Posted on 04/18/2006 10:22:45 PM PDT by Ernest_at_the_Beach
BUT! If, indeed, monetary inflation is, in the classic dichotomy, "neutral", it cannot therefore be "inherently immoral". Hyperinflation is the result of trying to appease a population or destroy an economy long after the problem was first detected.
In re real prices - inputs and outputs remain constant REGARDLESS of what goes on with nominal. As Friedman and Phelps pointed out -- it evens itself out. Some management is required to stabilize inflation and unemployment; but overreaction to perceived or antipcated or expected inflation is what causes the inflation/unemployment pendulum to swing into large arcs.
But that you can sell your house at all and prices are noticeably higher than 5 years ago, you can give credit directly to Newt Gingrich for creating the capital gains tax exemption for homeowners. It freed up $1T in real estate and created the boom we saw this past decade.
Monetary inflation is always immoral.
Why can't I do for myself some "monetary policy"?
The Fed, and all central banks for that matter, are legalized counterfeiters. If M3 increases 10%, prices are not going to increase 10% all across the board. Whoever gets the newly printed money first benefits from it. It doesn't matter if if it's 3% or 10% per year, inflation redistributes wealth.
The dollar and all currencies should be backed by gold.
Inflation cannot occur in a truly free market economy.
Yes. I just don't trust hedonics (or however it's spelled), and the inflation I've seen has been amazing since 2000. To be fair, some things were insanely cheap, still are, thanks to China's #1 export: deflation. Commodities though have been saying something for the past few years (which China imports)...
I beg to differ with you.
Inflation cannot occur in a truly free market economy
Not true. It would be re-invented.
Have you read Ayn Rand's book Atlas Shrugged? The theory goes that in a truly free market, live is rugged, but all mankind roams free. Not true. People will band together to form a community. Once that community grows, rules and a central government get formed. And so on. I learned a great deal about the reality of free-market economics from pals who escaped to the commune lifestyles many years ago.
They became, over time, what they alleged they had left.
The Fed, and all central banks for that matter, are legalized counterfeiters
That certainly is a bold and assertive statement. If we all agreed to trade in elephants, assuredly that would make our government and its people "counterfeiters" as well. Fiat monies are created for very good reasons. Primitive cultures used shells or beads as currency. That's counterfeit, too.
What you are referring to the, is a real good for a real good.
Pretty rough to transport 500 oranges from your backyard in exchange for a ship.
Moving away from the gold standard was problematic.
And yes, I do agree with you that inflation is a "hidden" tax. Cut out social spending, and there will be no hidden tax. Get rid of a government and there will be tax. But will there be a civilization? No.
Just read today that builders will have to build 40,000 new homes a year to keep up with the demand in Northern Virginia for the next 5 years....something never done before.
Thats interesting news. Most the fastest growing markets are decreasing the sales of new homes. If the demand is still there, its probably a good place to invest still.
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