User talk:Drvrage

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Could you have a go at referencing and wikifying your edits? Thanks! MSGJ (talk) 20:08, 14 January 2008 (UTC)

Damienism
Damienism is an economic theory that is a loose amalgamation of Monetarist and Keynsian economics. The model recognizes the merits of both primary schools of thought, but seeks to add additional information specifically with regards to inflation. Damienists believ that a fourth cause beyond those of Robert J. Gordon's "Triangle Model.

Triangle Model:


 * Demand-pull inflation: inflation caused by increases in aggregate demand due to increased private and government spending, etc.
 * Cost-push inflation: presently termed "supply shock inflation," caused by drops in aggregate supply due to increased prices of inputs, for example. Take for instance a sudden decrease in the supply of oil, which would increase oil prices. Producers for whom oil is a part of their costs could then pass this on to consumers in the form of increased prices.
 * Built-in inflation: induced by adaptive expectations, often linked to the "price/wage spiral" because it involves workers trying to keep their wages up (gross wages have to increase above the CPI rate to net to CPI after-tax) with prices and then employers passing higher costs on to consumers as higher prices as part of a "vicious circle." Built-in inflation reflects events in the past, and so might be seen as hangover inflation.

Damienist addition:


 * Non Productive transfer of wealth: Any activity that extracts money from a system without providing a tangible benefit. The most common example of this is a theoretical speculative investor who through market manipulations such as day trading and short selling extract money from the financial markets without producing anything of value.  The gains incurred by the investor are then inevitably used in end use consumption.  This consumption of resources, due to the investor lifestyle, reduces the available stores of wealth and increases demand for good and services.  However, because the fundamental nature of such activities are non-productive, no wealth is created to support the consumptive habits of the investor.  The increase in demand combined with the lack of producing anything of value simulates the Demand-pull inflation model, though its cause is of a different nature.  This same principal is included in any market including housing and commodities markets.

Criticism of Non-productive transfer of wealth:


 * It has been argued that market speculation does provide tangible productive benefits in the form of market liquidity. This liquidity results in a greater efficiency of financial markets as a whole, thus justifying the wealth extracted from the markets.  Damienists counter this argument by stating that the benefits provided by the liquidity of markets is not proportional to the extracted wealth.  Due to the nature of ascribing a price/cost of something as esoteric as market liquidity from a specific source is by it's very nature unquantifiable, Damienists are left with the moral assuation that "trying to make a quick buck" rather than earning a dollar is a root caus of inflation and a detriment to all players in financial markets and society as a whole.