Posted on 03/18/2019 11:52:48 AM PDT by SeekAndFind
"Eventually, the pension fund will run out of older bonds to sell, and the only solution will be to either a) start paying pensions out of its capital, or . . ."
Since when is "selling old bonds" NOT paying pensions out of its capital?!?
Have you tried to read his tome?
“Therefore, if you increase the money supply by 3.2% you need to have a corresponding increase in real output. If the change in real output is less, then prices will increase.”
Sure, but that is where the gold standard (or any standard based on something of value) comes in. You simply can’t increase the money supply on a whim, since you either need to acquire more of the good that is backing your currency (buy more gold) or devalue your currency in a transparent way (reduce the exchange rate of paper currency for gold).
So, yes, inflation still operates by the same mechanism with or without a gold standard, but it cannot be as easily hidden.
Keynes appeared to assess the situation properly relative to the ability to use tax and spend policies to control the economy. But he did not point out that governments, under the influence of people like John Kenneth Galbraith, would always choose to raise taxes and increase spending while pointing to Keynes as their guide.
I actually had a bonehead liberal teacher in high school claim that raising taxes and increasing spending were the ONLY tools available to government using Keynesian principles. I suspect he came to this spurious conclusion by reading too much Galbraith and not enough Keynse.
I got him to belittle me in front of class for claiming that government could achieve similar results by lowering taxes and lowering spending, at the appropriate times. Unknown to him, I had engaged our actual economics teacher to agree to my position during the prior class hour. So when the liberal, who was supposed to be teaching us anthropology instead of economics, made his spurious claim, he was actually disputing what the economics teacher (who was also liberal) had just said. Any of the students who had been paying attention would have seen that my position was backed up by the economics guy.
In high school, I was the leader of a small number of conservatives who referred to John Kenneth Galbraith as “JKG”. I was not happy when JKG was the invited speaker at my graduation ceremony at Oklahoma University several years later.
My high school economics and political science education was worth the time. When I arrived at OU I had to graduate quickly. I was able to take tests for credit in both political science and economics. For the economics test the professor gave me his finals from his micro and macro classes. I not only got a good enough grades to pass both, I was able to tie his best student in his macro class. I had never entered his classroom. I boned up by reading the text. But I had read several books on macro economics as a senior in high school.
Contrary to popular belief, there never was a one-to-one relationship between gold reserves and the money supply, nor did the Fed ever enforce such a relationship. The belief was that you could redeem your dollars for gold and, at one time, you could. However, if everyone did that at the same time, there would never have been enough gold to cover what was in circulation. Read up on the Fed’s “Fractional Reserve System and the Money Supply” and it can provide more details.
Pretty much... higher rates on a lower price hurts about as much as lower rates on a higher price.
The big thing is that once rates drop, you can refinance. So you bought the property at a cheap price.
Like I said, the only caveat is that if rates keep going higher, the property keeps dropping. Although, since you bought on debt, the real value of that keeps dropping too.
Depression is hard times; Hyperinflation is catastrophe.
In addition, by giving up the tie to specie, we also basically gave control of the currency and the economy to the Federal Reserve, a complete dereliction of duty by the US government.
His idea that a government may accrue debt because it was ‘loaning money to itself’
Some sadly amusing things: Keynes did not believe many of the things taught in modern Keynesian economics; and most of the last 50 years is not possible under Keynsian economics - yet it survives.
“Well, it’s a valid point about economic valuation: value declines over time because of opportunity cost if nothing else. Everything we value has a time frame within which we measure it, and when the time frame is long enough, the current perceived value falls to zero.”
His intellectual mentor, Kant, was 100 times worse.
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