The Gaming Den

Doom wrote:Another example, a friend of mine speculated on generators, bought dozens of the things. When the last hurricane threatened, he loaded up his truck and sold them on the corner, making profits. He provided a valuable service, protected capital, prevented the misallocation of resources by people that didn't buy generators sooner, and every single person who bought his generators was *happy* to get them, and, again, people had more stuff (the contents of their refrigerators) than before, thanks to his speculation.

There was some problem with leaving these generators at Home Depot, Lowes, or WalMart where people are protected by laws covering price gouging in the event of disasters? These people could make it to the corner where your friend was selling these things, but were somehow unable to get to one of those three stores?

Actually, when the electricity goes out, many stores close. Also, stores run out. You're implying he bought them from a retail store; he bought direct from China.

FrankTrollman wrote:
Before dismissing things on the grounds of having bad charts, you should read what those charts actually say.

Project much?

Quoting idiots who can't be fucked to read... is just you proving yourself foolish.

Question answered. There are alot of little gems in the comments section shredding this joke of an analysis. Here's a short one:

Hard to follow your methodology. You appear to have made up a new index of your own, without explaining how the BLS/CPI minus shelter is roughly equal to an inflation index with services eliminated. This should be good when the "Cherries Jubilee" crowd starts in on your penchant for biased data mining.

A penchant for data mining, indeed. Cherries Jubilee refers to another ridiculous 're-imagining' of a data set this clown did earlier.

Pro tip: you torture data long enough it'll tell you anything you want to hear.

Why not just go directly to the site and see with your own eyes, the red line is higher than the blue line?

But really the bottom line is that if

The bottom line is that if you take a personally created and impossible to reproduce index (like on the blog you quoted), some aspect will match up with some version of another index. This isn't news, or particularly meaningful.

Look, like I've said before, both are measuring the same thing, it's not a shock that some things will line up in some way.

you're relying on the BPP to show that the government are a bunch of liars about inflation you have failed to disprove the Null Hypothesis with your presented evidence.

You haven't actually addressed the evidence, you've simply referenced an extremely dubious blog, that, even if what it said was true, would mean nothing.

Try again?

Look, here's another lying liar.

Oh look, another lying liar. . I mean, seriously, how could wal-mart know anything about consumer prices? Wal-Mart's part of the conspiracy too, right?


And here's another site showing % increases in costs way above 2%.

And another lying liar.


In this thread I've listed at least 5 different sites now using 5 different methodologies, and even made a simple calculation with provided data.

Proof? No, but saying "the graph isn't squiggly enough" and citing a blog that shows in a very limited and unreproducible way that some aspect of BLS numbers line up with another modified inflation calculation isn't much of a counter-argument, I'm afraid, although I acknowledge those are the strongest counter-arguments you've made.

Since reading all these liars might be troublesome, a small quote from the last cite:

Ironically, while Chairman Bernanke just affirmed again a few days ago that the Fed will persist in its inflationary policy of quantitative easing to ward off the imaginary threat of falling prices, signs of inflation abound. The prices of consumer food staples have risen by 6 percent over the past year, with the prices of beef, bacon, butter and lamb rising by 10 percent or more. The U.N. index of grain export prices has risen by 70 percent in the past year and stands at its highest level in 21 years. Gasoline prices have surged 49 percent in the last six months. According to IMF statistics, commodity prices are up by 33 percent in the past year; metals prices by 40 percent; energy prices by 30 percent; crude oil prices by 31 percent; and commodity industrial inputs by 40 percent.3 As a result of skyrocketing prices of agricultural products such as corn, wheat, soybeans and other crops, the price of farmland in the U.S. has been soaring, particularly in the Midwest where land prices increased at double-digit rates last year and even regulators fear that a bubble is forming.

So, yeah, obviously the average of all those numbers is 2%. There's just no data saying otherwise.

violence in the media wrote:There was some problem with leaving these generators at Home Depot, Lowes, or WalMart where people are protected by laws covering price gouging in the event of disasters?

Technically yes, although each will look at the other and say "He's loco." In most places like the stores you mentioned, shelf space is valuable. You can't have shit sit costing you storage space (and thus MONEY) without it moving and giving you a profit. You have to base your shelf allocation as to what would reasonably move in a normal event. Putting aside shelf space for an "emergency" is not profitable; it is in fact stupid.

On the other hand, if you have a garage that's not doing a damn thing then there is no "cost" to your storage space. You can hold on to it until it is needed. Mind you, that storage space isn't making you any money in the here and now, unlike the storage space in the above mentioned stores. So to the store manager, so what if he made $5 in a once a year emergency when he has been making $1 every month from his shelf space.

The thing is that a store might have enough space allocated for X units. If you buy those units, they will get another X units to fill that allocation. Now there is 2X units available for the community. But that person is assuming that they will be needed in the future; the risk is solely on him.

Hmmm, I'll concede that I find that this sort of behavior strikes me as exceptionally douchebaggy, but that probably has a lot to do with living in Florida.

Then again, during disasters down here, entrepreneur is pretty much synonymous with scammer.

The problem is that you're dealing with bursts of supply rather than an unlimited steady stream. The folks that were ready for a hurricane bought their generators a while ago and the stores only stocked X amount at any time, so that X is all they had when the hurricane hit. Once the hurricanes hit, X goes to 0 pretty damn fast and then those private suppliers that have stocked supply take advantage.

If he bought them just prior to the hurricane, then he's a doucebag. But if he bought them over time many months before hurricane season, then he is not because the store would have replenished them before the hurricane.

Well, the folks that bought the generators are happy, the guy that sold the generators is happy...and him buying from China a year (maybe two, can't recall) earlier in no way reduced the generators available to the big box stores.

It's not douchebaggery if both sides of the transaction are happy about it.

Speculating a commodity can lose, can win, can hurt, can help...just like any other investment.

Where are you in Florida? I'm one of the few Tampa natives my age, not that I live there anymore.

Doom wrote:Where are you in Florida? I'm one of the few Tampa natives my age, not that I live there anymore.

I'm sure there are more than a few Tampa natives your age. I'm in Orlando currently, but my family originally moved to St. Petersburg in time for Elena.

Doom wrote: Why not just go directly to the site and see with your own eyes, the red line is higher than the blue line?

Uh... I'm looking at it right now. The red lines are sometimes higher than the blue lines. But you know, the blue line is higher than the red line right now in 30-day inflation, and the red line says that more deflation than the blue line did for annual inflation back in 2009 when you said deflation did not happen.

The BPP is goods-only. There are no services on that. If you strip the CPI down to goods-only, it agrees with the BPP more. But even without that, the numbers aren't that different. The CPI claims inflation was at +0.14% when the BPP reports inflation at -0.02%. These are not big differences. Also: they aren't all in the same direction.

-Username17

Doom, do you have reading comprehension problems? All those articles prove is that there is going to be more significant inflation, not that there has been.

How the fuck do you construe Wal Mart saying there will be significant inflation in coming months as something which proves inflation numbers now and over the last couple of decades were lies??? The mind boggles.

It's only inflation if our salaries go up with the rise in costs. Otherwise, it's just walmart fucking us at the drive through.

FrankTrollman wrote: Uh... I'm looking at it right now. The red lines are sometimes higher than the blue lines. But you know, the blue line is higher than the red line right now in 30-day inflation, and the red line says that more deflation than the blue line did for annual inflation back in 2009 when you said deflation did not happen.

And when, exactly, did I say deflation did not happen at some point for some period of time in the past?

It's worth noting, the vertical line at the end is indicating no data (the BLS numbers lag a bit). So, yeah, the vertical line is above, but it's not yet data. Oopsie. No problem, you'll get the hang of reading this stuff at some point, I'm sure. Try pointing your mouse pointer right at the graph, to see this for yourself, you don't get vertical line number, because it's not actually there...the vertical line is not yet entered data. I can't believe you struggle so much with this.

It's worth noting, if you consider area between the curves, the red line is overall ahead by far in the first two graphs. I concede the final one isn't perfectly obvious.

And, MFA, already shown the 'has been' part in detail, read back a few pages (note: this does not mean in any way that there wasn't deflation at some point, just that, using the BLS's data, using the BLS's numbers for price inflation is a joke)...the articles are referencing 'right now', the current topic of discussion. Anyway, MFA, Read more carefully, please. The mind boggles at this level of confusion.

I should also point out, the articles prove (your word) nothing, except that quite a few people don't believe in BLS's BS.

The BPP's main purpose isn't to say that the BLS is shit, its to...

1. Provide real-time inflation data
2. Dry run what online information sharing can do

An index that excludes by design everything that can't be bought online is not an attempt to provide an index replacing the BLS' CPI. It's an attempt to track online costs.

Doom wrote:I didn't ignore it, I acknowledged it. But the fact remains that you admitted that bubbles are random...and in the same line say they don't 'just happen'. It's as bizarre as saying gold isn't useful while you're typing on a computer (which, if I removed the gold from it, would no longer function).

I implore you to respond to what I've actually said, as opposed to what you would like to pretend I've said. Or do you really think that gold's current value is based solely on its use in electronics? It isn't, so let's move on there.

As for the other things I've said you're cherry-picking your way through... I did not say bubbles are random. I said there are random fluctuations in the market, and people trying to predict these fluctuations create bubbles. In a nearly completely deterministic fashion, in fact.

Person A has a theory that there will be a random fluctuation upwards in the price of oranges. Person A invests a lot of money in oranges, and this increased investment actually raises the prices of oranges, creating the fluctuation he predicted (self-fulfilling prophecy, completely 100% predictable and deterministic - there is nothing random here). It also lends credence to the idea that a fluctuation is happening, so more people might join in investing in oranges. If there is no predicted end in sight to the people investing in oranges, people will continue to invest until the market is over-invested and hits a peak, at which point everybody starts trying to withdraw and the price of oranges plummets, some people get rich, and some get left with tasty oranges. Which is good, because they probably can't afford to buy food anymore, so they'll be eating those oranges.

Point out the part of that bubble-building process that is 'random.' P.S. - it's not the natural market fluctuation person A was trying to predict, because we literally have no idea if that even happened. He and a bunch of other people created the fluctuation merely be predicting it (correctly or incorrectly) and acting on it, and it lead to a bubble when others joined in.

P.S., your examples of 'good' speculation suck, because they all so far involve people taking advantage of people struck by natural disasters. There are much, much better safety nets for disasters than speculators. That is not a social role they can reasonably be expected to fulfill to any adequate measure (selling a few dozen generators in a Hurricane-struck region had no noticeable effect on hurricane-relief efforts).

And the sort of speculation on food in a third world you suggest will literally kill people - that food is wanted now by people who need to eat. Any amount of speculation needed to 'conserve it' for later will raise its price such that those people will starve. Speculating on food in a third world nation kills people now to possibly save them later. Do you want to know what would be better for the economy and people of that country? Taking the money you used to speculate on food, and building a farm. Less people starve now (the people building your farm get paid and can buy food), and less people starve later (your farm produces more food, lowering price due to an increase in availability).

DSMatticus wrote: I implore you to respond to what I've actually said, as opposed to what you would like to pretend I've said.

Okeedoke.

You said:

because gold actually has very few uses, and the uses it has it's too expensive for.

You said this, you atually said this. You're wrong, of course, since gold is used for computers. Since computers actually exist, then, obviously gold is not too expensive for computers. Gold is also absolutely critical in satellites...satellites also exist. Basically all modern communications rely on gold.

So, yeah...you're wrong.

Or do you really think that gold's current value is based solely on its use in electronics? It isn't, so let's move on there.

Never said it was, just pointing out that you're woefully ignorant on the uses of gold. I won't bother listing other necessary uses for gold, beyond simply as money.

As for the other things I've said you're cherry-picking your way through... I did not say bubbles are random.

Okeedoke.

You said:

Bubbles happen because the market randomly fluctuates,

You said this, honest. So, um, yeah. Bubbles are not random, but they exist because of random things. Splitting hairs a bit, eh?

Let me guess, when you play a game and roll a to-hit, you say you're hitting doesn't depend on a die roll, it depends on the number showing on the top of the die after it rolls?

I said there are random fluctuations in the market, and people trying to predict these fluctuations create bubbles. In a nearly completely deterministic fashion, in fact.

Oh wow, again. The market is nearly completely deterministic, man, that'll be news to a great number of traders. Oh wow. Thanks, that'll keep me amused for quite a while.

Person A has a theory that there will be a random fluctuation upwards in the price of oranges. Person A invests a lot of money in oranges, and this increased investment actually raises the prices of oranges, creating the fluctuation he predicted (self-fulfilling prophecy, completely 100% predictable and deterministic

Oh wow, again. You keep using that word, deterministic. It doesn't mean what you think it means, by the way. 100% predictable, too. Oh wow.

Point out the part of that bubble-building process that is 'random.'

A hurricane comes and damages the orchards...prices go high. There are 2 days of freezes and wipes out the orchards....prices go sky high. There is a warm, wet year with a very mild winter....prices drop. There is a massive influx of foreign oranges/oranges from another state....drop even further.

That wasn't tough at all, and none of them had anything to do with your one guy buying up oranges.

P.S., your examples of 'good' speculation suck, because they all so far involve people taking advantage of people struck by natural disasters.

It's not 'taking advantage' of people...it's helping people that need help when they need it.

There are much, much better safety nets for disasters than speculators.

Interesting theory, but speculators still exist, so obviously wrong, since such safety nets would mean speculators would always fail.

That is not a social role they can reasonably be expected to fulfill to any adequate measure (selling a few dozen generators in a Hurricane-struck region had no noticeable effect on hurricane-relief efforts).

And there were numerous folks doing the same, having quite a noticeable effect on hurricane relief efforts. You're wrong, again.

And the sort of speculation on food in a third world you suggest will literally kill people - that food is wanted now by people who need to eat.

And again, this lack of understanding and extreme resistance to input that makes helping you to learn so difficult.

I'll remind you: if the speculator wasn't there, everyone would DIE. Everyone.

The speculator being there is an improvement on that outcome.

Any amount of speculation needed to 'conserve it' for later will raise its price such that those people will starve.

Again, no. One guy shipping in/saving a few warehouses full of bottled water/grain/whatever doesn't raise the price of water noticeably. Even 50 guys doing so won't cause people to die of thirst or starve. Please, think it through.

Speculating on food in a third world nation kills people now to possibly save them later.

Again, no. Bringing food from elsewhere or simply not throwing food away in the case of a possible famine and crop failure doesn't cause people to starve. How do you even arrive at this conclusion?

Do you honestly believe not cleaning your plate makes a kid in Ethiopia starve to death? Please, stop repeating what you've been told, and think about it.

Do you want to know what would be better for the economy and people of that country? Taking the money you used to speculate on food, and building a farm.

Such resistance to input, but I'll try again. If the crops fail, having a farm isn't going to do any good, it'll be just as worthless as every other failed farm. Speculating on commodities by stockpiling them is a lifesaving measure at times.

Let's try again more carefully. The speculator lessens the effects of famine by storing food in times of plenty, through a motive of personal profit. He buys and stores food against the day when it might be scarce, allowing him to sell at a higher price. You've noticed that one person behaving like this tends to create more, so let's build on that. The consequences here are far-reaching. Consumers are encouraged to eat less and save more, importers to import more, farmers to improve their yields, builders to erect more storage facilities, and merchants to store more food. The speculator, by his profit-seeking activity, cuases more food to be stored during years of plenty than otherwise would have been the case, lessening the effects of lean years to come.

And you hate him for this. Please, let go of your hate, and look at this less emotionally.

Again, reading some on this would help. I'll again recommend Defending the UnDefendable (mostly quoted above) as a starting point to overcome the hatreds ingrained from school.

Less people starve now (the people building your farm get paid and can buy food), and less people starve later

Crops failed, everyone dies. Game over. Sometimes simply saving what you have IS better than gambling, er, investing, in the hopes of creating more.

Known uses of GOLD

1. When rubbed onto the breathing apatarus of a cyberman can cause suffocation and death.
2. A vital ingredient in an infinite probability device (see heart of gold)
3. Something to press latinum with

It's quite valuable.

Doom wrote:

DSMatticus wrote:Bubbles happen because the market randomly fluctuates,

You said this, honest. So, um, yeah. Bubbles are not random, but they exist because of random things. Splitting hairs a bit, eh?

Are you not reading what the rest of the sentence says? Do you see that the quote you provide ends in a comma? That there's more, that makes that sentence mean something completely different than what you're saying it does? Are you trying to flat out misquote me?

Bubbles come from people trying to predict a truly random event (market fluctuations) - the bubble is NOT the truly random event, it is the deterministic and predictable result of multiple people making the same prediction about the original truly random event. There is a distinction.

To put it in your die example, it's the same as someone having a +5 bonus usable 1/day before they make their die roll. In an attempt to maximize their use of this ability, they have to make a prediction about a random event. But the decision to use the actual ability is completely deterministic and conscious (while being based on imperfect knowledge of what the future roll will be).

In the case of bubbles, it's using your imperfect knowledge to attempt to predict random fluctuations. Once you have a prediction, you try to take advantage of the fluctuation beore it happens. Your prediction is not random - it is based on your information, even though your information is imperfect (you have a hunch about the market, or some tips, or some clever theory that may give you a predictive advantage). Your decision to invest is not random - it is based on your prediction and a desire to make money. When a bunch of people share in your prediction, they will make the same decision, and together, the bunch of you create a bubble. That's not random.

The housing bubble was not random. The tech/dotcom bubble was not random. It was based on people making predictions (tech/dotcom is the future!, or housing prices are going to keep going up!), and then making decisions (buy tech/dotcom! buy housing!). There's nothing random there.

Doom wrote:

DSMatticus wrote:because gold actually has very few uses, and the uses it has it's too expensive for.

...

I did not say 'gold is never used at all, ever.' I said it was unjustifiably expensive for those uses it has. This is possibly a genuine misunderstanding of the language, but this is the difference between me saying 'gold is too expensive TO use' and 'gold is more expensive than its uses warrant.' I had intended to convey the latter, and you took away the former.

Doom wrote:

DSMatticus wrote: Any amount of speculation needed to 'conserve it' for later will raise its price such that those people will starve.

Again, no. One guy shipping in/saving a few warehouses full of bottled water/grain/whatever doesn't raise the price of water noticeably. Even 50 guys doing so won't cause people to die of thirst or starve. Please, think it through.

Your speculators spend three months collectively gathering enough food to feed 10,000 people for one month. If food is a desperate commodity during these three months (food is always a desperate commodity in many third world nations, in that there are people currently starving). This means that, during each of those months, enough food to feed 3,333 people is being taken out of the market and stored somewhere. If the options were "that food goes to my silo, or gets sold to someone hungry," someone goes hungry. Then that bad season comes, and you can feed 10,000 people. The actual market behavior here won't be as linear as this example - removing the food slowly will have less of a dramatic effect, and will flat out kill less people. You can probably get a net 'less people die' doing this, but it's far from the ideal solution, where you just plain invested in agricultural capital). And no, not even third world nations are wiped out entirely by a bad season. It isn't 'game over, everyone dies.' Countries have fairly diverse agricultural portfolios. It's bad, but you're already killing people by taking food off the market (depending on the pace you take it out).

Then there are the cases where you have seasons of excess production. In that case, speculation is going to happen in the sense that you're going to have grain you can't use, and it's going to sit in someone's silos to be sold later, even if it just is the farmer's. And that speculation can have beneficial effects on an economy.

But this is still hugely unrepresentative of how modern speculation happens. The sort of speculation you're referring to is still not what happens in financial markets, where slips of paper get handed around that have no real tie to the commodity being traded other than an abstract promise. That level of abstraction makes it possible to create a sort of feedback loop where prices become completely unrepresentative of what the market value actually is. When modern economies speculate on food, that food is still getting sold and eaten at the same time. It is moving through the economy while getting speculated on. And this abstract speculation heavily distorts prices, because in the time it takes you to eat a bowl of cereal and crap it out, its value can undergo significant changes that are not based on its supply or its demand. (This is hyperbole, unless you have a really slow digestive tract. And let's discount the fact that the cereal's value is depreciating rapidly as it's digested for reasons other than market fluctuations).

DSMatticus wrote:
I did not say 'gold is never used at all, ever.' I said it was unjustifiably expensive for those uses it has. This is possibly a genuine misunderstanding of the language, but this is the difference between me saying 'gold is too expensive TO use' and 'gold is more expensive than its uses warrant.' I had intended to convey the latter, and you took away the former.

Fair enough. You're still wrong, of course, since the use of gold in computers and satellites demonstrates to perfection that it's not "more expensive than its uses warrant". You DO use a computer, right? Did you pay for the computer? Did *someone* pay for the computer? Whoever did, absolutely thought the cost of the gold in the computer wasn't "more expensive than its uses warrant".

Oh wait, maybe you mean theoretically at the current price? You're saying nobody makes or buy computers now because the cost of gold is more expensive than its uses warrant? I respectfully disagree, I'm pretty sure folks still make computers, and still buy computers. So, wrong in this respect, too.

Oh wait, again. Maybe you're trying to say that the current price of gold is out of proportion to what it's used for? In this case, you're ignoring the fact that gold is most commonly used as a store of value (and do note: NEARLY EVERY COUNTRY ON THE PLANET USES IT IN THIS FASHION). As a store of value, it by definition can't be 'too expensive' for the use of 'store of value.' So, still wrong.

Well, I suppose at a hundred thousand million trillion dollars per atom it would be too expensive, but now we're back in 'dollars are worthless' territory.

Then there are the cases where you have seasons of excess production. In that case, speculation is going to happen in the sense that you're going to have grain you can't use, and it's going to sit in someone's silos to be sold later, even if it just is the farmer's. And that speculation can have beneficial effects on an economy.

There you go! You got it! The fact remains, I've already shown speculators can save lives. To learn past this point, you need to abandon what you learned in high school economics, and open your mind to other ways of looking at things. I'm glad we've made progress.

That other stuff you said before this last paragraph, you can just drop it in the trash, it's simply too wrong to address in detail. Well one thing: if storing food would cause people to die of starvation (your bad assumption), then you're already in the starvation situation, so it's time for the speculator to save lives.

But this is still hugely unrepresentative of how modern speculation happens. The sort of speculation you're referring to is still not what happens in financial markets,

Uh, buying generators is done in the modern world, as are many other forms of speculation.

That said, paper trading is a different form of speculation, which I reckon you've been trained to hate as well. Let's see how this goes...

where slips of paper get handed around that have no real tie to the commodity being traded other than an abstract promise. That level of abstraction makes it possible to create a sort of feedback loop where prices become completely unrepresentative of what the market value actually is.

Now, you do realize that this sort of thing has been happening in gold and silver for years, right? I mean, more paper gold is traded than even exists. Manipulation? Sure, but the paper market is somewhat disjoint from the real world market. It's worth noting that the 'market price' on COMEX for silver, for example hasn't been the price you get when you sell silver at an actual market (like E-bay). Evil? Possibly, possibly not.

Stuff happens, I just see no need to be judgmental. The 'questionable' prices on COMEX are funny, sometimes, but that doesn't mean the real world market is bad. Back when platinum had a 'market price' less than gold on COMEX, I tried really hard to buy some, but it wasn't possible. Nobody was selling physical platinum at the so-called 'market price'. I could still get it, just would cost me double (i.e., the 'real world market price' was twice the COMEX 'market price'). Even at double, however, 'completely unrepresentative' is a bit of an exaggeration.

But that doesn't mean per se that trading paper commodities is necessarily a bad thing. Goofy stuff happens, I don't like it much, but I'm not about to toss people into Hell for it.

When modern economies speculate on food, that food is still getting sold and eaten at the same time.

Ok, so now we're talking about actual things again. What was the previous line about, I wonder.

It is moving through the economy while getting speculated on. And this abstract speculation heavily distorts prices,

Ok, you really can't have it both ways. Real world prices and paper prices don't necessarily line up, as I've shown before (and feel free to go to e-bay and see silver auctions go for other than "official market" price).

because in the time it takes you to eat a bowl of cereal and crap it out, its value can undergo significant changes that are not based on its supply or its demand. (This is hyperbole, unless you have a really slow digestive tract. And let's discount the fact that the cereal's value is depreciating rapidly as it's digested for reasons other than market fluctuations).

And now we're back in "oh, wow" land. Sorry, you've lost me on your thesis here.

Doom wrote:Stuff about gold...

Again. Whatever you're reading is not what I'm saying. Nothing I said implied electronics don't actually exist, and are in fact a figment of our imagination. What I implied (rather correctly) is that gold has a limited use in certain electronics and that this limited use would lead to a market price far lower than gold's actual current market price.

Doom wrote:This, of course, goes above and beyond the fact that gold is most commonly used as a store of value

This is exactly my point. It used to be a currency (and has virtually been abandoned as such, because it turns out with economies so large nobody can get enough gold to represent their economy's transactions with it).

I'm not saying these artificial values don't exist - I'm saying they're artificial, and they are serving no function or purpose to the economy as a whole, and people who actually want to use gold in applications would benefit greatly from ridding ourself of this anachronism.

Doom wrote:

DSMatticus wrote:Then there are the cases where you have seasons of excess production. In that case, speculation is going to happen in the sense that you're going to have grain you can't use, and it's going to sit in someone's silos to be sold later, even if it just is the farmer's. And that speculation can have beneficial effects on an economy.

...

Yes, I infact stated that in the case of producing excess of a commodity, it is better to store that commodity than it is to say, burn it. This happens to be a form of speculation, in the most literal sense. In the same way that when if I buy a bunch of nonperishable food on sale, I'm speculating. If you think either of these forms of speculation are anything but the historical precedence of how modern speculation happens, that's a stretch.

Doom wrote:if storing food would cause people to die of starvation (your bad assumption), then you're already in the starvation situation, so it's time for the speculator to save lives.

That's how a lot of third world countries are, they're in a perpetual state of near-starvation. Buying the region's food means less people can afford to eat, and selling that food back to them later doesn't help them, because they have starved in the interim. On the off-chance a disaster occurs, and prices go higher than people can afford, you can sell in the interim to lower those prices again and save the people that would have starved at a later date.

Doom wrote:Ok, you really can't have it both ways. Real world prices and paper prices don't necessarily line up, as I've shown before (and feel free to go to e-bay and see silver auctions go for other than "official market" price).

Again, this is exactly my point. They don't line up, but that doesn't mean they're independent. Trading food on paper will not change the value of food with a 1:1 correspondence, but it has real, tangible effects on the market of real, tangible food. And that sort of high-level speculation can cause markets to spike or plummet sporadically (see stock prices, bubbles - there are surprises alllll the time). And you don't want the prices of food to be erratic - people have to buy that shit everyday, and use it everyday, and people make it for an actual living. And it can be very bad for them.

The housing bubble hurt, because in some way property touches every aspect of the economy. We don't really care if gold's price is bullshit and flakey, because none of us need gold. But we need food, and we need property, and when speculation causes erratic behavior in those realms of the economy you hurt a lot of people (because people can't stop eating when the economy's high).

Doom wrote:

P.S., your examples of 'good' speculation suck, because they all so far involve people taking advantage of people struck by natural disasters.

It's not 'taking advantage' of people...it's helping people that need help when they need it.

DSMatticus wrote:
This is exactly my point...with economies so large nobody can get enough gold to represent their economy's transactions with it).

Oh look, another classic false assumption from high school. Outside of truly unusual situations (the Spanish conquest where, maybe it happened, briefly), no country has *ever* had enough gold to represent all their economy's transactions. The Roman Republic pre-Caesar barely had gold coins (they didn't start appearing until after the conquest of Gaul, which had gold mines), same for the Greeks before them, and darn near every country after.

So, seeing as this standard was never necessary in the past, why do you feel that standard is necessary now? (Hint: it isn't, as well as never has been)

I'm not saying these artificial values don't exist - I'm saying they're artificial, and they are serving no function or purpose to the economy as a whole, and people who actually want to use gold in applications would benefit greatly from ridding ourself of this anachronism.

Ok, so you don't want to use gold as a store of value, even though that's worked well enough for 5,000 years or so.

What do you propose people use instead? Consider the 100% failure rate of all paper currencies, I personally feel people should have the ability to save in a way that isn't vulnerable to a clown with a printing press...and the rest of the world agrees. No country's economy has ever been obliterated due to a lack of gold, but almost every paper currency to date HAS led to that fate (with extant currencies perpetually heading in that direction)...getting rid of gold is like getting rid of life insurance, it's a very simple, yet necessary, form of protection.

Do you feel life insurance serves no purpose to anyone, either?

The entire world is against you on this, but, do tell: what do you want people to use instead of gold, so that those people that just barely have a use for gold (heh) don't have to pay for it.

That's how a lot of third world countries are, they're in a perpetual state of near-starvation. Buying the region's food means less people can afford to eat, and selling that food back to them later doesn't help them,

Ok, so you've amended your argument so that speculation is bad when there's nothing to speculate with and thus impossible, and good when it's possible. I can agree with that, and still call it progress.

Again, this is exactly my point. They don't line up, but that doesn't mean they're independent.

prices become completely unrepresentative of what the market value actually is

So, completely unrepresentative....and dependent. Again, think it through.

Trading food on paper will not change the value of food with a 1:1 correspondence, but it has real, tangible effects on the market of real, tangible food. And that sort of high-level speculation can cause markets to spike or plummet sporadically (see stock prices, bubbles - there are surprises alllll the time). And you don't want the prices of food to be erratic - people have to buy that shit everyday, and use it everyday, and people make it for an actual living.

Prices of food are already erratic, because we happen to live on a planet with seasons. How do you propose we get rid of that? Again, think it through.

Again, like I mentioned before, when there is a disconnect, the market corrects. When platinum got 'too low' on paper, you couldn't actually buy it. When the price of silver got too high with the Hunt brothers, people turned in their actual silver. You're fretting over something that doesn't happen, even if theoretically it could.

Whoa. I never said gold should be used to represent the entirety of an economy (the actual idea of expending something of actual value, labor and resources, to acquire something so it can be thrown in a vault to represent other things of actual value, is patently ridiculous).

Also, 100% failure rate of paper currencies - lol. Allow me to rephrase what you've actually said - "of all the paper currencies that are no longer around, 100% of them have failed." Which is like saying, "there's no dead person that's survived dying." Unfortunately for your assessment, there are paper currencies that are still around, and so the failure rate is not 100% (because they infact currently exist).

Is it possible they will fail in the future? Yes. Is it certain they will? Well, we're talking potentially huge time frames, so yes, failure is inevitable. Whether it's sharp and dramatic (bad) or slow and gradual (not so bad). And since you're implying paper currencies will die/be replaced, it's worth asking, "what are they going to be replaced by?" Undoubtably, that's going to be another paper currency. This isn't even a net 'loss' in the paper currency column. This is just a switch from one currency to another, and the gradual collapse of an entire economy (and the collapse of that economy is reflected in its paper currency value).

But paper currency is as much a valid representation of an economy as gold, because there's nothing to either except a gentleman's agreement to say, "yeah, this is more valuable than it actually is. Roll with it." The advantage with paper is that it's much cheaper and easier to acquire than gold. So if you're going to apply arbitrary value to something, paper's going to cost you less. For some reason, gold's arbitrary value sticks better than paper's arbitrary value, because A) more people subscribe to its arbitrary value, and B) it has a longer history. There's really no reason that can't change other than inertia in the market - gold has as much reason to tank as paper, it just doesn't because it's gold.

And if you're expecting a currency to tank, sure you can buy out of that dollar and into gold. And this will in fact weaken the dollar further, possibly causing the very collapse you predicted if you have a large share of the dollar, or enough people join you that you share a large portion of the dollar. If you're pointing out that speculation can be good for the individuals that do it right, obviously - I'm pointing out that it's flat out bad for the economy. A mass shift from paper -> gold in the expectation of the paper currency's collapse will literally cause the predicted collapse, and make it much faster and much worse than it would have been otherwise.

Doom wrote:Ok, so you've amended your argument so that speculation is bad when there's nothing to speculate with and thus impossible, and good when it's possible. I can agree with that, and still call it progress.

You can totally speculate on things at normal market conditions, if you're expecting abnormal conditions in the future in your favor. They won't not sell to you just because you don't look hungry. You're just buying food at normal market price like everyone else, and then next season there's a little less food and you make a profit.

Doom wrote: So, completely unrepresentative....and dependent. Again, think it through.

Just because those words sound like antonyms doesn't mean they in fact are. Especially in light of the fact that dependencies can exist one way. And the fact that I'm referring to two different values (baseline market value, value as affected by speculation).

Doom wrote:Prices of food are already erratic, because we happen to live on a planet with seasons. How do you propose we get rid of that? Again, think it through.

Are you implying that, "since the food market already has fluctuations within some parameters X, it isn't a problem that speculation can cause fluctuations outside some parameters X?" I.e., that the fact agricultural commodities spike at all means the height, frequency, and duration of those spikes is completely irrelevant, and if speculation changes the height, frequency, or duration of these spikes it is in fact no bigger a problem than if they occured at all?

You really just implied that all market fluctuations are the same, and I know you didn't mean to say that, so maybe you should think that through. The 'natural erraticness' of a market can be measured and predicted at a level of averages. As such, the economy can account for it without breaking everytime it fluctuates due to failsafes (which may be as simple as a farmer keeping some money under his mattress, or as complex as government assistance). If speculation causes fluctuations significantly outside those expected boundaries, it will break those safeguards. The farmer goes from cracking open his piggy bank to losing his farm. And that is a big change.

Doom wrote:lying liar.

Ironically, while Chairman Bernanke just affirmed again a few days ago that the Fed will persist in its inflationary policy of quantitative easing to ward off the imaginary threat of falling prices, signs of inflation abound. The prices of consumer food staples have risen by 6 percent over the past year, with the prices of beef, bacon, butter and lamb rising by 10 percent or more. The U.N. index of grain export prices has risen by 70 percent in the past year and stands at its highest level in 21 years. Gasoline prices have surged 49 percent in the last six months. According to IMF statistics, commodity prices are up by 33 percent in the past year; metals prices by 40 percent; energy prices by 30 percent; crude oil prices by 31 percent; and commodity industrial inputs by 40 percent.3 As a result of skyrocketing prices of agricultural products such as corn, wheat, soybeans and other crops, the price of farmland in the U.S. has been soaring, particularly in the Midwest where land prices increased at double-digit rates last year and even regulators fear that a bubble is forming.

So, yeah, obviously the average of all those numbers is 2%. There's just no data saying otherwise.

He sure does sound like a lying liar to me. His evidence for inflation is that gasoline and food are expensive. It's almost like he doesn't realize there's war in the middle east, massive crop failures, climate change, and oil depletion.

He sounds like a politician. They don't really "lie" they just filter out any facts that they don't personally like. So they actually believe the shit falsehoods they are promoting.

The fact is that the whole situation is really complex. There are a whole number of reasons why, for example, food is getting more and more expensive. Large areas of crop lands are being diverted to ethanol production, for example. Large areas of crop lands are suffering from typical bad weather events. The price for gas is equally complex; the price of oil, the lack of refineries in general, the legal requirements to switch types of gas from winter/summer blends in a number of states which requires production to change and also results in a shortage spike before and after the switch.

For better or worse, these are not the factors that Bernanke thinks are vital to the economy long term. They are also factors monetary policy cannot control. (The fed cannot create a single refinery by interest rates or printing money.)

Gold Is A Total Joke.

A reader sends in this chart of various markets and assets over the past year.

UP at the top you have the wild stuff like corn and silver and cotton.

Below you have the boring stuff. Equities. The euro, and yes... gold, acting like a total snoozer.

Corn I can see. Silver I can see. Cotton?

Excuse me, while I start singing "Old Man River."