MORTAL KOMBAT!
So.
This guy says that Moore's law applied to the economy proves that gold will hold back economic productivity be ensuring massive deflation against "massive increased productivity." He cites the military and technological developments as well as the "deflationary" (as he uses the word) tendancy (actual law) that computer technology loses value when stored to say that gold would
Here is something you may not know. Most of the fathers of Silicon Valley, including Moore, were Republicans. David Packard, of Hewlett-Packard, was Nixon's first deputy secretary of defense. Defense contractors were all aware of Moore's Law and its implications because they worked with technology all the time. They were a key part of Nixon's base. If the supply of money is fixed while the value of technology keeps going up, its price must, of necessity, go down. As technology impacts upon other areas of business, they feel the same deflationary effect. As we've seen in the last several years, deflation is much worse for an economy than inflation. Wages have a tendency to lead prices down. People lose their jobs as companies can't make money at new prices.
Here is something you may not know. Most of the fathers of Silicon Valley, including Moore, were Republicans. David Packard, of Hewlett-Packard, was Nixon's first deputy secretary of defense. Defense contractors were all aware of Moore's Law and its implications because they worked with technology all the time. They were a key part of Nixon's base.
If the supply of money is fixed while the value of technology keeps going up, its price must, of necessity, go down. As technology impacts upon other areas of business, they feel the same deflationary effect. As we've seen in the last several years, deflation is much worse for an economy than inflation. Wages have a tendency to lead prices down. People lose their jobs as companies can't make money at new prices.
I hope this hasn't been posted because I want to point out that the author conflates (or wrongly applies) value (in bold) where he should say "productivity." Amirite?
By saying that the supply of money is constant (due to gold; which is inaccurate in itself) then saying that the value of technology goes up he forgets why that is. The productivity of the chips goes up and this pushes prices downward (you get more for less...). Productivity =/= Value. The money supply really has nothing to do with this, does it?
Deflation isn't caused by the money supply being constant, but by the inceasing productivity of the chips. The value goes down doesn't it? Isn't that a reason that would indicate prices falling?
But here's the deal. Moore's Law can't be rationalized against Austrian economics. Rapid change, massive increases in productivity, can't be set against the steady-state theories of the Austrians and result in anything but deflation, unemployment and failure. Yes, it's risky having government control the money supply. There is always a risk of hyperinflation. But there's a cure for that: elections. Denying Moore's Law, as Ron Paul still seeks to do, makes as much sense as denying global warming, or evolution, or science itself. Gold's not money. This I know. It's Gordon Moore who told me so.
Yes, it's risky having government control the money supply. There is always a risk of hyperinflation. But there's a cure for that: elections. Denying Moore's Law, as Ron Paul still seeks to do, makes as much sense as denying global warming, or evolution, or science itself.
Gold's not money. This I know. It's Gordon Moore who told me so.
Elections....the panacea.
Appeals to global warming "denial" emotions....
Some of the comments are funny too.
He's applying an observation made in computer history to economic theory? There's yer problem.
Aristophanes:Productivity =/= Value. The money supply really has nothing to do with this, does it?
This depends on what you mean by productivity: MPP or MRP. MPP doesn't necessarily change (regardless as to how much each unit of a good costs, it does not follow that my marginal physical product will be affected by a change in the money supply). Once MPP is given monetary value (MPR), then the money supply has an effect on MRP. Prices are interpersonal valuations of goods in ratios of exchange for other goods. In other words [Productivity=/=Value] is meaningless until you clarify what you mean.
Aristophanes:The value goes down doesn't it? Isn't that a reason that would indicate prices falling?
The value of what? How do you define value? The purchasing power of the unit of currency will increase as a result of deflation.
Aristophanes:[...]the steady-state theories of the Austrians[...]
And just what in the hell is a "steady-state" theory of the Austrians? What does the party affiliation of those mentioned or Richard Nixon's "base" have to do with anything?
Send him pictures of cats until he decides to use logic or make any reference to actual economic theory (since he isn't using it, you can grant yourself the same fun).
If I had a cake and ate it, it can be concluded that I do not have it anymore. HHH
Thanks!
I realize that value is a touchy subject that is why i said it, "Isn't that a reason that would indicate prices falling?" (meant to imply many reasons for valuation being applied)
The author said that
If the supply of money is fixed while the value of technology keeps going up, its price must, of necessity, go down.
Aristophanes:I realize that value is a touchy subject that is why i said it, "Isn't that a reason that would indicate prices falling?" (meant to imply many reasons for valuation being applied)
Well, the full quote is this:
It's not that I'm trying to annoy you, but I don't understand what you are referencing when you say "the value" in the second sentence. According to the definition of deflation, deflation is a reduction in the money supply. It is because there are fewer units of currency chasing a constant amount of goods that prices decline. What happens to productivity is besides the point insofar as it pertains to the definition of deflation.
Aristophanes:The author said that If the supply of money is fixed while the value of technology keeps going up, its price must, of necessity, go down. I don't know how he could reason that prices go down if values go up regardless of productivity (unless he means 'value' as 'demand' and/or purchasing power expressed, which I don't think he did).
Regarding that article, I think the "I'm not an economist." statement is pretty accurate. I don't know what he could have meant there and he doesn't elaborate, which is annoying.
Aristophanes:So, productivity would mean anything that is produced from the increased efficiency of the chips (labeled MPP, apparently)? Then, productivity measured in exchange units is going to vary from person to person? And both will yeild different values from different origins?
MPP= Marginal Physical Product. It is the actual number of units of a good produced by an additional productive input (i.e. a new laborer or machine).
Yes, productivity varies from person to person (this is the basis for the Ricardian Law of Association).
Could you clarify the last question?
I don't understand what you are referencing when you say "the value" in the second sentence.
I meant that 'deflation' (I did clarify that I was using the word in the way that the mainstream does; ie. falling prices), or perception of falling prices as being a reason that one could say that the "value" is dropping. When I said,
(meant to imply many reasons for valuation being applied)
I meant that there are many reasons for "value" to come into existence for different people (subjectivity). The author selected this one and superimposed it as if it is the only necessary circumstance for universal perception (not possible).
Could you clarify the last question? "And both will yeild different values from different origins?"
"And both will yeild different values from different origins?"
Different order goods will have different values from different people. The end user of computer chips have little personal value for a combine, but it is essential to the farmer.
Or more transistors on a computer chip?