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Kuros
Joined: 27 Apr 2004
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 Posted: Tue Oct 28, 2008 2:42 pm Post subject: |
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Ya-Ta,
Things will get worse. But we need to keep things in perspective. Obama's going to probably win my admiration or destroy his credibility with me within a year. I really hope he keeps his cool and embraces the Taoist tenet that a soft touch is often more effective. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Tue Oct 28, 2008 2:45 pm Post subject: |
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I saw another post yesterday where you mentioned that. I am not any happier about that today than I was yesterday.
I'm toying with the idea of putting some more money in my mutual fund here in Korea. Now that the market is down 50% (just under 1,000) I have to believe the fund manager knows where the bargains are. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 28, 2008 3:50 pm Post subject: |
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| I dunno ya-ta. Buying equity at the start of a severe recession might not be a solid idea. While I'm sure there are a few good value firms here and there, it will be very hard to predict how a long global slowdown will affect them. |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Tue Oct 28, 2008 5:10 pm Post subject: |
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| mises wrote: |
With a gold standard there would be much less lending, which would mean everything is less expensive. |
Sure. There's long term inflation with a fiat money system. But most people see an increase an income that corresponds to that inflation.
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| There would be less need for lending (directing credit at a specific good increases the value of that good -see college tuition inflation-). |
One would suspect that the vast increases in college enrollment over the last 70 years would be indicative of something.
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| The lending that did happen would be less likely to be speculative and fewer bubbles would form. |
Is there any empirical evidence that nations under the gold standard had smaller business cycles? Much less avoided them all together?
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| It may or may not be an appropriate system. I do not think the current arrangement is appropriate anymore. |
There's a difference between giving credit and giving credit willy nilly with no regards for the future performance of that credit. Any extreme is bound to fail. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 28, 2008 5:21 pm Post subject: |
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| Sure. There's long term inflation with a fiat money system. But most people see an increase an income that corresponds to that inflation. |
If that were the case. Real wages in the US have been stagnant since about 1973. I don't know if that is directly related to Nixon's monetary change or not. I've read good arguments that it is, and opposite.
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| One would suspect that the vast increases in college enrollment over the last 70 years would be indicative of something. |
You're drawing a direct line from fiat currency to college enrollment? Surely not.
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| Is there any empirical evidence that nations under the gold standard had smaller business cycles? Much less avoided them all together? |
There is a good amount of debate about this. Sure, I could google and post articles from the 'yes' side and you from the 'no' side and go on for a few pages but what would be the point?
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There's a difference between giving credit and giving credit willy nilly with no regards for the future performance of that credit. Any extreme is bound to fail. |
Seems we're in an extreme now, no?
But again, as I said:
| mises wrote: |
It may or may not be an appropriate system. I do not think the current arrangement is appropriate anymore. |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Tue Oct 28, 2008 6:50 pm Post subject: |
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| mises wrote: |
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| Sure. There's long term inflation with a fiat money system. But most people see an increase an income that corresponds to that inflation. |
If that were the case. Real wages in the US have been stagnant since about 1973. I don't know if that is directly related to Nixon's monetary change or not. I've read good arguments that it is, and opposite. |
Stagnant in real terms would mean that wages are going up the same as inflation, no?
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| One would suspect that the vast increases in college enrollment over the last 70 years would be indicative of something. |
You're drawing a direct line from fiat currency to college enrollment? Surely not. |
Fiat currency and available credit. How else would most college students be able to afford college?
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| Is there any empirical evidence that nations under the gold standard had smaller business cycles? Much less avoided them all together? |
There is a good amount of debate about this. Sure, I could google and post articles from the 'yes' side and you from the 'no' side and go on for a few pages but what would be the point? |
How many economists believe that there were no business cycles on the gold standard? It doesn't take much thought to blow that theory out of the water.
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There's a difference between giving credit and giving credit willy nilly with no regards for the future performance of that credit. Any extreme is bound to fail. |
Seems we're in an extreme now, no? |
Yes, an extreme of no credit. Which is bad. The previous extreme of irrational credit was also bad. That doesn't me we should throw the baby out with the bath water.
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But again, as I said:
| mises wrote: |
It may or may not be an appropriate system. I do not think the current arrangement is appropriate anymore. |
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The "current arrangement" being what? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 28, 2008 7:45 pm Post subject: |
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| Stagnant in real terms would mean that wages are going up the same as inflation, no? |
Yes. They stopped rising over inflation during Nixon.
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| Fiat currency and available credit. How else would most college students be able to afford college? |
I'm sure you have a good study on hand to prove this.
University would be less expensive if credit were not assigned to it. When you direct credit to a specific good, that good rises in price to account for the newly available money.
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| How many economists believe that there were no business cycles on the gold standard? It doesn't take much thought to blow that theory out of the water. |
You don't have access to The Google in Korea? Research it yourself.
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| Yes, an extreme of no credit. Which is bad. The previous extreme of irrational credit was also bad. That doesn't me we should throw the baby out with the bath water. |
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| The "current arrangement" being what? |
You aren't aware of how Western nations manage monetary policy? I refer you again to Google.
I see that you want to have a debate about the gold standard with me. Which is odd, as I didn't advocate for one. I'm far more concerned with the flaws of the current system and how these flaws are pushing the global economy over the edge today than some silly google-driven pissing contest. |
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huffdaddy
Joined: 25 Nov 2005
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| Posted: Tue Oct 28, 2008 8:40 pm Post subject: |
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| mises wrote: |
| I see that you want to have a debate about the gold standard with me. |
Sheesh. Between Joo, Gopher, and you it doesn't take long to remind me why I avoid this festering hole. G-d forbid anyone try to have a meaningful discussion here.
Why did you even bother coming back to this forum? Is it that lonely in Singapore? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 28, 2008 8:42 pm Post subject: |
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| huffdaddy wrote: |
| mises wrote: |
| I see that you want to have a debate about the gold standard with me. |
Sheesh. Between Joo, Gopher, and you it doesn't take long to remind me why I avoid this festering hole. G-d forbid anyone try to have a meaningful discussion here.
Why did you even bother coming back to this forum? Is it that lonely in Singapore? |
G-d. ha. I forgot about that.
Maybe ontheway will indulge your desire to discuss pointless nonsense about a system that will never exist again. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 28, 2008 9:02 pm Post subject: |
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Anyways, back to the topic of the OP:
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Downturn Pummels Consumer Confidence
Consumer confidence dipped to its lowest level on record as Americans reacted with growing pessimism to financial uncertainty and widespread job losses, according to a survey released yesterday.
The sentiment found in the survey was reinforced by more bad news in the retail sector -- layoffs at the world's largest appliance manufacturer and decreased consumer spending at rental car, athletic apparel and other companies. Locally, there were also indications that more Washington area employers will be cutting jobs.
After increasing slightly in September to 61.4, the consumer confidence index fell more than 23 points to 38.0, the worst assessment of the nation's economic health since the Conference Board began conducting the survey in 1967. A rating of 90 or above indicates that consumers see a strong economy. |
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/28/AR2008102803614.html?hpid=sec-business
The Xmas shopping season is going to be brutal. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Oct 28, 2008 9:07 pm Post subject: |
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Related to consumer confidence, even those who still want to spend beyond their means may be less able to do so.
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| Consumers Feel the Next Crisis: Credit Cards |
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After years of flooding Americans with credit card offers and sky-high credit lines, lenders are sharply curtailing both, just as an eroding economy squeezes consumers.
The pullback is affecting even creditworthy consumers and threatens an already beleaguered banking industry with another wave of heavy losses after an era in which it reaped near record gains from the business of easy credit that it helped create.
Lenders wrote off an estimated $21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments. With companies laying off tens of thousands of workers, the industry stands to lose at least another $55 billion over the next year and a half, analysts say. Currently, the total losses amount to 5.5 percent of credit card debt outstanding, and could surpass the 7.9 percent level reached after the technology bubble burst in 2001.
�If unemployment continues to increase, credit card net charge-offs could exceed historical norms,� Gary L. Crittenden, Citigroup�s chief financial officer, said.
Faced with sobering conditions, companies that issue MasterCard, Visa and other cards are rushing to stanch the bleeding, even as options once easily tapped by borrowers to pay off credit card obligations, like home equity lines or the ability to transfer balances to a new card, dry up.
Big lenders � like American Express, Bank of America, Citigroup and even the retailer Target � have begun tightening standards for applicants and are culling their portfolios of the riskiest customers. Capital One, another big issuer, for example, has aggressively shut down inactive accounts and reduced customer credit lines by 4.5 percent in the second quarter from the previous period, according to regulatory filings.
Lenders are shunning consumers already in debt and cutting credit limits for existing cardholders, especially those who live in areas ravaged by the housing crisis or who work in troubled industries. In some cases, lenders are even reining in credit lines after monitoring cardholders who shop at the same stores as other risky borrowers or who have mortgages from certain companies.
While such changes protect lenders, some can come back to haunt consumers. The result can be a lower credit score, which forces a borrower to pay higher interest rates and makes it harder to obtain loans. A reduced line of credit can also make it harder for consumers to manage their budgets, because lenders have 30 days to notify their customers, and they often wait to do so after taking action.
The depth of the financial crisis has shocked a credit-hooked nation into rethinking its habits. Many families once content to buy now and pay later are eager to trim their reliance on credit cards. The Treasury Department, which is spending billions of dollars in taxpayer money to clean up an economic mess brought on in part by all sorts of easy credit, recently started an advertising campaign inviting consumers to check into the �Bad Credit Hotel,� an online game that teaches the basics of maintaining good credit.
Even those with good credit ratings are not excepted. American Express, which traditionally catered to more upscale cardholders, said it would be increasing effective interest rates by 2 or 3 percentage points for some of its credit card holders � a move that could, for example, push a 15 percent rate up to 18 percent.
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http://www.nytimes.com/2008/10/29/business/29credit.html?pagewanted=1&hp&adxnnlx=1225252638-LVkoOiaaV6yX5snvfK1MOg
This crises will move step by step through every credit market. |
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Big_Bird
Joined: 31 Jan 2003
Location: Sometimes here sometimes there...
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| Posted: Tue Oct 28, 2008 10:37 pm Post subject: |
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| I've never had a credit card. I ignored every offer from every bank for years. So none of this will bother me. I think... |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Oct 29, 2008 7:57 am Post subject: |
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[quote="huffdaddy"]
| mises wrote: |
| Quote: |
| Sure. There's long term inflation with a fiat money system. But most people see an increase an income that corresponds to that inflation. |
If that were the case. Real wages in the US have been stagnant since about 1973. I don't know if that is directly related to Nixon's monetary change or not. I've read good arguments that it is, and opposite. |
Stagnant in real terms would mean that wages are going up the same as inflation, no?
The deleterious of fiat money inflation include bubbles, recession and depression and your only counter argument is that wages might keep up with the inflation.
Inflation destroys savings and depletes the funds available for investment and thus slows and eventually destroys economic growth. It leads to malinvestment which causes recessions and bubbles wich burst and cause financial crises, major recessions, depressions and inflationary depressions.
Yet all you have is that pay levels might keep up with inflation.
Let's look at obesity.
Obesity is no problem because you can buy bigger clothes. Your clothes size can keep up with your weight level. That's your argument.
Just ignore the health problems, the isolation, rejection by society, work problems, early mortality.
If you are morbidly obese you can buy bigger clothes.
If your fiat money is morbidly inflated, you can get a bigger salary.
And, yes, Mises, I expect that most of the world will be back on some kind of a gold standard by the time this financial crisis and the coming entitlements fiscal crisis have both played out. No later than 2025.
The only question is whether they will get close enough to a rigid 100% gold standard so that the system will actually work.
With a 100% gold standard we will end inflation, have no bubbles, no financial crises, and no depressions or recessions.
We would have slow, steady decline in prices as measured by any kind of CPI even though the inflation rate would be zero, or nearly so. Inflation is the increase in the supply of money, or more precisely, an increase in the supply of money relative to the commodity backing the money.
There would be a slow increase in the quantity of gold due to mining and other forms of gold extraction, some of which could be coined into money. This would increase the amount of backed money slightly but would be offset by increases in production of goods and services. Thus, the long term trend would be a continuous slow decline in prices.
Interest rates would be very low and steady over decades. Savings and investment would be much more profitable than consumption as a means to get ahead, and the conservative moral principles of hard work, frugality, conservation of resources and assets, saving and investing would reassert themselves against the current fiat money / socialist paradigm that leads to wasteful consumerism, waste, and environmental degradation. |
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mises
Joined: 05 Nov 2007
Location: retired
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Wed Oct 29, 2008 1:44 pm Post subject: |
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| I'm glad I watched those videos this morning and not last night before I went to bed. |
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