rate, and equal to my measure.

Then it is very easy to create such a decision rule, while saving public money: no need to hold one referendum after another, just construct a die, with as many sides as there are "uniform groups", with the die's weight distributed in such a way that the side representing uniform group $i$ will have probability of turning up equal to $p_i$. It won't be difficult to construct, and publicly and objectively test it for the desired properties.

Then, wherever an issue comes up for voting, just roll the die. And ok, spend some money for a suitable public ceremony.

Whenever there is a census, the relative size of each uniform group can be re-measured and a new die can be constructed.

Why do I have the feeling though that no uniform group is likely to ever accept such a scheme?

(This of course puts aside the importance of each issue, in general, for each uniform group, etc, but I took that from the OP which concentrates on number of issues, irrespective of what the issues are about, and to whom they matter and how much they matter, and how do we measure that etc).

Rolling Dice?! Flipping a coin?! Randomly excluding voters?! To attain a fair vote?!

Here's a REAL set of answers that provide deterministic results and that start with the assumptions of the OP's conditions. Refer to the Addendum below if you need to understand how.

Some "fair" voting procedures that are deterministic:

You can skip to the section labeled with A,B,C etc...

In fairness, as a disenfranchised new member of the community (meaning that I can't vote), I would like to ask that those with the vote privilege please leave my vote count at zero if you likewise believe that my answer is of no value. Please leave a well-reasoned argument that is of value instead. I do edit my posts. Thank you...

INTRO.
Much of the work by the philosopher, Alexis de Tocqueville, could be quoted and then paraphrased to sum the very problem you describe in your question: 'The rule of the 51 percent majority is the tyranny and oppression over the 49 percent minority.' This is especially true, in the case of YES or NO, all or nothing, when essentially the other half of voters are given neither equally nor pragmatically viable alternative benefits or consolations to substitute with which they may be indifferent (as in a basket of goods A or B for them) to be satiated. (In America, by the way, this could even be as bad as a split-haired 49.99% vs. 50.01% popular vote.) They, the lesser half, cannot be ignored as they do not disappear. By little stretch of the imagination this sets the stage for a very Pareto Inefficient outcome.

In your comment, you say "there is a chance that one person will always make the decisions although all other people disagree with him." As you originally alluded, the contrapositive is also applicable: 'Many people may make decisions although one person may disagree.' This is a challenge for new thinking when there already exists conventional thought.

BODY.
What you're asking is 'For the most optimal outcome, how do you balance votes when there's a group within the total set of voters whose unchanging vote makes one majority outcome more probable than another (thereby even making the voting process itself superfluous.)'

There are several things that can be done. These solutions can be applied to remedying loaded coin/dice tosses mixed in with legitimate coin/die tosses or people who vote with bias:

A. IGNORE/REMOVE THE VOTES THAT NEVER CHANGE.
If a subgroup always votes the same way, then the existence of them having a rationale is questionable. A vote is, in contrast to a random toss, assumed to be a discrimination between choices based on information. But voters can behave irrational in their choice. They may, without further consideration, always select one brand instead of another when faced between substitutes that have different labels but equal content. Perhaps they do this to minimize the risk of trying new. They operate on no, low, or old information. At any rate they skew the total vote by acting as a bias coefficient. 'Bias coefficient' means that the choice is completely inelastic. There are no other options or outcomes. This can mean that, because they neither question nor reason, they have no constructive voting input other than to skew the results. The solution: Simply ignore the never changing votes. Subtract the coefficient on the graph and bring the starting point back to zero. Conduct the real vote: Count the remaining votes as 100%, i.e., the votes which can sway either way depending on exogenous factors (as opposed to an inherent, endogenous bias.)

B1. WEIGHT THE VOTES AND DECIDE ON A DIFFERENT MAJORITY FRACTION.
An inelastic vote bias gives the remaining voters who vote in line with the bias an unfair advantage over the other side of the YES/NO coin. This is a handicap for the other side. It takes less input for the former side to outvote the latter side - perhaps even when the majority of the latter votes are the actual thinking/rational voters who do constructively weigh YES vs. NO in decision-making. As you know, various sports employ handicaps to equate units of input, e.g., effort, on both sides. Q: How did David beat Goliath? A: By using an equalizer, i.e., a slingshot!

Also, pick a tie-breaker that is culturally tolerable. The US Congress uses the simplest fraction, 2/3 majority to represent a scenario where 2 out of 3 discrete/indivisible people would commit decisively one way versus another. In the 2/3 example, for the purpose of inclusion, redefine the inelastic subgroup as having 1/3 weight. The remaining voters can represent the other 2/3 of the vote. Multiply each vote of the remaining votes by some factor that makes their vote count numerically 2/3 the size of the first subgroup.

For example, the inelastic/biased group is made up of 90 voters or 40% of all voters. The remaining number of voters is therefore 90*60%/40% = 135 voters. Multiply the 135 elastic voters by a factor that gives them a 2/3 decision weight, i.e., 135*x=90*2 --> x = 180/(135) --> x = 4/3. In this example, the vote of each elastic voting person (who can be YES or NO) is equal to a 4/3 biased vote. This is actually a variation on A. The drawback is that the required majority might not be attained. The benefit is it makes the minority contingent smaller.

B2.
Let's say that there is yet another subgroup within the elastic, changeable subgroup that does not have an equal probability of voting YES or NO. It may be partially biased. Let's say members in this variable subgroup may have a 2/3 probability of voting one way versus another. Again, find out the number of this special subgroup that has an uneven probability versus the number of those who have an even probability and multiply each side by factors that give each group, e.g., an equal 50/50 voting weight. For simplicity, one half has 2/3 probability of voting one way; and the second half has a 1/2 probability of voting either way. Multiply the first side votes by 3/2 and the second side votes by 2/1 to make the influential weight of both sides 1:1 again. If the numbers of either elastic subgroup are uneven then do the additional simple math for which you can refer above in B1.

C. INCREASE THE VOTING SAMPLE SIZE AND APPLY B.
Imagine a room of only 2 voters: one stubborn, hard-headed person and one changeable,open-minded person. The outcome is either unanimous or 50/50 ambiguous. Increase your sample size! The problem is that neither of them and very likely at least one of them will not trust the newcomers especially after the winning/losing votes are tallied.

D. MAKE PEOPLE ACCOUNTABLE FOR VOTING CONSEQUENCES. [...this is my favorite one...]
Hindsight is 20/20 but risk can truly sharpen one's focus. Involve risk management as part of the vote. Let the voters reap the fruit of their vote but also let them enjoy or suffer its taste. In this instance, voters would have to be registered/identifiable. Those voters who win get the benefits (and costs) of their vote (most fairly in proportion to the size of their vote.) If 67% of voters got to decide on how to use a budget, let them enjoy 67% of that budget toward their decision. Those voters who lose do not get to share in that benefit (or cost.) However, if the majority vote makes a bad decision, they must pay for it - not those who didn't vote for it. Most primates if not animals do not like to break even when budgeting input in exchange for output but the fear of loss is indeed greater than hope of gain. The perception of risks for voting vs. not voting can radically change voting behavior and motivate voters to acquire better information, not vote, or participate more actively thereby changing the voting sample (toward a more honest/constructive/informed turnout & vote) as well.

CONCLUSION.
Fairness rules can be created and do exist (right here!) to balance a voting sample that contains biased subgroups in achieving a fair and deterministic outcome in both YES/NO votes or those that involve further complexity.

Hope these suggestions help, Erel!

BONUS.
A lengthy list of quotes by de Tocqueville:
http://www.goodreads.com/author/quotes/465.Alexis_de_Tocqueville

Enjoy!

ADDENDA.
[Originally a response to a comment below asking for clarification. Important for inclusion but too long for intro.]

An election is a decision. A vote is a decision. The difference between either is the word used for "decision" & fraction criteria for finalization. A decision represents a probability. The probable decision is the sum of all probabilities divided by the total number of probabilities. Therefore, without complete/perfect info, a priori, an election decision is a probability; a single vote decision is a probability. Before casting a vote, a voter conducts an election with themselves. Each issue may be comprised of sub-issues, all representing probabilities, each with weight.

The probable voting decision that a voter makes is the sum of all sub-decision probabilities (each multiplied by their weight of importance - analogous to individuals voting) divided by the total weight of sub-decisions. Taking issues, sub-decisions, etc., to infinity, using the formula, gives us the probability of a vote when total issues are taken to infinity. The same applies to a voter having infinite elections with themselves or conducting infinite elections. Whether a group given probability=1 for their preference gets their way (at infinity) depends on the required majority.

If the probability of the group's decision at infinity is greater than the required majority vote, then the group will have their way at infinity. The answer to the question above takes this as a starting assumption, a mutually understood given, and then offers solutions for a "fair decision rule" that's interpreted to mean an 'equitable voting outcome that is balanced, that is "fair."' Sources of error it addresses are groupsizes/weights and that, even when taken to infinity, voters do not work with the same sets of info at the sub-decision levels to come to the 'same vote decisions'*.

*In the above, the "same vote decision" implies that the vote of one voter is identical in scope and thus equivalent to another voter's vote if it encompasses an identical number of issues/sub-issues, identical sets of information, identical cost/benefit analyses, and identical degrees of consideration with all other things being equal. Votes are not the same if all that which goes into each vote (for each voter) is different from one vote to the next which therefore creates a probable bias in the process leading up to the voting decision and thus the vote...

Case in point: Five people standing in line at a ballot box for an infinite number of elections to vote YES/NO that covers an infinite number of issues. They're living in an episode of Rod Serling's Twilight Zone where it just keeps repeating with more and more issues added to infinity. The first two people eternally read the newspaper everyday and do much research, consultation, & contemplation over weeks/years in order to decide YES/NO. The probability of the first group's vote either way, given variable tastes, is more variable. The other three people who like the same style and, who stubbornly refuse to change, base their decisions on comparing bumper stickers, 5-second slogans, and operate - with no exception - on the bias that marketing image & affiliation is everything and that the final decision is one about image & affiliation. The probability of the second group's vote given the same never changing preferences (and for the purpose of illustration) is 1 or very close to it. How to establish a fair vote? Refer to all of the above...


Why recent crises all started with a housing bubble? I was writing some notes about the last economic and financial crisis and I noticed that all these recent crisis start with a housing bubble. Beside the 2007-08 US's one, also Japanese crisis in the beginning of the 90s and Spain's crisis, just to cite a couple of them, all have started by housing price boosting.

Why are all recent crisis starting with a housing bubble? Is something related to modern economies or just a coincidence?

In a fractional reserve monetary system loans create money and loan repayments destroy money. Most bank lending in modern times is for the purpose of purchasing real estate. So the amount of money that exists in the economy is closely tied to the enthusiasm for purchasing real estate. You could not really make this kind of statement for any other class of asset - this is why the housing market in particular has such an impact on the economy. During the upswing of a housing bubble the money supply will be growing fast, but when the bubble bursts the money supply will fall (as existing mortgages are repaid) leading to recession. The whole point of QE is to counteract this fall in the money supply.

Confusingly economists use the word "credit" to describe (most of) the money we use in the economy, so many people do not realise that the "credit crunch" was in fact a "money crunch".

Hyman Minsky is the most famous economist that would subscribe to these kind of views. You might also want to look up the term credit cycle.

By the way, none of these views are mainstream. Mind you the mainstream economists did not see the last crash coming, so you should not really expect them to explain what happened.

How do we go about fixing (or at least improving) the housing crisis?
I don’t think I’ve heard any dissenting voices to the opinion that the housing crisis that we’re in is being caused by the imbalance of supply and demand.
We’re not building enough homes and our population is growing.
It doesn’t take a Nobel winning economist to work out what that will lead to.

Since the 1980’s - we have seen an increasing consolidation amongst house builders. This means that small and medium sized builders and developers now build approximately 60-70% fewer homes than they used to and it means that 70% of our homes are delivered by about 10 different house builders.

Why is this important?

Well, consolidation reduces diversity and choice, and increases the power of the oligopoly.
This means that the big 10 can build what they like, when they like and that isn’t good for supply. Is it that surprising then that a recent RIBA report suggested that 75% of us would never buy a new-build home.
How can we improve both the quantity AND quality of the new homes being built?
Here are 5 actionable suggestions for Mr. Sharma, our new housing minister:
1. Create a farmer’s market of housing, where large sites are broken into smaller ones, where small and medium sized developers and builders can make a difference.
Exactly the same phenomenon has taken place in the supermarket industry. We have seen a consolidation of grocery shops so that the vast majority of our food purchases are through the big supermarket chains. We used to spend about 2 hours cooking every day and we now spend about 27 minutes. This is mainly due to the rise of the ‘ready-meal’ - which are tasty and convenient, but have too much salt and too much sugar in them and our nation is getting more obese as a result. The rise of the farmer’s market increases diversity and encourages that back to basic cooking from ingredients.
2. Disincentivise land trading by killing the planning arbitrage market.
It makes no sense that planning generally now costs tens of thousands of pounds and takes over a year on average to be successful.
3. Scrap stamp duty! I know that this is not really your bag, but please have a word with Mr. Hammond. Stamp duty is a (potentially) huge tax on transactions which discourages people to move out of their homes.
If we want the elderly to move out of their large homes and downsize into new homes freeing up space for the younger, we need to make the transaction as cheap as possible for them.
If we want families living near good schools to move on when their kids leave the school, we need to make that easy for them and cheap for them to do so.
4.Introduce a capital gains tax on all home profit sales over a certain level.
Fourth (again, a word to Philip), to offset the lack of tax take from stamp duty and to discourage flipping of homes and the holding of homes as investment assets, we should introduce capital gains tax on all home profit sales over a certain level.
5. Improve affordable housing. At the moment, policy dictates that developers should provide around 50% of new housing as affordable (borough/council dependent). In reality this never happens because of ‘viability assessments’.
Additionally, once a developer has agreed to provide the affordable homes, they are strongly incentivised to make these as low quality and as cheap as possible.
Instead, councils should build their own affordable housing - they know that building higher quality will pay dividends over the long-term as maintenance and refurbishment (whole life-cycle costs) are reduced, so they should do so, just like they used to.

If you found this article insightful, useful or even just amusing, read it in its entirety on our blog - How to solve the housing crisis: An open letter to the governmententer link description here.

https://www.inhabithomes.co.uk/custom-build-blog/how-to-solve-the-housing-crisis?utm_source=Quora&utm_campaign=Answers


Definition of Pareto efficiency and prisoner's dilemma Pareto efficiency is defined in Wikipedia as:

  Pareto efficiency or Pareto optimality is a state of allocation of
  resources from which it is impossible to reallocate so as to make any
  one individual or preference criterion better off without making at
  least one individual or preference criterion worse off.

And it has similar definitions in other sources.

Let's say in a Prisoner's dilemma game, A is confession, B is tie.

The strategies with results are:

(A, A) = -6, -6
(A, B) = 0, -10
(B, A) = -10, 0
(B, B) = -1, -1

Nash equilibrium is (A, A), also both confessing, and it's not Pareto efficient because by moving from (A, A) to (B, B), both could improve the result (form -6 to -1, also by 5).

But why is (A, B) and (B, A) not Pareto efficient? In both cases, no player can be made better off without making another player worse off.

Moving from (A, B) to (B, B) makes "player 2" better off (from -10 to -1) but makes "player 1" worse off (from 0 to -1).

Moving from (A, B) to (A, A) makes "player 2" better off (from -10 to -6) but makes "player 1" worse off (from 0 to -6).

Moving from (A, B) to (B, A) makes "player 2" better off (from -10 to 0) but makes "player 1" worse off (from 0 to -10).

So moving from (A, B) to any other combination makes one player worse off. That's the case with (B, A) too.

So why is (A, B) and (B, A) not Pareto efficient?

(A, B) and (B, A) are in fact Pareto efficient.
I believe that your confusion may be because when discussing the Pareto inefficiency of the Prisoner's dilemma equilibrium, we always discuss (B,B) as the Pareto efficient alternative to (A,A) and (almost) never discuss (A,B) or (B,A).
Keep in mind that Pareto efficiency always requires a starting point to be evaluated. I.e. one way to determine if a case is Pareto efficient is to ask "Starting from this point, is there any other allocation that is a Pareto improvement?". Here a Pareto improvement is a case making at least one person better off and no one worse off.
A natural starting point of discussion is the Nash equilibrium (A,A). Starting from there, only (B,B) is a Pareto improvement, which suffices to show that (A,A) is not Pareto efficient. That is what economists like to emphasize about the Prisoner's Dilemma and why textbook discussions focus on (B,B).
However, if your starting point is (A,B) or (B,A) then there are no Pareto improvements possible, as you argue. Hence, both those cases are Pareto efficient as well. However, note that these are not very interesting starting points anyway, because they are not Nash equilibria and therefore a bit irrelevant to discuss.

The prisoners start out sitting in chairs, neither having confessed.  So I would argue the logical starting point is the actual starting point--(B,B).  And from there, the only Pareto-efficient outcome is (B,B).


Short term and long term price elasticity of currencies If I have 1% of the world supply of US dollars, and I decide to sell all of them to buy Euros, how much should I expect the exchange rate to change? Is there some kind of empirically determined price elasticity of demand that I could use to predict this? I've tried looking this up but I haven't been able to find it.

I'm also interested in the long run price elasticity of demand. Eg, how much should I expect my 1% USD sale to affect the price of USD in a year?

There is no way to predict that.

A "price" is just the level of the last transaction. What happens in the next transaction does not depend on the previous transaction. So if you sell dollars at 1.10 dollars per Euro, the next person to sell dollars might sell them at 1.12 or 1.08 or some other amount based on a myriad of factors. There is no way to predict what trades might occur in the future, just from knowing the trade you made in the present.


Private Investment Impact on Bond Yields From Japan to the US to Germany, we are currently seeing longer term bond yields falling at an alarming rate.

I tune into a fair bit of economic commentary, and can often come to some sort of understanding of the factors that commentators say are at play in the current situation. But one I struggle with is the idea that weak private investment is a factor in declining yields.

Can somebody please explain why this is the case? Is the idea that weak private investment leads to weaker GDP growth, which leads to weaker inflation, which leads to higher bond prices? Or is there something else at play here?

I think you've answered your own question. Not only would lower inflation be a factor in lower bond yields but also consider that a lower level of demand for loanable funds for private real investment means lower corporate bond yields. That view is cited in the following Larry Summers quote taken from this economics.stackexchange.com question on secular stagnation...

  Think about what the world was like when General Motors or AT&T or
  Exxon or IBM were iconic companies. They were issuing debt. They were
  investing on a massive scale to expand capacity and to build networks.
  Now think about iconic companies of today like Apple and Google. They
  have more cash flow, fundamentally, than they know what to do with.
  And the result of that, of course, is an excess supply of savings.
  Another way to approach the question is to say, what's happened to the
  relative price of durable equipment, either producer equipment or
  consumer equipment, appliances? And the answer is those prices have
  gone way down. Well, when those prices go way down it means a given
  unit of savings goes much further.

  All of that, it seems to me, operates to reduce real interest rates


Have automation and technological advance been shown to have a positive impact on society and the economy or a negative one? My friends and I, 2 of which are computer science majors think it is worse because is humans can't work and thus afford necessities, how will they survive?  The definition of automation: the use of largely automatic equipment in a system of manufacturing or other production process.
"unemployment due to the spread of automation"

It is to reduce human intervention mainly in order for tasks to more economically efficient and save on paying unions, benefits to employees, as well as human workers.  A business starts with one person let's say, an assembler.  He hires a few other people to assembly more work he's getting, and eventually has a whole factory. He is able to buy 2 robotic arms and use them to cut his human workforce in half, not needing let's say 20 guys out of 40 he had.  A few years later he buys two more robotic arms and the rest are laid off.  He now only needs a few men (3-4) for monitoring and repairs.  BUT once the CEO can buy technology to fix the robots, pretty much all left is observers, but then the CEO eventually just wakes up, hits a switch, and begins building.  He's rich, made his own job, made his living, he'll probably be fine.

HOWEVER, not everyone has the mindset or means to be an entrepreneur or innovator.  ALSO because the CEOs and owners invested and made their own business, how can they be hated in a fair way? They should have this right since the whole thing is their ownership and job, it just needed other people for a while.

ALSO, during this time, new jobs were made like the observers and robot repair people.  They were eventually automated out too.  This is being done for drivers, surgeons, pilots, military, security, construction, even cashiers are replaced by self check outs now.  They have tested a truck that drives itself, size of a delivery one for products. Drones are already delivering things.

Therefore, I can't see (and neither can others) how advancing technology to be more self-sufficient in itself is good when people will eventually no longer be able to find work and thus afford medical care, food, housing, clothing...from that, it would for the majority (not those who are stocked on riches and resources and were innovated enough to prepare themselves) cause economic collapse. Due to lack of taxpayers now and there be less flow of the economy anyways, a communist type system would unlikely happen so nobody starves or freezes.

Thoughts...does it have a better impact as many I've heard say, or all in all realistically, have a worse one (in the long run at the very least)?

Would you rather work with a tractor or shovel?

Would you rather use one hand to work or two?...

Mathemathically the formula is:

$$EL  = \mathrm{GDP}_r$$

That is, efficiency ($/h) times hours worked per year equals the real GDP. Same is true for your personal life and personal income. Now, if efficiency decreases, you must either work more or live with less, which is not what anyone wants. Note that even as you increase your efficiency, there is little evidence that such thing decrease someone else's efficiency. So thus the result is income inequality and not "lack of necessities". That means, those with lower IQs generally earn less (since IQ is the primary driver of differences in efficiency between people)...

For the example in question, it seems that efficiency has increased, and at least temporarily the L term has decreased (even though the robot arm builders obviously still need to be employed). However, the cheaper robot arms make it easier for other sectors to accommodate people. So more likely result is a sectoral shift in the labor force, which is what historically has always happened. That is, the factory workers take pay cut, but demand for labor increases in a other sector providing a pay increase and more jobs to that sector. Historically L remains the same but E increases for the whole economy.

Who says humans need to work to earn a living?

The economy needs productivity. The economy do not need your work. It needs productive works.

Do you know what is the greatest source of productivity?

Work?

Think about it.

Alice salary is USD 10 an hour. Bob, an immigrant, or android, cost USD 1 an hour. Government prohibits Bob from replacing Alice. Did the economy improves?

The way I see it is Alice is still not productive even though she is working. Government act of prohibiting Bob from replacing Alice cost the whole economy $9 an hour.

That means customers must pay for more expensive service, yada yada yada.....

If work is not the main source of productivity, what is the main source  of productivity? What makes a country wealthy?

FREEDOM (imagine Mel Gibson voice at the end of brave heart)

Most inefficiency in economy happens because governments disrespect individual freedom.

Why not just "bribe" the voters so that they embrace freedom?

Think about it.

See that programmer in California? A few LSD and he can build another facebook. But it's illegal. So? Tax LSD. Money.

Look at rich billionaire buying expensive branded items leaving in expensive suburb. Surely they want to stay that way and save. Tax land. Tax expensive items. Tax luxury.

Oh look at Bob, a billionaire with no children. What would all his money go when he died? Legalize prostitution. Let Bob hire women to breed and breed and breed. Bob can give $1 million to each of his descendant. Bob produce 1000 descendants. Then?

Tax children. Each children dilute value of citizenship. Tax them. And only the productive have children. Tada. Less unemployment.

Give the money as citizen dividend for all adult citizens.

Then? Then voters and the mobs will have strong incentive to make the land free and save.

It'll be what the libertarian wish except that there are some small regressive tax on consumption or leaving in expensive land.

There are many many solutions to automation is taking our job. Think abundance.


What prevents a bank from simply going into their computer system and adding some zeros to their bank account? This question has been bothering me for a long time and I’m hoping that someone here can help to answer it.

I will use Greece as an example, but my question could really be applied to any country or even a bank:

While a government in the Eurozone, the Greeks for example, might have an actual building in which Euro coins are minted and Euro banknotes printed, these are most likely tightly regulated, with lots of physical checks to ensure that the Greek government doesn’t just print more whenever they want to.

I understand that physical money typically makes up a small portion of the actual money supply, so I assume that “printing them selves out of debt” regardless of whether it would be legal, isn’t an actual option for them.

However, what prevents the Greek national bank from simply going into their computer system and adding some zeros to their bank account? What system prevents any bank anywhere from doing the same? Does the bank of international settlements in Basel keep some kind of record of the total global money supply? How is this kind of fraud prevented?

I’m very curious to hear the answer!

Double entry book keeping.

If we take the example given here, of the Greek Central Bank (bank nerd trivia - interestingly the GCB is a commercial bank, listed on the Greek Stock Exchange), arbitrarily adding 000's to its deposit account.

This cannot be done as stated. The double entry book keeping accounting system on which all banking is based, requires that two ledgers are simultaneously updated, one with a credit and one with a debit. So if the GCB credits its own deposit account (which in practice would be a liability income account of some kind), there has to be a matching debit on another ledger. Those are the rules.

Typically deposit accounts increase their value either by people depositing cash in them (see below), by direct transfer from another deposit account, or by receiving a loan.

For example, if the government prints physical cash then this can be deposited at the central bank:

[debit cash account, credit GCB bank deposit account]

and this is how the US TARP intervention was performed. The federal reserve then used the money to buy loans from the US Banks. Note that a debit to an asset account increases its value, and a credit reduces it, whilst on the liability (right hand side), a debit reduces the account, and a credit increases it.

If the European central bank makes the Greek Central bank a loan then on the Greek side, the book keeping is:

[debit cash, credit interbank loan]

The GCB has received cash, and now has a debt that it owes the ECB among its liabilities.

The one thing it can't do is just arbitrarily increase the value of a single account, one of the main reasons for double entry book keeping is in fact to prevent that.

Bank fraud and the various forms of banking system abuse that do occur typically involve manipulations of banking operations within the framework of double entry book keeping. So while DEB. prevents accounts from having zero's tacked on the end, it doesn't prevent Mr. Smith the bank manager, lending his very good friend Mr. Brown a large sum of money that Mr. Brown has no intention of repaying.

Nothing.

In essence that's exactly how banking works nowadays, see Fractional Reserve Banking.

Furthermore, it's perfectly legal.

It works because people rarely ever want to withdraw all the money they have in cash. Instead, they are happy to just check their bank account balance and keep the cash secure in bank.

Obviously there are limits and even Fractional Reserve Banking can't go on for ever but, in essence, majority of money supplies gets created by shuffling account balances. It does not even have to zeros and ones as you can do the same on paper.

Banks do not go bankrupt because they have team of statisticians at hand that calculates how much cash should they have at any time to maintain liquidity.

Update

Regarding Greece. Since Nixon Shock, any country can create endless supplies of money at no cost but only if that country did not deprive itself from that right by joining currency union as Greece did.
Once Greece quits the Euro zone, they will regain the power to create money supplies.


What would be the impact on value of a country's assets and trade balance if its residents choose to increase their savings What would be the impact on value of a country's assets and trade balance if its residents choose to increase their savings by investing in overseas assets and why?
May please help with this question family.

An article on this topic:
https://www.investopedia.com/articles/personal-finance/022415/top-10-countries-save-most.asp
Generally economists would say that savings are bad for the growth because they decrease amount of money in the economy. Smaller group would say that savings are good because of higher stability, more thoughtful spending. There is no universal consensus on this question, but we can look at the data.
Countries where people save are usually less stable, get their money from resources. Probably this makes people realise that personal savings may improve stability. And low taxes make people save more too.
Data for europe and household savings:
https://howmuch.net/articles/saving-rates-around-the-world
It seems people save where they can. If they have growing income they save more. If they have large taxes or stagnation they save less. I dont know what will happen if people would change their saving behaivor contrary to the country's situation. If its too sharp change, economy would suffer, as with any change. If it is smooth, it could increase the growth, assuming international trade is significant enough to compensate reduced internal consumption.


Reading list: history of economic thought / political economy Can you all please suggest books that I can read to get started in the fields of political economy and the history of economic thought?

While my major in Mathematical Economics has given me a good grounding in the theoretical models of economics and the empirical methods used to test them in the real world, I feel that my knowledge of political economy and economic history is sadly lacking. I would like to get a more holistic understanding of the discipline(s) and would greatly appreciate your advice.

My app is acting odd and won't allow me to comment, but here's my follow up comment.

Yeah, for sure! My list consists of this:

Wealth of Nations - Adam Smith
Capital - Karl Marx
Principles of Economics - Alfred Marshall
General Theory of Employment, Interest and Money - John Maynard Keynes.

Those are just the most definitive works in the field that I've found, so there are many more I've yet to discover. If I remember correctly I think Marshall put most of his analytic work in the appendices at the back of his Principles. Marshall had the body of his work written - not in math, but in words - to be concise, but yet understandable for most of the laymen of his day.

Anyways, I pulled out those four books because they establish a turning point in some way for the field (i.e. General Theory caused a bifurcation between macro and microeconomics where it left Marshall's Principles for micro and Keynes for macro.)

If you are pressed for time, then I'd suggest reading Backhouse's book along with the Teachings book by Heilbroner. Those will give you a very broad and quick view of where the fields come from and almost catch you up to modern day economics. And unfortunately a lot of the classics are lengthy and hard to decipher. Karl Marx writes his critique of capitalism in a full three or four volume set! (I can't remember the exact number.)

I think if you approach this adventure in the right manner, you may become hooked. That's how I got fascinated with the field, I read Worldly Philosophers when I was younger and just fell head over heels for the subject.

Hopefully this helps out, just let me know if you have any more questions or concerns.

Economics of Good and Evil is a great read and covers a wide range of economic thought across human history and would be a good complement to the more technical curriculum of mathematical economics. While its focus isn't on the history of economics per se, it covers a broad range of ideas beyond simply modern liberal/classical economics.


What is the point of the indirect utility function? Where does this have application? I understand how the demand function may be arrived at using the utility maximization problem but I don't understand where the indirect utility function is used and I think the two are somewhat related... Please excuse me if this is a very fundamental question. I have only started Intermediate Microeconomics.

Recall that if $x$ and $y$ are consumption bundles, $u(x)$ is the consumer's utility function, and $u(x)>u(y)$ means the consumer strictly prefers bundle $x$ to bundle $y$.

The indirect utility function $v(p,w)$ is the highest value of the utility function when $u$ is evaluated over all affordable bundles given $(p,w)$. In other words, $v(p,w)=max u(x)$ subject to $p\cdot x \le w$.

So the indirect utility function tells you the consumers preferences over price-wealth pairs: $v(p,w)>v(p',w')$ means the consumer gets to consume a strictly better bundle when prices are $p$ and wealth is $w$ than any other affordable bundle when prices and wealth are $p'$ and $w'$.

It is very useful in industrial organization, whereby extensive use of discrete choice econometric models is made. See for instance McFadden 1973.