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mises
Joined: 05 Nov 2007
Location: retired
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 Posted: Mon Feb 09, 2009 9:06 am Post subject: |
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| Ya-ta Boy wrote: |
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At the cost of future jobs.
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Point of clarification: You're not calling Paul Krugman, Nobel winner, a liar, are you? |
I am saying that he has an unsophisticated or lacking understanding of what debt is, and how it functions over a period of time. |
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Hater Depot
Joined: 29 Mar 2005
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| Posted: Mon Feb 09, 2009 10:04 am Post subject: |
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| ontheway wrote: |
| This Second Great Depression was caused by the Federal Reserve and the socialist government just like the First Great Depression and all the recessions in between. |
So, you don't believe in the business cycle? How do you explain the fact that the boom and bust cycle was much more pronounced in the 19th and early 20th centuries when recessions were longer and depressions more common? Wasn't the longest period of sustained American prosperity the post-WWII era when government intervention in the economy was at a then-unprecedented level? |
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mithridates
Joined: 03 Mar 2003
Location: President's office, Korean Space Agency
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| Posted: Mon Feb 09, 2009 10:39 am Post subject: |
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This seems like a good thread to ask a question I have. What sort of research do we have on the ability to use government funding to not just stimulate an economy but bring it to an entirely new level? Let's say for example it was 1990 again and we're in a slight downturn, but the government has a crystal ball and knows that there's this thing around the corner called the internet that's going to be the next best thing, so it decides to invest a ton of cash into bringing this internet into reality right now instead of four years later when it actually happened in order to create an entirely new industry.
This is assuming incredibly clear foresight of course, but in something like that what is the value of using government investment to bring something like that into reality before it becomes profitable / cheap enough for private industry to do it? |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Mon Feb 09, 2009 10:43 am Post subject: |
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| Hater Depot wrote: |
| ontheway wrote: |
| This Second Great Depression was caused by the Federal Reserve and the socialist government just like the First Great Depression and all the recessions in between. |
So, you don't believe in the business cycle? How do you explain the fact that the boom and bust cycle was much more pronounced in the 19th and early 20th centuries when recessions were longer and depressions more common? Wasn't the longest period of sustained American prosperity the post-WWII era when government intervention in the economy was at a then-unprecedented level? |
The Austrian economists (name sounds funny, but there are thousands of economists in this "school") have studied every recession in the 19th and 20th centuries. Recessions have consistently come from going off the gold standard in some way. This is called dabasing the currency or inflation.
In a free market there are no business cycles. Business cycles are actually financial crises. They have been caused by socialist governments debasing the currency or the controlling banking institution inflating or debasing the currency. When it is done by private banks and individuals it is called fraud or sometimes counterfeiting. When it is done by governments or their institutions like the Fed, it is called inflation and blamed on others. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Mon Feb 09, 2009 11:09 am Post subject: |
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| what is the value of using government investment to bring something like that into reality before it becomes profitable / cheap enough for private industry to do it? |
Two fairly famous examples come to mind: the railroads and air conditioning. Government investment in railroads (in the form of smoothing the way to acquire the vast amounts of land necessary) was vital in the US to developing a nation-wide transportation system. To make the transcontinental railroad, the companies were given outright alternating sections (640 acres) of land from the Missouri River to the Pacific Ocean. The railroad companies could then sell the land to help finance construction.
In the '20's, the government decided to air condition public buildings as a way of getting that industry off the ground. The government contract provided the companies with funding and credit to build factories and eventually bring the price down to affordable levels.
No doubt there are other examples, but those are what came to mind. I suspect the oil industry and the electric industry were aided in their early days. Government orders for steel warships probably played a part in developing the steel industry and modern shipbuilding, too. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Mon Feb 09, 2009 11:27 am Post subject: |
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| the value of using government investment to bring something like that into reality before it becomes profitable / cheap enough for private industry to do it? |
Government investment, subsidies or interference in the market place has always proven to be a disaster. Supporters inevitably try to find some example that seems worthwhile on its face, but they never look at the whole picture. Doing so always turns up costs that far exceed the claimed benefits.
The railroads are a good example of the horrible failure of such efforts. We are still suffering from economic misallocation costs in the transportation, energy, ecological and urban development markets due to the negative effects of this misdirected investment.
An even better example is nuclear power. The free market refused to develop it at an early date because it was not safe. So, massive interference by the govt. caused unsafe power plants that were built before the technology was thoroughly developed to be built in highly populated urban areas. A disaster waiting to happen.
Yet now, since the nuclear power industry has been misdeveloped, we could have had a better technology located in isolated power generating areas shipping far larger quantities of safer and cheaper power - if only the government had stayed out.
The government pushed for airbags - and delayed their use by at least 20 years.
Sometimes, the government can "stimulate" and industry by buying its product. If this occurs because it is a legitimate need of the government to purchase the product, then this is just a natural outcome of the marketplace. The government exists and is a consumer like any other and will purchase things in the market.
If the government is purchasing goods and services for any other reason, such as propping up prices or artificially stimulating demand for something otherwise unneeded, then, in the end, it will always be harmful to the economy by displacing products that are actually of higher value. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Mon Feb 09, 2009 4:03 pm Post subject: |
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| ontheway wrote: |
The railroads are a good example of the horrible failure of such efforts. We are still suffering from economic misallocation costs in the transportation, energy, ecological and urban development markets due to the negative effects of this misdirected investment.
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That being said, freight railroad was deregulated in Reagan's first term, and is now entirely privately owned (including the rail tracks), and the cheapest form of transport in the USA. American rail companies are also far more efficient and cost effective than their European peers, who have more regulations and run on gov't-owned tracks.
(I'm aware of this due to a a financial analysis report on CSX that I have to do for a class) |
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Pluto
Joined: 19 Dec 2006
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| Posted: Mon Feb 09, 2009 6:29 pm Post subject: Re: IMF Says Advanced Economies Already in Depression |
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| mises wrote: |
It's official:
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Feb. 7 (Bloomberg) -- Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
�The worst cannot be ruled out,� Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. �There�s a lot of downside risk.� |
http://www.bloomberg.com/apps/news?pid=20601080&sid=a6aaWZ8ab8yU&refer=asia |
The cynic in me is wondering how much more money this bureaucracy wants. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Feb 09, 2009 7:32 pm Post subject: Re: IMF Says Advanced Economies Already in Depression |
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| Pluto wrote: |
| mises wrote: |
It's official:
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Feb. 7 (Bloomberg) -- Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
�The worst cannot be ruled out,� Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. �There�s a lot of downside risk.� |
http://www.bloomberg.com/apps/news?pid=20601080&sid=a6aaWZ8ab8yU&refer=asia |
The cynic in me is wondering how much more money this bureaucracy wants. |
I'm sure they're talking their book to some extent. And the IMF will be a great deal "better" funded when this is all said and done. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Tue Feb 10, 2009 12:51 am Post subject: |
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Technical question:
Back in the good old days of Econ 101, when books were printed in cuneiform, the prof said a recession is a depression with a new name. No difference. (He said it was because 'depression' had taken on such a negative nuance with the Great Depression.)
Is there now a technical difference? |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Tue Feb 10, 2009 6:04 am Post subject: |
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| Ya-ta Boy wrote: |
Technical question:
Back in the good old days of Econ 101, when books were printed in cuneiform, the prof said a recession is a depression with a new name. No difference. (He said it was because 'depression' had taken on such a negative nuance with the Great Depression.)
Is there now a technical difference? |
The definitions of the two are very subjective. For example, the idea that a recession is "two quarters of neg growth" isn't actually used by the NBER in the US. I believe they say "sustained period of negative GDP change" or similar.
Generally, a depression is characterized as a recession + large deleveraging. Other definitions will look at a 10% decline from peak in either employment or GDP.
It is in the eye of the beholder. We're in one, IMO. |
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Tue Feb 10, 2009 7:56 am Post subject: |
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Thanks.
I take that as meaning 'no, there ain't a significant difference'. Either one is bad if you are at the bottom of the heap.
I will admit that in my day, smoking in class was permitted if you had your own ashtray. (OK if made out of paper) The rumor, which proved to be true, was that if you smoked a bit of wacky tobaccy the night before, you'd get a buzz if you smoked the regular stuff the next day. Being of a scientific bent, I experimented. It was true. Only barbarian unis scheduled 8 am classes.
I blame it on them. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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Ya-ta Boy
Joined: 16 Jan 2003
Location: Established in 1994
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| Posted: Wed Feb 11, 2009 2:01 pm Post subject: |
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Here's the solution. You won't have to sleep under a bridge:
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Well, there's three minutes of my life I won't ever get back.
The cheeriest thought I've had this morning is that thanks to Obama, the bridge under which I may be sleeping won't fall down on my head. Hurray for Obama. |
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fiveeagles
Joined: 19 May 2005
Location: Vancouver
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| Posted: Wed Feb 11, 2009 11:00 pm Post subject: |
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| ontheway wrote: |
The world's real economists called it long ago. This depression was predicted and expected. It was inevitable according to the laws of economics.
The Ponzi economics schemes of the world's governments foisted upon us by the keynesian socialists, fabian socialists and the fascist socialists are the cause of this depression.
Unfortunately, the Ponzi group is still in charge and they are giving us more of the same. It is destined to get far worse. The more they borrow and spend, the more fiat money they print, the worse it will get.
Worldwide revolution is looming at the end of this Ponzi socialist tunnel.
Time to sharpen the guillotines. (Several of my students are already learning to knit.) |
Fear...fear....fear.
More like the love of money and those have built upon this principle are finally starting to crumble into darkness. |
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