A dishonest graph?

Get advice, tips, or help with science or religion debates that you are currently participating in.

Moderators: Alyrium Denryle, SCRawl, Thanas

Post Reply
User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

A dishonest graph?

Post by Magus » 2008-05-16 05:05pm

I'm debating with a libertarian who wants us to return to the gold standard (a la Ron Paul), and I'm arguing that, while the Fed needs some serious restrictions, the fiat system is not inherently flawed, and that the gold standard isn't a viable option for an economy this large.

Anyway, he trotted out this graph:

Image

His purpose is to state that "The dollar value remained relatively consistent" (before the Fed was established). Now, I could be a complete retard, but isn't it the nature of graphs such as these that the upper portions are "stretched" so to speak? For example, prices seem to have doubled between around 1860-1864, whereas it took 5 times as long for prices to double between 1980 and 1999. Despite this, it looks as though the 1860s growth is insignificant compared to the trend from the 80s on up. Isn't the percentage change from year to year far more useful in a discussion regarding stability?

Is this graph misleading? Does it paint a far worse picture regarding the value of the dollar after 1917 than is fair? Or am I reading it wrong?
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

User avatar
Surlethe
HATES GRADING
Posts: 12214
Joined: 2004-12-29 03:41pm
Location: Hiding a pot of gold at the end of the Ricci flow
Contact:

Post by Surlethe » 2008-05-16 05:12pm

Are the values nominal or real? Or am I misunderstanding what the graph is showing?
Keep, ancient lands, your storied pomp! Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me. I lift my lamp beside the golden door!

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-16 05:24pm

Surlethe wrote:Are the values nominal or real? Or am I misunderstanding what the graph is showing?
I believe that the "price levels" title means that if it cost $100 in 1999, it would cost $5 in 1900.
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

User avatar
Alyrium Denryle
Minister of Sin
Posts: 22132
Joined: 2002-07-11 08:34pm
Location: The Deep Desert
Contact:

Post by Alyrium Denryle » 2008-05-16 06:46pm

The question is not "what are prices now, vs what did prices used to be"

the question is

"has standard of living and the buying power of the individual person increased or decreased" and "can these things be attributed to the existence or non-existence of the Fed"

Hell, a gold standard does not make any sense. If I produce a widget, why should its value be converted a gold value, which is then bartered, when I can just exchange the token for my widgets value directly? If anything, a fiat system, with its middle man(gold) gone, prices more accurately represent the value of my widget, because wealth is not bound to some fixed standard, but rather, can be created proportionally to my creation of widgets that people are willing to buy.
GALE Force Biological Agent/
BOTM/Great Dolphin Conspiracy/
Entomology and Evolutionary Biology Subdirector:SD.net Dept. of Biological Sciences


There is Grandeur in the View of Life; it fills me with a Deep Wonder, and Intense Cynicism.

Factio republicanum delenda est

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-16 07:08pm

Alyrium Denryle wrote:The question is not "what are prices now, vs what did prices used to be"

the question is

"has standard of living and the buying power of the individual person increased or decreased" and "can these things be attributed to the existence or non-existence of the Fed"
I know, but it's his argument, not mine. I don't really want to get into things like "standard of living" or "individual buying power" because those statistics also reflect wages, taxes, and a slew of other things the Fed can't possibly control.
Hell, a gold standard does not make any sense. If I produce a widget, why should its value be converted a gold value, which is then bartered, when I can just exchange the token for my widgets value directly? If anything, a fiat system, with its middle man(gold) gone, prices more accurately represent the value of my widget, because wealth is not bound to some fixed standard, but rather, can be created proportionally to my creation of widgets that people are willing to buy.
Well right. I'm not having too much trouble with rebutting his position in general - I just want to be sure that the graph is at best not showing relevant data, and at worst is skewing the data.
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

User avatar
Alyrium Denryle
Minister of Sin
Posts: 22132
Joined: 2002-07-11 08:34pm
Location: The Deep Desert
Contact:

Post by Alyrium Denryle » 2008-05-16 07:17pm

Well, in short, the data is not relevant because it asks the wrong question.
GALE Force Biological Agent/
BOTM/Great Dolphin Conspiracy/
Entomology and Evolutionary Biology Subdirector:SD.net Dept. of Biological Sciences


There is Grandeur in the View of Life; it fills me with a Deep Wonder, and Intense Cynicism.

Factio republicanum delenda est

bilateralrope
Sith Marauder
Posts: 3854
Joined: 2005-06-25 06:50pm
Location: New Zealand

Post by bilateralrope » 2008-05-16 07:58pm

The graph states that pre 1913 prices were estimates. How were these estimates produced ?

Unless he can convince you that the estimation was a valid method, I'd treat all the pre 1913 values as unreliable. Especially as his argument seems to rely on them being accurate.

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-16 08:08pm

My response to the graph portion of his argument follows:
The purchasing value of the dollar is irrelevant on its own. Sure, a $450 car is unthinkable today. But so is a $150/month salary. Your graph, without additional data, is absolutely worthless. Additionally, how do we know the pre-1913 estimates are reliable?
Thanks, all.
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

User avatar
Surlethe
HATES GRADING
Posts: 12214
Joined: 2004-12-29 03:41pm
Location: Hiding a pot of gold at the end of the Ricci flow
Contact:

Post by Surlethe » 2008-05-17 01:07am

Ah, I'll bet it's a graph of the CPI from 1800 on. It's basically a measure of how much a basic basket of goods cost in each year relative to 1999, with 1999 normed to 100. As Alyrium pointed out, it doesn't correct for the ability to afford the basket of goods.
Keep, ancient lands, your storied pomp! Give me your tired, your poor, your huddled masses yearning to breathe free, the wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me. I lift my lamp beside the golden door!

User avatar
DPDarkPrimus
Emperor's Hand
Posts: 18399
Joined: 2002-11-22 11:02pm
Location: Iowa
Contact:

Post by DPDarkPrimus » 2008-05-17 01:12am

What do the vertical numbers even mean? 0-100 out of what, exactly?
Mayabird is my girlfriend
Justice League:BotM:MM:SDnet City Watch:Cybertron's Finest
"Well then, science is bullshit. "
-revprez, with yet another brilliant rebuttal.

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-17 02:15am

DPDarkPrimus wrote:What do the vertical numbers even mean? 0-100 out of what, exactly?
Dollars. Probably based on a theoretical "fixed commodity" (I suspect gold, already largely stable, adjusted for demand fluctuations). If it cost 100 in 1999, it used to cost Y-value dollars in year X-value.
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

User avatar
Illuminatus Primus
All Seeing Eye
Posts: 15774
Joined: 2002-10-12 02:52pm
Location: Gainesville, Florida, USA
Contact:

Post by Illuminatus Primus » 2008-05-17 02:39am

God, are lolbertarians pro-19th century? Is it irrelevent that the economy boomed and accelerated dramatically with the introduction and advancement of the industrial state? The value in the system goes up precipituously, and we're supposed to keep the flat money supply of the agricultural era indefinitely? How retarded is that?
"You know what the problem with Hollywood is. They make shit. Unbelievable. Unremarkable. Shit." - Gabriel Shear, Swordfish

"This statement, in its utterly clueless hubristic stupidity, cannot be improved upon. I merely quote it in admiration of its perfection." - Garibaldi in reply to an incredibly stupid post.

The Fifth Illuminatus Primus | Warsie | Skeptical Empiricist | Florida Gator | Sustainability Advocate | Libertarian Socialist |
Image

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-17 03:10am

Illuminatus Primus wrote:God, are lolbertarians pro-19th century? Is it irrelevent that the economy boomed and accelerated dramatically with the introduction and advancement of the industrial state? The value in the system goes up precipituously, and we're supposed to keep the flat money supply of the agricultural era indefinitely? How retarded is that?
The ones I talk to are under the impression that the value of gold will just increase until it can cover an economy of our size. This will result in a drastic increase in the value of a dollar, and prices and wages will fall across the board. Of course, this would be rather detrimental to high-performance micro-electronics industries, but they can't seem to understand that gold actually has functional demand in this day and age, not just value demand or ornamentation demand.
Last edited by Magus on 2008-05-17 03:53am, edited 2 times in total.
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

bilateralrope
Sith Marauder
Posts: 3854
Joined: 2005-06-25 06:50pm
Location: New Zealand

Post by bilateralrope » 2008-05-17 03:18am

Magus wrote:
Illuminatus Primus wrote:God, are lolbertarians pro-19th century? Is it irrelevent that the economy boomed and accelerated dramatically with the introduction and advancement of the industrial state? The value in the system goes up precipituously, and we're supposed to keep the flat money supply of the agricultural era indefinitely? How retarded is that?
The ones I talk to are under the impression that the value of gold will just increase until it can cover an economy.
How do they propose to accurately measure the gold required to buy a loaf of bread after this happens ?

If they propose alloying it with some cheap metal to make it easier, how would they deal with the coin maker putting a bit less gold in the coins so that they can increase their wealth by trading those coins for ones with the full amount of gold ?

Not that I expect them to have actually thought about this.

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-17 04:32am

bilateralrope wrote:
Magus wrote: The ones I talk to are under the impression that the value of gold will just increase until it can cover an economy.
How do they propose to accurately measure the gold required to buy a loaf of bread after this happens ?
Perhaps use a third stable commodity (other than gold or dollars) to gauge the new purchasing power of the re-valued gold? Beyond that, I have no idea what they're thinking, if at all.
If they propose alloying it with some cheap metal to make it easier, how would they deal with the coin maker putting a bit less gold in the coins so that they can increase their wealth by trading those coins for ones with the full amount of gold ?
Right, because no government has ever abused a gold-standard by cutting their own coins. </sarcasm>

I really doubt they've thought it through. I completely understand where they're coming from, what with the rampant abuse fiat currency is taking in America. They make the erroneous assumption, however, that such abuse is inherent in the system, as well as gloss over the abuses (and failures) that can and have occurred under gold standards.
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

User avatar
Jeremy
Jedi Master
Posts: 1132
Joined: 2003-04-30 06:47pm
Location: Hyrule

Post by Jeremy » 2008-05-17 08:25am

On a side note, is possible that some goods just cost more now than then?

How many people have a dairy cow in their neighborhood?
I'm sure a wooden sailing ship cost a lot in the 1700s but without all the dedicated industry and technical knoweldge of that era to that specific production, wouldn't a wooden sailing ship of the same make cost more now?
• Only the dead have seen the end of war.
• "The only really bright side to come out of all this has to be Dino-rides in Hell." ~ Ilya Muromets

User avatar
Zixinus
Emperor's Hand
Posts: 6618
Joined: 2007-06-19 12:48pm
Location: In Seth the Blitzspear
Contact:

Post by Zixinus » 2008-05-17 09:30am

On that note, aside the functional value of gold and its scarsity, how did we swich away from gold and what do we excatly have instead of it?

EDIT: I know we somehow measure a nation's economic output, but how does that work excatly?
Credo!
Chat with me on Skype if you want to talk about writing, ideas or if you want a test-reader! PM for address.

User avatar
Magus
Padawan Learner
Posts: 377
Joined: 2006-11-05 09:05pm
Location: Consistently in flux
Contact:

Post by Magus » 2008-05-17 11:16am

Zixinus wrote:On that note, aside the functional value of gold and its scarsity, how did we swich away from gold and what do we excatly have instead of it?

EDIT: I know we somehow measure a nation's economic output, but how does that work excatly?
Since 1973, the dollar and other world currencies work as honest-to-goodness scarcity-based resources. Since we're required to use the dollar to pay taxes, and there's only so many dollars, it maintains a certain relative value. By not telling the public exactly how many dollars are printed at any one time (or exactly when more are printed), inflation is retarded to the point where the dollar doesn't immediately lose value when the Fed prints more to cover the government's ass. Eventually (and slowly), however, the economy catches on to the fact that more of the resource exists than "should" and prices re-adjust upwards (since the dollar is then worth less) - causing inflation.

<partially researched>
I believe prior to the actual transition to a floating currency system, the dollar's value was based off a specific quantity of gold. Over a series of moves, however, the public's ability to actually trade in for that gold was removed, and at that point we had a workable system where the dollar was based on absolutely nothing (but retained the same approximate value it had when based on gold). By printing more or less money (as above) the government has reduced the value to about... ?1/10th? what it was based on gold. Of course, people now make more money as well, so it (partially) compensates. But at this point, we're simply trading on the idea that we want dollars, and there's not an unlimited supply.</partially researched>
"As James ascended the spiral staircase towards the tower in a futile attempt to escape his tormentors, he pondered the irony of being cornered in a circular room."

Post Reply