Schlagwort-Archive: getting richer

Very interesting to read

Here on the Mises blog:
http://mises.org/daily/5170/The-Myth-of-Japans-Lost-Decades

That is interesting and we can really build on it.
Let’s assume the production stays the same for one year. Let’s say it#s 100 PP (Product Pieces) now we just have the amount of 100 (money units) for paying this services.

Now the “stimulius should” start with more “money” . Well we increase the amount of money to 105. nothing will happen to PP. So we have 105 MU for 100 PP and so what happens to the +5 MU?
Well in the end the prices will have to rais to 1.05 MU/PP.

f

But in fact nothing more was produced. And still we’d an GDP growth of 5%. Which would imply that there are more goods. But it’s just an illusion. We have the same products just more money
so we did not get richer by any means. We could not have saved more nor could more be consumed.

I’m quite aware that the “illusion” of having more money makes a difference. If you think you have more money. You either consume more or of you are a producer you think about expanding your production. And here comes the base for the boom/bust. You invest in something under the impression that there is “really” more demand. But it’s not there really. And you investements will make you more poor.

So our problem always is to figure out if there really is more demand or just more money. I have though about it today and written down my ideas here:
http://fdominicus.blogspot.com/2011/04/welche-art-von-aufschwung-haben-wir.html
Sorrry it’s in German but I concluded from all the surrounding that we here in Germany see a boom driven mostly by thinking the demand is higher. It’s not fully clear because our car makers produce much more than before, but you have to see they had a sharp decline the former years. I’M not fully sure if we are on the same level of production as in 2008. But even if we’d have we do not know if all the cars really get sold.
So the above articles makes it very clear on how difficult this areas is. And it’s getting worse with every other non-market driven action like tax reductions or tax raises or new laws for social security etc.

Anyways the link gives us an idea. We can take e.g the car output as measure. Cars are real and so we’d have at least some better base. If we than see the raise in the in money valued growth, We can see if we really got “richer” by the means of more production or the “production of” money…. From this I think one can draw better conclusions as from any money valued growth alone…