Inflation and Monetary Policy

[tkobo]

As much as you would like only the voices that agree with you to speak in threads you post in, its not likely too happen.

Also,Umm, actually you sent 1 ONE 1(NOT plural) private message,at the time i replied in this thread.Please dont lie.
And you had NOT replied to my answer of it.
In fact the second PM wasnt sent til 04 Apr 2005 06:57 which was 4 FOUR 4 hours fater i posted above.

Lasty though you may FEEL you somehow can order people around on this forum, you cant.

You put forth a statement on a public forum ,expect it to be rebutted by people who feel its wrong.

"You know everyones opinion was acceptable."
Odd, i thought i read this somewhere.

You cant deal with that ? Tough.

" I will no longer be responding to you."
I can only wish.

Have a niiiccceee day.

[dust off]

Hey guys can you both call a truce or ignore each other or something else effective. Because your comments are moving towards the personal and in the best interests of SR2010 new visitors could be put off.

Whoever is at fault, if in fact anyone is, the effects of personal aguments could be negative.

Having said that I remember reading Super Power 2 threads with fantastic arguments about its dimness. They were great reading.



But the greater purpose of these threads are to debate aspects that might improve the game right? So best of both worlds could be to have an argument thread in off topic.

[Son of Moose]

Dust Off:

Yes .... I am afraid that I have to agree with you on this one.

As I would like to retain a cordial relationship with BOTH of the protagonists, I will not be overly censorious. Nevertheless, it can become a little overwhelming trying to sift through some extremely intense posts that have often drifted somewhat away from aspects that are fundamental to the game.

Maybe we are all getting a little intense about the imminent release of this game.

Perhaps Chris can forward BOTH Tkobo and RCBricker the private address for the beta download so that they can both "cool their heals" by playing a fairly recent version of the game prior to its release.

[RCBricker]

I actually came looking to learn about the game and allowed myself to get sucked into a childish arguement.

My apologies to the forum members and the devs and any new members that are having to read that load of junk we passed off as conversation.

...And now back to our regularly scheduled topic of economics

[dust off]

In case my last post was ambigious.

It is my honest opinion that, generally speaking, blame is often difficult to attribute to one belligerent only. Also it is my experience that many people argue, in both its formal and common usage, over some abiguity inherent in language. With its inherent ambiguity it is easy to convey a slight or insult without intending it. Also ideas forcefully attacked, when explored further, can often mean something different to the what one first understood it to mean.

My post really did not intend to judge who was at fault.
Rather it intended to highlight possible consequences of legitimate argumentation moving towards peronal dispute.

[Son of Moose]

Indeed, my comments were similarly intended.

[RCBricker]

No offense or feeling of fault felt from either of you.

[Balthagor]

Hey, let's all have a big group hug

Glad to see that things are getting back on topic. Didn't have the time to read much of these posts anyway, too many long posts

I saw that George answered some of the economy questions, hopefully we'll be able to get him to answer a few more since I for one know nothing about the subject. We may also be a little slow responding over the next couple weeks as the workload is tremendous ATM.

[the_economist]

perhaps it is a little late for this suggestion but you might consider to include it in the updates.

A word about the famous Phillips Curve.

Yes, you can still exercise it and get significant t-statistics for the independent variables, which means that the real values are affected by discresionary monetary policy (I have done research on this issue in my advanced econometrics class). The thing is that very few countries choose to exercise it extensivelly, but many (talking about well developed countries) play with it within reasonable limits (I wouldn't say more than 1% annually) before political elections in order to present more appealing numbers to the general public. I said enough theory and let me suggest some solutions for the game.

First, this would be very simplified scenario of the monetary system in the game. My suggestion will give the opportunity for an independent country to use the Phillips Curve in time of war, as many have done in the recent past (like Serbia under Milosevic, who financed the whole war in Bosnia from inflation)...

create a fictional world currency (let's say World Credits), which will represent the real values (a constant function) of the commodities in the world market and will be used to trade among countries.

if a player chooses high inflation environment, you could create 2 functions for the local economy: purchasing power and prices, something like this:

purchasing power = 2x
prices = 1 + x

or you can put in exponential or log (these two need more work to make it right). This will give some advantage in the short run (not more than 6 months in the game, maybe even less), but a lot of dissadvantage in the long run. In order not to figure out the equations and to feel the consequences, whenever the player chooses to cut inflation before the two functions intersect, the program would continue to drive the country into recession, under the "adjustment period," which will be a bit longer than expansion, in order to have net negative effect.

This is also neat when conquering a region. Once it is under conqueror's rule it will simply translate the old currency into the new one through the world currency.

Should also include real GDP/c...

for visual appearance you can put this value in parenthesis next to the local currency...

Sorry, but it is 4am and I gotta go to work early. Please, don't hesitate to reply if you have any questions, of if I missed something (since I am new).

[Igor]

No serious economist since the 1970s believes that low unemployment causes inflation -- or that higher inflation lowers unemployment.

Oh, really? Then perhaps you'd like to explain why Sweden (my country) currently has the lowest inflation in decades, while it has the highest unemployment in decades. Take a look at this:

http://www.riksbank.se/


That's the official website of the Swedish National Bank. Look in the lower right corner. That's the current inflation rate. As you can clearly see, it's currently at 0.1%, in other words bordering on DEFLATION. The unemployment rate is currently through the roof, and it's steadily climbing to over the 10% mark. The CIA fact book might tell you otherwise, but that's because they take the word of the goverment. See, the goverment counts people that are being shuffled around different training programs for the unemployed as being "employed", and certain other individuals, like part time employees, and temporary employees, as well as people on sick leave and so on.


This is of course to sanitize the unemployment figure and make it look like a slightly above average 4-5%, while the total number of people who don't have a regular job to go to ammounts to nearly 10%. Next year being election year and all, you can see why it's in their best interests to shuffle people around different programs and such to make them count as "employed", in order to make it look like they've lowered employment in preparation for the election. But most of those so called jobs are just hot air to make the statistics look better. Anyway, why don't you explain to me why the inflation is at a record low, while the unemployment is at a record high? And while you're at it, would you mind explaining why they teach the very thing you claim is false in my school? That's right, i learned that very concept in school, that high inflation equals low unemployment, while low inflation equals high unemployment.



It obviously has to be a very good economic theory since they're teaching it at schools...

[aegisx]

theories are just theories. If someone had mastered economics, we would know how to run things so no one has problems

[Igor]

Well, i think it's a little more than just a baseless theory, since there's obviously a connection between low inflation and high unemployment, and vice versa.

[lordrune]

It's a theory that seems to translate well to practice.

When unemployment is low, employers pay a premium to employ the workers they need. This has the effect of increasing wages, thus increasing demand for goods and services. This is inflationery.

By increasing the labour supply (e.g. getting people off welfare into work, or importing migrants, or outsourcing jobs) you put downward pressure on wages, which will by nature counter inflation to some extend. Of course, being an egalatarian commie, I prefer a market where there is strong demand for labour, combined with the concept of a somewhat scaled taxation system (tax-free thresholds and higher marginal tax rates for higher income people) - see it also drives inflation down (as there is not so much disposable income for the richest people) while keeping income at a decent level the middle class Of course, it doesn't help GDP growth, but I'm one of these people in real life who couldn't care less how the economy does so long as everyone's keeping their head above water and is happy.

But all that aside, in general, unemployment high=inflation low. Unemployment low=inflation high.