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Republican Presidential Candidate 2012
- Thread starter cover drive man
- Start date
silentstriker
The Wheel is Forever
Is Obama Chewing Gum at Joplin Memorial Service? - President Obama - Fox Nation
And this is why Fox News and the Republicans always have a chance. They know how to create controversy. I mean seriously. This is epic. I bet Sarah Palin chimes in on this.
And this is why Fox News and the Republicans always have a chance. They know how to create controversy. I mean seriously. This is epic. I bet Sarah Palin chimes in on this.
silentstriker
The Wheel is Forever
Tea Party member as of this morning:
PhoenixFire
Well-known member
You get black people in the Tea Party?
silentstriker
The Wheel is Forever
Not many but a few:
Redbacks
Well-known member
Short Answer I don't fully agree as the rating set by the Central banks encouraged people not to hold cash assets and now nobody has learnt a thing.
Long Answer:
The 'Barking Cat Syndrome' - you’re more likely to find a cat that barks before a politician who makes an economic decision over a political one.
I also agree that 'within the current economic paradigm' it was the correct decision to make, but mainstream economics has been caught out as a bit of a Bull**** market and perhaps sold dreams of a never ending boom to politicians who wouldn't know any better.
There are say roughly 3 schools of thought:
Mainstream: Supply Side (central banks can’t fool any of the people any of the time) – modern macroeconomics – A permanent boom is the way to run the economy with stoking of the money supply to keep it going, rational expectation will lead the market to adjust itself to the decisions of the central bank. Credit expansion is ok as long as growth keeps real wages roughly constant (deny that inflation will lead to mis-investment). This is great as it tells Governments that they can a) get faster growth and tell people they are great economic managers b) keep wages always growing numerically c) a bob each way, allows us to spend more than we earn making small business happy, whilst also maintaining a pool of funds for investment to support investment decisions which theory tells us should be bought from savings not fake money!
Austrians – Credit expansion will inevitably lead to artificial growth to a boom or bubble economy which must ultimately collapse via the ABCT, the rigour of this thoert is rejected by the mainstream. If prices are determined by incorrect interest rates then the economy will eventually collapse. What you have is a ‘rational expectation theory’ which says the market will react to the decision of the central bank in its calculation. During a time of artificial rates, the next central bank decision is based on a market not based on the ‘real’ interest rate any longer so you are shooting at shadows.
Keynes - Demand side, total activity = total money supply and an increased supply of consumer and investment goods (The central bank can fool all the people all of the time)
Spend in ways you believe the market can’t and influence how it will operate. Out of vogue bar as a response to ‘stimulate’ the economy.
Why the Austrian school suffered to gain traction is perhaps because it believed that unemployment has a natural rate in any economy. Keynes believed that this was idle resources so by simply increasing the money supply you could get full employment. In the end we have never seen the pure form of any of these theories in practice.
As for dealing with the crisis in the current economic situation it depends which political party were in power as to which economist you listen to:
Left leaning: then you say, idle resources can be put to work and created work without taking away actual investment from the most productive sectors of the economy. Right leaning: Lower taxes and cut spending to allow the market to sort itself out. Entrepreneurs adjusting to changes in prices to develop new ways of employing workers again. We’ll see the latter method now in the UK and the former in the USA, both probably will work but for the wrongly diagnosed reasons IMO.
Under the current paradigm you are right. If we accept that wages cannot go down, specifically in the government sector, then it much easier to print money or the political speak ‘quantative easing’, than to accept that people gradually accept lower wages.
So if, for illustrative purposes, the current wealth of a nation is 40 billion, then we print 10 billion out of nothing. Purchasing power in the economy rises 25% for the same amount of goods. Scarcity increases and prices rise, bar the first purchaser advantage. Thus everyone loses money as their assets drop in price but the initial spending keeps old demand alive. In the shorter term GDP increases. Question is, was this actually a sustainable practice? A lot of goods are priced on a wage plus mark-up basis so these prices rise. The value of good investments has been lowered by a deflated currency, thus we take resources away from good projects leading to lagging growth and potentially a double dip. Eventually unemployment has to rise if we hope to get back to a real equilibrium. Why, well the Keynesian theory is questionable in one important respect. Are idle resources (unemployed) actually idle? Or is it simply that the current level of production doesn’t need an extra worker so by competing for these resources we shoot ourselves in the foot. Pros: keep social services and general well-being of the community at large Con: delays an inevitable crash, bit like borrowing from a debt collector to pay another one.
The Right: Cut services that aren’t ‘deemed’ essential which leads to higher unemployment and opinion pages in favourable papers talking of a friend of a friend who heard about a government ‘officer for social inclusion of left footed polish widows’ on £50k who got turfed so something must be right. People maintain their current wealth more adequately, importers don’t suffer as much but unemployment jumps. You get slow growth but it’s more likely to be real and more people are available to be employed by profitable businesses. Con: loss of social services and the long term costs associated with removing things such as youth workers and other government programs in the background. If everyone in the public sector accepted pay cuts then jobs are saved, but then again, it’s not a teachers fault the financial system was trading fake money.
Economics is forever condemned to be wildly misunderstood it seems. Now, if a policy was based on inflationary policy, the taking away of this will ultimately appear as recessionary symptoms. Hayek used the ‘tiger by the tail’ analogy for inflation policy and the public reaction as it generally requires more and more of the same to keep going. As a tiger starts running faster and faster things get more and more bumpy till you have to let go but at the same time the tiger gets angrier and angrier the longer it happens.
I think Austrian economics still holds up quite well partly because two of its masters died prior to recent advances, thus it doesn’t bare to over emphasis on obscure mathematical models that the modern ‘technologies’ that caused the crisis were built on. But it also wins favour because it was not in favour of a fiat currency like we currently have and the business cycle theory pretty much lines up exactly with events as they unfolded. (‘The road to ruin is paved with good intentions’ as they say).
To quote Bertrand Russell:
"I had supposed until that time that it was quite common for parents to love their children, but the war persuaded me that it is a rare exception. I had supposed that most people liked money better than almost anything else, but I discovered that they liked destruction even better. I had supposed that intellectuals frequently loved truth, but I found here again that not ten per cent of them prefer truth to popularity."
I also agree that 'within the current economic paradigm' it was the correct decision to make, but mainstream economics has been caught out as a bit of a Bull**** market and perhaps sold dreams of a never ending boom to politicians who wouldn't know any better.
There are say roughly 3 schools of thought:
Mainstream: Supply Side (central banks can’t fool any of the people any of the time) – modern macroeconomics – A permanent boom is the way to run the economy with stoking of the money supply to keep it going, rational expectation will lead the market to adjust itself to the decisions of the central bank. Credit expansion is ok as long as growth keeps real wages roughly constant (deny that inflation will lead to mis-investment). This is great as it tells Governments that they can a) get faster growth and tell people they are great economic managers b) keep wages always growing numerically c) a bob each way, allows us to spend more than we earn making small business happy, whilst also maintaining a pool of funds for investment to support investment decisions which theory tells us should be bought from savings not fake money!
Austrians – Credit expansion will inevitably lead to artificial growth to a boom or bubble economy which must ultimately collapse via the ABCT, the rigour of this thoert is rejected by the mainstream. If prices are determined by incorrect interest rates then the economy will eventually collapse. What you have is a ‘rational expectation theory’ which says the market will react to the decision of the central bank in its calculation. During a time of artificial rates, the next central bank decision is based on a market not based on the ‘real’ interest rate any longer so you are shooting at shadows.
Keynes - Demand side, total activity = total money supply and an increased supply of consumer and investment goods (The central bank can fool all the people all of the time)
Spend in ways you believe the market can’t and influence how it will operate. Out of vogue bar as a response to ‘stimulate’ the economy.
Why the Austrian school suffered to gain traction is perhaps because it believed that unemployment has a natural rate in any economy. Keynes believed that this was idle resources so by simply increasing the money supply you could get full employment. In the end we have never seen the pure form of any of these theories in practice.
On the first point the answer would be: if you let real wages drop then there is no need for a prolonged depression, and rather you are simply reverting back to a ‘real’ level of economic wealth of the nation rather than the imagined one before the crisis hit. As people wages readjust to that reality then you have ‘hopefully’ worn the brunt of the recession and continue back towards growth.
As for dealing with the crisis in the current economic situation it depends which political party were in power as to which economist you listen to:
Left leaning: then you say, idle resources can be put to work and created work without taking away actual investment from the most productive sectors of the economy. Right leaning: Lower taxes and cut spending to allow the market to sort itself out. Entrepreneurs adjusting to changes in prices to develop new ways of employing workers again. We’ll see the latter method now in the UK and the former in the USA, both probably will work but for the wrongly diagnosed reasons IMO.
Under the current paradigm you are right. If we accept that wages cannot go down, specifically in the government sector, then it much easier to print money or the political speak ‘quantative easing’, than to accept that people gradually accept lower wages.
So if, for illustrative purposes, the current wealth of a nation is 40 billion, then we print 10 billion out of nothing. Purchasing power in the economy rises 25% for the same amount of goods. Scarcity increases and prices rise, bar the first purchaser advantage. Thus everyone loses money as their assets drop in price but the initial spending keeps old demand alive. In the shorter term GDP increases. Question is, was this actually a sustainable practice? A lot of goods are priced on a wage plus mark-up basis so these prices rise. The value of good investments has been lowered by a deflated currency, thus we take resources away from good projects leading to lagging growth and potentially a double dip. Eventually unemployment has to rise if we hope to get back to a real equilibrium. Why, well the Keynesian theory is questionable in one important respect. Are idle resources (unemployed) actually idle? Or is it simply that the current level of production doesn’t need an extra worker so by competing for these resources we shoot ourselves in the foot. Pros: keep social services and general well-being of the community at large Con: delays an inevitable crash, bit like borrowing from a debt collector to pay another one.
The Right: Cut services that aren’t ‘deemed’ essential which leads to higher unemployment and opinion pages in favourable papers talking of a friend of a friend who heard about a government ‘officer for social inclusion of left footed polish widows’ on £50k who got turfed so something must be right. People maintain their current wealth more adequately, importers don’t suffer as much but unemployment jumps. You get slow growth but it’s more likely to be real and more people are available to be employed by profitable businesses. Con: loss of social services and the long term costs associated with removing things such as youth workers and other government programs in the background. If everyone in the public sector accepted pay cuts then jobs are saved, but then again, it’s not a teachers fault the financial system was trading fake money.
Economics is forever condemned to be wildly misunderstood it seems. Now, if a policy was based on inflationary policy, the taking away of this will ultimately appear as recessionary symptoms. Hayek used the ‘tiger by the tail’ analogy for inflation policy and the public reaction as it generally requires more and more of the same to keep going. As a tiger starts running faster and faster things get more and more bumpy till you have to let go but at the same time the tiger gets angrier and angrier the longer it happens.
I agree bankers can be greedy, however to blame this on the crisis is more of a media meme propogated by people with journalism degrees rather than in economics (listen to the actual finance workers and they will point to bad loans being asked for by the government hence while they have been collectively blamed, in reality they have no case to answer). Their ability to operate in a system where they can extract instant profits before the long term realisation of the effects is suspect and you can’t discount the massive role governments play in letting this all take place. It’s simple politics for them to blame the bankers, who is going to hold them to even a slight amount of account? A Banker, he will be publically vilified by the spin doctor apparatus before the end of the same day as a greedy prick looking for a scapegoat. I think I’ve shown above that your Lib/Soc line is slightly incorrect, I’d be more inclined to say a mix of both got us in and potentially out of the problem.
I think Austrian economics still holds up quite well partly because two of its masters died prior to recent advances, thus it doesn’t bare to over emphasis on obscure mathematical models that the modern ‘technologies’ that caused the crisis were built on. But it also wins favour because it was not in favour of a fiat currency like we currently have and the business cycle theory pretty much lines up exactly with events as they unfolded. (‘The road to ruin is paved with good intentions’ as they say).
To quote Bertrand Russell:
"I had supposed until that time that it was quite common for parents to love their children, but the war persuaded me that it is a rare exception. I had supposed that most people liked money better than almost anything else, but I discovered that they liked destruction even better. I had supposed that intellectuals frequently loved truth, but I found here again that not ten per cent of them prefer truth to popularity."
Haha, yes indeed...
She cant see Australia from her house. Which probably explains the 'oops'...
cover drive man
Well-known member
Wow, Very interesting post redbacks. I'm not sure how to respond tbh.
Last edited:
silentstriker
The Wheel is Forever
Redbacks
Well-known member
not bad, his site has some better 'arguement' over what he put forward. I think he puts up a lot of conjectures of an infinite predecessor, as is the post-modern way, which ultimately deny us a chance at ever finding a decent theory other than the one we stops asking difficult questions about. What if...is the reason for X, or what if other factors lead to X that we haven't accounted for. I don't see how he proposes any economic knowledge is possible if we have to go through 'unlimited' experiments to prove why something works or didn't work. You simply won't get such a chance in reality thus his ideas are very difficult to falsify. Likewise he is correct in assuming that 'correlation does not mean causation.'
If you follow one evolutionary psychology thoery it would be as such: We evolved from groups of ~30 people where it made absolutely no sense for one person to accumulate capital, nor to compete amongst each other for food or to let one member of a tribe eat more because he was a lot more productive a hunter. Modern society bares minimal resemblance to this scenario and in fact it is valuable for capital to accumulate with those who can produce the most efficiently, meaning we are all better off if a few people get very rich very rich (in context, Bill Gates probably only has enough money to buy a suburb. If we gave everyone a slice of his wealth they would get about $170, and it would be gone in a week) at least they have very little power to 'force' anyone to do what they don't wish to.