|
Korean Job Discussion Forums
"The Internet's Meeting Place for ESL/EFL Teachers from Around the World!"
|
| View previous topic :: View next topic |
| Author |
Message |
Pluto
Joined: 19 Dec 2006
|
 Posted: Tue Apr 21, 2009 7:33 pm Post subject: |
 |
|
For those of you that don't understand Mises' analogy, Wall Street did indeed get drunk. BUT it was the Federal Reserve that provided the open bar. As a result the taxpayer is suffering the hangover.
I tend to, for now, support M. Friedman's theory on Monetarism. You should read Chapter 3 of Capitalism and Freedom to get a basic understanding of his monetary philosophy. He makes the distinction between the Scylla, an automatic gold standard, and the Charybdis, full control of monetary policy to small group of technocrats. He argues, and I agree, that neither system is desirable for differing reasons. However, he finishes up by saying that nothing in monetary policy would be perfect. We don't know what the optimal monetary policy should be. A free money market economy is something that deserves more scrutiny. FA Hayek has a lot of literature on the subject, though I have yet to read any of it. I am interested in learning more about a free market money supply, but since I haven't studied it in any great detail, I'll hold off on any opinion on the subject. |
|
| Back to top |
|
 |
Rusty Shackleford
Joined: 08 May 2008
|
| Posted: Tue Apr 21, 2009 8:19 pm Post subject: |
|
|
| samcheokguy wrote: |
| -The invention on fake money is the most bizarre issue when you think about it. Once currency is worth what ever people think it is worth you have a certain chaos. 'm not advocating gold and silver, its heavy, and impossible to divide nicely, but still the whole concept of currency exchange has moved economics from a mathimatical one to a psychological one. |
It would actually be incredibly easy to implement gold as a world wide currency as the infrastructure is already in place. People would simply carry debit cards that are denominated in gold, so that whenever you make a purchase a small amount of gold would be withdrawn from your account and deposited in the sellers gold account.
Gold was the world currency for 3500 years until about 35 years ago, it's basically inevitable that we will go back to it.
As for the person who said the govt should have used the bail out money to set up govt run banks, I ask, why? There are literally hundreds of strong, medium sized banks that could easily take up the slack from the failed ones. If the failed banks were allowed to go bankrupt, those banks who followed prudent lending practices could easily step in to mop up all that misallocated capital.
The laws of the Economy are immutable, just like the laws of gravity. They will impose themselves and correct the distortions in the markets, one way or another. Our leaders are choosing to draw out the process and make it more painful than it needs to be. |
|
| Back to top |
|
|
Privateer
Joined: 31 Aug 2005
Location: Easy Street.
|
| Posted: Tue Apr 21, 2009 8:39 pm Post subject: |
|
|
| Fox wrote: |
| Privateer wrote: |
| Fox wrote: |
| Kuros wrote: |
b) plunging into a depression, resetting real estate prices to reflect their true values
...
b) trying to avoid a depression at all costs
...
Tell me which model is more desirable? |
I think the people who support economies with at least some government control find themselves drawn to the second model because it could hypothetically succeed at ending these "correction" cycles, while the first model simply accepts such cycle.
Can you really blame people for aspiring to more? |
All this talk about models ignores the fact that economies are run by people, who have their own goals. You can't take politics out of the equation! |
I don't think it ignores that fact at all. In fact, part of what makes any given model a good or bad model is how well it accommodates the very people you mention. That's part of what makes models like Communism unworkable. |
Now that I read it again, I agree with you! We need some government regulation to prevent these 'cycles' from happening in the first place. Or they'll keep happening. This is just the latest and biggest bailout of a long succession of them. |
|
| Back to top |
|
|
Privateer
Joined: 31 Aug 2005
Location: Easy Street.
|
| Posted: Tue Apr 21, 2009 8:42 pm Post subject: |
|
|
| samcheokguy wrote: |
| -The invention on fake money is the most bizarre issue when you think about it. Once currency is worth what ever people think it is worth you have a certain chaos. 'm not advocating gold and silver, its heavy, and impossible to divide nicely, but still the whole concept of currency exchange has moved economics from a mathimatical one to a psychological one. |
Gold is just the illusion of 'real' money. |
|
| Back to top |
|
|
blade
Joined: 30 Jun 2007
|
| Posted: Tue Apr 21, 2009 8:58 pm Post subject: |
|
|
| Pluto wrote: |
For those of you that don't understand Mises' analogy, Wall Street did indeed get drunk. BUT it was the Federal Reserve that provided the open bar. As a result the taxpayer is suffering the hangover.
|
Yes and the reason Federal Reserve probably provided the open bar was because of the massive drain the Iraq was having on the US economy.
http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html |
|
| Back to top |
|
|
Rusty Shackleford
Joined: 08 May 2008
|
| Posted: Tue Apr 21, 2009 9:40 pm Post subject: |
|
|
| Privateer wrote: |
| samcheokguy wrote: |
| -The invention on fake money is the most bizarre issue when you think about it. Once currency is worth what ever people think it is worth you have a certain chaos. 'm not advocating gold and silver, its heavy, and impossible to divide nicely, but still the whole concept of currency exchange has moved economics from a mathimatical one to a psychological one. |
Gold is just the illusion of 'real' money. |
Nothing is perfect. At least you can't print more gold like you can cash. |
|
| Back to top |
|
|
Manner of Speaking
Joined: 09 Jan 2003
|
| Posted: Tue Apr 21, 2009 10:43 pm Post subject: |
|
|
| Privateer wrote: |
| Manner of Speaking wrote: |
| Free-market capitalism is based on the idea that self-interest by each participant in the market provides the maximum possible benefit to all. In free-market capitalism, 'foresight' is not an end in itself; it serves self-interest. The banks "failed" because the senior managers practiced self-interest at the personal and professional level, regardless of whether or not they had the foresight to see how their decisions would affect the economy as a whole. |
The theory (of the invisible hand of the free market) is that if everyone follows their self-interest the economy will take care of itself. Well, the truly big businesses at the top are taking care of themselves alright, but using taxpayers' money - money that is denied to everyone and anyone else if they get themselves into a similar pickle. So is this really providing the maximum possible benefit to all? Of course not: it's providing maximum possible benefit to those at the top. |
That's a good point...and it might be one of the reasons why just letting some or all of the banks fail never really came up on the radar as an option. Notice the terminology, too...the problem was "toxic debt" and 'toxic loans...not 'toxic banks'. I think too that the atmosphere of "urgency" and "crisis" lead everybody to believe that a bailout package was the only option, and had to be implemented immediately...I thought the same, I must admit.
| Quote: |
| Only democratically accountable political institutions can set limits to the pursuit of self-interest on moral - and, as it turns out, economic - grounds. We, the public, are not allowed to kill for gain and neither are big businesses. We, the public, are not entitled to bailouts when we're financially irresponsible and neither should the big business interests be. One of the main purposes of democracy is to make sure everyone is playing by the same rules. |
| Manner of Speaking wrote: |
| However, to get back on topic...it is interesting that nobody ever suggested the idea of using the bailout money as a venture cap fund to set up new banks, instead of bailing out the existing ones. It probably would not have taken any longer to set up a number of new banks than it would have to get the existing ones back on their feet. And by starting from scratch, the goverment could have ruled out a whole slew of abuses that lead to the current managerial, regulatory and compensation problems. Seems like it would have been a wiser investment. |
| Privateer wrote: |
| I suspect what that would come down to would be appointing a new set of upper management for existing banks, because you'd still need the same pool of expert workers to run the same system, and most likely in the same physical institutions as well. You're not going to start a whole new banking system from scratch and expect everything to run smoothly. |
Which, in retrospect, may have been a lost opportunity. Even if a lot of the same expert workers may have taken many of the positions at the "new venture capital" banks, there was an opportunity for - the government, the fed, I don't know - to change the regulatory and compensation regime. Sort of like Japan at the end of WWII; a lot of the big combines and trusts were broken up or restructured, even though many of the same workers and senior management took positions in the new companies.
But reasonably, I have to ask myself, who in Washington back in January was in the position to take on developing this brave new banking world? Nobody, really.
| Quote: |
| So why didn't they get rid of the old set and appoint new people? Simple. Because the people running the banks run us, that's why. And if anyone dare suggest getting rid of them they scream 'nationalization'. |
|
|
| Back to top |
|
|
Pluto
Joined: 19 Dec 2006
|
| Posted: Wed Apr 22, 2009 4:04 am Post subject: |
|
|
| blade wrote: |
| Pluto wrote: |
For those of you that don't understand Mises' analogy, Wall Street did indeed get drunk. BUT it was the Federal Reserve that provided the open bar. As a result the taxpayer is suffering the hangover.
|
Yes and the reason Federal Reserve probably provided the open bar was because of the massive drain the Iraq was having on the US economy.
http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html |
No, no, no. The reason the Greenspan Fed was encouraged to keep interest rates so low for so long was because of Chinese savers. Many Chinese workers make only US$300/month, yet are able to sock away $50 per month. To use a Keynesian term, China's aggregate savings were massive. China's savers and the US consumers still have a huge debit/credit imbalance that needs to work itself out.
Take a look at this doco |
|
| Back to top |
|
|
Kuros
Joined: 27 Apr 2004
|
| Posted: Wed Apr 22, 2009 9:01 am Post subject: |
|
|
| blade wrote: |
| Pluto wrote: |
For those of you that don't understand Mises' analogy, Wall Street did indeed get drunk. BUT it was the Federal Reserve that provided the open bar. As a result the taxpayer is suffering the hangover.
|
Yes and the reason Federal Reserve probably provided the open bar was because of the massive drain the Iraq was having on the US economy.
http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html |
That is an incredible stretch, blade. |
|
| Back to top |
|
|
postfundie
Joined: 28 May 2004
|
| Posted: Wed Apr 22, 2009 12:43 pm Post subject: |
|
|
| Kuros wrote: |
| blade wrote: |
| Pluto wrote: |
For those of you that don't understand Mises' analogy, Wall Street did indeed get drunk. BUT it was the Federal Reserve that provided the open bar. As a result the taxpayer is suffering the hangover.
|
Yes and the reason Federal Reserve probably provided the open bar was because of the massive drain the Iraq was having on the US economy.
http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html |
That is an incredible stretch, blade. |
If you happen to view the world with BDS, it's not much of a stretch at all. |
|
| Back to top |
|
|
mises
Joined: 05 Nov 2007
Location: retired
|
| Posted: Wed Apr 22, 2009 12:49 pm Post subject: |
|
|
| BDS? |
|
| Back to top |
|
|
Kuros
Joined: 27 Apr 2004
|
| Posted: Wed Apr 22, 2009 12:52 pm Post subject: |
|
|
| Bush Derangement Syndrome. |
|
| Back to top |
|
|
mises
Joined: 05 Nov 2007
Location: retired
|
| Posted: Wed Apr 22, 2009 12:55 pm Post subject: |
|
|
| Ah. I purged such vocabulary from my mind a few months back. |
|
| Back to top |
|
|
blade
Joined: 30 Jun 2007
|
| Posted: Wed Apr 22, 2009 2:19 pm Post subject: |
|
|
| postfundie wrote: |
| Kuros wrote: |
| blade wrote: |
| Pluto wrote: |
For those of you that don't understand Mises' analogy, Wall Street did indeed get drunk. BUT it was the Federal Reserve that provided the open bar. As a result the taxpayer is suffering the hangover.
|
Yes and the reason Federal Reserve probably provided the open bar was because of the massive drain the Iraq was having on the US economy.
http://www.theaustralian.news.com.au/story/0,25197,23286149-2703,00.html |
That is an incredible stretch, blade. |
If you happen to view the world with BDS, it's not much of a stretch at all. |
What ever, I keep forgetting that you guys are so much smarter everybody else and so when a Noble Prize winning economist comes out and says that he believes that the Iraq war cost upwards of 3 Trillion dollars he must wrong and that the idea that spending hundreds of billions dollars every year on a war will have no effect what so ever on the US economy. |
|
| Back to top |
|
|
Pluto
Joined: 19 Dec 2006
|
| Posted: Wed Apr 22, 2009 3:06 pm Post subject: |
|
|
| Blade, Iraq is only part of the problem. It is the most visible exhibit that demonstrates the fiscal irresponsibility of the US government. However, there are even bigger things happening. What would your economist say about the bailout mania, Tarp 1 & Tarp 2 and the present and future liabilities re: Social Security, Medicare and Medicaid? |
|
| Back to top |
|
|
|
|
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
