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On February 11 2012 01:05 Gaga wrote:Show nested quote +On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:On February 09 2012 09:49 Hider wrote:On February 09 2012 09:37 Skilledblob wrote:On February 09 2012 09:31 Probulous wrote:
[quote]
If it is so obvious now, why were they let into the euro in the first place? It must have been clear that having access to cheaper credit would not stop this behaviour even if there were so called penalties for it. A far more important question is how will this be prevented in the future. I have yet to hear a decent explanation aside from a central fiscal policy.
greece got into the Euro zone because they faked their records. That's really all there is to it. What Greece has to do is get it's fiscal politics in order. I cant think of anything more. The greece industry is hardly exsisting, most of it's money comes from tourism. But through entering the Euro zone and probably out of greed too, vacations in greece became really expensive compared to maybe ten years ago. So this means they destroyed lots of their own tourism income through too high prices. This led to tourists going to Turkey instead of Greece. On February 09 2012 09:34 Hider wrote:
Ye thats spending too much money (relative to income). With flexible labor markets wages would fall when tourism decreases. This is what they are supposed to do.
I dont see how that's related to spending too much money at all. Anad your so called "flexible markets" would only achieve one thing and that is destroy the inland demand for products. Less wages mean less sold goods, means less taxes, means less government jobs ( something greece relys on ), this starts a chain reaction that destroys your inland demand. Keynesians (mistakenly) think that this chain reaction is bad and that it will last forever. No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line. Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ?
Dont understand.Are you talking about a transaciton tax?
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On February 11 2012 00:50 WhiteDog wrote:Show nested quote +On February 11 2012 00:31 Hider wrote:On February 11 2012 00:19 WhiteDog wrote:On February 10 2012 23:55 SilentchiLL wrote:On February 10 2012 23:37 WhiteDog wrote:On February 10 2012 23:18 Velr wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. In theorie that can work. In Greece it obviously didn't  . Of course it didn't work in a free market environment (the EU zone). The money that the government gave to the government emloyee was most likely used to buy german, english or french goods and not greek goods... So you'd want to fall back to the times when mercantilism was in? Not at all. There are two solution : either the europe decide to give themselves some kind of economic policy in order to help the weakest link of the euro zone to create themselves comparativ advantages, or you permit some country to temporarily get out of the free zone to create those advantages (it is the idea, described by Mill, of the industry at birth). On February 11 2012 00:13 Hider wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. If you discount "production created" with oppurtunity cost, then government is destroying wealth. The formula could look like this: You have a scare amount of ressources (consiting of labour and commodities). Either the government owns these ressources or the private sector does. You can't have both. Wealth created = The value of the government transformation (=from ressources to final product) proces (of these ressources) - The value of the private sector transformation proces (given they had the ability to use those ressources). This btw is a completely standard way of measuring wealth creation as an economist (thinking in terms of opp. costs.). (Its not just austrians who defines wealth creation in this way.) What you are describing is the eviction effect (crowding out in english I think). Since the eviction effect is not total (or you are a monetarian and this discussion is just ridiculous) then the government is creating wealth. The whole idea of the public policies is that the private sector does not have the ressource to create any wealth. Not to mention the state is one of the only economical agent that can endebt itself that much. They create less than the private sector, but they create wealth. There is no discussion about that. I suggest you accept that the economy is not as simple as you would like to. I'm sure you would be really interesting if you were not trying to make us believe that the state is always a bad thing for economy no matter what. Crowing out effect affects interest rates. This really isn't relevant here. In this scenrio the ressources are avaiable to both. If ressources only are avaiable to government, then you need to explain why that would be the case. Let's make it clear. When the state invest money, it create a crowding effect that makes it less efficient in theory than private investment. It's valid. But as I said, the rest of what you said is just false, because public investment is made exactly because the private sector does not have the ressource or will not invest in the sector in question. Not to mention your equation can be used the exact same way to say that the private sector is destroying wealth - do you have any proof that the private sector is more efficient in producing anything than the public sector ?
Im not really talking about the crowding out effect here. There is only 2 options on how to use these limited ressources:
1) Either government uses them.
2) Or private sector uses them.
(So if you could imagine you could first give these ressources to government. Then after they had used those ressources they would have created X wealth (in absolute terms). Then you would go back in time and instead give the ressources to the private sector, and they would create Y Wealth (aboolute)). X - Y = Real wealth creted/desroyed by government.
So it should be obivious that in the above example the ressources are avaiable to both, and that X - Y = Real wealth created (I hope we agree on that part).
The questions is of course whether the private sector would be using those ressoruces better than government. I think you agree with that when the economy is doing well (high demand from consumers).
Private companies will be using these ressources better than government (because if they don't use them well they lose money per se) (?)
But I also suspect you would think that when the economy isn't doing well (barely any demand at the current level of prices), then private companies aren't using those ressources. They are just idle, and hence (at least short-termish) government could be creating wealth by using those ressources?
Do you agree with the above?
EDIT: Sorry for multiple posts in a row. Really need a multiple quote function.
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On February 11 2012 03:58 Hider wrote:Show nested quote +On February 11 2012 00:50 WhiteDog wrote:On February 11 2012 00:31 Hider wrote:On February 11 2012 00:19 WhiteDog wrote:On February 10 2012 23:55 SilentchiLL wrote:On February 10 2012 23:37 WhiteDog wrote:On February 10 2012 23:18 Velr wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. In theorie that can work. In Greece it obviously didn't . Of course it didn't work in a free market environment (the EU zone). The money that the government gave to the government emloyee was most likely used to buy german, english or french goods and not greek goods... So you'd want to fall back to the times when mercantilism was in? Not at all. There are two solution : either the europe decide to give themselves some kind of economic policy in order to help the weakest link of the euro zone to create themselves comparativ advantages, or you permit some country to temporarily get out of the free zone to create those advantages (it is the idea, described by Mill, of the industry at birth). On February 11 2012 00:13 Hider wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. If you discount "production created" with oppurtunity cost, then government is destroying wealth. The formula could look like this: You have a scare amount of ressources (consiting of labour and commodities). Either the government owns these ressources or the private sector does. You can't have both. Wealth created = The value of the government transformation (=from ressources to final product) proces (of these ressources) - The value of the private sector transformation proces (given they had the ability to use those ressources). This btw is a completely standard way of measuring wealth creation as an economist (thinking in terms of opp. costs.). (Its not just austrians who defines wealth creation in this way.) What you are describing is the eviction effect (crowding out in english I think). Since the eviction effect is not total (or you are a monetarian and this discussion is just ridiculous) then the government is creating wealth. The whole idea of the public policies is that the private sector does not have the ressource to create any wealth. Not to mention the state is one of the only economical agent that can endebt itself that much. They create less than the private sector, but they create wealth. There is no discussion about that. I suggest you accept that the economy is not as simple as you would like to. I'm sure you would be really interesting if you were not trying to make us believe that the state is always a bad thing for economy no matter what. Crowing out effect affects interest rates. This really isn't relevant here. In this scenrio the ressources are avaiable to both. If ressources only are avaiable to government, then you need to explain why that would be the case. Let's make it clear. When the state invest money, it create a crowding effect that makes it less efficient in theory than private investment. It's valid. But as I said, the rest of what you said is just false, because public investment is made exactly because the private sector does not have the ressource or will not invest in the sector in question. Not to mention your equation can be used the exact same way to say that the private sector is destroying wealth - do you have any proof that the private sector is more efficient in producing anything than the public sector ? Im not really talking about the crowding out effect here. There is only 2 options on how to use these limited ressources: 1) Either government uses them. 2) Or private sector uses them. (So if you could imagine you could first give these ressources to government. Then after they had used those ressources they would have created X wealth (in absolute terms). Then you would go back in time and instead give the ressources to the private sector, and they would create Y Wealth (aboolute)). X - Y = Real wealth creted/desroyed by government. So it should be obivious that in the above example the ressources are avaiable to both, and that X - Y = Real wealth created (I hope we agree on that part). The questions is of course whether the private sector would be using those ressoruces better than government. I think you agree with that when the economy is doing well (high demand from consumers). Private companies will be using these ressources better than government (because if they don't use them well they lose money per se) (?) But I also suspect you would think that when the economy isn't doing well (barely any demand at the current level of prices), then private companies aren't using those ressources. They are just idle, and hence (at least short-termish) government could be creating wealth by using those ressources? Do you agree with the above? EDIT: Sorry for multiple posts in a row. Really need a multiple quote function.
I think you are confusing economic activity with wealth creation. They are not the same thing. During a recession the general idea is for the government to spend money to stimulate the economy. But this does not create wealth, in fact, it often destroys wealth.
For example, the government could build and use an army to stimulate the economy. The production of tanks bombs etc. would create jobs and income but once the war is over the tanks and factories and machines are all worthless - and the resources used to create them are gone so wealth is destroyed.
*Sometimes* the government is better at creating wealth than the private sector (basic research, public goods / services) but in general the private sector is better both in good times and bad since their motivation is rather strictly to create wealth where the government has conflicting motivations and creating wealth is generally not the number one priority.
TARP created wealth. http://faculty.chicagobooth.edu/brian.barry/igm/P_gift.pdf But how many taxpayers and politicians would support another TARP program in the future? Government and politics care more about how wealth is distributed and an overall sense of fairness than whether or not wealth is created.
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On February 11 2012 04:44 JonnyBNoHo wrote:Show nested quote +On February 11 2012 03:58 Hider wrote:On February 11 2012 00:50 WhiteDog wrote:On February 11 2012 00:31 Hider wrote:On February 11 2012 00:19 WhiteDog wrote:On February 10 2012 23:55 SilentchiLL wrote:On February 10 2012 23:37 WhiteDog wrote:On February 10 2012 23:18 Velr wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. In theorie that can work. In Greece it obviously didn't . Of course it didn't work in a free market environment (the EU zone). The money that the government gave to the government emloyee was most likely used to buy german, english or french goods and not greek goods... So you'd want to fall back to the times when mercantilism was in? Not at all. There are two solution : either the europe decide to give themselves some kind of economic policy in order to help the weakest link of the euro zone to create themselves comparativ advantages, or you permit some country to temporarily get out of the free zone to create those advantages (it is the idea, described by Mill, of the industry at birth). On February 11 2012 00:13 Hider wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. If you discount "production created" with oppurtunity cost, then government is destroying wealth. The formula could look like this: You have a scare amount of ressources (consiting of labour and commodities). Either the government owns these ressources or the private sector does. You can't have both. Wealth created = The value of the government transformation (=from ressources to final product) proces (of these ressources) - The value of the private sector transformation proces (given they had the ability to use those ressources). This btw is a completely standard way of measuring wealth creation as an economist (thinking in terms of opp. costs.). (Its not just austrians who defines wealth creation in this way.) What you are describing is the eviction effect (crowding out in english I think). Since the eviction effect is not total (or you are a monetarian and this discussion is just ridiculous) then the government is creating wealth. The whole idea of the public policies is that the private sector does not have the ressource to create any wealth. Not to mention the state is one of the only economical agent that can endebt itself that much. They create less than the private sector, but they create wealth. There is no discussion about that. I suggest you accept that the economy is not as simple as you would like to. I'm sure you would be really interesting if you were not trying to make us believe that the state is always a bad thing for economy no matter what. Crowing out effect affects interest rates. This really isn't relevant here. In this scenrio the ressources are avaiable to both. If ressources only are avaiable to government, then you need to explain why that would be the case. Let's make it clear. When the state invest money, it create a crowding effect that makes it less efficient in theory than private investment. It's valid. But as I said, the rest of what you said is just false, because public investment is made exactly because the private sector does not have the ressource or will not invest in the sector in question. Not to mention your equation can be used the exact same way to say that the private sector is destroying wealth - do you have any proof that the private sector is more efficient in producing anything than the public sector ? Im not really talking about the crowding out effect here. There is only 2 options on how to use these limited ressources: 1) Either government uses them. 2) Or private sector uses them. (So if you could imagine you could first give these ressources to government. Then after they had used those ressources they would have created X wealth (in absolute terms). Then you would go back in time and instead give the ressources to the private sector, and they would create Y Wealth (aboolute)). X - Y = Real wealth creted/desroyed by government. So it should be obivious that in the above example the ressources are avaiable to both, and that X - Y = Real wealth created (I hope we agree on that part). The questions is of course whether the private sector would be using those ressoruces better than government. I think you agree with that when the economy is doing well (high demand from consumers). Private companies will be using these ressources better than government (because if they don't use them well they lose money per se) (?) But I also suspect you would think that when the economy isn't doing well (barely any demand at the current level of prices), then private companies aren't using those ressources. They are just idle, and hence (at least short-termish) government could be creating wealth by using those ressources? Do you agree with the above? EDIT: Sorry for multiple posts in a row. Really need a multiple quote function. I think you are confusing economic activity with wealth creation. They are not the same thing. During a recession the general idea is for the government to spend money to stimulate the economy. But this does not create wealth, in fact, it often destroys wealth. For example, the government could build and use an army to stimulate the economy. The production of tanks bombs etc. would create jobs and income but once the war is over the tanks and factories and machines are all worthless - and the resources used to create them are gone so wealth is destroyed. *Sometimes* the government is better at creating wealth than the private sector (basic research, public goods / services) but in general the private sector is better both in good times and bad since their motivation is rather strictly to create wealth where the government has conflicting motivations and creating wealth is generally not the number one priority. TARP created wealth. http://faculty.chicagobooth.edu/brian.barry/igm/P_gift.pdf But how many taxpayers and politicians would support another TARP program in the future? Government and politics care more about how wealth is distributed and an overall sense of fairness than whether or not wealth is created.
Eh your right (the first). But how come you think I am confusing stuff. I am inclicned to think you have not read my prev. posts where I actually state that government only destroys wealth every time it uses scare resources.
But in the above post I am just trying to understand his throught proces.
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On February 11 2012 05:18 Hider wrote:Show nested quote +On February 11 2012 04:44 JonnyBNoHo wrote:On February 11 2012 03:58 Hider wrote:On February 11 2012 00:50 WhiteDog wrote:On February 11 2012 00:31 Hider wrote:On February 11 2012 00:19 WhiteDog wrote:On February 10 2012 23:55 SilentchiLL wrote:On February 10 2012 23:37 WhiteDog wrote:On February 10 2012 23:18 Velr wrote:On February 10 2012 23:18 WhiteDog wrote:
[quote]
Maybe the government employs can create wealth and because of that pay their own salary ?
Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. In theorie that can work. In Greece it obviously didn't . Of course it didn't work in a free market environment (the EU zone). The money that the government gave to the government emloyee was most likely used to buy german, english or french goods and not greek goods... So you'd want to fall back to the times when mercantilism was in? Not at all. There are two solution : either the europe decide to give themselves some kind of economic policy in order to help the weakest link of the euro zone to create themselves comparativ advantages, or you permit some country to temporarily get out of the free zone to create those advantages (it is the idea, described by Mill, of the industry at birth). On February 11 2012 00:13 Hider wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. If you discount "production created" with oppurtunity cost, then government is destroying wealth. The formula could look like this: You have a scare amount of ressources (consiting of labour and commodities). Either the government owns these ressources or the private sector does. You can't have both. Wealth created = The value of the government transformation (=from ressources to final product) proces (of these ressources) - The value of the private sector transformation proces (given they had the ability to use those ressources). This btw is a completely standard way of measuring wealth creation as an economist (thinking in terms of opp. costs.). (Its not just austrians who defines wealth creation in this way.) What you are describing is the eviction effect (crowding out in english I think). Since the eviction effect is not total (or you are a monetarian and this discussion is just ridiculous) then the government is creating wealth. The whole idea of the public policies is that the private sector does not have the ressource to create any wealth. Not to mention the state is one of the only economical agent that can endebt itself that much. They create less than the private sector, but they create wealth. There is no discussion about that. I suggest you accept that the economy is not as simple as you would like to. I'm sure you would be really interesting if you were not trying to make us believe that the state is always a bad thing for economy no matter what. Crowing out effect affects interest rates. This really isn't relevant here. In this scenrio the ressources are avaiable to both. If ressources only are avaiable to government, then you need to explain why that would be the case. Let's make it clear. When the state invest money, it create a crowding effect that makes it less efficient in theory than private investment. It's valid. But as I said, the rest of what you said is just false, because public investment is made exactly because the private sector does not have the ressource or will not invest in the sector in question. Not to mention your equation can be used the exact same way to say that the private sector is destroying wealth - do you have any proof that the private sector is more efficient in producing anything than the public sector ? Im not really talking about the crowding out effect here. There is only 2 options on how to use these limited ressources: 1) Either government uses them. 2) Or private sector uses them. (So if you could imagine you could first give these ressources to government. Then after they had used those ressources they would have created X wealth (in absolute terms). Then you would go back in time and instead give the ressources to the private sector, and they would create Y Wealth (aboolute)). X - Y = Real wealth creted/desroyed by government. So it should be obivious that in the above example the ressources are avaiable to both, and that X - Y = Real wealth created (I hope we agree on that part). The questions is of course whether the private sector would be using those ressoruces better than government. I think you agree with that when the economy is doing well (high demand from consumers). Private companies will be using these ressources better than government (because if they don't use them well they lose money per se) (?) But I also suspect you would think that when the economy isn't doing well (barely any demand at the current level of prices), then private companies aren't using those ressources. They are just idle, and hence (at least short-termish) government could be creating wealth by using those ressources? Do you agree with the above? EDIT: Sorry for multiple posts in a row. Really need a multiple quote function. I think you are confusing economic activity with wealth creation. They are not the same thing. During a recession the general idea is for the government to spend money to stimulate the economy. But this does not create wealth, in fact, it often destroys wealth. For example, the government could build and use an army to stimulate the economy. The production of tanks bombs etc. would create jobs and income but once the war is over the tanks and factories and machines are all worthless - and the resources used to create them are gone so wealth is destroyed. *Sometimes* the government is better at creating wealth than the private sector (basic research, public goods / services) but in general the private sector is better both in good times and bad since their motivation is rather strictly to create wealth where the government has conflicting motivations and creating wealth is generally not the number one priority. TARP created wealth. http://faculty.chicagobooth.edu/brian.barry/igm/P_gift.pdf But how many taxpayers and politicians would support another TARP program in the future? Government and politics care more about how wealth is distributed and an overall sense of fairness than whether or not wealth is created. Eh your right (the first). But how come you think I am confusing stuff. I am inclicned to think you have not read my prev. posts where I actually state that government only destroys wealth every time it uses scare resources. But in the above post I am just trying to understand his throught proces.
My bad. I think I misread what you were getting at...
I shall be flogged for my crimes :-)
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On February 11 2012 03:48 Hider wrote:Show nested quote +On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:On February 09 2012 09:49 Hider wrote:On February 09 2012 09:37 Skilledblob wrote:
[quote]
greece got into the Euro zone because they faked their records. That's really all there is to it.
What Greece has to do is get it's fiscal politics in order. I cant think of anything more. The greece industry is hardly exsisting, most of it's money comes from tourism. But through entering the Euro zone and probably out of greed too, vacations in greece became really expensive compared to maybe ten years ago. So this means they destroyed lots of their own tourism income through too high prices. This led to tourists going to Turkey instead of Greece.
[quote]
I dont see how that's related to spending too much money at all. Anad your so called "flexible markets" would only achieve one thing and that is destroy the inland demand for products. Less wages mean less sold goods, means less taxes, means less government jobs ( something greece relys on ), this starts a chain reaction that destroys your inland demand. Keynesians (mistakenly) think that this chain reaction is bad and that it will last forever. No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line. Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax?
not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level.
By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino.
thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch
http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447
... the things i am talking about starts at 1:02:45
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On February 11 2012 08:12 Gaga wrote:Show nested quote +On February 11 2012 03:48 Hider wrote:On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:On February 09 2012 09:49 Hider wrote:
[quote]
Keynesians (mistakenly) think that this chain reaction is bad and that it will last forever. No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line. Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax? not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level. By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino. thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447... the things i am talking about starts at 1:02:45
This is amateur economics based on a naive understanding of a monetary system. Actually inflation is exactly what Gesell is looking for. If you don't invest money today you are losing ~2..3 % per year. Moving the origin (instead of 2% inflation, devalue the nominal value) as Gesell advices, accomplishes next to nothing.
Actually you can't hoard money as any bank/fond/insurance/pension plan invests your money behind the scene. The only way to make money not "work" is to put real money under your bed. Nobody is doing this (because of inflation). So the percentage of ready cash is ~2% of overall money supply, which indicates there is not much hoarding going on ..
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when i speak of cash i mean liquidity. liquidity can be used for longer investments (making it no longer liquid) or be withhold of the real economy and used to speculate in the financial markets. and Exactly that the ability to have liquidity (move your money) must have a cost to not lead to crisies.
watch or you won't understand.
can't explain it in reasonable length.
btw. i don't claim this to be 100% correct but it is an interesting thought to bring up.
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On February 11 2012 08:12 Gaga wrote:Show nested quote +On February 11 2012 03:48 Hider wrote:On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:On February 09 2012 09:49 Hider wrote:
[quote]
Keynesians (mistakenly) think that this chain reaction is bad and that it will last forever. No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line. Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax? not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level. By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino. thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447... the things i am talking about starts at 1:02:45
Well investors want to maximize their riskadjusted return (alpha), so if the "risk free interest rate" is too low, they rather speculate. I don't see the problem? Because this drives interest rates up. You only hoard money (for a decent amount of time) if the risk adjusted return of hoarding is higher than the interest rate on deposits. That would typically be if banks are too leveraged.
The interest rate (in a free market - gold standard) is determnined by the suply of money (savings) and the demand of money.
This is a healthy economy, as you can't lend out money that is not saved. Banks can't do fractional reserve banking as they cant lend out gold that doesn't exist.
Today that is (unfortunately) completely different. Banks lend out shitton of money that doesn't exist. These money gets used to speculate. These "money" would never have existed in a free market. Hence the free market would actually make a disctionction between investment banking and commercial banking. No government regulation is needed.
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On February 11 2012 21:07 Hider wrote:Show nested quote +On February 11 2012 08:12 Gaga wrote:On February 11 2012 03:48 Hider wrote:On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:
[quote]No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line.
Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax? not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level. By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino. thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447... the things i am talking about starts at 1:02:45 Well investors want to maximize their riskadjusted return (alpha), so if the "risk free interest rate" is too low, they rather speculate. I don't see the problem? Because this drives interest rates up. You only hoard money (for a decent amount of time) if the risk adjusted return of hoarding is higher than the interest rate on deposits. That would typically be if banks are too leveraged. The interest rate (in a free market - gold standard) is determnined by the suply of money (savings) and the demand of money. This is a healthy economy, as you can't lend out money that is not saved. Banks can't do fractional reserve banking as they cant lend out gold that doesn't exist. Today that is (unfortunately) completely different. Banks lend out shitton of money that doesn't exist. These money gets used to speculate. These "money" would never have existed in a free market. Hence the free market would actually make a disctionction between investment banking and commercial banking. No government regulation is needed.
you have it a bit mixed up. Banks can still do fractional reserve banking with a gold standard. Assuming a bank receives 100kilos of gold from people's deposits, it simply lends out 90 kilos of that gold which doesn't even belong to the bank in the first place, and voila you have fractional reserve banking.
What cannot be done with the gold standard is the reckless printing of money by the central bankers such as the Fed, BoE, BoJ, and the ECB.
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On February 11 2012 21:25 sekritzzz wrote:Show nested quote +On February 11 2012 21:07 Hider wrote:On February 11 2012 08:12 Gaga wrote:On February 11 2012 03:48 Hider wrote:On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:
[quote]
Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire).
Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax? not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level. By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino. thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447... the things i am talking about starts at 1:02:45 Well investors want to maximize their riskadjusted return (alpha), so if the "risk free interest rate" is too low, they rather speculate. I don't see the problem? Because this drives interest rates up. You only hoard money (for a decent amount of time) if the risk adjusted return of hoarding is higher than the interest rate on deposits. That would typically be if banks are too leveraged. The interest rate (in a free market - gold standard) is determnined by the suply of money (savings) and the demand of money. This is a healthy economy, as you can't lend out money that is not saved. Banks can't do fractional reserve banking as they cant lend out gold that doesn't exist. Today that is (unfortunately) completely different. Banks lend out shitton of money that doesn't exist. These money gets used to speculate. These "money" would never have existed in a free market. Hence the free market would actually make a disctionction between investment banking and commercial banking. No government regulation is needed. you have it a bit mixed up. Banks can still do fractional reserve banking with a gold standard. Assuming a bank receives 100kilos of gold from people's deposits, it simply lends out 90 kilos of that gold which doesn't even belong to the bank in the first place, and voila you have fractional reserve banking. What cannot be done with the gold standard is the reckless printing of money by the central bankers such as the Fed, BoE, BoJ, and the ECB.
True but obv. central bank deposits * FRB creates new money.
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On February 11 2012 21:07 Hider wrote:Show nested quote +On February 11 2012 08:12 Gaga wrote:On February 11 2012 03:48 Hider wrote:On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:
[quote]No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line.
Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax? not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level. By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino. thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447... the things i am talking about starts at 1:02:45 Well investors want to maximize their riskadjusted return (alpha), so if the "risk free interest rate" is too low, they rather speculate. I don't see the problem? Because this drives interest rates up. You only hoard money (for a decent amount of time) if the risk adjusted return of hoarding is higher than the interest rate on deposits. That would typically be if banks are too leveraged. The interest rate (in a free market - gold standard) is determnined by the suply of money (savings) and the demand of money. This is a healthy economy, as you can't lend out money that is not saved. Banks can't do fractional reserve banking as they cant lend out gold that doesn't exist. Today that is (unfortunately) completely different. Banks lend out shitton of money that doesn't exist. These money gets used to speculate. These "money" would never have existed in a free market. Hence the free market would actually make a disctionction between investment banking and commercial banking. No government regulation is needed.
that is true and is probably the greater part of the problems we face today...
but still the principle is at work also with fractional reserve banking, making it even worse.
and exactly the Fact that lenders can always keep the interest rates high because the option of speculation with liquidity is my problem. Result is that only positive interest rates exists. Because of the exponential growth of our money with only positive interest rates many say that this system cannot be stable and HAS to lead to crisies. thats the deeper root of my argument, creating negative interest so that the resulting interest rates will hoover around 0.
There is a reason there are 900 trillion $ worth of derivates while the worlds GDP is just over 63 trillion. and its everything but healthy.
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On February 11 2012 21:55 Gaga wrote:Show nested quote +On February 11 2012 21:07 Hider wrote:On February 11 2012 08:12 Gaga wrote:On February 11 2012 03:48 Hider wrote:On February 11 2012 01:05 Gaga wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:
[quote]
Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire).
Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. you speaking about what Gesell wrote about ? keyword : circulation fee ? Dont understand.Are you talking about a transaciton tax? not really ... its about the belief that on the market of money supply there is an unfair balance in favor of the suplliers of money. money does not rot... so if the demand of the economy for money is small that should lower interest rates. But the suppliers of money can choose not to lend that money to inverstors but instead use it for example betting in the financial markets (derivates) or just hoard it for later use to raise to interest rates to whatever desired level. By introducing a fee on cash interest rates wouldnt move from 0 to +x but from -x to +x. Meaning that if you have cash that you dont want and did not spend will reduce in value every month for example. Money that rots...Ideally that gives you the incentive to lend that money to someone who will pay you back the whole amount lets say .. in a year. For no interest... but since if you just hoarded that money you would loose some it becomes a good deal. And the money is uses in the real economy and is not sucked up by the money casino. thats a very rough explanation ... sorry if you haven't heard of it and want to understand the ideas watch http://blip.tv/quorum/bernd-senf-deeper-roots-of-world-financial-crisis-part-1-of-3-4130447... the things i am talking about starts at 1:02:45 Well investors want to maximize their riskadjusted return (alpha), so if the "risk free interest rate" is too low, they rather speculate. I don't see the problem? Because this drives interest rates up. You only hoard money (for a decent amount of time) if the risk adjusted return of hoarding is higher than the interest rate on deposits. That would typically be if banks are too leveraged. The interest rate (in a free market - gold standard) is determnined by the suply of money (savings) and the demand of money. This is a healthy economy, as you can't lend out money that is not saved. Banks can't do fractional reserve banking as they cant lend out gold that doesn't exist. Today that is (unfortunately) completely different. Banks lend out shitton of money that doesn't exist. These money gets used to speculate. These "money" would never have existed in a free market. Hence the free market would actually make a disctionction between investment banking and commercial banking. No government regulation is needed. that is true and is probably the greater part of the problems we face today... but still the principle is at work also with fractional reserve banking, making it even worse. and exactly the Fact that lenders can always keep the interest rates high because the option of speculation with liquidity is my problem. Result is that only positive interest rates exists. Because of the exponential growth of our money with only positive interest rates many say that this system cannot be stable and HAS to lead to crisies. thats the deeper root of my argument, creating negative interest so that the resulting interest rates will hoover around 0. There is a reason there are 900 trillion $ worth of derivates while the worlds GDP is just over 63 trillion. and its everything but healthy.
Your right, this (the current) system has to lead to crisis when monetary expansions stop growing exponentailly.
Don't understand your point about positive interest rates though? Aren't interest rates supposed to be positive, cus of time value of money + credit risk ?
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im speaking not of the credit risk here but time value. right now you pay the lender to give up his privilege of liquidity. what i say is the saver should pay for the privilege of liquidity.
a simple analogy would be parking spaces in citys. Right now the guy that stands in the parking lot demands pay to drive on. (The money would get back into circulation by lending with high interest). What i say would mean that he has to pay for the time he stands in that parking lot and is therefore willing to leave without pay.
credit risk is something that woulkd obviously always come on top. But it's two different things for me.
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On February 11 2012 22:55 Gaga wrote:
im speaking not of the credit risk here but time value. right now you pay the lender to give up his privilege of liquidity. what i say is the saver should pay for the privilege of liquidity.
a simple analogy would be parking spaces in citys. Right now the guy that stands in the parking lot demands pay to drive on. (The money would get back into circulation by lending with high interest). What i say would mean that he has to pay for the time he stands in that parking lot and is therefore willing to leave without pay.
credit risk is something that woulkd obviously always come on top. But it's two different things for me.
Yes time vale of money. Whats the problem with that? Shouldn't people be compensated?
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On February 11 2012 03:58 Hider wrote:Show nested quote +On February 11 2012 00:50 WhiteDog wrote:On February 11 2012 00:31 Hider wrote:On February 11 2012 00:19 WhiteDog wrote:On February 10 2012 23:55 SilentchiLL wrote:On February 10 2012 23:37 WhiteDog wrote:On February 10 2012 23:18 Velr wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. In theorie that can work. In Greece it obviously didn't . Of course it didn't work in a free market environment (the EU zone). The money that the government gave to the government emloyee was most likely used to buy german, english or french goods and not greek goods... So you'd want to fall back to the times when mercantilism was in? Not at all. There are two solution : either the europe decide to give themselves some kind of economic policy in order to help the weakest link of the euro zone to create themselves comparativ advantages, or you permit some country to temporarily get out of the free zone to create those advantages (it is the idea, described by Mill, of the industry at birth). On February 11 2012 00:13 Hider wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. If you discount "production created" with oppurtunity cost, then government is destroying wealth. The formula could look like this: You have a scare amount of ressources (consiting of labour and commodities). Either the government owns these ressources or the private sector does. You can't have both. Wealth created = The value of the government transformation (=from ressources to final product) proces (of these ressources) - The value of the private sector transformation proces (given they had the ability to use those ressources). This btw is a completely standard way of measuring wealth creation as an economist (thinking in terms of opp. costs.). (Its not just austrians who defines wealth creation in this way.) What you are describing is the eviction effect (crowding out in english I think). Since the eviction effect is not total (or you are a monetarian and this discussion is just ridiculous) then the government is creating wealth. The whole idea of the public policies is that the private sector does not have the ressource to create any wealth. Not to mention the state is one of the only economical agent that can endebt itself that much. They create less than the private sector, but they create wealth. There is no discussion about that. I suggest you accept that the economy is not as simple as you would like to. I'm sure you would be really interesting if you were not trying to make us believe that the state is always a bad thing for economy no matter what. Crowing out effect affects interest rates. This really isn't relevant here. In this scenrio the ressources are avaiable to both. If ressources only are avaiable to government, then you need to explain why that would be the case. Let's make it clear. When the state invest money, it create a crowding effect that makes it less efficient in theory than private investment. It's valid. But as I said, the rest of what you said is just false, because public investment is made exactly because the private sector does not have the ressource or will not invest in the sector in question. Not to mention your equation can be used the exact same way to say that the private sector is destroying wealth - do you have any proof that the private sector is more efficient in producing anything than the public sector ? Im not really talking about the crowding out effect here. There is only 2 options on how to use these limited ressources: 1) Either government uses them. 2) Or private sector uses them. (So if you could imagine you could first give these ressources to government. Then after they had used those ressources they would have created X wealth (in absolute terms). Then you would go back in time and instead give the ressources to the private sector, and they would create Y Wealth (aboolute)). X - Y = Real wealth creted/desroyed by government. So it should be obivious that in the above example the ressources are avaiable to both, and that X - Y = Real wealth created (I hope we agree on that part). The questions is of course whether the private sector would be using those ressoruces better than government. I think you agree with that when the economy is doing well (high demand from consumers). Private companies will be using these ressources better than government (because if they don't use them well they lose money per se) (?) But I also suspect you would think that when the economy isn't doing well (barely any demand at the current level of prices), then private companies aren't using those ressources. They are just idle, and hence (at least short-termish) government could be creating wealth by using those ressources? Do you agree with the above? EDIT: Sorry for multiple posts in a row. Really need a multiple quote function.
I understand your point but it's flawed.
1) There are no proof the private sector is more efficient than the public sector no matter what.
2) When a state invest in something, it is done because the private doesn't have the will to invest or the capacity to do so - train, economical crisis, negativ anticipations, etc. So all in all, your calcul is worthless.
3) Of course the money could be used better, we could even guess than the money can always be used better even in the private sector. Do we still consider than half the investment made are bad or destroy wealth just because they are not the most efficient possible ? No, when someone create wealth, the idea is just that he gain more than he have invested, period.
Then math you linked is not used to measure "how much wealth is destroyed", but "how efficient the investment were".
Or, to say it in another way, the wealth is not "destroyed" because it was never "created" in the first place.
On February 11 2012 03:43 Hider wrote:Show nested quote +On February 11 2012 01:06 paralleluniverse wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:On February 09 2012 09:49 Hider wrote:On February 09 2012 09:37 Skilledblob wrote:
[quote]
greece got into the Euro zone because they faked their records. That's really all there is to it.
What Greece has to do is get it's fiscal politics in order. I cant think of anything more. The greece industry is hardly exsisting, most of it's money comes from tourism. But through entering the Euro zone and probably out of greed too, vacations in greece became really expensive compared to maybe ten years ago. So this means they destroyed lots of their own tourism income through too high prices. This led to tourists going to Turkey instead of Greece.
[quote]
I dont see how that's related to spending too much money at all. Anad your so called "flexible markets" would only achieve one thing and that is destroy the inland demand for products. Less wages mean less sold goods, means less taxes, means less government jobs ( something greece relys on ), this starts a chain reaction that destroys your inland demand. Keynesians (mistakenly) think that this chain reaction is bad and that it will last forever. No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line. Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. Your argument is ridiculous. 1. To fix the crisis let's implement Austrian policies, like cutting government spending. 2, Then your policies inevitably fails, increases unemployment, reduces growth, perpetuates human misery, etc. 3. Now blame the failure of your policies on it not being a free market in the first place. Very helpful. Keynesian logic: 1. Too much spending in a country? NP. Keynesians know a easy way out: Spend more! 2. Wait for employment to rise. 3: The rise in employment unfortunately doesn't seem to be constant 4. Argue that governements didn't spend enough. 5. Argue that governments that interfered in basicially every way in the economy (and fails) prooves that austrian school has been empirical rejected. Please stop with these kind of arguments. They go nowhere. From your post I realize that you still don't get the austrian school. Your are allowed to have your opinion, but why do you feel obligated to criticize something you don't understand? Regarding Stiglitz. His analysis is based on asumptions that doesn't make sense. (LIke he argues that private actors try to maximize, yet they don't take externatilities into account + Governemnt has godlike knowledge). Anyway you can read more about why free markets actually can exist and work: http://mises.org/daily/2301Here is a quote: Logically, within the model's confines, the government is either a creature of the other economic actors (households and firms) or it is not. If it is an institution created and run by the household and firm sectors to rationalize externalities, then (assuming that it can and will do this and that it is the optimal means of doing this), we actually are not dealing with government at all in the usual sense of the word. We are dealing with a voluntary means of negotiating exchanges, a kind of a market, and we are not dealing with coerced taxes.
No, it's not the keynesian model at all man. The keynesian model is all based around the idea of contra-cyclic investment. The state is not a big machine made for investment AT ALL for Keynes. The idea is that you have to invest when the private sector cannot because of its anticipation, to help the economy go on despite the crisis. But, during economical growth, from a pure keynesianist perspective, you should not invest and you will eventually get all your investment back through taxes - taxes that will be higher by themselves just because of the economical growth.
The idea around unemployment is also way more complex. The idea is that there is no market for labor as the classical think and that a government can decide between inflation and unemployment (phillips).
In my country "austrian school" does not exist anymore and is completly outdated. It seems like you are neglecting Keynes, but also neglecting the marginalist who were actually way more subtile and complicated than just "the state is always bad, blablabla".
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On February 11 2012 23:21 Hider wrote:Show nested quote +On February 11 2012 22:55 Gaga wrote:
im speaking not of the credit risk here but time value. right now you pay the lender to give up his privilege of liquidity. what i say is the saver should pay for the privilege of liquidity.
a simple analogy would be parking spaces in citys. Right now the guy that stands in the parking lot demands pay to drive on. (The money would get back into circulation by lending with high interest). What i say would mean that he has to pay for the time he stands in that parking lot and is therefore willing to leave without pay.
credit risk is something that woulkd obviously always come on top. But it's two different things for me.
Yes time vale of money. Whats the problem with that? Shouldn't people be compensated?
no, for what ? having too much money that they dont want or can spend/invest it anymore ?
cashmoney shouldn't be used to amass wealth ... it's a mean of trading and should circulate.
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On February 11 2012 23:41 WhiteDog wrote:Show nested quote +On February 11 2012 03:58 Hider wrote:On February 11 2012 00:50 WhiteDog wrote:On February 11 2012 00:31 Hider wrote:On February 11 2012 00:19 WhiteDog wrote:On February 10 2012 23:55 SilentchiLL wrote:On February 10 2012 23:37 WhiteDog wrote:On February 10 2012 23:18 Velr wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. In theorie that can work. In Greece it obviously didn't . Of course it didn't work in a free market environment (the EU zone). The money that the government gave to the government emloyee was most likely used to buy german, english or french goods and not greek goods... So you'd want to fall back to the times when mercantilism was in? Not at all. There are two solution : either the europe decide to give themselves some kind of economic policy in order to help the weakest link of the euro zone to create themselves comparativ advantages, or you permit some country to temporarily get out of the free zone to create those advantages (it is the idea, described by Mill, of the industry at birth). On February 11 2012 00:13 Hider wrote:On February 10 2012 23:18 WhiteDog wrote:On February 10 2012 23:07 Ryuhou)aS( wrote:
I've heard the Greece's government employs some number over 50% of the greek people. I was just wondering, how nobody else noticed that taxes of the minority (in this case Greek citizens NOT employed by the government) pay the paychecks of the majority. ..It just doesn't make any sense, the constant and neverending build up of government, and I think it's probably what had the most to do with the Greek economy crashing. Maybe the government employs can create wealth and because of that pay their own salary ? Also, the salary given to the government employee is actually used by them for consumption - so they create a demand and because of that permit the private sector to exist. If you discount "production created" with oppurtunity cost, then government is destroying wealth. The formula could look like this: You have a scare amount of ressources (consiting of labour and commodities). Either the government owns these ressources or the private sector does. You can't have both. Wealth created = The value of the government transformation (=from ressources to final product) proces (of these ressources) - The value of the private sector transformation proces (given they had the ability to use those ressources). This btw is a completely standard way of measuring wealth creation as an economist (thinking in terms of opp. costs.). (Its not just austrians who defines wealth creation in this way.) What you are describing is the eviction effect (crowding out in english I think). Since the eviction effect is not total (or you are a monetarian and this discussion is just ridiculous) then the government is creating wealth. The whole idea of the public policies is that the private sector does not have the ressource to create any wealth. Not to mention the state is one of the only economical agent that can endebt itself that much. They create less than the private sector, but they create wealth. There is no discussion about that. I suggest you accept that the economy is not as simple as you would like to. I'm sure you would be really interesting if you were not trying to make us believe that the state is always a bad thing for economy no matter what. Crowing out effect affects interest rates. This really isn't relevant here. In this scenrio the ressources are avaiable to both. If ressources only are avaiable to government, then you need to explain why that would be the case. Let's make it clear. When the state invest money, it create a crowding effect that makes it less efficient in theory than private investment. It's valid. But as I said, the rest of what you said is just false, because public investment is made exactly because the private sector does not have the ressource or will not invest in the sector in question. Not to mention your equation can be used the exact same way to say that the private sector is destroying wealth - do you have any proof that the private sector is more efficient in producing anything than the public sector ? Im not really talking about the crowding out effect here. There is only 2 options on how to use these limited ressources: 1) Either government uses them. 2) Or private sector uses them. (So if you could imagine you could first give these ressources to government. Then after they had used those ressources they would have created X wealth (in absolute terms). Then you would go back in time and instead give the ressources to the private sector, and they would create Y Wealth (aboolute)). X - Y = Real wealth creted/desroyed by government. So it should be obivious that in the above example the ressources are avaiable to both, and that X - Y = Real wealth created (I hope we agree on that part). The questions is of course whether the private sector would be using those ressoruces better than government. I think you agree with that when the economy is doing well (high demand from consumers). Private companies will be using these ressources better than government (because if they don't use them well they lose money per se) (?) But I also suspect you would think that when the economy isn't doing well (barely any demand at the current level of prices), then private companies aren't using those ressources. They are just idle, and hence (at least short-termish) government could be creating wealth by using those ressources? Do you agree with the above? EDIT: Sorry for multiple posts in a row. Really need a multiple quote function. I understand your point but it's flawed. 1) There are no proof the private sector is more efficient than the public sector no matter what. 2) When a state invest in something, it is done because the private doesn't have the will to invest or the capacity to do so - train, economical crisis, negativ anticipations, etc. So all in all, your calcul is worthless. 3) Of course the money could be used better, we could even guess than the money can always be used better even in the private sector. Do we still consider than half the investment made are bad or destroy wealth just because they are not the most efficient possible ? No, when someone create wealth, the idea is just that he gain more than he have invested, period. Then math you linked is not used to measure "how much wealth is destroyed", but "how efficient the investment were". Or, to say it in another way, the wealth is not "destroyed" because it was never "created" in the first place. Show nested quote +On February 11 2012 03:43 Hider wrote:On February 11 2012 01:06 paralleluniverse wrote:On February 11 2012 00:49 Hider wrote:On February 11 2012 00:39 paralleluniverse wrote:On February 11 2012 00:05 Hider wrote:On February 10 2012 21:37 paralleluniverse wrote:On February 09 2012 23:21 Hider wrote:On February 09 2012 09:51 Sub40APM wrote:On February 09 2012 09:49 Hider wrote:
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Keynesians (mistakenly) think that this chain reaction is bad and that it will last forever. No they dont. Keynes, and Keynesians are pretty clear that one way out of a crisis is to wait long enough for a deflationary depression to be so severe that prices are in fact reset eventually. What Keynesians are about is avoiding those 5-10 years of defletionary depression and an economic trend where "new" full employment is higher than the previous trend line. Your right sorry. I misrepresented your view. But something I don't get is, why 5-10 years? Do keynesians have any empircal proof that it takes that long with laizzes-faire politics (and no great depression was no laizzes-faire). Your faith in Laissez-faire has reached levels surpassing religious fundamentalism. http://en.wikipedia.org/wiki/Stiglitz#Information_asymmetry Your posts usually has a higher quality. This is pretty dissapointing. 1) No reason to shit on other people with a different opinion than you. 2) Stiglitz doesn't have any empirical evidence on laizzes faire politics after an economic crisis? I would suspect that in order to analyze that, you would have to study the crisis of the early 20th century and 19th century Some years ago I myself read about some of these crisis, and they were supporting my hypothesis, but of course, i could be biased, so I asked you if you had any other empirical studies (and you respond with an irrelevant link). 3) I suspect you wanted to disproof free markets with the following quote: "Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well". This is basic economics. Of course its a problem. But if you read (and understood) my prev. posts, then you would have realized that the problem was lack of well defined property rights (if rights are well defined, then you can sue people for violating your rights). A bit hypocritical for an Austrian to be asking for empirical evidence. The world is full of examples of information asymmetry, e.g. health insurance, selling financial derivatives, etc. Stieglitz won a Nobel Prize for showing that free markets are always inefficient because of information asymmetry, which is why regulation is needed to correct for it. Putting your faith in free markets is foolish, the idea is fundamentally flawed because of information asymmetry. In fact, a quick google search turns up several articles showing the cause of the financial crisis boils down to information asymmetry: + Show Spoiler +This has now deviated off the topic of this thread. 1) I didn't ask for empircal evidence. I asked for empircal studies. Thats not being a hyprocit. People (like you i believe) has constantly claimed how the austrian school has been prooved wrong by history - By what studies I ask? Then I receive no answer. 2) Thats not free markets. Free markets = well defined property rights. Why aren'y you responding to what I have (now said) twice in this debate? 3) We already had this discussion previously. Health care sector = NOt even close to "free". Private sector = Not even close to free. I argued for that in the rep. thread, but (apparently) you didn't understand the implicaitons of it, and why financial instruments don't need government regulations. But I feel like I am wasting too much time repeating my self again and again. If you want to have a serious discussion then try to understand the austrian school and what free market implies (by actually reading my posts or doing other kind of research). So unless you show me that you actually understand the Austrian business cycle theory, but just do not understand why financial instruments isn't gonna be a problem (in a free market), then I will gladly explain it. Your argument is ridiculous. 1. To fix the crisis let's implement Austrian policies, like cutting government spending. 2, Then your policies inevitably fails, increases unemployment, reduces growth, perpetuates human misery, etc. 3. Now blame the failure of your policies on it not being a free market in the first place. Very helpful. Keynesian logic: 1. Too much spending in a country? NP. Keynesians know a easy way out: Spend more! 2. Wait for employment to rise. 3: The rise in employment unfortunately doesn't seem to be constant 4. Argue that governements didn't spend enough. 5. Argue that governments that interfered in basicially every way in the economy (and fails) prooves that austrian school has been empirical rejected. Please stop with these kind of arguments. They go nowhere. From your post I realize that you still don't get the austrian school. Your are allowed to have your opinion, but why do you feel obligated to criticize something you don't understand? Regarding Stiglitz. His analysis is based on asumptions that doesn't make sense. (LIke he argues that private actors try to maximize, yet they don't take externatilities into account + Governemnt has godlike knowledge). Anyway you can read more about why free markets actually can exist and work: http://mises.org/daily/2301Here is a quote: Logically, within the model's confines, the government is either a creature of the other economic actors (households and firms) or it is not. If it is an institution created and run by the household and firm sectors to rationalize externalities, then (assuming that it can and will do this and that it is the optimal means of doing this), we actually are not dealing with government at all in the usual sense of the word. We are dealing with a voluntary means of negotiating exchanges, a kind of a market, and we are not dealing with coerced taxes. No, it's not the keynesian model at all man. The keynesian model is all based around the idea of contra-cyclic investment. The state is not a big machine made for investment AT ALL for Keynes. The idea is that you have to invest when the private sector cannot because of its anticipation, to help the economy go on despite the crisis. But, during economical growth, from a pure keynesianist perspective, you should not invest and you will eventually get all your investment back through taxes - taxes that will be higher by themselves just because of the economical growth. The idea around unemployment is also way more complex. The idea is that there is no market for labor as the classical think and that a government can decide between inflation and unemployment (phillips). In my country "austrian school" does not exist anymore and is completly outdated. It seems like you are neglecting Keynes, but also neglecting the marginalist who were actually way more subtile and complicated than just "the state is always bad, blablabla".
To your first part:
Reg. private sector more efficient:Then you need to respond to the problem of not having prices to estimate demand, which was my basic argument for why capitalism is more efficient than communism. You can find it a few pages back.
You didn't understand my calcus. Because it exactly take into account if ressources are idle, and there is no will for the private sector to use them. I even wrote that in the post. My formula doesn't imply that government destroys value:
If ressources are idle then it would go like this:
Government created (aboslute wealth) = 10
Private created (absolute wealth) = 0
Government real wealth created = 10 - 0 = 10
Which is a scenario you could agree on right?
And no, you confuse accounting definition of wealth creation with how an economist thinks.
This is how an economist thinks:
http://en.wikipedia.org/wiki/Economic_Value_Added
An accountest would only look at ROIC (ignore WACC).
Well that is keynesian logic to some extent. Keynesians don't care about the cause of the crisis when they want to cure it. Its jsut spend more. Sure they might argue that govnerments shouldn't spend that much during good time, but this isn't really affecting their post-bobble decision making. Austirans are different, they will argue that during the bobble prices got to high and now they have to fail, and hence increased spending can't increase aggreagate number short-term, but those aggregate numbers aren't sustainable (as prices are sitll too high).
But really I just argued like that, because its the same way Parallel argued (agianst austrians), because I wanted to illustrate how useless that kind of argumentation was.
In sovjet im sure they trought capitalism was outddated. So the popularity of an economic school isn't relevant when discussing who is right.
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On February 12 2012 00:15 Gaga wrote:Show nested quote +On February 11 2012 23:21 Hider wrote:On February 11 2012 22:55 Gaga wrote:
im speaking not of the credit risk here but time value. right now you pay the lender to give up his privilege of liquidity. what i say is the saver should pay for the privilege of liquidity.
a simple analogy would be parking spaces in citys. Right now the guy that stands in the parking lot demands pay to drive on. (The money would get back into circulation by lending with high interest). What i say would mean that he has to pay for the time he stands in that parking lot and is therefore willing to leave without pay.
credit risk is something that woulkd obviously always come on top. But it's two different things for me.
Yes time vale of money. Whats the problem with that? Shouldn't people be compensated? no, for what ? having too much money that they dont want or can spend/invest it anymore ? cashmoney shouldn't be used to amass wealth ... it's a mean of trading and should circulate.
So when people don't want to consume/invest money, and they decide to go the bank, receives interest rate, who lends the money out. What happens then?
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the bank will ofc not give you a positive interest rate if you just put it onto a check account at a bank. but probably they would charge a little less if you wouldnt out it into the bank. and thats the idea ...
in a picture ![[image loading]](http://www.humonde.de/images/article/zinstreppe.jpg)
its german but i guess u can get the idea.
from top to bottom the translation of the steps is :
long term assets
short term assets
checking accounts
cash
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EPT
