pppeter

V is Velocity and P is Price so if you want to look for changes in price you're using the wrong formula - you need to consider the acceleration of money. V doesn't have to be zero for there to be deflation, it just has to be less than before. This is possible with a fiat money system. The Fed owns the mortgages and controls the money supply. If it allows hyperinflation the value of the mortgages will be eroded to nothing and the people will own their homes outright but if there is deflation the debt will become more difficult to repay and the homes will become property of the Fed. So, inflation means people own assets and Fed owns paper whereas deflation means people own nothing and Fed owns assets. Why would the Fed inflate to "save the system"? Every scam has an endgame but why should the Fed's be slavery through usury and not slavery through poverty?

How many of these "Black *day" threads have there been? We've lost 40% and nobody's got the day right yet. I hope nobody is trading this (but if you are making money, please let me know how).

Don't worry, I don't actually believe it, but perhaps my criticism was a little too subtle - revealed only by the quotes around the word "efficient". Free markets are only efficient by their own measure whereas people and society are what matters and we have different yardsticks to measure success and happiness. Markets like profit, profit comes from scarcity, scarcity is the opposite of abundance, abundance creates security, security leads to happiness (perhaps). The problem is though, like a lucky horseshoe, economics works that way whether you believe in them or not.

Comparative Advantage suggests that if you can earn more from buying and selling houses than by answering the telephone then you are more productive doing the former. The way sterling has been going this week, it shouldn't be long before that's no longer the case. Eventually the standards of living across the world will be equalised (for a given class of worker), just like they were before the industrial revolution. Governments can't do anything about it because to try would be to devalue their currency and speed up the process. In the economic sense. If it's not efficient it can't happen, because free markets are perfect

If the government had not allowed off-shoring then we'd have heard "the government of business is not the business of government" from all quarters. In truth the government knew they could do nothing about it, indeed that it should actually make us more prosperous because we get the same work done (forgetting quality for the moment) for less money and can redeploy British workers into something more productive. The fact that this didn't happen is not the government's fault is it? If private enterprise doesn't want to make anything productive with the excess workforce that private enterprise has give itself then private enterprise is to blame (or not, because it cannot allocate capital incorrectly when it has no aim other than to allocate capital in the manner it desires - mass unemployment is obviously "efficient" if mass unemployment exists so there is no problem and no blame to place). I tried to cancel a credit card a few months ago, got through to an Indian woman who I could barely understand. I had no confidence in her at all so asked for a letter to be sent to me confirming the cancellation. Guess what?! I'll never use that company again! If their front of house is such a pi55 poor case of Fail then imagine the mess in the bits you don't get to see.

Of all the nonsense you've ever posted here that takes the biscuit.

Someone at SingingPig started a petition to force lenders to "roll up" BTL loans where the debtor could not afford the repayments, instead of reposessing the property. The fact that they didn't get many signatures is obviously because BTL is a healthy industry whose participants don't need a bailout

How many nails is that now? Must be onto the 2nd coffin soon.

Forget profit, what matters is what people want. A car advert will depict a car and the freedom the car delivers, which is the bit people really want. If we try to maximise profit rather than freedom we will not guarantee freedom, only cars. At its very essence capital is the ability to get things done. Dwelling on the profit and the machinery/business aspect of capital is hugely limiting. A flourishing ecology, strong friendships, infrastructure, law & order and well considered regulation all help to get things done. The Social Contract may be forced on us but it helps deliver things which might not otherwise exist, so if it were abolished we would be poorer for it. If there were no violence then nothing could be enforced so the risk in every trade would be greater and the trade more expensive, less efficient. The scale and complexity of business would necessarily be smaller and capital would be therefore be reduced. As long as the authority which regulates society is benign and controlled by society then we benefit from the social contract and it will do no harm. The goal should not be to remove it and replace it with nothing, it should be to ensure it is benign. Edit: Perhaps with no social contract the non-business side of capital would come to the fore. I'd not considered that before. We'd likely be more local in our trading and our circle of friends, we'd probably have less but we might still be better off in terms of happiness and other hard-to-measure metrics.

So capital is machines, whilst they are turned on and being fed with commodities, operated by labour and outputting consumables. No, capital is so much more than that. If a machine is not being operated it is still capital, but it is on strike. The Daily Mail won't be organising a hate campaign when capital goes on strike but it does so none the less, and remains capital. There are a number of examples of capital in the wikipedia link above, including Societal capital. IIRC you once had a link in your sig denouncing the existence of the Social Contract, but considering you seem to be more open to ideas lately I thought you might have reconsidered that. A society with a social contract is richer than one without and this is one area where government tries to increase the capital base and provide what itself and the free markets cannot deliver efficiently. Consider the elderly poor or the uneducated youths from earlier in the thread. If someone can be encouraged to help them out by being offered the chance of winning a piece of metal with the letters MBE on it then Social Capital has increased and the portion of society's wants that capital has provided has been increased. In this case concience alone was not enough for the person to act charitably. This is the most benign of state interventions but can still come at a cost to the "traditional" capital base as the person has less time and money to invest in productive capital. As with all state intervention it does not automatically follow that the whole capital base has been reduced, a fact which many anti-statists don't accept.

I mean productive capital, not just investment capital. There is money in both the circles in my earlier analogy. From wikipedia (so it must be true): In economics, capital or capital goods or real capital refers to items of extensive value, it can also be applied to the amount of wealth a person controls or is capable of controlling. "Extensive" isn't a great word to use there. I'd say it's items of intrinsic value or capable of producing value (which is probably the same thing). You could probably include entrepreneurialism in there too. It's distinct from normal labour and if you lack this in an economy then the capital isn't worth as much. http://en.wikipedia.org/wiki/Capital_(economics)

I just reread this thread. I'm stunned you didn't realise this about statist societies before. You're much better when you write multiple-sentence replies than when you glibly state that X doesn't exist :-)

Free markets provide what capital wants (more precisely they allow capital to provide for itself what it wants). Capital provides what it wants to provide out of the set of things people want, and it provides things outside this set if it requires them itself. Think of it as a venn diagram with 2 interlocking circles, one represents the desires of capital and the other the desires of society. There is nothing wrong with reducing the freedom of the market if you can increase the part of the capital circle which exists inside the society circle, indeed it's a noble endeavour, but you must be aware that the size of the capital circle may decrease if you do this. The decreasing size of the capital circle may demonstrate that the reduced freedom of the market will increasingly fail to satisfy the wants of society as time goes on, but unregulated capital may fail in that regard too because it can only respond to price and demand signals in the present or near future. Far future generations cannot tell us how much natural resources they want and at what price, meanwhile capital provides disposable consumables and the landfill to put them in.

Ok, the first inflation and first deflation refer to money supply, the second of each refer to price changes. The terms tend to be used for price changes so I'm never quite sure how to use them on a site full of people who mostly understand that they really mean. Edit: and you might be confusing money with credit, but that topic's a minefield well trodden in these parts

How much of the last 10 years' worth of credit was created outside the housing market? That market saw a lot of inflation and is now seeing deflation but we've not had much inflation in other markets until recently. May we not get deflation except in housing?

No, they prefer to pay for petrol at £1/l and be able to transport themselves to their office than to go without petrol and income, or to car share etc. In freemarketspeak: they choose it.

That was for writing on

Adapt and survive. Good luck to you.

It's a png. Coming, darling!

Thay had 2000 buyers for 133 properties yet they went bust. And they still have faith in property.

That's why (s)he used quotes around "too expensive". There's some argument about semantics or at cross porpoises in this thread but people basically agree.

Are you talking about input prices in response to a quote about output prices? IMO Stuff that was typically bought on credit last year will typically be cheaper next year, when compared to things typically bought with ready money.

$/£ was almost 1.97 at the start of the week, now 1.92; £ moving up against € at the same time. A strengthening $ means oil and other commodities get cheaper in $ (all other things being equal) but why would they also get cheaper in £? Wouldn't the US buy more oil as the price goes down, pushing the price up in other currencies? Does the fall in £ value of oil suggest that bull market futures trading does, contrary to numerous articles I've read lately, lead to inflated prices? I'm sure I must be missing something.

I used to buy my work shirts from M&S, they were £19.50 for at least 3 years. The last time I needed some I found to my horror that they'd reduced the quality (they're much thinner material now) and kept the price the same. On the face of it this sounds inflationary but because I'm now waiting for my current shirts to depreciate past the quality of their replacements I think it's actually short-term deflationary. On the other hand I might just go somewhere else.

How I long for the heady days of the last 3 weeks when threads didn't turn after the first few pages into pointless discussions about how perfect an imposible system of money and self-government would be. If there is anything useful after page 5 (yes, I stumbled on regardless) I'd be greatful if it could be summarised. I'll even put up the fag packet.