The Benefits of the Fair Tax
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21-02-2014, 10:29 AM
RE: The Benefits of the Fair Tax
(21-02-2014 09:48 AM)frankksj Wrote:  Now, google for all instances of high inflation. Can you find even one example where (a) the high inflation was not a result of a fiat currency and loose monetary policy, and (b) it resulted in inequality in proportion to the amount of money printing? One of the famous examples of massive fiat currency printing was Germany post WWI, and it resulted in a destitute population with the entire wealth of the nation concentrated in the hands of the bankers who controlled the printing press. But, look at Argentina, Russia, etc. The pattern is unbroken.

In each of these cases, you also have a rise of authoritarianism and excessive government power that precedes the fiat currency. That muddles the picture, as authoritarianism always concentrates wealth at the top, regardless of the currency. So is fiat currency the cause of disparity, or is it a symptom of authoritarian regimes that are the real cause of wealth disparity?

But at any rate, I'm not convinced the gini curve is demonstrating this, because the US was debasing its currency long before Nixon pulled the rug out. The US had effectively ended the gold standard in 1933, because private gold ownership of nontrivial amounts was criminalized (coincident with the massive devaluation of the dollar the following year), eliminating the ability of citizens to demand their dollars be exchanged for gold, and foreign demands for gold were simply not being honored. This allowed the Fed to create as many 'gold backed' dollars as it wanted, and it did. The money supply was rising exponentially long before 1971, and if you look at a chart of it, there is no discontinuity at that date.

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21-02-2014, 05:01 PM
RE: The Benefits of the Fair Tax
(21-02-2014 10:29 AM)toadaly Wrote:  So is fiat currency the cause of disparity, or is it a symptom of authoritarian regimes that are the real cause of wealth disparity?

Do you agree with both of these statements?

1. Anytime something loses its value, the people who lose are those who save or get paid in whatever it is that lost value.

e.g. If you work for Apple and they pay you with 1,000 iphones/year, which you then trade for other goods and services, if the value of an iphone gets cut in half, your buying power, and thus your income, also gets cut in half.

2. The poor and middle class have a higher percentage of their income and savings in currency.

e.g. A poor person's income may entirely from $10/hour job, but a rich person's income is generally not tied to a particular amount of currency (like dividends, corporate profits, capital gain, etc.)

If you agree with both of those statements, then it seems uncontroversial that devaluing currency by printing more of it is a burden on the poor and middle class more than the rich, effectively widening inequality.

I agree there are myriads of other factors in parallel so the effects of devaluing currency cannot be perfectly correlated with inequality, but it seems to be one factor that's easy to identify because the way it concentrates wealth at the top is so apparent. Even with that chart you posted, while it's true that the money supply increased during the 50's and 60's too as the Fed was secretly printing money, but there is a pretty clear jump around 1971 when Nixon officially took the handcuffs off the Fed and decided to pay for Vietnam by printing money. And this does correlate with the change in equality in the US. Further, I challenge anyone to name one instance when high inflation did not result in a more unequal society.
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22-02-2014, 12:41 AM
RE: The Benefits of the Fair Tax
(21-02-2014 05:01 PM)frankksj Wrote:  Do you agree with both of these statements?

1. Anytime something loses its value, the people who lose are those who save or get paid in whatever it is that lost value.

Of course.

Quote:2. The poor and middle class have a higher percentage of their income and savings in currency.

Not as evident, but I don't want to get distracted by it, because it isn't relevent to the discussion we are having. Currency debasement was going on for nearly 40 years before Nixon. You can see it in any chart you desire, from M1, to commodities (other than gold and silver which were tightly controlled), or pretty much anything else that's a proxy for currency debasement.

Quote:If you agree with both of those statements, then it seems uncontroversial that devaluing currency by printing more of it is a burden on the poor and middle class more than the rich, effectively widening inequality.

I don't disagree with the general conclusion, but we were discussing specifically what Nixon did, and whether his action was what was responsible for the widening gap between rich and poor. But we've effectively had fiat currency since 1934, as the connection between currency and gold reserves existed only in some theoretical sense after that. By the time Nixon came around, the problem had grown so large, that dropping the facade of a gold standard altogether was the only feasible option.

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22-02-2014, 10:14 AM
RE: The Benefits of the Fair Tax
(22-02-2014 12:41 AM)toadaly Wrote:  whether [Nixon's] action was what was responsible for the widening gap between rich and poor.

Todaly, we're in complete agreement. There are a many factors contributing to the widening gap, and perhaps it comes across like I'm suggesting it's entirely because of the "Nixon Shock".

The reason I focus on this so much is to highlight the hypocrisy of the pro-big-government left. They're the biggest defenders of a fiat currency and money printing because they know it's the easiest way to fund a bloated government. Without it, voting taxpayers need to hand over the money willingly, and that's really tough. A Fed and fiat currency means the government can take all it wants without getting voter approval. But what I find so irritating is the hypocrisy that these same people stand on their soap box, preaching about the evils inequality as the self-proclaimed champions of the poor and middle-class. Yet, it's irrefutable that THEIR beloved fiat-currency-funded big bloated government IS one of the major contributing factors to the widening gap. It's really obvious that if you cut the value of the dollar in half, somebody like Bill Gates isn't effected much--a tiny portion of his wealth is in cash, and his income isn't a fixed salary. However, the single-parent mom renting an apartment and struggling to make ends meet, her only assets are likely to be cash, such as a savings account, so cutting the value of the currency in half effectively cuts her income and savings in half.

Thus, the pro-big-government left are the most enthusiastic defenders of a monetary system where the burden of big government falls disproportionately on the poor and middle class, yet they refuse to get off their soapboxes and still insist they're primary concern is equality. It's not. They don't give a fuck about equality or the poor. They just want a nanny state that they can use to micro-manage every aspect of everybody's life and force everybody to do things their will, and they don't care what it takes to get it. If it means creating a hugely unequal society, that's the price they're willing to pay.
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24-02-2014, 03:10 PM (This post was last modified: 24-02-2014 05:06 PM by Cathym112.)
RE: The Benefits of the Fair Tax
(21-02-2014 10:29 AM)toadaly Wrote:  But at any rate, I'm not convinced the gini curve is demonstrating this, because the US was debasing its currency long before Nixon pulled the rug out. The money supply was rising exponentially long before 1971, and if you look at a chart of it, there is no discontinuity at that date.

(22-02-2014 10:14 AM)frankksj Wrote:  Todaly, we're in complete agreement. There are a many factors contributing to the widening gap, and perhaps it comes across like I'm suggesting it's entirely because of the "Nixon Shock".


Interesting, Frank. Toad tells you that the Gini Coefficient chart (that you've been insisting is a good measurement) is not a good measurement for demonstration, and you agreed with him?! Why? I've been telling you the same damn thing and you completely fight me on it.

Unless I'm missing something here...

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25-02-2014, 10:09 AM
RE: The Benefits of the Fair Tax
(24-02-2014 03:10 PM)Cathym112 Wrote:  Interesting, Frank. Toad tells you that the Gini Coefficient chart (that you've been insisting is a good measurement) is not a good measurement for demonstration, and you agreed with him?! Why? I've been telling you the same damn thing and you completely fight me on it.

Unless I'm missing something here...

Yes, you definitely are missing something.... Reading comprehension.

Toadaly NEVER said that the gini coefficient is not a good measurement of inequality. It is what every government, the UN, the OECD, and every economist uses. It's the only measure of inequality widely used. YOU, Cathy, are on your own planet insisting the gini coefficient cannot be used to measure inequality.

Toadaly actually said the opposite of what you said. He acknowledged the gini showed a change in equality, BUT, he said it was a confluence of many factors because the US had been stealthily printing money in secret a long time before Nixon made it official US policy, and inequality was improving. However, Toadaly also acknowledged what is so blatantly obvious, that when printing money transfers wealth from the people, it does not do so evenly--it hits those who have more of their income/savings in currency.

Everything Toadaly said is accurate, it just went completely over your head apparently.
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25-02-2014, 10:21 AM
RE: The Benefits of the Fair Tax
(25-02-2014 10:09 AM)frankksj Wrote:  YOU, Cathy, are on your own planet insisting the gini coefficient cannot be used to measure inequality.

Well, now. Let's see...

(11-02-2014 01:32 PM)Cathym112 Wrote:  Here Frank, Since you love wikipedia so much, right there, in your own classroom, is a blurb on why the Gini-Coefficient is useless in the CONTEXT you are using.

What was that about reading comprehension?

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25-02-2014, 12:22 PM
RE: The Benefits of the Fair Tax
(25-02-2014 10:21 AM)cjlr Wrote:  
(25-02-2014 10:09 AM)frankksj Wrote:  YOU, Cathy, are on your own planet insisting the gini coefficient cannot be used to measure inequality.

Well, now. Let's see...

(11-02-2014 01:32 PM)Cathym112 Wrote:  Here Frank, Since you love wikipedia so much, right there, in your own classroom, is a blurb on why the Gini-Coefficient is useless in the CONTEXT you are using.

What was that about reading comprehension?

Cjlr, seriously, you're just being argumentative. I know you understand this.

I used the gini coefficient chart for one thing: to show trends in inequality. It showed thing got better in the 50's and 60's, and have been getting worse since 1970. This is not disputed by anybody but Cathy. When she writes: "Gini-Coefficient is useless in the CONTEXT you are using", the only CONTEXT is I'm using is to show changes in inequality. So, yes, she is arguing the gini coefficient is useless for tracking inequality. In her last post she changed context to demonstration and wrote: "Gini Coefficient chart (that you've been insisting is a good measurement) is not a good measurement for demonstration". She keeps using vague terms like 'context' and 'demonstration', but, AGAIN, the only information I've proposed we can determine from the gini coefficient is changes in inequality.

Now in her last post she claims this is the same thing toadaly said. That's absurd. Neither toadaly, nor the US, nor the UN, nor the OECD, nor any professional economist has ever said, as did Cathy, that the gini coefficient is useless for determining inequality. Whether or not it's the best tool is debatable, the fact is it's the only one that's widely used. Go to the ciaworldfactbook--they use gini to report inequality. Go to any OECD report--same. Go to any UN report--same.

What Toadaly said, namely that correlation is not causation and there are many factors influencing the inequality, is something that went over Cathy's head, and she thought he agreed with her that the gini coefficient doesn't measure inequality. But given the eloquence in many of your posts and the intelligence you revealed in your comments about physics, I'm sure it did not go over your head.

Further, my contempt for "professional economists" like Cathy is the opposite of my admiration for, say, physicists. Physics is a science, you follow the scientific method. And even a mediocre junior physicist understands things that I don't, and there is not a single question in the realm of physics that I could pose which I could answer and yet would stump a physicist.

Economics, however, is, imo, no different than a course on religion. Somebody can spend one weekend reading Hayak to come up with questions that will leave even the most senior, nobel-prize winning Keynesian economists totally stumped. For example, the basic issue discussed here in is that when you devalue anything (including currency) the people who hurt the most are get paid in and save in whatever is devalued. This is so obvious and basic, it's uncontroversial. Yet, ask a Keynesian economist what kind of people get hurt when the central bank prints money and devalues the currency. You'll just get blank stares.

In fact they can't even comprehend the basic idea that money printing is a transfer of wealth. Ask them this: "Imagine the total quantity of US dollars is $100 trillion. And the banks currently have $10 trillion, or 10% of the total, and everybody else has 90%. Now the Fed prints another $10 trillion and gives it to the banks, so that now the banks have 18% of the total wealth (20/110), and everybody else has 82%. So, printing money effectively transferred 8% of the wealth from 'everybody else' to the banks." You'll just get blank stares. They'll never dispute it or acknowledge it because then it leads to the next question: "If the public just lost 8% of the wealth, was the loss spread evenly? Or did it disproportionately hit the poor and middle class?" Then ask them "Of the 3,000 or so times a fiat system has been tried to allow the central bank to print money, name one instance when the system did not collapse within 50 years and lead to a very unequal society with the wealth concentrated at the top?" By this time, their heads explode. They cannot name one instance, but cannot bring themselves to admit that they're backing a system that's been tried 3,000 times with a 100% record of failure. Then start quoting Santayana and Einstein about not learning from history and doing the same thing, and you'll see blood vessels popping out of their head.

This reaction is EXACTLY the same thing as when you ask a religious nut how exactly Noah managed to fit all the animals in the ark. But, in any real field of science, like physics or math, it is impossible to leave the experts utterly flabbergasted by basic questions.
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25-02-2014, 01:14 PM
RE: The Benefits of the Fair Tax
(25-02-2014 12:22 PM)frankksj Wrote:  Cjlr, seriously, you're just being argumentative. I know you understand this.

You wildly misrepresented her statement.

(25-02-2014 12:22 PM)frankksj Wrote:  Now in her last post she claims this is the same thing toadaly said. That's absurd. Neither toadaly, nor the US, nor the UN, nor the OECD, nor any professional economist has ever said, as did Cathy, that the gini coefficient is useless for determining inequality.

Funnily enough, she didn't say that.

You either don't understand the distinction or don't care.

(25-02-2014 12:22 PM)frankksj Wrote:  What Toadaly said, namely that correlation is not causation and there are many factors influencing the inequality, is something that went over Cathy's head, and she thought he agreed with her that the gini coefficient doesn't measure inequality.

Since that is literally what she said - that the gini coefficient in that specific time and place does not account for certain important outside factors - I'm still not sure where you drew your misinterpretation from.

(25-02-2014 12:22 PM)frankksj Wrote:  Economics, however, is, imo, no different than a course on religion.

Let's see where you're going with this.

(25-02-2014 12:22 PM)frankksj Wrote:  Somebody can spend one weekend reading Hayak to come up with questions that will leave even the most senior, nobel-prize winning Keynesian economists totally stumped. For example, the basic issue discussed here in is that when you devalue anything (including currency) the people who hurt the most are get paid in and save in whatever is devalued. This is so obvious and basic, it's uncontroversial. Yet, ask a Keynesian economist what kind of people get hurt when the central bank prints money and devalues the currency. You'll just get blank stares.

In fact they can't even comprehend the basic idea that money printing is a transfer of wealth. Ask them this: "Imagine the total quantity of US dollars is $100 trillion. And the banks currently have $10 trillion, or 10% of the total, and everybody else has 90%. Now the Fed prints another $10 trillion and gives it to the banks, so that now the banks have 18% of the total wealth (20/110), and everybody else has 82%. So, printing money effectively transferred 8% of the wealth from 'everybody else' to the banks." You'll just get blank stares.

Has it ever entered your analysis that exactly the same thing happens with any physically constrained currency whenever stockpiles are volatile? Such as has happened countless times through history with metal-backed currency? Or that the deflationary pressure of an expanding economy and a constrained money supply is also harmful?

(25-02-2014 12:22 PM)frankksj Wrote:  They'll never dispute it or acknowledge it because then it leads to the next question: "If the public just lost 8% of the wealth, was the loss spread evenly? Or did it disproportionately hit the poor and middle class?"

Then ask them "Of the 3,000 or so times a fiat system has been tried to allow the central bank to print money, name one instance when the system did not collapse within 50 years and lead to a very unequal society with the wealth concentrated at the top?" By this time, their heads explode. They cannot name one instance, but cannot bring themselves to admit that they're backing a system that's been tried 3,000 times with a 100% record of failure. Then start quoting Santayana and Einstein about not learning from history and doing the same thing, and you'll see blood vessels popping out of their head.

This reaction is EXACTLY the same thing as when you ask a religious nut how exactly Noah managed to fit all the animals in the ark. But, in any real field of science, like physics or math, it is impossible to leave the experts utterly flabbergasted by basic questions.

It turns out where you were going with that is that "economics which disagrees with me is like religion and it's not a real field of science unless I'm doing it".

It strikes me that this is very reminiscent of your earlier stance that "multiple interpretations are possible but mine are correct because I say so". Incidentally that is a profoundly religious attitude.

Notwithstanding the same tired old magic by which you, apparently, know how all people will respond to a serious of asinine questions, having, I suppose, read their minds?

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25-02-2014, 02:07 PM
RE: The Benefits of the Fair Tax
(25-02-2014 01:14 PM)cjlr Wrote:  Since that is literally what she said - that the gini coefficient in that specific time and place does not account for certain important outside factors - I'm still not sure where you drew your misinterpretation from.

She said: "Toad tells you that the Gini Coefficient chart (that you've been insisting is a good measurement) is not a good measurement...". She did NOT say Gini is a good measurement of inequality, but other factors were at play, she said it is not a good measurement.

(25-02-2014 01:14 PM)cjlr Wrote:  It turns out where you were going with that is that "economics which disagrees with me is like religion and it's not a real field of science unless I'm doing it".

Totally wrong. My conclusion works with ANY subject. I lack respect whenever the self-proclaimed experts in a given field have studied for years and have prestigious degrees, but, when you ask really basic, obvious questions about their field they simply cannot answer.

If they provide an answer that was hard to understand, that's one thing. If they admit the answer eludes the experts, that's also reasonable. But if you leave them utterly flabbergasted unable to come up with any sort of coherent response, proving that while they have book knowledge, they never actually thought any of this through, that tells you a lot.

So it has NOTHING to do with "economics which disagrees with me is like religion". Whenever I start with an economist I don't even express my views at all. I just ask basic questions, like those in my last post. When they run off in a fit because they can't answer the questions without looking stupid, THAT is when I call it a religion. Whether they disagree with me or not is unimportant.

I gave you a list of basic, obvious questions in my last post that anybody who thought about this would ask. I challenge you to find one time when ANY of the Keynesian "experts" have addressed any of them. With Cathy, when I first asked her why inequality got so bad after 1970, her initial response was NOT that the gini co-efficient is "useless in this context". Rather, she said she knew the answer but wouldn't waste her time telling it to me. As months passed and she posted long emails to me, I kept pointing out that her position was a ruse. So, finally, after pushing her to explain the change, she said that the reason inequality has gotten worse since 1970 is because that's "precisely when women entered the workforce". I gleefully copied/pasted her comments on the abortion thread so the feminists could hear Cathy saying the reason we have such inequality is because women won't stick to cooking and making babies. Only after this did Cathy change her position to the current one that the gini coefficient is useless for this.

Name one field of science that works like this? I'm in software engineering. I can post in forums all day about issues, like if C++ is better than Java. Sure, everybody has their own opinion. But, the only people who voice an opinion CAN explain it. If I ask a Java developer a basic question, like 'what about memory usage?', he's never going to run off in a rage telling me he refuses to answer such a question. No, he'll say, "Ok, you have a point, Java uses more memory, but it's worth it because...."
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