[P2P-F] "Fun, and Games"

Sat May 5 11:00:18 CEST 2012

 Most of my posting occurs on MBs Facebook site. The following is a cut and paste " fun, and games"  scenario on MTT, and TFE....This may continue...

http://www.facebook.com/surprisinglyfree#!/groups/156161594445160/

Robert, there seems to be a fundamental belief that "too much" money creation causes inflation, which could be cured by taxation. However, money does not exist in a vacuum. It is spent, which means adding money creates demand for goods and services, while subtracting money reduces demand. Bottom line: Changing the money supply affects more than inflation; it affects the economy. A better inflation fighter is to change the demand for money itself. See: http://rodgermmitchell.wordpress.com/?s=risk+and+reward

Search Results risk and reward « #Monetary Sovereignty – Mitchell rodgermmitchell.wordpress.com 
Uncategorized cut debt, cut deficits, cut medicaid, cut medicare, cut social security, cut spending, cut taxes, cut the budget, MMT, modern monetary theory, monetarily non-sovereign, monetarily sovereign, monetary sovereignty Rodger Malcolm Mitchell 9:44 am

LikeUnlike ·  ·Unfollow postFollow post · Share · Wednesday at 16:50
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	* Chris Cook and Marcelo Milan like this.
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Robert Searle Yes, I liked your clear article. I think if we had a near perfect knowledge of the economy, and powerful instant direct controls (as opposed to tax, and interest which are indirect controls, and could be phased out) we would be able to move forwards without serious fears about inflation . Ofcourse, for the time being sufficient new money could be created electronically.Indeed, this is what happened to a certain extent with the Vietnam War if I am correct..... 
Thursday at 10:21 · LikeUnlike
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Rodger Malcolm Mitchell Further, there has been no relationship between federal deficits and inflation. Not only is this obvious today, but historically true, too: http://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/ 
Thursday at 18:23 · LikeUnlike
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Robert Searle You say this but how can we be a 100% sure especially when the accuracy of economic data is always in doubt ? The answer is we cannot with complete confidence. However, to be fair it is possible with some confidence to create new money (ie.QE) using the aid of conventional data (eg.Consumer Prices Index). But at the end of day unless we have a credible 24/7 understanding of the actual economy in real time inflation risk assessments will largely be questionable. This is why Transfinancial Economics is of huge importance. It is the REVOLUTION per se in economics because for the first time it would offer a more "scientific" understanding of the ACTUAL mechanics of our Free Market Economy. 
23 hours ago · LikeUnlike
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Robert Searle Personally, I think there is great truth in your article, and as I said before it is very clear. But we cannot know with ABSOLUTE CONFIDENCE that things could really go wrong. This is the problem. This is why Transfinancial Economics is so important, and absolutely vital if humanity is to progress successfully into the future.... 
22 hours ago · LikeUnlike
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Robert Searle This is why my project on TFE is far more important than MMT which has only an INCOMPLETE understanding of the economy. 
17 hours ago · LikeUnlike
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Rodger Malcolm Mitchell Not being familiar with "Transfinancial Economics" I looked it up. I noticed this line: " . . . taxing authorities would need to be replaced with an “inflation authority” which controls the economy by deciding who can receive system credits, and in what amount."

That is in agreement with Monetary Sovereignty. Federal taxes and borrowing would be eliminated. Also, on several occasions, I have suggested federal ownership of all banks, which is similar to your non-debt economy. 

However, in the U.S., we have many other governments -- state, county, city, parks -- and none of them are Monetarily Sovereign, so cannot simply create dollars (credits) at will.

The federal government can and should provide dollars to these "sub-governments." They, however, demand some measure of autonomy, which includes taxing and borrowing. 
16 hours ago via  · LikeUnlike
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Rodger Malcolm Mitchell Mr. Reisberg,

The graph shows no relationship between federal spending and inflation. If federal spending caused inflation, you would expect to see some sort of relationship.

What data would you use to show that federal spending does cause inflation? I'm curious about what data would satisfy you. 
16 hours ago via  · LikeUnlike
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Robert Searle Thank you for your response. There are obvious similiarities between TFE, and MMT. However, for the most authorative, and most accurate data on the former it would be best to go to the following link.. http://www.p2pfoundation.net/Transfinancial_Economics 
Transfinancial Economics - P2P Foundation p2pfoundation.net 
Transfinancial Economics is an evolving project nearing basic completion. It sho...uld be said that there has been a degree of interest in it from some economists.In April 2010 it was also a subject discussed at a major scientific conference (the ICEME, or International Conference of Engineering, and M...See more
15 hours ago · LikeUnlike · 
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Rodger Malcolm Mitchell Subtract federal spending from what? 
13 hours ago via  · LikeUnlike
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Rodger Malcolm Mitchell You mean subtract federal spending from GDP? Easily done, but what do you predict will be found? 
13 hours ago via  · LikeUnlike
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Rodger Malcolm Mitchell I'm confused. Are you trying to prove federal spending does or does not cause inflation? 

If federal spending caused inflation, we should see a relationship between increases in federal spending and increases in inflation. And we should see a relationship between decreases in federal spending and decreases in inflation. We see no such relationships.

Now it is possible to see if there is a relationship exists between inflation and other kinds of spending (Mortgage, consumer credit, business, state government), but I'm not sure that's what you're asking. 
13 hours ago via  · LikeUnlike
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Rodger Malcolm Mitchell If the government had not spent, we would have had a depression:

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929. 

Anyway, you misunderstand how cause and effect are be determined. If you believe federal spending increases inflation, then over time increases in federal spending should show a pattern of increased inflation. If you don't see that pattern, and you still believe (with no supporting evidence) federal spending causes inflation, you then you also would have to believe increases in federal spending correspond by coincidence, with some anti-inflationary effect. 

Bottom line: You have a belief supported by nothing. You just have a hunch. I'm won't debate your hunch. When you have something more than intuition, we can talk further. 
12 hours ago via  · LikeUnlike
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Rodger Malcolm Mitchell You have offered no viable alternative to my methodology (which, by the way, is pretty standard), so presumably there is no way to prove whether or not federal spending causes inflation. Right? So you have not been much help in my "quest for truth."

You asked what would have happened if the government had not spent, and I showed you the answer: Depression. Sorry, if those data are not what you wanted. 
12 hours ago via  · LikeUnlike
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Roland Berie Tschäff is right Rodger Malcolm Mitchell, your methodology does not tease out the contribution to inflation/deflation of government spending. I would go a step farther and say it's an exercise in futuility because some government spending may add to inflationary pressures, think of all the oil consumed by the military, while other government spending might reduce inflationary pressure, think how a fire department keeps us from rebuilding our cities. 
12 hours ago · LikeUnlike
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Rodger Malcolm Mitchell I'm satisfied. You both are saying there is no methodology that will demonstrate whether or not, or how much, federal spending contributes to inflation. 

I believe you both to be dead wrong. If A causes B, then the evidence for that would be, increases in A causing increases in B, and decreases in A causing decreases in B. 

But I'm happy to leave it, right where it began: <b>There is no evidence to show that federal spending causes inflation.</b>

That's what I said in the first place. 
12 hours ago via  · LikeUnlike
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Genaro Grasso Grasso Genaro Deficits can also be a result of inflation, as the government has to spend more to buy the same goods and taxes always are payed with a delay at before prices. What mechanism would you suggest for deficits to create inflation, if there are idle resources? It is the other way round, to buy smething that is more expensive, you need to take a bigger credit (in the bank for consumers or investors, in the FED for the government). 
10 hours ago · LikeUnlike
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Rodger Malcolm Mitchell Right Genaro,

In today's world economy, where products and services easily are purchased from all over the world, it is quite difficult to cause inflation when there are idle resources -- and easy to cure it. Inflation has been the debt-hawk mantra for many years. They still talk about Weimar and Zimbabwe as examples, of course, having no idea what caused those inflations. Meanwhile, inflation fear leads to recessions all over the world. 
9 hours ago via  · LikeUnlike
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Rodger Malcolm Mitchell So, go ahead and isolate. Prove your point, whatever it may be. It's a bit disingenuous to say I'm wrong but you don't know how to demonstrate it. What makes your intuition definitive? 
9 hours ago via  · LikeUnlike
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Genaro Grasso Grasso Genaro Government spending is supposed to be inflationary because aggregate demand is too big and there's no productive capacity. If government spending is increasing ad other components also, rhwb your hypothetical inflation-deflation bias does not exist. 
7 hours ago · LikeUnlike
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Genaro Grasso Grasso Genaro I know, but theory is important to get correlations right. Let's say we try to study the fiscal and monetary policy impact on the solution to the great depression( as Christina Romer did). If we're not counting that they used monetary policies to spend in deficits, you may be counting as monetary policy something that was fiscal, and, therefore, you might say that fiscal policies aren't important, as Romer did. 
6 hours ago · LikeUnlike
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Genaro Grasso Grasso Genaro What I'm saying is that, in theory, fiscal deficits make preassures in markets with growing private sector spending because there is no capacity left to produce them, and then prices must go up. We could then a) study the utilisation capacity and the relationship of full utilisation of it and inflation (you will see there that full utilisation is never reached), b) you could use only the years when there was fiscal policy in a context of private spending expansion. There there won't be any deflation because the state and the people would be "in competence" for a limited market, and you could estimate the impact. (I don't know what rhbw was meant to be) 
6 hours ago · LikeUnlike
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Robert Searle I feel a bit sorry for RMM as he is getting a bit of pasting! I know the experience, and this is the price one has to pay for trying to introduce a "new" paradigm. Unsuprisingly, I have yet to see any comments about Transfinancial Economics.... 
32 minutes ago · LikeUnlike
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Robert Searle Ofcourse, in advanced stage TFE we would know at the point of transaction whether there are any inflationary pressures at work, and where they originate in REAL TIME. This is revolutionary......and goes beyond MMT, and indeed, Social Credit as well........
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