$this->bbcode_second_pass_quote('radon1', '')$this->bbcode_second_pass_quote('AgentR11', '
')The middle class guy with no significant real assets or liabilities, can get dinged pretty hard by inflation if his wage doesn't rise along with it; but if wages aren't rising, inflation won't hold.
PeakOil is You
Interesting Times
Ukrainians honestly don't have inflation.
What they have is a termination of subsidies which presents the appearance of consumer inflation.
It is not inflation, it is simply a change of who is paying the market price.
PreMaidan
UA Bob went to the store, paid 5 copper for his bread, and behind the scenes the state forked in another 20 copper that went to energy, grain subsidies, fuel subsidies, corruption subsidies, oligarch subsidies, friend of oligarch subsidies, etc.
PostMaidan
Now UA Bob is paying most of the cost of that bread, but unfortunately his government is still forking out those corruption subsidies, destroying Ukraine's future in order to pad the checking accounts of a special few.
UA with a functioning Donbass, and capture of Crimea would have been worth this cost to the EU/NATO; heck, telling the French and English public they could freely sail in and out of Sevastopol in recreational/personal yachts; would have been enough to assure plenty of funds for Ukraine/Kiev and probably, eventually overwhelm that oligarch subsidy thing. Without those assets.. Kiev is a black hole of cheap labor and corruption, at a time Europe is absorbing millions of cheap, migrant labor from MENA.
Yes we are, as we are,
And so shall we remain,
Until the end.
And so shall we remain,
Until the end.
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Re: Interesting Times
by AgentR11 » Tue 10 Nov 2015, 12:01:09
$this->bbcode_second_pass_quote('Pops', 'A')ll true Agent. Bits are great as long as everything is hunky-dory.
My opinion is that if things are NOT hunky-dory, paper cash will be essentially useless. Localized badness, I can rely on the out of state account; generalized badness, time to get a shovel and figure out where I put those silver coins! Paper is only valuable if people believe the general system will come back online within a reasonable time. If a hurricane knocks out the localized system, people accept cash at their stores because they believe they will be able to deposit it in a reasonable time frame. No merchant wants to sit with a safe in his store holding several weeks of cash receipts, that'd get terrifying within a few days.
Of course my outlook is strictly within the context of the adequate pantry my grand parents taught me to always have. I can go a month or few without buying any food or turning on the water taps, and nothing TOO horrible would happen. Anything that would outlast that time frame, and the USD would pretty much cease to exist anyway. A month without electronic banking and this whole mess of bonds, derivatives, and hedges will unwind like a giant spring coil under tons of pressure. Nothing will financially survive it. I doubt even the modern definition of "currency" itself would survive it.
I do suspect that a month or two on rice plus essentials will result in some epic complaining. I live with a pair of overly civilized softies though... lol.
Yes we are, as we are,
And so shall we remain,
Until the end.
And so shall we remain,
Until the end.
- AgentR11
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Re: Interesting Times
by radon1 » Tue 10 Nov 2015, 12:08:50
$this->bbcode_second_pass_quote('Pops', '
')There are 2 kinds of money, inside money is bank money,
')There are 2 kinds of money, inside money is bank money,
G distinguishes between "financial" and "consumer" money. Financial money are mostly inter-bank mutual claims and alike "financial assets", while "consumer" money are those kept in the pocket to be used for consumption. They are no different for an outsider observer (dollars are dollars), therefore people ordinarily do not see difference between them (that's why so much hype and whine around "one-percenters" and "egregious debt in the system").
Apparently, Adam Smith argued somewhere in his writings that it was stupid to use gold for inland settlements - those could be settled in paper while the precious and scarce gold should be used for trade with offshore territories. This was one of the first examples where the paper would be used as "financial" money at the time when the gold was universally utilized as "consumer" money.
Operation of the "financial sector" with the "financial" money generates deflation (which may need a bit of consideration), while "consumer" money generate inflation (which is pretty much obvious).
QEs, for example, are injections of the "financial" money in the hope that they will trickle through to the "consumer" sector and will thus generate inflation and growth. Some do trickle through, but not much, because of the current lack of the profitable projects - which are the only prey for the "financial sector" in the real world. Most of those money, however, stay as the "financial" money - i.e. got invested in stocks, futures, RE etc, giving rise to the perception of "one percenters profiteering" and such, while the real world does not change that much.
In order to generate inflation in these circumstances, the state, being the main generator of the "consumer" money via government spending, has to spend.
Last edited by radon1 on Tue 10 Nov 2015, 12:41:48, edited 2 times in total.
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