Quotes For The Deflationists

[Injin]

money in a vault is not buying and selling anything...clearly, uncirculating money causes a shortage, and therefore adds to its desirability and therefore its value.

money in a vault is like uncreated money. pass it out and it has the same effect as printing it.

it changes the behaviour of the man who has it in his vault.

This is also true for bank credit - peoples behaviour has changed because the bankers have lied.

The behaviour is not sustainable, so now there is readjustment.

[roman holiday]

Bank credit affects actions.

People with bank credit think they have money - at a certain value. That value is set by the supply and demand of the underlying currency at the time they are told they have the bank credit.

They plan for that value.

When the fraud is revealed the value is gone, either by default or by printing of the underlying currency.

Bank credit primarily affects actions in the boom when assets are inflated.

In the bust, value only falls in assets which were over-inflated. It does not require the printing of money. As for the the fall in value of the currency it depends on which is the biggest gorilla in the end; printing or deleveraging. In deflation, cash is valued more, so the practical qualitative aspects of money [saving it, holding onto it, valuing it] cancel out the theoretical effects of QE which concern monetarists so much.

Edited July 25, 2009 by roman holiday

[Helena Handbasket]

Not always true. If by printing money, you can stimulate the economy into increasing its output, you can actually increase the value of money.

This occurs only under rare circumstances of course, normally where you are facing the severest of deflationary spirals.

Which was probably the case last Autumn. Since the printing started in the UK, the pound has appreciated in value.

Appeciated against what, though? Other countries' paper money, or bags of rice, sugar, fruit or meat?

The things I buy with 'the pound' (Not houses or the latest electronics), show that the pound has devalued.

[the_austrian]

not in tjis case.

Cos 1 of them is real and the other isn't. Real things have a real effect - lies don't.

Yes but they don't actually consider it to be a lie... they might know the bank can't meet all withdrawal requests, but that doesn't mean it is a lie for them to say you have a certain quantity of deposits, equally they are not lying when they make a loan because they don't think the distinction is important. Remember many of them (who bother to think about these things at all) actually think that debt makes everyone richer because of "growth" and prices for houses going up.

[Injin]

Yes but they don't actually consider it to be a lie... they might know the bank can't meet all withdrawal requests, but that doesn't mean it is a lie for them to say you have a certain quantity of deposits, equally they are not lying when they make a loan because they don't think the distinction is important. Remember many of them (who bother to think about these things at all) actually think that debt makes everyone richer because of "growth" and prices for houses going up.

That's my whole point.

People have acted as though they have x amount of the pounds that really exist. They are wrong.

Finding out they are wrong causes a recession/depression.

Printing new notes creates inflation.

Hyperinflationary depression.

[the_austrian]

That's my whole point.

People have acted as though they have x amount of the pounds that really exist. They are wrong.

Finding out they are wrong causes a recession/depression.

Printing new notes creates inflation.

Hyperinflationary depression.

...it can't be your whole point unless you have changed your mind because you say that they lie (and here I assume maliciously) and I have made the point that they do not. Can we deal with this before moving on?? I think the notion of whether or not they lie informs the rest, at least for you it would seem, with respect.

[Injin]

...it can't be your whole point unless you have changed your mind because you say that they lie (and here I assume maliciously) and I have made the point that they do not. Can we deal with this before moving on?? I think the notion of whether or not they lie informs the rest, at least for you it would seem, with respect.

I love they structure of your sentences.

It's a lie.

How can it not be?

[the_austrian]

I love they structure of your sentences.

It's a lie.

How can it not be?

Thank you very much, that is very kind.

I don't deny that people are confused, we have plenty evidence of that. So there is misinformation going on. If two people exchange a pint of milk for some coins, all the time referring to the milk as a hippopotamus and the coins as angel dust, we don't care that they are lying because everything is as they desire and no fraud has taken place. I guess I am talking about willful fraud: If both parties assume (wrongly) that no other party has been harmed, can we have a complaint about their transaction?

[Guest absolutezero]

Thank you very much, that is very kind.

I don't deny that people are confused, we have plenty evidence of that. So there is misinformation going on. If two people exchange a pint of milk for some coins, all the time referring to the milk as a hippopotamus and the coins as angel dust, we don't care that they are lying because everything is as they desire and no fraud has taken place. I guess I am talking about willful fraud: If both parties assume (wrongly) that no other party has been harmed, can we have a complaint about their transaction?

Don't argue with Injin. It's pointless.

He lives in his own little world where countries and many other things don't exist.

[the_austrian]

Don't argue with Injin. It's pointless.

He lives in his own little world where countries and many other things don't exist.

I'm arguing with him so eventually I don't have to

[weebag]

I'm arguing with him so eventually I don't have to

It doesnt work like that.

Injin could start an argument in an empty room.

[weebag]

Printing new notes creates inflation.

Hyperinflationary depression.

And this happens 100% every time?

What happened in Japan? Or has Japan, like the USA (by the Injin unit of measurment) currently got hyperinflation?

[Injin]

Thank you very much, that is very kind.

I don't deny that people are confused, we have plenty evidence of that. So there is misinformation going on. If two people exchange a pint of milk for some coins, all the time referring to the milk as a hippopotamus and the coins as angel dust, we don't care that they are lying because everything is as they desire and no fraud has taken place. I guess I am talking about willful fraud: If both parties assume (wrongly) that no other party has been harmed, can we have a complaint about their transaction?

I don't think that changes whether it's fraud or not.

Does it?

[Injin]

And this happens 100% every time?

What happened in Japan? Or has Japan, like the USA (by the Injin unit of measurment) currently got hyperinflation?

japan exported their money, causing an enormous housing bubble in the west.

[Guest absolutezero]

japan exported their money, causing an enormous housing bubble in the west.

But Japan is a country and you said countires don't exist, Injin.

Buzzzz. Brrrrr. Does not compute.....

[Injin]

But Japan is a country and you said countires don't exist, Injin.

Buzzzz. Brrrrr. Does not compute.....

What you struggling with?

[the_austrian]

I don't think that changes whether it's fraud or not.

Does it?

Strangely enough, I think that it does: I can forgive a mechanic who mistakenly fits the wrong part, but if it is malicious for any reason, I have a problem. If you pay for me to fix your plumbing and I put in new carpets, it isn't fraud, or a crime at least, if I thought that was what you meant all along...

[Guest absolutezero]

What you struggling with?

1. Injin said at some point in the past that "countries don't exist".

2. Injin says "Japan exported their money".

3. Japan is a country.

4. Therefore Injin now believes countries exist.

[MrB]

If increasing the supply of something doesn't decrease it's value, then we best pack this economics in right now.

Astrology anyone?

I know Noel likes it.

What about if the demand for money increased by more than the supply of it at the same time?

The value of money is a function of it's supply in reality.

As they print, the value goes down.

Not if banks are writing off loans that can't be paid back with real money - or writing down the value of their credit using real money.

Not always true. If by printing money, you can stimulate the economy into increasing its output, you can actually increase the value of money.

This occurs only under rare circumstances of course, normally where you are facing the severest of deflationary spirals.

Which was probably the case last Autumn. Since the printing started in the UK, the pound has appreciated in value.

Slightly odd, Galbraithian argument there.

Inflation is about money and the quantity of it (I agree with Injin here), supply/demand/capacity are irrelevant, they are just functions of market pricing mechanisms. Injin sees credit as not real. Even though real charges need to be made for credit that won't get paid back.

[Injin]

Strangely enough, I think that it does: I can forgive a mechanic who mistakenly fits the wrong part, but if it is malicious for any reason, I have a problem. If you pay for me to fix your plumbing and I put in new carpets, it isn't fraud, or a crime at least, if I thought that was what you meant all along...

I;'m not sure I follow.

My point was that it's fraud even if we never find out about it, even if when we find out about it we aren;t fussed. The action of fraud is not dependant on how we feel about it.

[Injin]

1. Injin said at some point in the past that "countries don't exist".

2. Injin says "Japan exported their money".

3. Japan is a country.

4. Therefore Injin now believes countries exist.

Japan in this sense was the BoJ. You are putting things out of context in a half hearted trolling attempt.

Borrrrring.

[Injin]

What about if the demand for money increased by more than the supply of it at the same time?

The the government vanishes.

Not if banks are writing off loans that can't be paid back with real money - or writing down the value of their credit using real money.

if you write off a loan, the amount of money isn't changed at all - you have already told people that they have it as savings. All that happens is that instead of a "borrower" being matched up with a saver, the ankers have to find the cash they promised out of their own pockets.

Slightly odd, Galbraithian argument there.

Inflation is about money and the quantity of it (I agree with Injin here), supply/demand/capacity are irrelevant, they are just functions of market pricing mechanisms. Injin sees credit as not real. Even though real charges need to be made for credit that won't get paid back.

Credit works because people mistake it for money. In mistaking it for money they also make plans that can't possibly work.

[weebag]

japan exported their money, causing an enormous housing bubble in the west.

So you agree that although Japan dramatically expanded their money supply, it did NOT lead to hyperinflation.

So your previous statements that one ALWAYS leads to the other were 'not valid'.

[Bloo Loo]

So you agree that although Japan dramatically expanded their money supply, it did NOT lead to hyperinflation.

So your previous statements that one ALWAYS leads to the other were 'not valid'.

silly, expanding the money supply in excess of wealth creation leads to inflation.

Japan lent new money out to foreigners, at interest.

[weebag]

silly, expanding the money supply in excess of wealth creation leads to inflation.

Japan lent new money out to foreigners, at interest.

Just hoping that Injin will admit that life isnt as simple as 'you do this - this will happen'. There are many factors involved.

Cant for a moment imagine that he will admit that he has ever been wrong though!