Can an Economy Grow Without Inflation?


It is commonly taught that we need a stable increase in prices in order for our economy to grow.  We are told, after all, gold does not expand quick enough to accommodate rapid economic gains.  But is it possible for an economy to grow without inflation?  Not only that, can an an economy grow when prices are actually deflating?

This common inflation argument seems to ignore the greatest economic expansion in the history of the world – the industrial revolution.  During the late 1800’s the American economy was booming.  The living standard of the average man increased faster than any time frame compared to today.  While I agree that no one wants to go back and forgo all the advances that have come since, it is irresponsible to ignore the shoulders on which we now stand.

I have heard from multiple intelligent people that they just don’t believe me.  They say that our economy could not have grown quicker during the industrial revolution than any time since, and are commonly under the impression that poverty increased during the Gilded Age.  But if you are to compare apples to apples, the industrial revolution experienced more growth than any time frame.  The middle class was created during late 19th century.  In 1800 the average American was a farmer, destined to a short life of poverty.  By 1900 that had all changed.

Please refer to the graph below.  We take into account 3 different – 25 year time frames in American history: 1878 – 1903, 1946 – 1971, and 1987 – 2012.  If the time following the second world war was actually a larger expansion in the economy and living standards of citizens, you would expect a larger increase in both life expectancy and average income per person.

Economic Expansions over 25 Year Periods

According to the information found at GapMinder, it is very clear that the time preceding the Federal Reserve was actually a larger economic expansion in every measurable way (these numbers are inflation adjusted).  When you take a look at the information on that site, it is clear the average income and life expectancy is greater today than in 1903, which is why no one would want to go back to that time (straw-man argument).  The point is, if we were to see the same economic expansion during the late 20th century as we had during the late 19th century, we would all be living much longer with a much larger income per capita today.

It is also important to note that we do not feel GDP as a good indicator of economic growth, especially since it includes government spending.  But even using the government’s GDP numbers, the fact still remains.  The only thing that would change this chart is if you included World War 2, since the massive government programs exploded GDP.  But it is obvious that when food is being rationed, the living standards are not increasing for the average person.

Let us not ignore the third part of this graph, the value of the dollar.  After the Civil War ended and we no longer printed greenbacks, our country relied on a hard money standard without any central bank.  We experienced some boom and busts (though I attribute that to legalized fractional reserve theft), but by any standard they were not as long nor as severe as the recessions experienced since.

No matter the source, you will find $1 held in 1878 would buy you far more goods in 1903.  This means the value of the dollar INCREASED and we experienced a DEFLATION of prices.  This goes against all economic theory you have been likely been taught.  While our economy did not expand nearly as quickly, the two other 25 year periods experienced roughly 50% devaluation of the dollar (or 50% inflation of prices).  This is using the government’s own CPI numbers, and many would consider that we actually experienced far more price increases during the 1987 – 2012 time frame (due to the manipulation of the CPI calculation).

History is not on the side of modern day Keynesian economists.  Yes life is better now, society is more accepting of different behaviors and ethnicities, but that cannot ignore the growth we experienced and the shoulders on which we now stand.

Jobs Don’t Exist So That You Can Support Your Family


Image by The All-Nite Images on FlickrI hear this argument all the time when discussing Minimum Wage laws: “How is a person supposed to survive, making X dollars an hour?” The answer, of course is, you’re not. The idea that every single job should pay enough to support a person and his whole family, is ludicrous. Think about the last time you paid someone to do a job for you; a plumber, landscaper, painter, or whatever. Did you come to an agreement on the price based on how much money the worker needed in order to pay his bills, or did you pay him or her based on the job performed?

Some jobs pay more than others because they are simply more valuable to the person who is paying. As consumers, we love choices. We sometimes choose to buy lesser quality goods to save a little money. Sometimes, we choose more expensive goods because we find them to be worth the money. But somehow, this gets lost on those who think even the simplest jobs that require no skills at all, should have some minimum price arbitrarily set by the government.

What is a job anyway? You may use your job as your source of income in order to support yourself and your family, but this isn’t the reason for its existence. A job is something that needs to be done. Someone needs something done and is willing to pay for it because having the job performed by someone else is worth more to that person than the money he is giving up. And the person who voluntarily accepts a job offer has determined that the money he or she will receive is worth more than the time and effort required to perform the job. If both sides didn’t feel they were better off by entering into the agreement, no agreement would ever take place. It isn’t one-sided as many would have us believe.

If you subscribe to the notion that society owes you a job that pays a certain amount, then why aren’t you contributing by hiring someone to do your dishes for you, just so you can help someone pay their bills? Maybe because it’s not worth it for you to pay someone to do your dishes? What if I told you that not only must you hire someone to do them, but you also should pay that person a “liveable” wage? When people claim to have a right to a job or a right to a minimum wage, they always forget that someone else needs to be forced to provide that so called “right.”

If you can’t make enough money doing a particular job, then you need to be doing a different kind of job, one that is more valuable. This may sound harsh, but it is also economics and common sense.

“But these companies are just so greedy! They always want to pay you less.” Umm, yeah, and employees always want to earn more, those greedy bastards. Somehow, the vast majority of jobs pay more than the minimum wage set by the government. Have you ever wondered why that is? Employers are greedy. They don’t want to pay more, but somehow they do. Who is forcing these evil people to do this against their will, if it isn’t the almighty government? Could it be that those jobs are actually that much more valuable to employers than minimum wage jobs? Could it be that if they refuse to pay more, they could lose employees to their competitors? That couldn’t be, could it? Because what we are told is that if the government didn’t step in, these evil corporations would have us all working for nothing and we would have no choice in the matter.

Jobs that require little skill and are therefore, not as valuable to employers actually serve a great purpose for students and those with little or no education. It allows them to gain some of the basic skills necessary so that they can become more valuable, and earn more as a result. If you want people to earn more, you should be thinking of ways to make them more productive/valuable, not finding ways to prevent students, the poor, and the unskilled, from accepting jobs that pay less than what you feel they should get paid. How dare you? Laws that mandate a minimum wage just backfire and hurt the very people we are trying to help.

I TOLD YOU…


HE DID TELL US — I GUESS NO ONE WAS LISTENING!

George Will: “the Clintons can find a loophole in a stop sign”…


We have almost 30 years of watching this and if nothing else that have this obfuscation down pat!

WATCH You’ve Been Warned: The Dark Future of Europe, by an Expert on Muslim Radicalisation


Personally I don’t see how Europe can be saved they are too far gone down the path of Islamic domination.

Don’t Get Fooled by Peaceful Islam and Islamist Tactics


Very good and very accurate discussion on Islam.

Is Obama a Manchurian Candidate?


One thing is for sre and that is Obama does not love America as it was prior to him — and he did tell us that he wanted to fundamentally change America — he just didn’t tell us into what?

Exporting the Islamic Revolution


I would say that they adopted the same principles as did the Marxists in their attempts at converting the world to their view. I experienced this directly in Vietnam and it does work!

Is Man-made Climate Change Real #7?


Part Seven Equations that define Climate

The PCM Climate model development was based on some very basic and simple principles that I think NASA, NOAA and the IPCC has either ignored or forgotten. The reason for this is they thought they knew what was causing the apparent increase in world temperatures in the 1980’s. Therefore they didn’t try to find out why but instead looked only at what the result would be if that observed pattern was caused by CO2 and that it continued into the future. Since CO2 was not the Ultimate cause of the increase in apparent Global temperatures the results of the work were flawed and we now have policy being built to, in essence, stop Mother Nature from doing what is natural to her. Obviously this will not work and will ultimately cause great harm!

The first is that the Earth’s temperature is very stable never deviating from a mean of about 17 degrees Celsius by more than +/- 2% over the past several hundred million years; which means there are no positive feedback mechanisms.

The second is the fact that for all practical purposes the planet’s surface temperature is determined solely by the energy arriving here from the sun and how long it stays there.

The third is that water in the oceans, lakes and rivers along with what is the atmosphere acts as a thermal buffer that holds a tremendous amount of heat.

The fourth is that the energy that makes it to the surface falls on a small circle centered on a direct line from the center of the sun to the center of the earth creating a hot spot.

The fifth is that the energy from the hot spot flows north and south to the polls through both the oceans and the atmosphere.

The sixth is that the planet rotates around the sun in an elliptical orbit and the planet spins around its axis so that hot spot moves up to the tropic of cancer and down to the tropic of Capricorn creating thermal flows that are not easy to model as the land and water portions are not the same over the entire planet.

The seventh is that changes in the intensity of the solar wind will make changes in the earth’s magnetic field and that changes how high energy particles enter the atmosphere and that increases or decreases the planets cloud cover.

The eighth is that small changes in cloud cover make changes in the planets albedo and that will make changes in the amount of energy reaching the surface of the planet.

The ninth is that small changes in the energy reaching the planet’s surface makes a large change in the temperature because of the physics involved in the Stefan-Boltzmann Law.

The tenth is that the combination of: the orbital changes of the Earth, the fact that the Earth rotates every 24 hours, and there is a variable energy input from solar radiation and the solar wind create, means that what we call climate and weather is not and has never been a constant

It is my professional opinion that the physics and chemistry interactions on the planet considering all the variables, along with the external orbital variables are not model-able with present knowledge and computer power to predict global climate with sufficient precision and accurately to justify make energy or economic policy. By this I mean we have not been measuring climate at the global level long enough to know if the logic we have developed and use is correct or not. Temperatures have gone both up and down while CO2 was going up.

However, having said that I do think that there is enough data over the past 4000 to 5000 years to make a crude model that will explain or at least get us into a ball park understanding of the thermal energy flows that seem to us as climate change. This misunderstanding is because these changes are orders of magnitude longer than a human life. In particular there is a thousand year cycle and a seventy year cycle that is observed and we know that CO2 will have some effect on how fast the heat in the atmosphere radiates off the planet e.g. the black body temperature and the greenhouse effect which was discussed in Part Two.

Since we know that the last cold period, the little ice age, bottomed around 1600 to 1650 and we know there is a thousand year pattern and a seventy year pattern it seemed to me that it should be possible to write simple equations that would be able to show these thermal movements. The following equations will, in fact, accurately predict Global Temperatures from January 1600 to the present; with two assumptions. One is that the Global Temperature was in the general range of 13.5 degrees Celsius in 1600. Two was that CO2 levels were in the range of 270 ppm during that same period. The developed equations are robust enough to allow for some changes in these two key variables. A model of CO2 was already shown in part four.

The following five equations will produce a Global Temperature from a time series starting from January 1600 to which we give the value 1 and label that number as M. Each succeeding month from that date adds 1 to that number such that January 2015 is M = 4981 and that gives a CO2 value of 399.98 ppm verses the actual of 399.96 or an error of .02 ppm which is basically no error; and a Global Temperature of 14.57 degrees Celsius verse NASA at 14.74 degrees Celsius for an error of .17 degrees Celsius using January 2015 values published in the LOTI table.

The following are the definitions of the terms used in the five equations. GT equals Global Temperature in degrees Celsius. LT equals the Global Temperature adder from the 1000 years cycle. ST equals the Global Temperature adder from the short cycle. CO2 equals the level of CO2 in ppm. CT equals the Global Temperature adder from the CO2 level. Just an aside the result from using these five equations may not be exactly what my spreadsheet calculates because it uses more places in the calculation.

GT = 13.5 + LT + ST + CT

LT = SIN (( M -3500 ) * .0004974 ) * .45

ST = SIN (( M -350 ) * .0088139 ) * .14

CO2 = 270 + 730 / ( 1 + 8.75 * EXP ( .00173 * (4612 – M )))

CT = (( 14 / ( + EXP ( -.009 * CO2 ))) -7 ) – 5.867

These five equations were developed without the use of any statistical software and were first developed using the 2003 version of Excel; since then I have upgraded to the 2007 version so I can now use the .xlsx format. I am also sure that these equations could be improved on with the use of appropriate software which I do not have. This model was developed solely by observation of the relationships found. The serious reader, if interested, may request a copy of the spreadsheet containing this model by sending me a formal request to david.pristash@gmail.com and after reviewing the request I will send the requester a copy of the spreadsheet in xlsx format or a reason why I did not

The following three Charts were made using these five equations the large variation in the NASA data can be seen in these charts and that is why I use a 12 month running average and/or the blocks of 10 years in most of my work. These Charts are identical except for the time frames shown. The red plot is actual NOAA monthly CO2 data in ppm. The Green plot is actual monthly NASA data converted from anomalies to degrees Celsius for Global Temperature. The blue plot is the CO2 model in ppm. The purple plot is the PCM Climate model projection of Global temperatures cased on these five equations in degrees Celsius.

0002-01 PCM MODEL

The first Chart is for a 200 year period bracketing the NASA and NOAA data. The purple PCM plot is not perfect but it is very close to the green NASA plot.

0002-02 PCM MODEL

This Chart goes back to 1600 which is about the time the temperatures bottomed out during the Little Ice Age and forward to 2100.

0002-03 PCM MODEL

This last Chart starts at the bottom of the last ice shows the peak of the current long cycle around 2150 at 15.1 or 15.2 degrees Celsius and then continues moving down to the next tough around 2700 and then continuing with the start of the next upswing. We can see that the 2700 bottom is only about .6 or .5 degrees Celsius higher even though CO2 has peaked at 1000 ppm.

It is my personal belief after studying the available literature that the variations is the suns electromagnetic radiation along for the particle based solar wind has an effect on the Earth’s magnetic field; and those variations allow more or less of the cosmic rays (charged particles) to enter the Earth’s atmosphere. Those particles interact with the water in the atmosphere to create droplets which then form clouds. Clouds being the main driver of the Albedo of the Earth have a significant effect on how much and how long the thermal energy stays on the atmosphere before being re-radiated out. This is, of course, the greenhouse effect which determines the earths Global Temperature.

This is not my idea but it is the one that I think is the principle cause of the short cycle and possibly of the long cycle as well.

 

 

How ‘independent’ was the net neutrality decision?


By 

http://watchdog.org/204472/net-neutrality-independent-fcc/

EXECUTIVE INFLUENCE: The trajectory of the Federal Communications Commission’s ruling in favor of 332-page net neutrality rule calls into question the agency’s alleged “independence.

 

While the Obama administration appears to have used its power once again to force the issue of net neutrality, the FCC has been rebuked in the courts twice before, and is likely to lose on this one as well.

On Feb. 26, the five FCC commissioners voted 3-2 to place the Internet under strict common-carrier rules of Title II of the Communications Act of 1934. It was a party line vote, with the three Democrats voting for and two Republicans voting against. The FCC kept the 332-page regulation under wraps before the vote. As with Obamacare, they had to pass it so we could find out what is in it. Chairman Tom Wheeler even refused to testify before Congress on the rules under consideration. Even though they have now voted, they have yet to release the document to the public.

The FCC is supposedly an independent body, commissioned by Congress, but in a public announcement broadcast on YouTube, Obama essentially ordered Wheeler to impose “the strongest possible rules” on the Internet. Nothing new for this president, but Wheeler himself had been initially opposed to this idea, instead working on a “third way,” which used some authority from the Communications Act but avoided the heavy hand of Title II. However, as so many others who find themselves at odds with the administration, he abruptly changed his tune and began promoting what appeared to be the Obama plan. Following its vote by the commission, Wheeler announced, “Today is the proudest day of my public policy life.”

If the FCC was voting under orders from the administration, then it has created a potential constitutional crisis. The FCC’s role as an independent creation of Congress has been usurped and it has for all intents and purposes simply become another arm of the executive branch. Internet Consultant Scott Cleland says the regulation is also on very weak legal grounds:

As an analyst, one does not have to see the order’s final language to predict with confidence that the FCC’s case faces serious legal trouble overall, because the eight big conceptual legal problems spotlighted here are not dependent on the details of the FCC’s order. After two FCC failed court reviews in 2010 in Comcast v. FCC and 2014 in Verizon  v. FCC, and  decades of multiple Title II definitional and factual precedents completely contrary to the FCC’s current legal theory, the legal field of play is much more clear than usual or most appreciate.

Wheeler defended the FCC decision in a Feb. 26 statement:

The Open Internet Order reclassifies broadband Internet access as a “telecommunications service” under Title II of the Communications Act while simultaneously foregoing utility-style, burdensome regulation that would harm investment. This modernized Title II will ensure the FCC can rely on the strongest legal foundation to preserve and protect an open Internet. Allow me to emphasize that word “modernized.” We have heard endless repetition of the talking point that “Title II is old-style, 1930’s monopoly regulation.” It’s a good sound bite, but it is misleading when used to describe the modernized version of Title II in this Order.

Contacted for this article, Cleland called FCC’s legal theory “a Rube Goldberg contrivance to manufacture legal authority.” Cleland said of Wheeler’s statement:

Making a claim to modernization by using a 1934 law is Orwellian doublespeak. The problems they cite as an excuse to impose these regulations are non-existent. With over 2,000 Internet Service Providers there have been only a handful of problems—all resolved without regulation. Wheeler is mischaracterizing the issue to mask a duplicitous, premeditated strategy of control. This is a power grab, pure and simple.

So how was this decision pulled off? For starters, with lots of money. George Soros and the Ford Foundation, two of the left’s biggest money funders, tossed at least $196 million into the effort. In addition, staff from the Center for American Progress, the Free Press and others obtained key positions on the FCC and in the White House to facilitate it. The Washington Examiner characterized it as a “shadow FCC” operating out of the White House.

As explained in an earlier post, the Free Press was co-founded by Marxist Robert McChesney, who wants to see the Internet become a public utility, with the “ultimate goal” being “to get rid of the media capitalists in the phone and cable companies and to divest them from control.” The former Free Press board chairman until 2011 was Tim Wu, who actually coined the phrase “network neutrality.” McChesney told the socialist magazine Monthly Review, “Our job is to make media reform part of our broader struggle for democracy, social justice, and, dare we say it, socialism.”

So there you have it.

In pushing this power grab, the Obama administration has wrapped itself in emotional buzzwords, characterizing net neutrality as a battle for free speech, or a method to achieve an “open Internet.”  Cleland calls it “teddy bears and rainbows rhetoric.”

The Internet is the most open, most free, most innovative technological marvel of the modern age, and a rare bastion of free speech. The Obama administration is determined to smother it.

This article was written by a contributor of Watchdog Arena, Franklin Center’s network of writers, bloggers, and citizen journalists.