Inflation Targeting: the Original Sin

[bart]

Re: Inflation Targeting: the Original Sin

If you were attempting to produce a competitor for the FDI, you could do that, but why not a cooperative effort? Given our different strengths, it would be more productive. With the caveat that free advice may be worth every penny you pay for it, mine would be to stick to your monetary knitting - with but one modification - calculate your monetary aggragate on a per-capita basis. Then apply my 'knitting' for the price stuff. Finally, assemble a composite of your per-capita monetarily-derived inflation series and my price-derived inflation series.

Presto! Entire picture covered.

To be perfectly frank, that thought has crossed my mind more than once. The real answer is just plain that I'm not far enough along in how happy I am with what I have to date to have even privately emailed you like I normally do.

This is rough stuff and my certainty level with what I want to do and to prove keeps getting kicked around as I work with the data, or even find that I've had another "senior moment" and forgotten some key data.
As usual, I'm out on the ragged edge... and getting ripped here & there...

This is the core theoretical problem with a single-commodity-based monetary system. All individual commodities have their own supply and demand dynamic. What if, say, some huge new discovery of high-purity ore just three feet underground occured? This may be a stretch, but something like this happened when the Spanish brought huge loads of gold and silver back to Europe from South America. High inflation in a hard money regime actually happened. There could also be a technological breakthrough making nuclear transmutation much cheaper than heretofore. (Imagine a Federal Reserve Bank of Los Alamos.) Or conversely, what if someone discovered a cancer cure in which gold was a critical ingredient? You could have a rapidly appreciating money, deflation, and falling prices. Ultimately, and ideally, you seek a neutral commodity of intrinsically constant value for your point of reference. Like I do with the FDI.

...

Exactly, oh wonder maven of money and The Manor.

I had almost added in the Spanish experience but used the Gold Rush since it's more familiar to U.S. folk... and it's the exact same situation, only worse since more gold was thrown into the Spanish money supply.

:eek: :eek: on a Fed of Los Alamos! ;)

The FDI would certainly measure any given monetary system, but the kicker remains of how to effectively deal with the lessons of history and that very small percentage of folk with black goals.
There's nothing innately wrong with fiat money too - it's the scum that allow it to get out of hand for whatever "colorful" reasons.

[Finster]

Re: Inflation Targeting: the Original Sin

To be perfectly frank, that thought has crossed my mind more than once. The real answer is just plain that I'm not far enough along in how happy I am with what I have to date to have even privately emailed you like I normally do.

Now that you mention it, if we were to explore it any further, off-line would probably be the place for it ... no need to burden a public forum with our *trade secrets* ... ;)

:eek: :eek: on a Fed of Los Alamos! ;)

Scary thought, huh? Wouldn't that be the limit! Just about the time they ruined everything to the point people would be ready to revisit a gold standard, they'd figure out a way to "print" the stuff up on the cheap ... ;)

The FDI would certainly measure any given monetary system, but the kicker remains of how to effectively deal with the lessons of history and that very small percentage of folk with black goals.
There's nothing innately wrong with fiat money too - it's the scum that allow it to get out of hand for whatever "colorful" reasons.

It's kind of like the weather. The best we can do is measure and forecast it. Actually doing something about it is an altogether different proposition ... ;)

[bart]

Re: Inflation Targeting: the Original Sin

Now that you mention it, if we were to explore it any further, off-line would probably be the place for it ... no need to burden a public forum with our *trade secrets* ... ;)



Scary thought, huh? Wouldn't that be the limit! Just about the time they ruined everything to the point people would be ready to revisit a gold standard, they'd figure out a way to "print" the stuff up on the cheap ... ;)

That gets at least two:
http://www.nowandfutures.com/grins/rimshot.mp3
http://www.nowandfutures.com/grins/rimshot2.mp3

It's kind of like the weather. The best we can do is measure and forecast it. Actually doing something about it is an altogether different proposition ... ;)

One day I'll actually scare up a bunch of time and start working with folk like Catherine Austin Fitts and others in the political area. As much as I've resisted it over the years, I don't know any other way to try and make a difference... and it's an outlet for the frustration and anger too.