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Thread: For HOG: Does monetary inflation affect the middle class ?

  1. #1
    If I die before I wake.. Cullion's Avatar
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    Default For HOG: Does monetary inflation affect the middle class ?

    I believe so, but the mechanism isn't easy to unpick.

    I believe that, in the long term, inflation of the money supply transfers real wealth from the 'median average' member of the population towards the wealthiest fraction who have 'first use' access to that new money.

    I will use American statistics to conduct this argument, because they are the easiest to access, and they are the most immediately meaningful to the majority of Sociocide posters.

    First, lets look at the decline in purchasing power of the US dollar in terms of what the average guy earns, vs what the average home costs in the same year, from 1963 to 2005.

    Spoiler:


    Now, this graph certainly doesn't give the whole picture. In order to do so, I'd have to compare this divergence between home prices and incomes against a graph plotting home-starts against population, so that we could see if there was a divergence between homes-available and population which was sufficient to explain the price-change vs incomes.

    It may also be the case that the graphs above are inaccurate in some way I'm not aware of, and this should certainly be examined. I'm not trolling in this thread.
    ONE SOUL AT A TIME

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    Registered Member Supporting Member bob's Avatar
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    I assume you mean what the average guy earns.

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    If I die before I wake.. Cullion's Avatar
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    I edited my typo before you posted, I think. Which part is unclear to you ?
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    Quote Originally Posted by Danno
    i got nothing, you win again.
    Quote Originally Posted by resolve
    I trust God more than I trust you. And that will never change. I've always viewed you as kind of a snake. No biblical connotations need apply, just the regular ones. You're wise. You're really intelligent. But you're also conniving and have this way of getting what you want when you want it. The sickness I was talking about was your propensity to kind of reach in and grasp on to something to define someone here. You harangue them about it and manipulate it in to conversations. You do that with every single poster here. You do this until they see things your way. The "correct way". It's vile.

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    Registered Member Supporting Member bob's Avatar
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    Nothing now. That was all.

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    Registered Member HappyOldGuy's Avatar
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    One aspect of your graph that might be misleading is using average wage. I think that average household income might be a better comparison. I'm not sure what that is going to do to your argument, since I'm not sure where you are going with it yet.

    Very curious though.

    I'm here a week now... waiting for a mission... getting softer. Every minute I sit in front of this computer, I get weaker, and every minute Charlie squats in the gym, he gets stronger


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    Registered Member BadUglyMagic's Avatar
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    Uh, what mechanisms/sources are you holding responsible for the increase in the supply of money?

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    If I die before I wake.. Cullion's Avatar
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    I'm not going to be able to research and post more detail until this evening, but I'll give a quick explanation of what I'm thinking for HoG's benefit.

    As I explained in the other thread, I have a theory that the time delay between new money being created and a particular asset's price actually going up is a mechanism that allows wealth to be concentrated over time, because the person who gets the money earliest gets to buy stuff with it before prices have adjusted upwards in proportion to the new money supply.

    I'm going to try to demonstrate this by showing people's purchasing power for certain types of asset decreasing over time. One thing I would note about HoG's graph is that I believe that whilst it shows a slight upward trend in the price of a home relative to 'household' income, it understates the case because the trend over the period is for each 'household' to be more likely to contain two full time wage earners rather than just one.
    So it is understating how much less an individual Working Joe's income is worth.

    Please don't consider this one of our usual left-vs-right arguments, because in this thread I'm trying to explain a mechanism which I think a wealthy elite benefits from at the expense of everybody else. I am not telling people to 'be more self reliant' or blaming 'commie' politicians here.
    Last edited by Cullion; 7th May 10 at 07:35 AM.
    ONE SOUL AT A TIME

    Quote Originally Posted by Danno
    i got nothing, you win again.
    Quote Originally Posted by resolve
    I trust God more than I trust you. And that will never change. I've always viewed you as kind of a snake. No biblical connotations need apply, just the regular ones. You're wise. You're really intelligent. But you're also conniving and have this way of getting what you want when you want it. The sickness I was talking about was your propensity to kind of reach in and grasp on to something to define someone here. You harangue them about it and manipulate it in to conversations. You do that with every single poster here. You do this until they see things your way. The "correct way". It's vile.

  8. #8
    If I die before I wake.. Cullion's Avatar
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    Quote Originally Posted by BadUglyMagic
    Uh, what mechanisms/sources are you holding responsible for the increase in the supply of money?
    Two things:-

    Fractional reserve banking, and the Fed's power to simply create money at the (figurative) stroke of a pen.
    ONE SOUL AT A TIME

    Quote Originally Posted by Danno
    i got nothing, you win again.
    Quote Originally Posted by resolve
    I trust God more than I trust you. And that will never change. I've always viewed you as kind of a snake. No biblical connotations need apply, just the regular ones. You're wise. You're really intelligent. But you're also conniving and have this way of getting what you want when you want it. The sickness I was talking about was your propensity to kind of reach in and grasp on to something to define someone here. You harangue them about it and manipulate it in to conversations. You do that with every single poster here. You do this until they see things your way. The "correct way". It's vile.

  9. #9
    staff Ajamil's Avatar
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    Quote Originally Posted by HappyOldGuy
    Can someone explain this graph a bit better? It's showing the ratio of house price to household income over time. What are the shaded areas representing? The dotted lines? Is the horizontal bar the average?

  10. #10
    Registered Member BadUglyMagic's Avatar
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    It is possible that the real estate market in the US is not the best example( not that I have a better one).

    Are you going to define a particular time period or go with the one on the graph?

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