Economics is Taught with a Left Wing Bias

Well, it sounds like [MENTION=57189]akphidelt2007[/MENTION] isn't going to tell us what the austrians teach that he considers to be trash.

 

I rarely venture to the economics section. Wish they would allow this conversations in the political opinions section. Things I can't stand for Austrian economics

- Balanced budget agreements
- Reducing the national debt
- Competing currencies
- Their belief that you can understand the economy from empirical research
- Elimination the Federal Reserve
- Their belief that centrally planned economies don't work
- Their belief that inflation is bad
- Their crazy insistence that hyperinflation is going to happen any day now
- Their made up beliefs that the up and down cycle was created because of government
- Their belief that government provides no benefit to the economy

They are more of a philosophy than an actual economic theory. Very few people around the world that are educated in economics take Austrian economics seriously. It is pretty much a joke and their supporters are usually pretty uneducated and dumb. But the one benefit to Austrian economics is they simplify economics to the point that even dumb people could understand what they are trying to say. Even though none of it is true, it is still simple. It's what Sarah Palin believes.

 

That's quite a list of things you disagree with.

Why do you think that inflating the money supply (the inflation that austrians oppose) is a good thing?

 

It helps out producers and investors

 

How so?

 

When you buy a house and you sell it for more than you bought it. When you buy stock and you sell it for more than you bought it. If you have a product that you can increase the price and make more money. Are those not good things?

 

Now you're making me want a 7000% annual inflation rate. I'd make so much when I sell my house in 30 years. I'd make mega-mega million, maybe trillions.

 

Reductio ad Absurdum

Typically Austrian argument.

 

No, 10,000,000% percent annual inflation would be reductio ad absurdum

You said inflation is good, no? So why is 2-3% good but 7000% bad? Wouldn't 7000% be WAY better than 3%? I mean isn't it better to get more when you sell your house rather than less?

 

7000% is bad for consumers. 2-3% is good for investors/producers and still manageable for consumers. Is it really that difficult to understand?

 

So monetary inflation is bad for consumers, which is to say everyone. Why is it bad for consumers?

 

People who make money off inflation are also consumers. It's bad for consumers because prices are higher since people have more money. People who can't make more money are hurt in our system. That's the way it should be. Reward those that invest, produce, and use their money to make more. Capitalism.

 

Yes, understand your point that as the money supply is inflated the the price of a unit of money (say a dollar) falls by 2% per year. So when I sell my house and get more, but less valuable, units of money how am I better off than getting less, but more valuable, units of money?

 

If you make more than inflation, you're better off. Be that person. Be the person that invests, produces, and makes more money than inflation. That's what are economy is set up for. It's not set up to reward those that do nothing.

 

Well yeah, everyone wants to invest and produce.

But you said earlier than inflation is good because when I buy a house and and its nominal price in money units goes up, I'll get more money units. But if I get 2% more money units that are each worth 2% less how does that actually help me? It's a wash. So where's the benefit?

 

In that example yes. If you make 6% and inflation is 2%, you're better off. Be that guy.

 

But why can't we just have 0% currency inflation and I make 4% and I'd still be better off? I am that guy, but why do we need to inflate the currency supply, and why is it a good thing?

You said it was a good thing because it drives the price of the money unit down, so when I sell an asset I get more money units. But how does getting 2% more money units help me if each of them is 2% less valuable?

 

Since you mentioned that you don't frequent the economics forum, I assume you missed my response. I'm not sure anyone is interested in this conversation, but perhaps [MENTION=11406]Ted[/MENTION] is. Here it is again:

But why can't we just have 0% currency inflation and I make 4% and I'd still be better off? I am that guy, but why do we need to inflate the currency supply, and why is it a good thing?

You said it was a good thing because it drives the price of the money unit down, so when I sell an asset I get more money units. But how does getting 2% more money units help me if each of them is 2% less valuable?

 

2% inflation is usually the goal. It's hard to achieve but better to aim for 2% than risk deflation buy trying to hit 0%. Plus it provides a little stimulus since its better to spend your money today if it will be worth 2% less tomorrow.

 

I was going to buy a case of beer today for $32 dollars, but decided to wait a year, because then it will be $31.36.

 

when the public knows for example that the currency is deflating those on the margin of consumption will say, lets wait till next year for the vacation or car since it will be cheaper then. Those with money to invest will stretch for yield into riskier investments when the after inflation return for less risky investments is cited

 

Like I said. In your 2% example. You are not better off, but you're also not worse off. It's beating inflation that they want. That's what investors and producers strive to do. Having 0% inflation puts no pressure on your money. The goal is to reward those that put their money to use, rather than make it and sit on it. It's how economies work, from people investing and producing. It keeps economies going and rewards those that take risks. It punishes those that refuse to take those risks. As a capitalist, I'd think you want people who take risks to be rewarded.

 

Hm. When I asked you why inflation was good, you told me this:

That was the reason you gave why inflation is good.

But as we have seen, if I get 2% more money units but each of them if 2% lower in price, then I'm not better off at all.

Do have any other reasons you'd like to offer for why inflation is good?

 

My son, who is not rich by any extent, just bought tickets to go visit his friend in Colorado. They cost $380 round trip. I don't really think that he would delay his trip for a year because he could buy the tickets for $372.40 a year from now.

 

would you put off buying a house if it was going to be $50,000 cheaper in a year or $250 cheaper in 5 years? This is common economic thinking