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I am not suggesting that GDP is incorrect. I will gladly stipulate that given the definition of GDP, the economists do a fairly good job of estimating it. Instead, I am questioning the GDP's relevance as a metric of economic progress, given that increase in productivity does not increase GDP. In fact, an argument could be made that targeting real
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I am characterizing extremes of types of demand for an item. When the price falls because of increased productivty, demand could increase, or not increase. The "limited demand" case reflects the situation where halving of prices produce absolutely no change in the demand for an item. The other "unlimited demand" extreme is where
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I fixed the post to make case 2 clearer. I think it answers your question. Yes, "typical" means half the country spends (slightly better than has) less than him and the other half spends more than him. Consequently, what it does not mean is that half the money spent is by people poorer than him and the other half is being spent by people richer
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I am starting to have difficulty believing that it indicates more productivity. I considered two cases where productivity of the worker doubles, and consider its long term influence on the GDP. Case 1 : Limited demand for item: In this extreme, the demand for the item is completely limited at the current or lower price. Influence of higher price is
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[quote user="DD5"]The so called interest rate it charges banks on short term loans disappears right back to where it came from; air! when banks allegedly repay their loan.[/quote] And this exactly is my problem. If this is true (and I will consider it is for argument purposes. Whether it is actually true can be decided later), then what I
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FED came into existance in 1913 for the purpose of controlling the money supply by lending to banks at higher or lower interest rates. I just read from wikipedia that this interest after expenses goes to the treasury. I think this interest must be a LOT. What does the treasury do with this amount? Case a) Gives it to some part of the govt. Well, that's
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[quote user="sthomper"] The Depository Institutions Deregulation and Monetary Control Act of 1980 had begun phasing out interest-rate ceilings on deposits and modified reserve requirements in complex ways. Combined with subsequent administrative deregulation under Greenspan through January 1994, these changes left all the financial liabilities
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[quote user="Knight_of_BAAWA"] [quote user="Knight_of_BAAWA"]There is such a thing as the "search" function. If you don't like being told to use it, perhaps you shouldn't be here. Being told to use the tools at your disposal isn't cruel or sarcastic; it's something proper. This is not a government-run school
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[quote user="Knight_of_BAAWA"] There is such a thing as the "search" function. If you don't like being told to use it, perhaps you shouldn't be here. Being told to use the tools at your disposal isn't cruel or sarcastic; it's something proper. This is not a government-run school where you get a gold star for just
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[quote user="Smiling Dave"] Say Bank A initially has 10million. It loans 100million to Bank B, which loans 1b to Bank A i'm guessing the buck stops here. By which I mean [I assume] that bank B has to have 100 million of cash, not 100 miliion of a check issued to it from bank A. And if they cash the check, bank A is out of business, not