Upstate groups rally for secession

[GEddie]

Inflation of the currency is Federal Reserve policy. They aim for a 2% inflation rate. This is called “price stability.”

That makes sense to my non–business–school mind.

In an expanding economy, the amount of currency in circulation has to increase so that the increasing value of goods and services can be paid for, IIUC. Increasing the amount of currency means price inflation.

In an economy that was contracting long-term, money would be hoarded and deflation would be seen.

Zero percent movement toward either inflation or deflation would occur only in an economy in steady state, if that could happen sustainedly.

Am I understanding correctly? Correct me if not.

ICXC NIKA

 

[Joie_de_Vivre]

Well, you know, here in TX some still say “If at first you don’t secede, try try again.”

No-one really wAnts to do that though; we gave up one-third of our square mileage to enter the Union, and wouldn’t get it back.

The U.S. dollar is also a much better deal than trying to float a new Texas Peso.

ICXC NIKA

Person A: The South shall rise again
Person B: The North shall raze again

I’ve heard of several states that have movements to create new states, like in California the upper half is more conservative some people there want to create a State called “Jefferson”, another movement wants to break away from eastern Tennessee to form the State Of Franklin.

Jefferson is more like the Northern 1/3 or 1/4

That makes sense to my non–business–school mind.

In an expanding economy, the amount of currency in circulation has to increase so that the increasing value of goods and services can be paid for, IIUC. Increasing the amount of currency means price inflation.

In an economy that was contracting long-term, money would be hoarded and deflation would be seen.

Zero percent movement toward either inflation or deflation would occur only in an economy in steady state, if that could happen sustainedly.

Am I understanding correctly? Correct me if not.

ICXC NIKA

Pretty much this

 

[GEddie]

Jefferson is more like the Northern 1/3 or 1/4

And also a chunk of Oregon, non?

ICXC NIKA

 

[JimG]

That makes sense to my non–business–school mind.

In an expanding economy, the amount of currency in circulation has to increase so that the increasing value of goods and services can be paid for, IIUC. Increasing the amount of currency means price inflation.

In an economy that was contracting long-term, money would be hoarded and deflation would be seen.

Zero percent movement toward either inflation or deflation would occur only in an economy in steady state, if that could happen sustainedly.

Am I understanding correctly? Correct me if not.

ICXC NIKA

I’m no economist. I think that if the amount of money in an expanding economy expanded to match the GDP, there would be no inflation. Every dollar would be backed by a particular amount of goods and services.

(The only thing I recall from college economics class is the question I once asked in a discussion about money: "Isn’t the value of money really based on the GNP, because that’s what it represents. The prof, after giving it some consideration, agreed.)

But I think that the real reason the Fed goes for a 2% inflation rate is that they are deathly afraid of deflation, and don’t want to get too close to it. Now, deflation would make savings more valuable, and wages more valuable. But it would also, in their view, dampen economic activity: everyone would postpone buying because you could get things cheaper tomorrow. Inflation makes them want to buy now (and demand increased wages tomorrow.)

 

[stinkcat_14]

I’m no economist. I think that if the amount of money in an expanding economy expanded to match the GDP, there would be no inflation. Every dollar would be backed by a particular amount of goods and services.

(The only thing I recall from college economics class is the question I once asked in a discussion about money: "Isn’t the value of money really based on the GNP, because that’s what it represents. The prof, after giving it some consideration, agreed.)

But I think that the real reason the Fed goes for a 2% inflation rate is that they are deathly afraid of deflation, and don’t want to get too close to it. Now, deflation would make savings more valuable, and wages more valuable. But it would also, in their view, dampen economic activity: everyone would postpone buying because you could get things cheaper tomorrow. Inflation makes them want to buy now (and demand increased wages tomorrow.)

Does it matter whether inflation is 0% or 2% if wages tend to be adjusted for inflation anyway? I mean is it really worse to make $10.20 an hour with 2% inflation or $10 an hour with zero inflation?

 

[JimG]

Does it matter whether inflation is 0% or 2% if wages tend to be adjusted for inflation anyway? I mean is it really worse to make $10.20 an hour with 2% inflation or $10 an hour with zero inflation?

I don’t know. It does mean that the value of savings is constantly going down, especially now when interest rates are held at zero while seeking a 2% inflation rate. It just seems strange that over the course of the years the value of money keeps going down and down. I would really prefer stable money but I’m not an economist. I’m sure they have their reasons for continuous inflation.

 

[BobCatholic]

I’m sure they have their reasons for continuous inflation.

It is to enrich cronies.

 

[JW55]

This really isn’t a new phenomenon. This was a move many years ago to form the state of “Calumet”, that roughly followed the Lake Michigan lakeshore from Milwaukee through Chicago to South Bend, IN to better represent the urban concerns of those states. Then there was “Superior” which would take in the northern portion of Wisconsin, NE Minnesota nd the U.P. of Michigan. There was a proposal to divide California into 7 states to better represent the inhabitants there. I don’t necessarily know the legalities and political barriers involved but it is indeed frustrating when you feel your region has little control over state politics. I think Texas is the only state that has authority to divide itself. I do not recall the specifics, but I believe in Switzerland each Canton can decide at each election if they wish to remain a part of the country.

 

[GEddie]

I’m no economist. I think that if the amount of money in an expanding economy expanded to match the GDP, there would be no inflation. Every dollar would be backed by a particular amount of goods and services.

(The only thing I recall from college economics class is the question I once asked in a discussion about money: "Isn’t the value of money really based on the GNP, because that’s what it represents. The prof, after giving it some consideration, agreed.)

But I think that the real reason the Fed goes for a 2% inflation rate is that they are deathly afraid of deflation, and don’t want to get too close to it. Now, deflation would make savings more valuable, and wages more valuable. But it would also, in their view, dampen economic activity: everyone would postpone buying because you could get things cheaper tomorrow. Inflation makes them want to buy now (and demand increased wages tomorrow.)

Why would they be afraid of deflation?

Deflation would occur only in times of economic contraction, ie, that would happen first.

ICXC NIKA

 

[GEddie]

This really isn’t a new phenomenon. This was a move many years ago to form the state of “Calumet”, that roughly followed the Lake Michigan lakeshore from Milwaukee through Chicago to South Bend, IN to better represent the urban concerns of those states. Then there was “Superior” which would take in the northern portion of Wisconsin, NE Minnesota nd the U.P. of Michigan. There was a proposal to divide California into 7 states to better represent the inhabitants there. I don’t necessarily know the legalities and political barriers involved but it is indeed frustrating when you feel your region has little control over state politics. I think Texas is the only state that has authority to divide itself. I do not recall the specifics, but I believe in Switzerland each Canton can decide at each election if they wish to remain a part of the country.

Correct on both TX and CH.

The treaty of annexation signed between the Texan Republic and the USA in 1845 provided that the new state could subdivide later into five states. That idea never took hold however. Texanism is too strong

The Swiss cantons can indeed vote on separation, but there is an understanding that that would make them vulnerable to the big nations surrounding them.

ICXC NIKA

 

[stinkcat_14]

I don’t know. It does mean that the value of savings is constantly going down, especially now when interest rates are held at zero while seeking a 2% inflation rate. It just seems strange that over the course of the years the value of money keeps going down and down. I would really prefer stable money but I’m not an economist. I’m sure they have their reasons for continuous inflation.

Long term interest rates tend to account for expected inflation. So it doesn’t really matter what the inflation rate is, as long as it is reasonably predictable. I mean is it better to receive 3% with zero inflation than to receive 5% with 2% inflation?

Zero inflation is a very difficult target to hit. A low inflation rate is easier to hit and does no real damage to the economy. Plus if you target zero you might get deflation, and that harms debtors.

 

[Joie_de_Vivre]

This really isn’t a new phenomenon. This was a move many years ago to form the state of “Calumet”, that roughly followed the Lake Michigan lakeshore from Milwaukee through Chicago to South Bend, IN to better represent the urban concerns of those states. Then there was “Superior” which would take in the northern portion of Wisconsin, NE Minnesota nd the U.P. of Michigan. There was a proposal to divide California into 7 states to better represent the inhabitants there. I don’t necessarily know the legalities and political barriers involved but it is indeed frustrating when you feel your region has little control over state politics. I think Texas is the only state that has authority to divide itself. I do not recall the specifics, but I believe in Switzerland each Canton can decide at each election if they wish to remain a part of the country.

The proposal to carve up California was stupid as it would be too many pieces and the lines ignored recognized internal boundaries.

 

[JimG]

Long term interest rates tend to account for expected inflation. So it doesn’t really matter what the inflation rate is, as long as it is reasonably predictable. I mean is it better to receive 3% with zero inflation than to receive 5% with 2% inflation?

Zero inflation is a very difficult target to hit. A low inflation rate is easier to hit and does no real damage to the economy. Plus if you target zero you might get deflation, and that harms debtors.

Inflation harms savers while deflation harms debtors. We’ve favored debtors for a long time now. We’ve encouraged debt and discouraged savings.

 

[Sarcelle]

Well, you know, here in TX some still say “If at first you don’t secede, try try again.”

No-one really wAnts to do that though; we gave up one-third of our square mileage to enter the Union, and wouldn’t get it back.

The U.S. dollar is also a much better deal than trying to float a new Texas Peso.

ICXC NIKA

Texas has one of the largest economies in the country. Maybe secession would be good. Who knows?

 

[Sarcelle]

This really isn’t a new phenomenon. This was a move many years ago to form the state of “Calumet”, that roughly followed the Lake Michigan lakeshore from Milwaukee through Chicago to South Bend, IN to better represent the urban concerns of those states. Then there was “Superior” which would take in the northern portion of Wisconsin, NE Minnesota nd the U.P. of Michigan. There was a proposal to divide California into 7 states to better represent the inhabitants there. I don’t necessarily know the legalities and political barriers involved but it is indeed frustrating when you feel your region has little control over state politics. I think Texas is the only state that has authority to divide itself. I do not recall the specifics, but I believe in Switzerland each Canton can decide at each election if they wish to remain a part of the country.

Wasn’t there a civil war in Switzerland because the Catholic cantons threatened to secede?

 

[stinkcat_14]

Inflation harms savers while deflation harms debtors. We’ve favored debtors for a long time now. We’ve encouraged debt and discouraged savings.

Actually, it is unanticipated inflation that harms savers. Anticipated inflation is built into the interest rate. If we had zero inflation the nominal interest rate would be lower by the reduced inflation. A 5% rate with 2% inflation is no different than a 3% rate with no inflation.

 

[JimG]

Actually, it is unanticipated inflation that harms savers. Anticipated inflation is built into the interest rate. If we had zero inflation the nominal interest rate would be lower by the reduced inflation. A 5% rate with 2% inflation is no different than a 3% rate with no inflation.

Then the Fed should aim for a 5% interest rate and a 2% inflation rate, rather than holding interest rates at zero for nearly a decade.

 

[stinkcat_14]

Then the Fed should aim for a 5% interest rate and a 2% inflation rate, rather than holding interest rates at zero for nearly a decade.

I agree that the Fed keeping interest rates low has been a bad policy.

 

[GEddie]

Texas has one of the largest economies in the country. Maybe secession would be good. Who knows?

And what would keep the Texas Peso from at once going into free fall?

The US$ has a long track record; the TXP would not.

ICXC NIKA