New Tractor Sales Are Declining

[Cahaba Valley Farm]

Please explain?

Deficit spending by local governments is done via bond issues, yes? Which the bonds are bought by..investors, using money that already exists.

Deficit spending by the federal goverment is done via...treasury/bond issues, which similarly are bought by investors, but also by the federal reserve via quantitative easing. I agree quantitative easing is basically printing money from thin air..but QE is the issue, not deficit spending there, as the treasuries that fund the spending (not via QE) are bought using existing US dollars, no?

I fail to see how deficit spending increases the money supply more than fractional reserve lending, where each loan made can be 100% newly magic'ed money due to zero serves, or 90% new money (assuming 10% fractional reserve).

IMO, this is an important topic as most people (and perhaps I'm one of them) don't understand our monetary system, how money is created, or what is actually causing inflation (increase in money supply, not increase in prices).

I'm backing you up on this post. I think it was well thought out and well communicated. And I also have been wondering the same thing for a long time. For Torvy to say he can't be bothered to explain this is a cop out in my opinion.

 

[airbiscuit]

I just stopped at the local Kioti dealer. Their sales have been brisk. More stock is coming in, and most of it is pre-sold. And today is really the only nice weather we've had so far this spring. Nice weather makes people twitchy to buy tractors

 

[Cahaba Valley Farm]

I just stopped at the local Kioti dealer. Their sales have been brisk. More stock is coming in, and most of it is pre-sold. And today is really the only nice weather we've had so far this spring. Nice weather makes people twitchy to buy tractors

Thanks for the update AB. It seems you are in one of the few markets that still has very strong demand.

 

[tacticalturnip]

Our Kioti dealer just go restocked to the hilt; one evening I went by and there was a truck just sitting there loaded up with crate tractors. Well they're assembled now, and they've got a good selection. I hope they move them, I like these guys and I want them around lol.

 

[Cahaba Valley Farm]

Our Kioti dealer just go restocked to the hilt; one evening I went by and there was a truck just sitting there loaded up with crate tractors. Well they're assembled now, and they've got a good selection. I hope they move them, I like these guys and I want them around lol.

Where are you located tactical?

 

[tacticalturnip]

Where are you located tactical?

I'm up here in Maine; my dealer has two locations, and they've done well to cement Kioti into the local market. I really hope to see it continue, the competition they provide is good for slowing down the rise in prices at least a little. There may not be much room for negotiating these days, but it helps when you can.

 

[rScotty]

I'm backing you up on this post. I think it was well thought out and well communicated. And I also have been wondering the same thing for a long time. For Torvy to say he can't be bothered to explain this is a cop out in my opinion.

Here is how I think of additional dollars created by deficit spending. I don't know if it is formally correct, but would be interested to see is others feel that same way. Here goes....

A paper dollar has no REAL value like it would if it were gold. What it has is the concept of value.
Similarly, deficit spending creates the concept of additional money in circulation even though there isn't any real additional money.

An example, is suppose you took out a loan (that is deficit spending) and although you only made one dollar last year your loan enabled you to spend two dollars of value. That additional dollar has no real existance - and certainly no real value - but it exists because it was used in a transaction. . That meant that an the "concept " of an additional dollar was added to the economy.

rScotty

 

[jyoutz]

It’s not going to compare to a taxpayer funded government pension, but yeah 5% is still pretty good.

Taxpayer funded government pensions are half funded by employee contributions. And no, the COLA on them isn’t often 5% or more per year. It’s usually more like 2%. But I’m not retired, I just get the mailings from the retirement board.

 

[jyoutz]

So not all economists agree, right?

Economics is called “the dismal science “ and there are a diverse range of opinions among economists and economics professors.

 

[airbiscuit]

 

[rScotty]

Economics is called “the dismal science “ and there are a diverse range of opinions among economists and economics professors.

I don't know if economics is a science. That's not a knock on economics, the same can be said for literature, law, and lots of things. But I don't see economics as even claiming to comply with the basic requirements of being a science.

One test of something being scientific is that it is experimentally repeatable & yields the same results each time.
Another test is that a theory that explains the experimental results can be used to make accurate predictions of future events.

Studies of lots of subjects can be fascinating without needing to suffer the peculiar constraints required to be sciences.

rScotty

 

[jyoutz]

I don't know if economics is a science. That's not a knock on economics, the same can be said for literature, law, and lots of things. But I don't see economics as even claiming to comply with the basic requirements of being a science.

One test of something being scientific is that it is experimentally repeatable & yields the same results each time.
Another test is that a theory that explains the experimental results can be used to make accurate predictions of future events.

Studies of lots of subjects can be fascinating without needing to suffer the peculiar constraints required to be sciences.

rScotty

I agree with you. I’m just quoting my old college economics professor.

 

[Cahaba Valley Farm]

Here is how I think of additional dollars created by deficit spending. I don't know if it is formally correct, but would be interested to see is others feel that same way. Here goes....

A paper dollar has no REAL value like it would if it were gold. What it has is the concept of value.
Similarly, deficit spending creates the concept of additional money in circulation even though there isn't any real additional money.

An example, is suppose you took out a loan (that is deficit spending) and although you only made one dollar last year your loan enabled you to spend two dollars of value. That additional dollar has no real existance - and certainly no real value - but it exists because it was used in a transaction. . That meant that an the "concept " of an additional dollar was added to the economy.

rScotty

That's an interesting concept But somehow there has to be recompense for the dollars that were loaned or too many dollars would be created and eventually the value of every dollar would be worth nothing and that's the point where it becomes more questions then answers.

 

[drumminj]

Here is how I think of additional dollars created by deficit spending. I don't know if it is formally correct, but would be interested to see is others feel that same way. Here goes....

A paper dollar has no REAL value like it would if it were gold. What it has is the concept of value.
Similarly, deficit spending creates the concept of additional money in circulation even though there isn't any real additional money.

An example, is suppose you took out a loan (that is deficit spending) and although you only made one dollar last year your loan enabled you to spend two dollars of value. That additional dollar has no real existance - and certainly no real value - but it exists because it was used in a transaction. . That meant that an the "concept " of an additional dollar was added to the economy.

rScotty

Thanks for productively engaging in the discussion, rScotty!

I think there's interesting nuances to your scenario to explore and pick apart. The dollar you borrowed in this example came from one of two places -- 1) it already existed in the form of someone's savings, which was re-deployed into the economy as a loan, or 2) it is newly created.

#2 is pretty straight-forward -- there's 1 new dollar in existence that wasn't there before.

#1 is more complicated. I'd argue that no new money is created -- the dollar that was in savings was simply given to someone else for a period of time. But now there are basically two claims on that one dollar (and what if the borrower deposits it in savings which is then re-deployed as another loan?).

I think I agree with you the concept of an additional dollar was added to the economy, at least while the loan is outstanding. I'm still debating whether outcomes #1 and #2 are any different in a practical sense.

I do think that borrowing via issuing a bond which someone must purchase/trade dollars for is different than borrowing via bank loan.

 

[2manyrocks]

Economics can be elusive to understand because it's a mix of conceptual and practical thinking about tendencies of human behavior sometimes measured by statistical data and analysis. At its core, the basic premise is that there is a finite amount of goods and services to be had and therefore, there is a cost associated with the production of everything.

Milton Friedman was 100% correct when he said there's no such thing as a free lunch because it costs somebody something to produce. This basic principle is why no one, not the government and not the central bank, can just print money, run deficits, impose regulations, etc. without someone paying the cost directly or indirectly. It's difficult to statistically determine how much these costs are and who specifically bears them. This is also partly why this is getting worse as time goes by because it's not like a direct tax where most citizens have to pay a specific, measurable tax bill because they would eventually rebel and say they are spending too much and taxes are too high. But when it's all pie in the sky, we get what we're getting right now.

There's no need to get lost in the weeds in the details of how the fed works or deficits work. There's a cost. Somebody gets stuck with the bill.

 

[ddbackhoe]

Economics can be elusive to understand because it's a mix of conceptual and practical thinking about tendencies of human behavior sometimes measured by statistical data and analysis. At its core, the basic premise is that there is a finite amount of goods and services to be had and therefore, there is a cost associated with the production of everything.

Statistics - the art of making something look like whatever you want it to be

 

[Hay Dude]

All this talk about “corporate greed” is just low hanging fruit.
Sure, it exists, but how about the greed of individuals living off government handouts/welfare/SNAP when there are many perfectly fit for a job? Why is there no energy to go after them, too?

 

[ddbackhoe]

All this talk about “corporate greed” is just low hanging fruit.
Sure, it exists, but how about the greed of individuals living off government handouts/welfare/SNAP when there are many perfectly fit for a job? Why is there no energy to go after them, too?

One guess, the powers that be find that their core voting block is mostly guilty so they opt to not look into the matter further.

 

[rScotty]

Economics can be elusive to understand because it's a mix of conceptual and practical thinking about tendencies of human behavior sometimes measured by statistical data and analysis. At its core, the basic premise is that there is a finite amount of goods and services to be had and therefore, there is a cost associated with the production of everything.

Milton Friedman was 100% correct when he said there's no such thing as a free lunch because it costs somebody something to produce. This basic principle is why no one, not the government and not the central bank, can just print money, run deficits, impose regulations, etc. without someone paying the cost directly or indirectly. It's difficult to statistically determine how much these costs are and who specifically bears them. This is also partly why this is getting worse as time goes by because it's not like a direct tax where most citizens have to pay a specific, measurable tax bill because they would eventually rebel and say they are spending too much and taxes are too high. But when it's all pie in the sky, we get what we're getting right now.

There's no need to get lost in the weeds in the details of how the fed works or deficits work. There's a cost. Somebody gets stuck with the bill.

Yes, that is one school of economic theory. It is based around the idea that the supply of things that can be bought is finite, and therefore there is a limit on the amount of money. Very big with horders and gold bugs. The big advantage to that way of thinking seems to be that if we are accepting those limits it allows for a self-consistant field of economic mathematics to be developed and studied. Professors and universities love that for all the obvious reasons. The disadvantage is that the results of that math don't seem to apply so well to the real economic world we live in.

There are other schools of economic thought as well. Another one popular today is that the supply of things that can be purchased is always expanding as human knowledge and abilities expands. That leads to a different economic math which is more complex and possibly more applicable.

I am NOT an economist and haven't bought into either school of thought. Both are interesting.
rScotty

 

[rScotty]

One guess, the powers that be find that their core voting block is mostly guilty so they opt to not look into the matter further.

Uh.... Bingo!