[Traverser]

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	You don't fully understanding investing. People who have extra income put it in things that appreciate with time rather than depreciate (aka stocks and bonds). During periods of deflation and market instability, keeping cash on hand can be a hedging maneuver. However, my extra cash will not keep for long, so I put in something that will be worth more over time (like land, real estate, stocks).

Grasping at straws here? I never said that people with extra income don't invest their money. I said precisely the opposite! No matter if you put it in your mattress, or in stocks and bonds, it is still investing and within the context of time-preferences. My argument that people still spend their money in deflationary times still stands. That, and my pointing out that investments ought to be measured in real terms, not nominal terms, as you seem to be suggesting.

"You don't fully understanding investing". Oh please. I've heard that before.

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	However, capitalists do not want this. They want me to give them all of my money. Have you ever bought a house?

Capitalists are selling present goods for future goods. That means they're offering a service. If you had good credit, but no money, yet wanted a house...you probably would appreciate having a roof over your head. Unfortunately, in today's system of massively enabled fraud and counterfeiting thanks to the government, this system of entrepreneurship is collapsing in favor of criminality. So don't confuse criminality for capitalism.

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Do you know how many capitalists come running, offering you this and that and everything in between, most of it is shit you don't need or want. Do you know how aggressive those sales people are trained to be?

The nice is, Polymath, about a free market...is that you can refuse!

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	And this is where it comes full circle. I, as an investor, tend to pick companies with good spreadsheets. What do those companies do that gives them good spreadsheets? Extract as much wealth from everyone that they possibly can.

You dare to say that I know little about investments, yet argue that companies "extract" wealth from the public. Have you ever heard of Absolute Advantage and Comparative Advantage? Please, if you purport to be a good investor, pick up a book and research these two terms.

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Well, this goes against my moral fiber, so I don't invest with banks or any other evil company. I tend to invest with companies who provide real goods and real services in industries that are not known for exploitation. Most investors are not so discerning.

I'll give you some credit here. I wouldn't invest in, say, Lockheed Martin for its close affiliations with the military industrial complex, for example. Such companies, aren't catering to consumers, who work hard by their own right to offer the exchange; they're catering to the leech known as the State at everyone else's expense. So, I commend you in avoiding companies who actually provide nothing in return for what they offer.

However, you have made many mistakes regarding how a free market works, and how competition in service of consumers lessens the burden of debt. If you don't understand how monopolies via the threat of violence work, and incapable of dissecting between criminality and capitalism, then I have nothing more to discuss with you.

[Daoist]

Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Mind you, the fact that one may have dollars lying in his or her basement does not mean that he or she is not investing his or her resources. You have to remember that to earn these dollars, people must be producers first and foremost. That is to say, they must invest their time into certain industries to earn them. So in a sense, money is the credit that you earn for performing a service to the public.

This is wordplay, not logic.

[Traverser]

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	You are talking about two entirely different things there. The cost of things dropping specifically relevant to technology is not deflation. Deflation has to do with the supply and value of a currency, not the cost of a good or service. Things like electricity and food costs are matters of economies of scale (infrastructure) as well as technological sophistication.

Oh my lord! Give this guy a book!

The value of a currency is directly related to its supply, and demand therof, and the scarcity of every other given good. Hence why computers are cheaper now than they were years ago, electricity, etc. You can't seperate the law of supply and demand from a currency's worth and say, "You are talking about two entirely different things". They're two sides that make up the same coin! No pun intended! So of course it matters with the cost of any given good or service. Unless...you're talking about actually bartering without the use of money, which would just be silly.

If you don't believe, fly to India sometime and remark upon how much you can buy with your dollar.

And mind you, the dollar's supply has grown since the early 1900s when the Federal Reserve was first brought into being, and yet we still had deflationary periods. At best, we're actually agreeing with each other; just disagreeing over the context.

[INTelliJent]

I would answer earlier posts but Traverser has already said everything I could have rejoined.

[Polymath20]

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Grasping at straws here?

You didn't understand my point. I was agreeing with one of your points. Capitalists want money now. They want consumers to consume now. They do NOT want consumers to save their money, they want consumers to spend all of their money in one way or another. Consumers will save more of their money during periods of deflation. Smart consumers will save money regardless.

Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Capitalists are selling present goods for future goods. That means they're offering a service. If you had good credit, but no money, yet wanted a house...you probably would appreciate having a roof over your head. Unfortunately, in today's system of massively enabled fraud and counterfeiting thanks to the government, this system of entrepreneurship is collapsing in favor of criminality. So don't confuse criminality for capitalism. The nice is, Polymath, about a free market...is that you can refuse!

The only person here confused is you. I'm talking about legitimate businesses with aggressive marketing strategies, not criminals. This supports my above claim that capitalists want you to give them all your money.

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Please, if you purport to be a good investor, pick up a book and research these two terms.

My overall portfolio is up 19% YTD. Zero tax liability. Terms shrmerms. I'm concerned with results.

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	However, you have made many mistakes regarding how a free market works, and how competition in service of consumers lessens the burden of debt. If you don't understand how monopolies via the threat of violence work, and incapable of dissecting between criminality and capitalism, then I have nothing more to discuss with you.

I think anyone who's done even a marginal amount of research into economics knows that everything comes back to the threat of force (not necessarily violence). I mean, come on, who doesn't understand the value of the enforcement of compliance, the purpose of compliance, and who put it there, not to mention the powers constantly trying to corrupt the purpose of compliance and undermine the integrity and efficacy of enforcement agencies. I think we're both a bit beyond pedantic insults.

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Oh my lord! Give this guy a book!

I daresay you spend too much time in books and not in the real world gaining real experience.

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	The value of a currency is directly related to its supply, and demand therof, and the scarcity of every other given good.

That's about exactly what I said. But you're conflating supply and demand of currency with supply and demand of goods. There's a difference. Hence, they are indeed two different things.

Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Hence why computers are cheaper now than they were years ago, electricity, etc. You can't seperate the law of supply and demand from a currency's worth and say, "You are talking about two entirely different things". They're two sides that make up the same coin! No pun intended! So of course it matters with the cost of any given good or service. Unless...you're talking about actually bartering without the use of money, which would just be silly.

All exchanges are bartering. Money is just an abstraction of goods and services. Like you said before, money "So in a sense, money is the credit that you earn for performing a service to the public." It's bartering. You barter with your employer to give you money in exchange for service. You then take that money (which is an abstraction of services rendered) in exchange for other goods and services.

[Arcanist]

Hush Poly, and try to learn from someone who hasn't(yet) given up on explaining things to the average, misinformed common person.

[Daniel86]

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	It depends on the market and the time scale we use. If we look at, say, electricity through the last 100 years, the price per killowatt hour has dropped enormously. Ditto that for computers, food and the Internet. Short-term, through the last 10 years, and we can see rising inflation.

Maybe I was not clear enough in my wording, I meant deflation across the economy as a whole. Every example I know of a growing economy, had some inflation according to the indicators used for the whole economy (price indexes).

[Clueless]

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	I daresay you spend too much time in books and not in the real world gaining real experience.

LOL. Res ipsa loquitur.

[INTelliJent]

Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

That's about exactly what I said. But you're conflating supply and demand of currency with supply and demand of goods. There's a difference. Hence, they are indeed two different things. All exchanges are bartering. Money is just an abstraction of goods and services. Like you said before, money "So in a sense, money is the credit that you earn for performing a service to the public." It's bartering. You barter with your employer to give you money in exchange for service. You then take that money (which is an abstraction of services rendered) in exchange for other goods and services.

Money is a good, and yes it can be conflated with other goods/services. The second paragraph quoted acknowledges as much in an indirect fashion.

[Polymath20]

	Originally Posted by INTelliJent To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Money is a good, and yes it can be conflated with other goods/services. The second paragraph quoted acknowledges as much in an indirect fashion.

gold is a good. Money can be pulled out of thin air and the supply is controlled by humans. It is unique in that it is not dependent upon nature or man power.

[INTelliJent]

	Originally Posted by Polymath20 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	gold is a good. Money can be pulled out of thin air and the supply is controlled by humans. It is unique in that it is not dependent upon nature or man power.

Money can be/is made from paper and ink or digital bits. So can books. So can wallpaper. The value of the good called money is subjective, dependent on any number of given factors at the time per the individual. Regardless of the nominal face value of the paper currency, it's purchasing power is continually in flux vs other goods (to include gold).

[Clueless]

	Originally Posted by INTelliJent To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Money is a good, and yes it can be conflated with other goods/services. The second paragraph quoted acknowledges as much in an indirect fashion.

Money is not a good. Money is a medium of exchange. Goods are products/service the demand for which is predicated upon direct utility. Demand for money is predicated upon indirect utility in that its function is to facilitate the exchange of real goods.

Further, supply of money is practically untethered from demand, unlike real goods. Increased demand for money doesn't necessarily translate to increased supply and vice-versa. Additionally, increased production does not result in a move toward equilibrium, but rather supports a greater increase in demand.

Increasing production of toilets in a demand-heavy environment eventually results in equilibrium. Not so with money, because it's not a good.

Because of these facts money cannot be conflated with actual goods. While there is a similar corresponding relationship between supply and value, there's no similar corresponding relationship between demand and supply. The properties of money cannot be evaluated using the same criteria used for goods.

[Traverser]

	Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Maybe I was not clear enough in my wording, I meant deflation across the economy as a whole. Every example I know of a growing economy, had some inflation according to the indicators used for the whole economy (price indexes).

Well sure, deflation has occurred throughout the economy as a whole for the past 100+ years in real terms. That's practically the case for virtually every service and good, including automobiles, communication, etc, and in spite of the growing money supply. For example, instead of measuring in dollars, let's compute in hours spent getting the desired good. My math is bad, and time is short, so I'll do it the lazy way and and give it hypothetical numbers.

1900- 1 killowatt of electricity= at least 1 hour of labor.
2012- The same= 1/10 an hour of labor.

1900- 1 Automobile (max speed=30mph, fuel economy 14 mpg, seats two people)= 20,000 hours of work.
2012- 1 automobile (max speed= 60mph, fuel economy 30mpg, seats four)=10,000 hours of work.

And so on and so on.

(hours of work spent depends on the profession in question, but I think it's safe to say that it was tougher for our grandparents to work for the same things we enjoy now).

Mind you, it wasn't the growing supply of money that enabled the deflating costs of goods in real terms, but rather the investments made in producing more capital and minimizing waste. Without an increasing supply money, the natural price system of the market would had adjusted to reflect the scarcity of money in any given market. Such was the case before the advent of the Federal Reserve system in 1913, a big step toward government-enabled counterfeiting; post Andrew Jackson, the economy actually grew in goods and services while still being pegged to a stricter gold standard (albeit one that did not have its share of embezzlement). You don't read that in the Econ history books these days, especially during high-school and college, but it's there.

Nominally, as you point out, the economy has grown with inflation, but like I pointed out to Polymath earlier...you measure your wealth not in nominal terms, but in real terms. That is, what you can actually buy with your money now, not how much money you're earning. Ideally, money is a useful ruler to measure your business's success, but the market for money right now is monopolized and rife with fraud. Short of a free market for money, I can't trust it as far as I can throw it (have you tried throwing paper? It doesn't go very far!)

[Daniel86]

Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Well sure, deflation has occurred throughout the economy as a whole for the past 100+ years in real terms. That's practically the case for virtually every service and good, including automobiles, communication, etc, and in spite of the growing money supply. ... Nominally, as you point out, the economy has grown with inflation, but like I pointed out to Polymath earlier...you measure your wealth not in nominal terms, but in real terms. That is, what you can actually buy with your money now, not how much money you're earning.

Yes I made this very same point earlier in this thread. But this is not what I meant. I was talking in nominal terms. Let's not move the goalposts.

Also this begs the question, if real purchasing power is increasing with 3% inflation (+/-)...then what is the problem?

If you are saying that monetary policy measures should be taken to eliminate that nominal inflation, then I ask again, where is there an example of an economy that grew without some level of nominal inflation?

[Traverser]

	Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Yes I made this very same point earlier in this thread. But this is not what I meant. I was talking in nominal terms. Let's not move the goalposts.

	Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	If you are saying that monetary policy measures should be taken to eliminate that nominal inflation, then I ask again, where is there an example of an economy that grew without some level of nominal inflation?

I already gave you an example. Here's another from a master,
To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
:

"Notably, rapid economic growth occurred both before and after 1897; neither a falling nor a rising general price level was uniquely associated with economic growth." To elaborate just a bit, the rate of economic growth from 1866 to 1897, a period of secular deflation, was perhaps the greatest ever experienced by the US economy during a period of comparable length. Real GDP grew by more than 4 percent per year, on average, notwithstanding the persistent deflation.

	Originally Posted by Daniel86 To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Also this begs the question, if real wages are increasing with 3% inflation (+-)...then what is the problem?

For one, the BLS's figure of 3%
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in the face of alternative sources of more reliable data. Never trust an entity that gains the most from inflation...to report the real numbers.

For two, fractional-reserve banking (aka embezzlment of deposits) and counterfeiting (aka "quantitative easing") do not create wealth, but only give an advantage to those who get the money first to outbid other, more productive, competitors in the market for scarce resources through a fraudulent means.

For three, income growth typically lags behind inflationary price increases for the average individual. This money doesn't appear instantly in our pockets; it flows directly from the sources I just mentioned (deposits and printing machines). Ultimately, this results in a transference of wealth through the bidding process from you and I to the powers-that-be.

For four, and not all, inflation through a manipulation of the money supply (whether through fractional-reserve banking or outright printing) necessarily creates damaging distortions in the production schedules of manufacturers everywhere. In other words, it spurs investment into areas that would otherwise have never happened due to a lack of sufficient capital in the overall market (to make this easier to understand, imagine an investor building a computer factory in the middle ages without there being electricity). Money is not capital, but the manipulation of interest rates downward through fraud causes more risk taking with capital. Eventually, you'll have a deflationary bust as investors realize the error of their mistakes. The powers-that-be, on the other hand, get to bail themselves out with new ones and zeros. There's ultimately little risk of them going bankrupt, which makes them leeches of the worst kind.

[INTelliJent]

Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Money is not a good. Money is a medium of exchange. Goods are products/service the demand for which is predicated upon direct utility. Demand for money is predicated upon indirect utility in that its function is to facilitate the exchange of real goods. Further, supply of money is practically untethered from demand, unlike real goods. Increased demand for money doesn't necessarily translate to increased supply and vice-versa. Additionally, increased production does not result in a move toward equilibrium, but rather supports a greater increase in demand. Increasing production of toilets in a demand-heavy environment eventually results in equilibrium. Not so with money, because it's not a good. Because of these facts money cannot be conflated with actual goods. While there is a similar corresponding relationship between supply and value, there's no similar corresponding relationship between demand and supply. The properties of money cannot be evaluated using the same criteria used for goods.

Money, when untethered from any non-exchange functions or properties (such as fiat paper), is still a good, merely one limited to exchange properties (most importantly, tax payment). It is the fiat nature of money and the tax structure which distorts the supply and demand relationship, not it's status or "non-status" as a good.

[scorpiomover]

Originally Posted by wolfyx To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

I think the real problem is that my Ne gathered and tested too much objective evidence. My worldview suffered major updates since I started to think independently in my early teen years, and now I'm in my mid-late twenties. I was born in a country in transition in eastern Europe in an extremely corrupt and inefficiency system.I also had a conflict of identity because I was mixed-race in a white society and I never had a father figure in my life. When I finally found my father could't establish a relationship with him because the system in his "country" is based on nonsense. Because I was one of the best at physics in my country got a scholarship and left my "home country" when I was 17. I lived and worked in various countries in the "West" and acknowledged the relative efficiency of the Western systems. More then an year I choose to come work in Asia to boost my CV and to understand the "Asian systems". Observing the bigotism and self righteousness of both westerners expats and locals, associated with my previous experiences made me realize the nonsense of the World division along "nationalistic" lines. I consider myself way above this petty and illogical emotional biases and I define myself as World Citizen. So now I am a fierce anti-nationalist. To the point that my blood pressure raises every time I even hear the word "country" or "nation". I am absolutely convinced that I am right to be so because I analyzed a lot of information and I spent a lot of time thinking about this subject. Those who are still "nationalists" are either very ignorant or intellectually dishonest, trying to protect their comfortable (and unethical) systems and privileges. So I am pro-federalist, pro-modialist or pro any other system that would decrease the Human Civilization's entropy an increase the logical and ethical coherence in this world.

Lots of people here like that. One of the reasons why Marx and Engels came up with Marxist Communism in the UK. They all have the belief that the current systems are wrong, and that getting rid of them will make things all right. Problem is, that people have tried it, numerous times, and the problems that they tried to solve, just became worse.

For instance, you wrote that you "acknowledged the relative efficiency of the Western systems". If you spend time listening to all aspects of Western systems, including the parts that most people tend to not pay much attention to, which I like to do, they are as much as 1000% inefficient, and often much more than that.

By that, I mean to say that you have given me cause to think that you are young, and confident, that you already know the answers, without double-checking them. There are plenty of people who feel that way in the UK. By the time they are 40, they have a very different opinion.

---------- Post added 07-02-2012 at 12:28 AM ----------

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	You just pointed out that inflation means lower productivity per worker. Shouldn't we want more productivity, not less?

Depends on the situation. If supply already meets demand, then over-supply means that the price should drop. That's fine, so long as the price was over-inflated last week. But if it's been that way for a while, people tend to rely on things that have been that way for a while, and then a price drop, means cutting the money from what people now are so used to, as to think of as necessities, like the internet. Then people have a perceived necessity to invent ways of competing for a larger share of the market, to offset the lower price. This in turn drives a bidding war, which drives smaller competitors out of business, and puts them all out of work. Then, having driven their natural competitors out of business, the market is monopolised by a cartel who all agree on massive price hikes, and then this now acts as if the supply was lowered, and productivity thus decreased.

On the other hand, if productivity is lowered slightly, then the majority of demand is met, but with a small demand that is not met by supply. Companies tend to focus on the unmet supply, before messing with the met supply. So then they tend to fight over this sector, offering very good deals. As long as supply is never perceived to be saturated, things often become competitive in a positive way, as Adam Smith probably intended.

Of course, this requires actually thinking out how ideas work in reality, and that often means taking books written by famous and well-respected academics with a grain of salt the size of Mount Etna. Many people either reject the theory outright, or accept the theory as is, but never actually question if the theory could be half-right.

[Daoist]

	Originally Posted by Traverser To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	I already gave you an example. Here's another from a master, To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts. :

You still haven't addressed the point that this is impossible without messing with the money supply. The quantity theory of money - one of the few theories in economics that is a physics-type theory, in that its units are consistent - says that MV = PQ, money supply times velocity (a constant for our purposes) equals price times quantity, or GDP. If Q goes down because the economy becomes more efficient, than either P must adjust upwards, or M must adjust down.

[INTelliJent]

	Originally Posted by scorpiomover To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Then, having driven their natural competitors out of business, the market is monopolised by a cartel who all agree on massive price hikes, and then this now acts as if the supply was lowered, and productivity thus decreased.

Then, (regardless of the mechanism or events that caused this to happen) absent state protection, new competition would arise and undercut and destroy the cartel. Also, the possibility presents itself that individual members of the cartel would, over time, undercut each other in secret, until such time as the cartel dissolves due to both internal and/or external market pressures. Or they can just use the state to regulate competition out of existence.

---------- Post added 07-01-2012 at 05:31 PM ----------

Originally Posted by Daoist To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

You still haven't addressed the point that this is impossible without messing with the money supply. The quantity theory of money - one of the few theories in economics that is a physics-type theory, in that its units are consistent - says that MV = PQ, money supply times velocity (a constant for our purposes) equals price times quantity, or GDP. If Q goes down because the economy becomes more efficient, than either P must adjust upwards, or M must adjust down.

Generally speaking, the laws of physics are not subjective. Value systems are. This is the disconnect you are experiencing. Kind of like the modern, forced, artificial disconnect between macro and micro.

[scorpiomover]

Originally Posted by INTelliJent To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Then, (regardless of the mechanism or events that caused this to happen) absent state protection, new competition would arise and undercut and destroy the cartel. Also, the possibility presents itself that individual members of the cartel would, over time, undercut each other in secret, until such time as the cartel dissolves due to both internal and/or external market pressures. Or they can just use the state to regulate competition out of existence.

These things can all happen. However, they have no reason to wait until after the cartel appears. Thus, in the very process of a cartel forming, they are already beset by forces ripping them apart. Only those cartels that have developed a mutation that is immune to the common pressures of the system, can survive. Normally, those cartels then still have reason to fear, and so do a heck of a lot of things to keep that from happening.

An example is how most political parties have complex systems of persuasion, pressure and blackmail, in order to keep their party members voting in the same way. They also run a lot of PR and advertising, and do a lot to encourage younger people to join as new members, to keep numbers up.

So yes, you are right. As a result, cartels either never come about, or when they do survive, they tend to be pretty hardy, and appear almost immune to the very forces that you mentioned.

This in itself would mean that cartels are usually immune to the forces of competition, but only IF they survive. However, the more competitive the environment, the more pressure on the members to not survive, and thus the more evolutionary pressure to give rise to mutations that are immune to the normal forces of competition, such as a properly functioning cartel.

As a result, the greater the sense of competition, the more likelihood of things emerging like a cartel, that are immune to competitive forces, and thus can remain for an eternity.

Even cartels can be taken down. But because they only exist because of their immunity to almost all forms of competition, this is most likely to happen when the environment changes in such a way that the rules change in unexpected ways, that the cartel were not expecting, and are not prepared for, and have not made themselves immune to. This in turn gives rise to economic systems resembling a kind of punctuated equilibrium. New markets are very open. Then cartels and the like form, and the market appears totally controlled by a tiny elite. Then things stay that way for a long time, until things change that few expected, and that the cartel had not planned for, and destroy them. Then that leaves the market open again, to repeat the cycle.

[INTelliJent]

Well I would agree. The point is that people allow/encourage cartels to form through political means by listening to alternating free lunch/fear propoganda, as opposed to cartels being a "market feature", etc. Examples include the Western (really, world) banking system and drug cartels. Although they formed through entirely different direct mechanisms, both are operating on a system completely alien to "the free market", and are politically created.

[Clueless]

	Originally Posted by INTelliJent To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Money, when untethered from any non-exchange functions or properties (such as fiat paper), is still a good, merely one limited to exchange properties (most importantly, tax payment). It is the fiat nature of money and the tax structure which distorts the supply and demand relationship, not it's status or "non-status" as a good.

Your confusion is amazing. Money is not a good, fiat or otherwise. No wonder you don't "get it". The supply/demand distortion is due to its use as an exchange medium. Any material designated as such will remain in high demand, with demand increasing as production increases. Non-fiat money would simply become more valuable over time, assuming a constant supply.

As money does not exhibit the same supply-demand relationship as real goods, it should not be so defined. It is what it is, an exchange medium. Additionally, liquidity differentiates money from goods. Many valuable goods are quite limited with regard to exchangeability. It's critical to understand this difference if you are to understand economic function.

I have no idea what's taught to economics students, but reality is obvious.

[Daoist]

	Originally Posted by INTelliJent To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	Generally speaking, the laws of physics are not subjective. Value systems are. This is the disconnect you are experiencing.

This equation simply says that money that circulates in the economy must chase either real economic activity, or prices. It's true by definition. It is furthermore the same equation one would point to in asserting that an increase in the money supply leads to an increase in prices.

	Kind of like the modern, forced, artificial disconnect between macro and micro.

Awkward, yes. But forced? Macro came about through observation, not theory. Modern? Trade wars played a major part in European colonialism. Macro is as simple as the observation that money has roles as a medium of exchange, unit of account, and medium for savings, and cannot fulfill all of them simultaneously. The only way to avoid this issue is by negating one or two of these roles.

---------- Post added 07-01-2012 at 09:40 PM ----------

	Originally Posted by Clueless To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.
	I have no idea what's taught to economics students,

A hint: it's pretty different from what you'll see in this thread.

[wolfyx]

Originally Posted by scorpiomover To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Lots of people here like that. One of the reasons why Marx and Engels came up with Marxist Communism in the UK. They all have the belief that the current systems are wrong, and that getting rid of them will make things all right. Problem is, that people have tried it, numerous times, and the problems that they tried to solve, just became worse. For instance, you wrote that you "acknowledged the relative efficiency of the Western systems". If you spend time listening to all aspects of Western systems, including the parts that most people tend to not pay much attention to, which I like to do, they are as much as 1000% inefficient, and often much more than that. By that, I mean to say that you have given me cause to think that you are young, and confident, that you already know the answers, without double-checking them. There are plenty of people who feel that way in the UK. By the time they are 40, they have a very different opinion.

I am very sure that I know "the answers" only after thinking them over a thousand times, bouncing it upon factual evidence and enforcing them by provoking debates with intelligent people that have a different opinion (I have provoked the "anti-Nation-state" debate on 4 different "intellectual" forums and I have yet to get coherent and consistent counter-arguments).

But I am sure you already know all this if you are an expert in INTP psychology as you pretend.

---------- Post added 07-02-2012 at 01:35 PM ----------

Originally Posted by INTelliJent To view links or images in this forum your post count must be 2 or greater. You currently have 0 posts.

Well I would agree. The point is that people allow/encourage cartels to form through political means by listening to alternating free lunch/fear propoganda, as opposed to cartels being a "market feature", etc. Examples include the Western (really, world) banking system and drug cartels. Although they formed through entirely different direct mechanisms, both are operating on a system completely alien to "the free market", and are politically created.

So you agree that the banking system is a cartel that is alien and obstructing to the free market?

But a Capitalist system cannot function without a banking system. In a "wild Capitalism" scenario the banking system will always hold the control on the real economy simply because they will control that "Capital". The supply/demand always faked by financial speculations. The financial speculations will take the "profits" away from the real economy in order to benefit the insiders of the “financial system”.

That is why I believe that there should another system above the free market that is capable in setting ground rules. The overseer system will have as a main role to avoid destructive financial speculations and to make sure that the "profit' is used in an efficient and ethical manner.

[thod]

	new competition would arise and undercut and destroy the cartel.

Profit cannot exist in a perfect market since new entrants should drive margins to zero.

The problem for new entrants is the cost of entry. Suppose I have a factory which supplies all the markets demand. Should you build a small factory to compete, you would lose out to my economy of scale. If you built an identical factory, then we would split the market and we would each lose money due to our excess capacity. As the established, and presumably richer party, all I need do is wait for your pockets to empty. It can be seen that this strategy is based on building excess capacity and will always be won by the one with the deeper pockets. Knowing this, knowing that I am richer than you, you would be foolish to compete. Thus I am able to charge a high margin on my goods.

This sort of strategy was used by the government backed Asian companies. They simply dumped their products below cost on the US market. The US companies, who did not have infinite funds to support loses, were the first to close leaving the market to the Asians.