Inflation is caused by... manufacturers making less stuff? Unemployment? Huh?

McDuffie posted on Thu, Apr 16 2009 12:58 PM

rated by 0 users

My chat program (yahelite) automatically keeps a transcript of every chat session. I was scrolling through and found this one. I took out all of the banter and peanut gallery comments from the other chatters. What's left is the unedited comments by me (Fred), this guy named durtyoldman and later some remarks from a chick named nobiwan.

This chat transcript perfectly illustrates why it is a futile and stupid waste of time to debate liberty online.

Let me set it up a litte: this bozo (durty) was explaining to someone that inflation is caused by several factors, chief among these being unemployment. I tried to explain to him that it is only an increase in the money supply that causes inflation. I tried doing this by way of analogy, though as I said later in the transcript, I assumed that he was smarter than he really was. I should have been more clear from the start. I was talking about an island whereupon about 100 people lived where gold was the medium of exchange. Obviously, this is a post-barter economy. I created a scenario where the money supply doubled overnight. I then asked the idiot to comment on what he thought would happen to the price of a cow if the cow was worth 200 oz of gold the day before the money supply doubled. Obviously, the answer is that the new price of a cow would be 400 oz.

At first, I thought he was (not so) cleverly evading, so that he wouldn't have to deal with losing this debate, but as time went on, I realized that he really is this stupid. Here is the transcript:

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Fred: durtyolman58 you don't have a clue in hell what causes inflation, do you? )

durtyolman58: fred, yeah high unemployment is a rip time for inflation lol

Fred: durtyolman58 inflation has one single cause: inflation of the money supply

durtyolman58: fred, another bullshit deinition

Fred: durtyolman58 it's a proven fact

durtyolman58: inflation can have many causes

Fred: no, it can't

Fred: it can only have one cause

Fred: it's well known

durtyolman58: lol

Fred: durtyolman58 as I said, you clearly haven't read up on any of this stuff

Fred: you and I both know it

Fred: almost your every post betrays and utter lack of knowledge of economics

Fred: you have never read even an article on economics, much less a book

durtyolman58: fred, I read up on it before the libertairian retards redined thinsg to fit their beliefs

Fred: durtyolman58 I can't tell you too many more times that I am not a libertarian

Fred: maybe once or twice more

durtyolman58: fred, as you claim, but yoru arguments abotu economics are straight from their propoganda

Fred: durtyolman58 I haven't met too many libertarians who know much about economics at all

Fred: including the Libertarian Party's last two presidential candidates

durtyolman58: fredm I agree they are cluless about it, and you make teh same argumnts they make

Fred: no, I have studied this

Fred: you and I both know it

Fred: and you and I both know that you have not

Fred: durtyolman58 I would be willing to bet that you haven't read more than 3 articles about economics in your entire life

durtyolman58: fred, that's liek a guy claiming he studied biology and stating evolution never happens

Fred: and zero economics books

durtyolman58: inflation is a result of an imbalance in supply and demand

Fred: durtyolman58 no it isn't

durtyolman58: right it isn't lol

Fred: an inbalance in supply and demand will cause the prices for that service or commodity to rise, but not for prices to rise in the economy in general

Fred: which is the definition of inflation

durtyolman58: you can hav inflation because manufactireres aren't creating consumer goods and rare consumer goods would result in inflated prices

Fred: durtyolman58 UNLESS you are talking about the supply and demand of MONEY

Fred: then I would agree with you

durtyolman58: or teh could be a huge demand, causing an inflation of prices as well

Fred: durtyolman58 no, that just causes an increase in prices in those specific industries

Fred: not the economy as a whole

Fred: see, you haven't read any of this stuff

Fred: haha

Fred: you and I both know it

durtyolman58: and to talk of money supply increases when so man laons are being dfeaulted on, and the value of thinsg securing those loans ar plummeting, is illogical

Fred: durtyolman58 you very clearly don't know what you are talking about

durtyolman58: the money supply is booming, aig lost 5 billion dollars lol

Fred: durtyolman58 I am frankly amazed that you would continue to pretend to speak authoritatively on a subject you know so little about

durtyolman58: as if that lost money can be foudn under a rock, or wasn't borrowed from others

durtyolman58: idiots who talk of an increased money supply in these times are just idiots, who read a book, but didn't understand anything

durtyolman58: idealogues

Fred: durtyolman58 so if you, me and 100 or so people lived on an isolated island, and there was 1000 oz of gold on that island

Fred: and a cow was worht 200 oz

Fred: and then a ship wrecked on that island and we found an extra 1000 oz of gold

Fred: and it circulated through the economy

durtyolman58: fred, we aren't talking of an isoloated island here, it si  world economy

Fred: what would the price of a cow THEN be?

Fred: durtyolman58 irrelevant

Fred: just answer the question

Fred: what would the price of a cow THEN be?

durtyolman58: fred, there is no answer, I have all the gold and I don't want the cow, so the value of teh cow is 0

Fred: after a doubling of the money supply

Fred: durtyolman58 nice evasion

Fred: the price of the cow would be 400 oz

durtyolman58: fred, again, how can you double teh money supply unde todays conditoins

Fred: durtyolman58 through the federal reserve

Fred: in fact, in the last 9 years, the fed has created more US dollars than have ever existed in the aggregated preceeding years

Fred: durtyolman58 it is stunning that you hold such strong opinions on a topic you have so little understanding of

durtyolman58: fred especially that braon dead island with a cow and gold analogy

Fred: durtyolman60 funny that, since it is taught in econ classes worldwide

Fred: that is exactly how econ profs teach inflation

Fred: exactly how I did with the island example

durtyolman60: fred, on that island, the gold has 0 value, only the cow has value

Fred: wrong

Fred: it presumes that gold is the medium of exchange

Fred: I could have said nails

durtyolman60: fred, an example of the assumptions at teh root of your errors with regard to economic theory

durtyolman60: fred, the only thing of value on that island would be teh cow

Fred: durtyolman60 explain then why econ profs use that exact example when they teach inflation?

Fred: durtyolman60 you are wrong

durtyolman60: fred, ebcause they are assholes

durtyolman60: fred, the type of assholes whose ideas got us in this bind

Fred: durtyolman60 it presumes a society, like so many throughout history, wherein gold, or silver, or nails, or pearls, are the unit of exchange

Fred: durtyolman60 you are so goddamned dumb it's no longer funny

durtyolman60: fred, yeah presumes, but on a desreted island with only males and a cow, the gold is wrothless, unless soem oen has a strong yen for shinies

Fred: durtyolman60 that's not the presumption

durtyolman60: fred, what was dumb is taking that abalogy ast face value, and not looking at it to see what the things of value on that island were

Fred: durtyolman60 you can't refute the metaphor by changing it

durtyolman60: fred, it was a prssumption that gold would have value to teh guy who owne the cow

Fred: durtyolman60 no, the island example is a gold based economy

Fred: you just can't refute it, so you changed it

durtyolman60: as if money sat idele, the use of money the appearance of money is due to it's ciculation

durtyolman60: stagnant money is wrthless

Fred: durtyolman60 the island example is an economy wherein gold is a currency

Fred: I could have used chickens

Fred: nails

durtyolman60: fred, what mad it a gold based eceonomy? why would anyoen want gold?

Fred: or anything

Fred: durtyolman60 because gold has independently arisen as money worldwide

Fred: durtyolman60 you can't address the analogy

durtyolman60: fred, you create a improbable fantasy and claim it proves a point, when you can't justify why gold would have value within it

durtyolman60: fred, it was brainless

Fred: durtyolman60 not an improbable fantasy: historically accurate

Fred: it has happened millions of times throughout history

Fred: durtyolman60 in Scotland, nails were used as currency

durtyolman60: fred, historical my ass, gold hasd never had value in an isolated non comercial region

nobiwan911: Are you guys seriously arguing over why gold is valuable?

Fred: cows were valued in numbers of nails

nobiwan911: Gold is valuable because it is a scarce resource with alternative uses.

Fred: durtyolman60 you dumb son of a bitch: in any economy that evolves past bartering SOMETHING arises as the main commodity of exchange

Fred: maybe it's gold, silver, eggs, nails, wool, whiskey

Fred: it doesn't matter what it is

nobiwan911: Barter is inefficient, hence we invent currency.

durtyolman60: gold has NO intrisic value, the only value it has is as a raw meterial in making things

Fred: exactly nobiwan911

Fred: nothing has intrinsic value

durtyolman60: soem non comercial society without metal workers, would place no value of bold

Fred: durtyolman60 it doesn't matter what5 the medium of exchange is

Fred: it doesn't matter

Fred: you really cannot be this fucking stupid

Fred: really

durtyolman60: fred, the only medium of excanhe in your example was teh cow itself and the milk it produced

Fred: durtyolman60 let's say that the commodity of exchange is nails, as it was in Scotland prior to the english taking over

Fred: ok?

Fred: durtyolman60 let's say that the commodity of exchange is nails, as it was in Scotland prior to the english taking over

durtyolman60: and if it was my cow and you anted the milk, any god nuggets you had would be garbage, go clear the broken sea shells from the beacj so I don't hurt my toes when I go swimming if you want

durtyolman60:  soem milk

Fred: ok?

Fred: so it's nails

Fred: agree?

durtyolman60: fred, stop inventing currencu\ies

Fred: I am not inventing shit

Fred: nails were used as currency in ancient scotland

durtyolman60: nails are as useless to me as gold, without timber

Fred: durtyolman60 ok, we are talking about a post barter economy, ok?

durtyolman60: they had axes and forests to get timber

Fred: in ALL post barter economies, SOMETHING arises as the main commodity of exchange

Fred: do you at least agree with that?

durtyolman60: godl has no use to a hungry man where there is no one to buy food ffrom

Fred: in ancient scotland, nails were the commodity of exchange

durtyolman60: if I alrady controlled the food supply, I don't need your gold or your nails

Fred: durtyolman60 you are ignoring history

Fred: what I am talking about is historical

Fred: your retorts are not

Fred: that's the difference

Fred: and what you are doing is short circuiting any debate

durtyolman60: fred, you create dthe anology, now froma  desreted isolated island, it is one with a big economy, but only 1 cow lol

Fred: so that you won't have to deal with the fact that, in the end, I win

Fred: durtyolman60 no, I didn't create this analogy

Fred: it's taught in econ 101

Fred: worldwide

durtyolman60: marplost, only if there are metal workers around with the tools to smelt and shape it

nobiwan911: Fred: That's why I know it. I took an econ class.

Fred: I never said there was only one cow

durtyolman60: fred, right you just quoted it lol

Fred: thank you nobiwan911

durtyolman60: lingiustics again, zetardism

nobiwan911: I only took one, though. Heh.

Fred: durtyolman60 what I am talking about is historical

Fred: what you are talking about is not

durtyolman60: fred, what you were talking about is what some asshoel told you ina  class room, and you bought it

Fred: no, I am talking about PhD economists

nobiwan911: Durty: Every single intro to economics class.

durtyolman60: lol fred

nobiwan911: Durty: Kind of like how evolution is taught in biology.

Fred: durtyolman60 I have two econ textbooks right here

Fred: and both of them contain at least one of the two examples I mentioned

durtyolman60: phd's are teh peopel who crashed our economy, using assumptions sich ass I've seen you use, regarding teh value of land, and which you used just now regarding the value of gold in a

durtyolman60:  limited environment

nobiwan911: Fred: Seashells and cigarettes are the ones I was given.

Fred: I even have Krugman's macro and micro books around here, and I wouldn't be surprised if they had either one or both too

Fred: nobiwan911 have you read the study of the German prison camp economy?

durtyolman60: fred, bih shit, the economists you rea have been proved wrong by recent events

nobiwan911: Fred: No, but that sounds fascinating.

Fred: it proved, undeniably, nearly every claim of neo-classical micro

Fred: durtyolman60 the economists I read predicted the current events

Fred: that is exactly why I read them

durtyolman60: fred, raw gold had value in the prison camps?

Fred: no, cigarettes did

nobiwan911: Fred: I was given the phenomena of cigarettes as currency in the prison population here in the US.

durtyolman60: lol fred

Fred: they were used as a medium of exchange

durtyolman60: I've seen you post abotu how real estate will always go up

Fred: durtyolman60 never once have I ever said that real estate will always go up

Fred: not once

durtyolman60: cigs had value, because peopel wanted them, so what?

Fred: you are either confused or lying

durtyolman60: on that island, the only thing of value was teh cow, and what the owner of teh coe wanted

durtyolman60: the value of teh cigs was that soem peopel wanted to smoke them, jeese

Fred: durtyolman60 no, stupid: I already told you the island is a post-barter economy using SOMETHING as a commodity of exchange

durtyolman60: fred, cnaging your definition of teh island now lol

durtyolman60: post barter, instead of isolated and populated by just a few men with 1 cow

Fred: durtyolman60 I started this conversation out assuming that you would be smart enough to figure that out

Fred: I over estimated you

Fred: durtyolman60 I said about 100 people, including me and you

Fred: I said that right from the start

Fred: and a post-barter economy can be isolated

Fred: or not

durtyolman60: fred, no your analogy was pure assumption, assuming the onlything the peopel would want with teh gold they found was the cow, and that the owner of teh cow wanted gold

durtyolman60: in this now post barter island

Fred: durtyolman60 no, it assumes, like so many times in history, that gold would be a medium of exchange

Fred: it doesn't matter what the commodity is

durtyolman60: fred, if there are a 100 cows and only 10 men wanting 1, the price of a cow is cheap

Fred: durtyolman60 so?

Fred: durtyolman60 but a surplus of cows wouldn't drive up the cost of everything in the economy

durtyolman60: so it would not efefct the value of a cow, no matter how much gold was tehre

Fred: inflation is an increase in all prices in an economy

Fred: yes it would, if the money supply increased or decreased

durtyolman60: inflation is not an increase in all prices, unless it is tied to a devaluation of teh currencey, and this is only one type of inflation

Fred: inflation is an increase in all prices in an economy

Fred: that is the definition of inflation

Fred: nobiwan911 did you learn that inflation was a general increase in prices in an economy?

durtyolman60: so fred, we are back to tyour linguistic use of one of teh possible definitions of infaltion, in otehr words, a zeradism

Fred: and not an increase in a few or one commodity

nobiwan911: Fred: Yep.

Fred: durtyolman60 you are incredibly stupid

Fred: literally incredibly

durtyolman60: fred, you are incredibly dense

Fred: as in: I literally cannot believe how stupid you are

Fred: durtyolman60 nobiwan911 just took an econ class and she has been consistently agreeing with me

nobiwan911: I took it four years ago.

nobiwan911: Got a B.

Fred: ok :p

Fred: 4 years ago

nobiwan911: It was hard.

Fred: yeah, it's a hard subject

nobiwan911: The second time I took something even vaguely resembling an econ class was last fall. Global political economy. Which then proceeded to collapse.

durtyolman60: neo economic tehory has been dumbed down, that basis for reagn's trickle down bullshit

nobiwan911: So, I'm not taking any more econ classes.

Fred: durtyolman60 you are breathtakingly stupid

Fred: durtyolman60 why is it that nobiwan911 took an econ class and has consistently agreed with everything I have yet said?

Fred: nobiwan911 does this sound familiar: MV = PQ

nobiwan911: Fred: I need you to understand right now that I'm a liberal arts major. I took statistics to fulfill the math requirement.

nobiwan911: I hate math.

Fred: where M equals the money supply, V the velocity of money (pretty much constant)

nobiwan911: Money has velocity?

Fred: oh darn, I was hoping you remembered the other two

Fred: haha

Fred: yeah

nobiwan911: Price and something

Fred: I'll google it

Fred: P is the general price level

Fred: and Q is an index of the real value of final expenditures;

Fred: meaning, even theoretically (nevermind what history teaches) inflation is caused by an increase in the supply of money