Credit expansion and cyclical economies

[RichardE]

Originally posted by: bamacre

Originally posted by: Barack Obama

Originally posted by: bamacre
I think Obama is saying that Paul was right.

I'm not too sure on what RP's stance on this is, but the article i quoted fully had links to Ron Paul on it. It actually made me skeptical of the article's merits , but there doesn't seem to be any obvious flaws in its logic.

I'm sure our resident Fed-loving "experts" will come in here and say the OP is full of shit, the Fed and its artificially low interest rates do not cause bubbles and busts, economic cycles happen naturally, just like the weather, and the devaluing of the dollar is a good thing. If you question their assertions, you must provide copies of your resume including all education levels and employment positions.

Since the Federal reserve was born out of 3 banking crisis that had happened before it in the late 1800's, yes I would say bubbles and busts happen in a cyclical way.

The Federal reserve was created out of a demand to try and stop the pattern of bank failures, crisis and bubble/burst. Bubble/Burst is just the way the economy works.

You cannot say a system is bad when you know nothing about it.

 

[BoberFett]

Originally posted by: RichardE

Originally posted by: bamacre

Originally posted by: Barack Obama

Originally posted by: bamacre
I think Obama is saying that Paul was right.

I'm not too sure on what RP's stance on this is, but the article i quoted fully had links to Ron Paul on it. It actually made me skeptical of the article's merits , but there doesn't seem to be any obvious flaws in its logic.

I'm sure our resident Fed-loving "experts" will come in here and say the OP is full of shit, the Fed and its artificially low interest rates do not cause bubbles and busts, economic cycles happen naturally, just like the weather, and the devaluing of the dollar is a good thing. If you question their assertions, you must provide copies of your resume including all education levels and employment positions.

Since the Federal reserve was born out of 3 banking crisis that had happened before it in the late 1800's, yes I would say bubbles and busts happen in a cyclical way.

The Federal reserve was created out of a demand to try and stop the pattern of bank failures, crisis and bubble/burst. Bubble/Burst is just the way the economy works.

You cannot say a system is bad when you know nothing about it.

Yeah, the Fed has been doing great. We have haven't had an bubble/burst since it started. Good job Fed! :thumbsup:

 

[RichardE]

Originally posted by: BoberFett

Originally posted by: RichardE

Originally posted by: bamacre

Originally posted by: Barack Obama

Originally posted by: bamacre
I think Obama is saying that Paul was right.

I'm not too sure on what RP's stance on this is, but the article i quoted fully had links to Ron Paul on it. It actually made me skeptical of the article's merits , but there doesn't seem to be any obvious flaws in its logic.

I'm sure our resident Fed-loving "experts" will come in here and say the OP is full of shit, the Fed and its artificially low interest rates do not cause bubbles and busts, economic cycles happen naturally, just like the weather, and the devaluing of the dollar is a good thing. If you question their assertions, you must provide copies of your resume including all education levels and employment positions.

Since the Federal reserve was born out of 3 banking crisis that had happened before it in the late 1800's, yes I would say bubbles and busts happen in a cyclical way.

The Federal reserve was created out of a demand to try and stop the pattern of bank failures, crisis and bubble/burst. Bubble/Burst is just the way the economy works.

You cannot say a system is bad when you know nothing about it.

Yeah, the Fed has been doing great. We have haven't had an bubble/burst since it started. Good job Fed! :thumbsup:

I never said it was suppose to prevent bubble burst

It was suppose to the massive 20-25 year depressions we were use too, and it has done a pretty good job so far. It did a damn good job in the 70's and chances are it will do a damn good job here too.

As I said, you can't criticize a system you know nothing about.

 

[economicsjunkie]

"It was suppose to the massive 20-25 year depressions we were use too, and it has done a pretty good job so far." - I assume this is supposed to be a giant joke so I won't comment ny further. History alone already proves it's wrong. I recommend you read A History of Money and Banking in the United States: http://www.amazon.com/gp/produ...reativeASIN=0945466331

The same rule applies to you my friend: Don't write about something you don't know about.

 

[economicsjunkie]

rchiu: Wrong. Government is precisely where we need to point the finger to.

"Government isn't the one borrowing what you cannot afford." - What?? Did you ever look at the US national debt? Did you ever look at the constantly increasing deficit? Did you ever look at the social security obligations that have a present value of $36 trillion?


"Government isn't the one lending without checking thoroughly." - Of course it is. The easy money policy of the federal reserve bank has created an environment where all its subdivisions, the "private" banks lend too risky and too much. Please read up on credit expansion at http://www.economicsjunkie.com/credit-expansion-policy/

"Government isn't the one leveraging all the money without proper risk management." - Yes it is. Did you ever have a look at the governments debt to equity ratio? Read the latest financial report by the US Treasury itself at http://www.fms.treas.gov/fr/

"So far, all the banks and companies that failed are private companies ran by CEO appointed by the board, not government." - Not true. The biggest failures were Fannie Mae and Freddy Mac which were entities with government guarantees. Plus all "private" banks only did what they did due to credit expansion policy (see above).

 

[soccerballtux]

Originally posted by: Zebo
Soros saying what idiots like me, bober, skoorby and others been saying for awhile - notice a couple dreamers are missing from this thread.

Bottom line we are deadbeats. Will pay though the nose our debt off and have to start producing again or we face banana republic as rest of the world passes us by..

I've been considering picking up Chinese once I have time, to increase my marketability. Obviously China is not there yet, but they will be the next buying power; and being able to hold a simple conversation in Business Mandarin would impress the Chinese businessmen a lot (or so my FOB Chinese friend says). Being able to tuck tail and move to the next America would be a nice ability to have too.

 

[soccerballtux]

Originally posted by: RichardE

Originally posted by: bamacre

Originally posted by: Barack Obama

Originally posted by: bamacre
I think Obama is saying that Paul was right.

I'm not too sure on what RP's stance on this is, but the article i quoted fully had links to Ron Paul on it. It actually made me skeptical of the article's merits , but there doesn't seem to be any obvious flaws in its logic.

I'm sure our resident Fed-loving "experts" will come in here and say the OP is full of shit, the Fed and its artificially low interest rates do not cause bubbles and busts, economic cycles happen naturally, just like the weather, and the devaluing of the dollar is a good thing. If you question their assertions, you must provide copies of your resume including all education levels and employment positions.

Since the Federal reserve was born out of 3 banking crisis that had happened before it in the late 1800's, yes I would say bubbles and busts happen in a cyclical way.

The Federal reserve was created out of a demand to try and stop the pattern of bank failures, crisis and bubble/burst. Bubble/Burst is just the way the economy works.

You cannot say a system is bad when you know nothing about it.

Hey nobody is interested in legislating the Fed out of existence-- we need them dearly. We just wish they had restrained them selves a little bit in 01-02; and Greenspan before that in the 90s during the Asian housing crisis.

What we ARE fussing about is FM&FM creating a market for risky MBS under the approval of the Clinton administration, and then a blind eye turned under the Bush administration.

 

[soccerballtux]

Originally posted by: economicsjunkie
"It was suppose to the massive 20-25 year depressions we were use too, and it has done a pretty good job so far." - I assume this is supposed to be a giant joke so I won't comment ny further. History alone already proves it's wrong. I recommend you read A History of Money and Banking in the United States: http://www.amazon.com/gp/produ...reativeASIN=0945466331

The same rule applies to you my friend: Don't write about something you don't know about.

Have you read The Theory of Money and Credit? Also Von Mises. I think I'll either read that next, or buy this book you've linked and read that (as I think it would be more useful-- I might already know most of what TOMAC is going to talk about).

 

[First]

^ Honestly, anything is better than Rothbard or Mises, who consistently deny hard data due to stringent ideology. If you're looking for someone who is actually taken seriously in their profession and is more conservative than most economists, Greg Mankiw is quite brilliant. His blog is particularly good: http://gregmankiw.blogspot.com/

 

[First]

Originally posted by: economicsjunkie


"So far, all the banks and companies that failed are private companies ran by CEO appointed by the board, not government." - Not true. The biggest failures were Fannie Mae and Freddy Mac which were entities with government guarantees. Plus all "private" banks only did what they did due to credit expansion policy (see above).

Then how did Goldman and SunTrust survive, or foreign conglomerates like UBC and HSBC, in addition to thousands of other U.S. banks and hedge funds manage not to go under or need gov't bailouts? I find it more than a bit comical that someone says the government is more at fault for the current crisis than private institutions, yet Fannie and Freddie, NOT run by gov't but merely partially subsidized, outweigh the failures of private decisions made by Lehman, AIG, Bear Sterns, Wamu, Merril Lynch, Wachovia, Citigroup?

 

[JJChicken]

Originally posted by: Evan
^ Honestly, anything is better than Rothbard or Mises, who consistently deny hard data due to stringent ideology. If you're looking for someone who is actually taken seriously in their profession and is more conservative than most economists, Greg Mankiw is quite brilliant. His blog is particularly good: http://gregmankiw.blogspot.com/

Thank you for the blog link, will read :thumbsup:

 

[soccerballtux]

Originally posted by: Evan

Originally posted by: economicsjunkie


"So far, all the banks and companies that failed are private companies ran by CEO appointed by the board, not government." - Not true. The biggest failures were Fannie Mae and Freddy Mac which were entities with government guarantees. Plus all "private" banks only did what they did due to credit expansion policy (see above).

Then how did Goldman and SunTrust survive, or foreign conglomerates like UBC and HSBC, in addition to thousands of other U.S. banks and hedge funds manage not to go under or need gov't bailouts? I find it more than a bit comical that someone says the government is more at fault for the current crisis than private institutions, yet Fannie and Freddie, NOT run by gov't but merely partially subsidized, outweigh the failures of private decisions made by Lehman, AIG, Bear Sterns, Wamu, Merril Lynch, Wachovia, Citigroup?

You are right, I've decided it's both their fault. Government for creating the opportunity and these corps for exploiting it. There are lots of banks that haven't had these problems.

 

[economicsjunkie]

soccerballtux: Yes I have read The Theory of Money and Credit. It is an excellent treatise but very long and rather dry. I would recommend the following order:

- What Has Government Done To Our Money, Rothbard
- The Case Against the Fed, Rothbard
- A History of Money and Banking..., Rothbard
- Human Action, Mises
- The Theory of Money and Credit, Mises

Evan: I have read Mankiw in undergrad school. To even remotely compare him to Mises or Rothbard, or to recommend his work over these two authors, shows that you have not read more than maybe two Mises/Rothbard books ... or have you even read any?

"...Rothbard or Mises, who consistently deny hard data due to stringent ideology" - Complete nonsense. What in the world are you talking about? In fact, Rothbard supplies some of the bast hard data in his historical books. But he doesn't use the data to build his theory. He uses it in order to confirm it, which is the only correct way to use statistical data in economics.

"Then how did Goldman and SunTrust survive, or foreign conglomerates like UBC and HSBC, in addition to thousands of other U.S. banks and hedge funds manage not to go under or need gov't bailouts?" - Because they still have money to blow. Is this not obvious? Why are you asking me this question? What does it have to do with the statement you are responding to? Nothing.

"I find it more than a bit comical that someone says the government is more at fault for the current crisis than private institutions, yet Fannie and Freddie, NOT run by gov't but merely partially subsidized, outweigh the failures of private decisions made by Lehman, AIG, Bear Sterns, Wamu, Merril Lynch, Wachovia, Citigroup?" - Obviously you did not read my last sentence: 'Plus all "private" banks only did what they did due to credit expansion policy (see above)'. Please read up on credit expansion (http://www.economicsjunkie.com...dit-expansion-policy/) and the business cycle (http://www.economicsjunkie.com/the-business-cycle/) so you understand how the government is behind the rise and fall of ALL these banks.

 

[First]

Originally posted by: economicsjunkie

Evan: I have read Mankiw in undergrad school. To even remotely compare him to Mises or Rothbard, or to recommend his work over these two authors, shows that you have not read more than maybe two Mises/Rothbard books ... or have you even read any?

I've read plenty of their stuff, and mostly just chuckle. They come to awful conclusions, sometimes completely ignoring the data they cite. It's dreadful stuff, torn to shreds by the likes of Samuelson and Friedman on more than one occasion.

"...Rothbard or Mises, who consistently deny hard data due to stringent ideology" - Complete nonsense. What in the world are you talking about? In fact, Rothbard supplies some of the bast hard data in his historical books. But he doesn't use the data to build his theory. He uses it in order to confirm it, which is the only correct way to use statistical data in economics.

I assume you mistyped something there, you just wrote that you're supposed to fit conclusions to data and not the other way around.

In case that wasn't a typo, I'm sorry to tell you, but no good economist (or scientist for that matter) comes to a conclusion and then tries to find data to back it up. You always follow the math, otherwise you're talking out of your ass.

Because they still have money to blow. Is this not obvious? Why are you asking me this question? What does it have to do with the statement you are responding to? Nothing.

Wait, am I to understand that private financial firms in the U.S. are only solvent because they haven't yet blown their money? Do you get paid for that ingenious analysis or does it come free?

And my statement had everything to do with your post. You tried to obfuscate terrible private investment decisions (Lehman, AIG, etc.) as if the gov't caused them to make those decisions while simultaneously ignoring that the vast, VAST majority of banks are solvent in the U.S. If you're going to make the claim these institutions only made their decisions because of the gov't, you'll first have to come up with some data to support it. Otherwise it's just horseshit.

Obviously you did not read my last sentence: 'Plus all "private" banks only did what they did due to credit expansion policy (see above)'. Please read up on credit expansion (http://www.economicsjunkie.com...dit-expansion-policy/) and the business cycle (http://www.economicsjunkie.com/the-business-cycle/) so you understand how the government is behind the rise and fall of ALL these banks.

You'll have to put it into your own reads and then repost it here. Somehow I don't quite believe you really understand what you're saying. Just a wild guess. :laugh:

 

[economicsjunkie]

Evan: Which Mises/Rothbard books have you read? Which parts in particular made you chuckle? Which conclusions did you deem "awful", which data do they "ignore". Please post the particular references where Samuelson or Friedman "tore into shreds" any of Mises's or Rothbard's writings? It's YOUR statements that are pulled out of your ass.

I won't dignify the rest of your blatant nonsense with an answer. It answers itself.

 

[First]

Originally posted by: economicsjunkie
Evan: Which Mises/Rothbard books have you read? Which parts in particular made you chuckle? Which conclusions did you deem "awful", which data do they "ignore". Please post the particular references where Samuelson or Friedman "tore into shreds" any of Mises's or Rothbard's writings? It's YOUR statements that are pulled out of your ass.

No, they're not. Samuelson, Friedman and Krugman have torn Austrian nonsense to shreds, as has any other good peer review. Read, and learn:

"The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false." - Milton Friedman

"I tremble for the reputation of my subject" after reading the "exaggerated claims that used to be made in economics for the power of deduction and a priori reasoning [the Austrian methods]." - Paul Samuelson

I won't dignify the rest of your blatant nonsense with an answer. It answers itself.

You won't because you can't.

 

[economicsjunkie]

Evan: Still scrabmbling to answer my questions? Which Mises/Rothbard books have you read? Which parts in particular made you chuckle? Which conclusions did you deem "awful", which data do they "ignore".

"The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false." - You call that "torn into shreds"? Laughable. All Friedman does is utter an opinion that is wrong. So what?

"I tremble for the reputation of my subject" after reading the "exaggerated claims that used to be made in economics for the power of deduction and a priori reasoning [the Austrian methods]." - He doesn't "tear apart" one single statement or theory posed by either Mises or Rothbard. If it wasn't so sad I'd be amused by this attempt to discredit them.

You haven't shown me one single writing that takes apart an Austrian paper and specifically points out what is wrong. This is of course not surprising. It is because most people don't understand Austian economics and thus have to attack it in ambiguous and general (albeit completely wrong) terms.

I have done this many times without any rebuttals from anyone in articles like these http://www.economicsjunkie.com/tag/paul-krugman/ - feel free to point out where exactly I am wrong.

You obviously haven't read about the basics of Praxeology and as a result got caught up in a web of inconsistencies and falsehoods, calling the mainstream method "scientific" and the Austrian one "pre-scientific". This is what I was taught at school and what I believed in when I was a complete fool in the field of Economics, thinking I had it all down. After studying the Austrian school and analyses with precision, it was pretty amazing to me what a bunch of nonsense I believed in.

Most people go through this process before they understand the Austrian School.

I wish you good luck in this and recommend you actually do read books like Human Action or The Ethics of Liberty, before talking about stuff you don't understand at all.