I thought I better post this because austrian economics is so popular

[Daal]

Quote from hofficita:

You must have never read any Austrian economics, since none ever claimed that recessions could be eliminated. Austrian principles could however minimize much of the destruction caused by the credit fueled boom/bust cycle.

Debt is the result of free economic agents allocating savings into what they believe are the most productive investments. Therefore to criticize debt is to criticize the free market itself. A central bank doesnt make people crazy, US had bubbles before 1913
Greenspan didnt put a gun to Chuck Prince's head, matter of fact, Greenspan had nothing to do with Prince's ability to finance itself at low rates over LONG periods, given that he targed overnight fed funds

If one wants to limit people's ability to borrow, they are acting against the essences of Laissez-faire, which is freedom to take risk and act

 

[hofficita]

Quote from Specterx:

Rand's world is predicated on the existence of some cadre of hardworking, ultra-moral, god-like illuminati. In her case it's wealthy entrepreneurs and businessmen, for Marx it was the proleteriat, but neither system is workable because such people just don't exist - at least not in perfect form, and not as a cohesive socioeconomic grouping. I bet even George Washington told a few lies in his life.

In reality people will lie, cheat, steal, collude, screw other people over, make uneconomical decisions, act on bad or imperfect information, and so on. To some extent, where you draw the line between "earning" and "taking" is a political question that has no definite answer.

You clearly never read her, so no point in discussing, but I will indulge. Rand's worldview was based on the belief that there are indeed hard-working, self-interested individuals in the world who do not seek to exploit their fellow man, and that these people are the drivers of improvement in human living standards. This is demonstrably true.

I don't understand what Marx has to do with this discussion, since he did not believe that human living standards can actually increase. He believed in the 'fixed-pie' model of wealth, and his whole worldview is based on the presumption that wealth for one person means privation for another. This is demonstrably false.

If you really believe that there is no difference between earning and taking by force, than you are a helpless piece of human scum.

 

[Specterx]

Quote from Daal:

Inflation is a result of money supply, velocity and output. If you fix the money supply then inflation will fluctuate mainly with velocity, which in times like these will lead to severe deflation and negative feedback loops

Check out the recession of 1920-21. Double-digit deflation, no stimulus spending (in fact the federal budget was cut), no extreme New Deal measures or controls. If your "negative feedback loop" led to the roaring 20's, bring 'em on

 

[Martinghoul]

Quote from Specterx:

I don't see your point. Of course people want free money, but that doesn't mean they can get it. Obviously it's impossible for everybody to earn 'excess' yield; equally obviously, any conceivable reforms to the financial system and the pensions system will need to take this reality into account, or else we haven't actually solved any problems. We're in this mess because everybody thought there was all this riskless "excess yield" out there for the taking, but of course it never existed except for the smart or lucky few.

Of course I don't think that any of these proposals have a chance in hell of actually being implemented, but it's because we lack the will to do it - not because the proposals lack merit.

My point is simple. All I am saying is that trying to prohibit fractional lending is like trying to prohibit consumption of alcohol. Both have been tried and both just don't work, in practice. Reason being, simply, that you can't 'fade' human nature.

 

[Specterx]

Quote from hofficita:

You clearly never read her, so no point in discussing...

Didn't get past this point I'm afraid The only bit of Atlas Shrugged I skipped was the mind-numbing forty (?) page monologue. Seemed about as worthwhile as trying to wade through Marxist BS.

As to her other writings - can't say I bothered. I think I got the idea after round one.

 

[hofficita]

Quote from Daal:

Debt is the result of free economic agents allocating savings into what they believe are the most productive investments. Therefore to criticize debt is to criticize the free market itself. A central bank doesnt make people crazy, US had bubbles before 1913
Greenspan didnt put a gun to Chuck Prince's head, matter of fact, Greenspan had nothing to do with Prince's ability to finance itself at low rates over LONG periods, given that he targed overnight fed funds

If one wants to limit people's ability to borrow, they are acting against the essences of Laissez-faire, which is freedom to take risk and act

Austrians have no problem with debt, just the mis-pricing of it caused by central bank/government interference. "Criticize debt is to criticize the free market itself." Are you on crack? Debt is completely compatible with free markets- I have 5 dollars, you need 5 dollars; You promise to pay me back 6 in a month, I agree. Debt created, free of government or CB.

Go back and study how infrequent and quickly resolved bubbles were before 1913. In addition, most had roots in some sort of monetary expansion- eg gold rush booms. As for Citi and Greenspan, of course the Fed encouraged Prince to take excessive risk to chase yield. Why not when money only costs 1%? And this crap about the Fed not controlling the long end is bullshit. Raise short rates to 10% and see how quickly long rates rise. Who would lend for 30 yrs at 4% when you can get 10% in a savings account? No one.

 

[hofficita]

Quote from Specterx:

Didn't get past this point I'm afraid The only bit of Atlas Shrugged I skipped was the mind-numbing forty (?) page monologue.

Seeing how those 40 pages were the whole point of that novel, I stand by my assertion. Maybe you read a bit, but with no understanding.

 

[Daal]

Quote from Specterx:

Check out the recession of 1920-21. Double-digit deflation, no stimulus spending (in fact the federal budget was cut), no extreme New Deal measures or controls. If your "negative feedback loop" led to the roaring 20's, bring 'em on

That was one of the most severe recessions on record, it is also matched by a peak in the money supply in 1921 and through in 1922/23. In order for you to counter my statement the money supply would have to continue to decline and the economy to boom. That didnt happen, deposits continue to grow quite positively till 1930 after 1922/23

 

[makloda]

Quote from hofficita:Go back and study how infrequent and quickly resolved bubbles were before 1913.

Infrequent? There were multiple boom-bust cycles and outright depressions in the 1800s, their effects and aftermaths lasting for many years at times... contrary to the Austrian's credo that all recessions/depressions are quickly resolved if you let everybody and everything fail, because the "free market system's self healing forces" enable quick recoveries after a short 12 or so months if "just let to it's own devices":

1837
1857
1873
1893

It's not like roasted chickens were flying straight into the mouths of the working class before 1913.

 

[hofficita]

Quote from makloda:

Infrequent? There were multiple boom-bust cycles and outright depressions in the 1800s, their effects and aftermaths lasting for many years at times... contrary to the Austrian's credo that all recessions/depressions are quickly resolved if you let everybody and everything fail, because the "free market system's self healing forces" enable quick recoveries after a short 12 or so months if "just let to it's own devices":

1837
1857
1873
1893

It's not like roasted chickens were flying straight into the mouths of the working class before 1913.

1837- Caused by paper money inflation
1857- Caused by inflationary boom resulting from 1840's gold rush. But over in two years.
1873- Caused by government artificially contracting the money supply by demonetizing silver.
1893- Silver remonetization (sort-off) in 1890 caused inflationary boom. Over in one year.

Government interference or fractional reserve banking were behind each case, except 1857. But at least they were relatively infrequent and short compared to post 1913, when fractional reserve banking was cartelized with the federal reserve act.