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Austrian economics = faulty due to paradox
- Thread starter scriabinop23
- Start date
Quote from buzzy2:
So according to you, Keynesianism and Monetarism have "certain weaknesses and failures" but they are not enough to discredit them.
But Austrians; "logical weaknesses" (not real, actually made up by yourself) are enough to "bring it down".
Thanks for showing us your bias. You pretend to be rational and open to discussion, but you are the real ideological zealot.
The Scientific Method says that theories must be tested by their predictions: did textbook Keynesianism predict the current crisis? No. Did textbook monetarism? No. Did textbook Austrians? YES!!!
You are just bullshitting us.
The current crisis boiled down to fundamental supply/demand laws, the self reinforcing nature of trends and leverage, etc. Now Keynesianism is saying to do fiscal stimulus and print money to increase aggregrate demand. And it will.
I'm not disagreeing with you fractional reserve banking exacerbates bubbles, but like I said, there are tradeoffs to tying up deposits of capital by not relending it. To keep the price level from collapsing, we'd need to probably increase the monetary base by a factor of 10. Otherwise, you wouldn't be able to get a loan at a decent enough rate to make it worth doing anything other than saving. Prices of everything would collapse in the order of 10x+ probably (from here). That just accounts for the transition.
It is like internet bandwidth - also a three card monte. If we had to reserve 100% of bandwidth of all infrastructure (ie for each 10mbit cable modem subscriber, we had to dedicate 10mbit of backhaul to our backbone), Internet access would be enormously expensive and likely we'd all have much slower connection as a compromise.
The wildness of this boom/bust cycle is all about bank leverage, but you act as if the benefits of the boom aren't meaningful enough to do it. I say they may be. Most people who are responsible have access to credit and can live in a house they will eventually pay off and draw value from. That is a benefit that is nice to be available to a lot more people, that wouldn't otherwise be available without fractional reserve banking.
Quote from Anaconda:
Cause under Austrian methodologies, you can't make unlimited riches via being a money changer. You actually have to work for it. And if you do finance & trading type activities, it is due to it being needed, not due to excess of credit.
Look I don't work in banking, but I see the benefits to society of it. Access to credit has its positives. But you are basically arbitrarily calling banking 'not working for it.' There are plenty of other occupations under the same logic the same ... other schemes such as the insurance industry, sales of franchise ideas, etc -- Anything involving middle men.
Well in the end it all gives us something to do and not stay idle. Otherwise you wouldn't trade (since that is equally useless to society if what you say is true). There is a value the stability in society that high employment provides, and the quality of the pursuits is totally subjective to who is evaluating them. Austrian ideology doesn't give a shit about employment levels - it thinks the market will take care of things. It takes a long time and cycles are still inevitable due to inherent human greed and fear.
ie I happen to think 99% of modern music is crap, the music industry is a bunch of middle men idiots, performers with meager taste and talent, etc. etc. I personally have the highest standard that Bach and other such composers are what real music is. etc. etc. You know what, 99% of people think I am out of touch and arrogant to say that. And sure I am.. but I am right just as much as you are right that bankers are useless middlemen. I think your music is shit (unless you think the same as I) and the planet could likely do without all of your breed, and you think the same of bankers. All subjective, thus not a worthwhile argument.
Now can you do me a favor and stop being a cliche and attacking my "bullshit" just because I am pricking your little bubble?
Quote from scriabinop23:
It is like internet bandwidth - also a three card monte. If we had to reserve 100% of bandwidth of all infrastructure (ie for each 10mbit cable modem subscriber, we had to dedicate 10mbit of backhaul to our backbone), Internet access would be enormously expensive and likely we'd all have much slower connection as a compromise.
Excellent points, especially the above quote.
These people (Austrians) don't get it. I will bring up another example, mobile phone cells. If you are to reserve bandwidth for each user then the service will be too expensive. But you know that only on rare occassions there will be a big load on the system. it is silly to design the system with no leverage.
Austrian Economists are empirical fools.
Quote from intradaybill:
Can you be more specific? History means different things to different people. Some poeple want to go back in time and some others hate to look back.
History of money, history of banks, history of credit, interest, loans, defaults, history of the term "moneychangers". T
Do you even know where the first central bank ever came about? Or how? Do you even know that fractional reserve banking used to be ILLEGAL, and for good reasons? How about the fact that its perpetrators used to be tarred and feathered?
Austrians don't necessarily pitch metal backed money, they simply understand why gold & silver have traditionally been the most common form of money and why it was arrived to naturally by societies.
Quote from scriabinop23:
The current crisis boiled down to fundamental supply/demand laws, the self reinforcing nature of trends and leverage, etc.
You just proved you do not know what you are talking about. I was planning to respond to your other post with a serious discussion but it's pointless. Your internet example is not relevant, but that's besides the point.
You don't want a discussion, you just want to continue deluding yourself that everything is fine. If you want to learn, go read, plenty of great papers written at Mises institute. You may also try Cato journal.
The real difference between Austrians and Keynesians/Monetarists is that the latter keeps on hoping and the former is getting ready (and has been ready).
Quote from Anaconda:
You don't want a discussion, you just want to continue deluding yourself that everything is fine.
You are behaving like a child now...be serious. He gave you a good example of the economic value of leverage in optimal allocation of resources and you immediatelly get somewhat ad hominen, which is a sign of weakness.
He never said everything is fine...