Monday, February 25, 2013


Tänkvärt från slashdot

The funny thing about economics is that it's not scientific.
Sure, it uses math and all, in the manner that astrology uses math, but it's nothing more than feel-good storytelling.
In the case of inflation/deflation, there is no analytic theory which describes the situation - nothing based on conclusions from testable assumptions. It's all guesswork from historical evidence.
Don't believe me? Can you tell me the best value for inflation? If the answer is "it depends", then what does it depend on? Is the function strongly peaked or relatively flat? (IOW, is it important to hit the "best" value exactly, or can it be off by a little?) How much is too much?
Or how about the elephant in the room: how is inflation measured? (Does it include luxuries? Should it include gas prices?)
Here's the scoop, the part that your ECON 200 professor didn't teach you.
The economy is healthiest when people have the most choice. Not the greatest "number of choices" - that's different - but the most "choice" of what to do with their money.
Negative inflation encourages people to forego spending, because saving money gives you more spending power in the future. Positive inflation encourages people to spend, since their money will be worth less in the future. Both situations reduce choice by encouraging one action over another without regard to the merits.
Zero inflation is the point at which people will consider a purchase entirely on its merits, which is the point of maximum choice.
This thing about "a little positive inflation is good" is a fallacy. It encourages people to invest when they really don't want to. It forces people into financial markets which are, at their core, corrupt and unfair to the small investor.
The other thing about positive inflation is that it causes bubbles. Inflation is essentially the amount of money more than the total value of goods and services. The extra money goes somewhere, and because money tends to earn more money it forms "pools" in the economy. These pools are areas where the monetary value is greater than the actual value. The very definition of "bubble".
Positive inflation causes bubbles which eventually burst, positive inflation forces people to gamble with their money, and positive inflation is a hidden tax on the population.
Rather than parrot your religious teachings, take some time to think things through logically, as a scientist would.
You've been fed a load of crap. Stop repeating it.