I understand the official position that pure economic theory, cannot suffice on its own to produce good entrepreneurial decision making, but I've long suspected things are nto so straightforward. For instance,when first learning about the Austrian business cycle theory, I was struck as to how similiar their analysis was to the kind of cyclical analsis applied by fundamentals investors in the way they correlate changes in GDP, inflation and interest rates to determine the state of the cycle. Indeed, I feel there is enough to say on that I might even write a paper on that.
But furthermore take a look at the following piece:
http://news.bbc.co.uk/1/hi/8517156.stm
If you glance at the short list showing which sectors have experienced major price increases, and and which have experienced major drops I couldn't help but wonder that any Austrian or praxeologist for that matter would be able to see easily how the top 3 were good trades. It's strange, it's like things that seemed like a mystery seem to be so easily brought into focus with an understanding of praxeology.
Take second hand cars. Understandably, during a recession people may be looking for budget items for the same types of purchases in general, though this has been further compounded as a result of the earlier interventions like "cash for clunkers" schemes that have been undertaken in Europe and America.
Or DVDs, considering that marginal income that might have been used to go out is reduced, people obviously may opt for cheaper substitutes, hence that is fairly ascertainable. With carrots, a similiar trend to with regard to indoor cooking can be perceived. Same goes for longet range flights in the sense they represent a "luxury" marginal good.
I think obviously as can be seen this requires more than just pure praxeology, but clearly those with a good understanding of it would have a competitive advantage over others in the sense, their "lens is more in focus", with regard to the causal effect of interventions. Do you think this could even be a strategy for the movement? Speculate and profit on the markets and re-invest to learn more theory and fund libertarian organisations?
Or am I off my rocker, and just engaging in easy post-hoc conformational bias? This kind of stuff makes me itch to get back into trading!
"When the King is far the people are happy." Chinese proverb
For Alexander Zinoviev and the free market there is a shared delight:
"Where there are problems there is life."
"LVM points out [see "the Theory of Money and Credit"], that the final value [purchasing power] of a unit of currency at any point in time is, as with everything else, always the final outcome of the interactions of 2 factors- the supply of money, and the demand for it, not just supply alone." -onebornfree
Fine, given demand for the currency remains constant, Austrians can predict with certainty that if the government increases the supply of the currency, prices will increase.
""Do you know of a theory that can predict if a government will increase the money supply? "
I understand that your question was not addressed to me- so apologies for interjecting here, but I could not help but comment. So I would have to say "yes, I do" - it's called " onebornfree's general theory of government" , meaning that as with monetary inflation, although nothing in the end is wholly predictable, the percentages appear to be on the side of someone who pretty much assumes that the government will nearly always increase the money supply - it is practically a natural law- at least as far as I can see." -onebornfree
No it is not. Past experience is very unreliable at predicting future performance.
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
Spideynw: "LVM points out [see "the Theory of Money and Credit"], that the final value [purchasing power] of a unit of currency at any point in time is, as with everything else, always the final outcome of the interactions of 2 factors- the supply of money, and the demand for it, not just supply alone." -onebornfree Fine, given demand for the currency remains constant, Austrians can predict with certainty that if the government increases the supply of the currency, prices will increase. ""Do you know of a theory that can predict if a government will increase the money supply? " I understand that your question was not addressed to me- so apologies for interjecting here, but I could not help but comment. So I would have to say "yes, I do" - it's called " onebornfree's general theory of government" , meaning that as with monetary inflation, although nothing in the end is wholly predictable, the percentages appear to be on the side of someone who pretty much assumes that the government will nearly always increase the money supply - it is practically a natural law- at least as far as I can see." -onebornfree No it is not. Past experience is very unreliable at predicting future performance.
"Fine, given demand for the currency remains constant, Austrians can predict with certainty that if the government increases the supply of the currency, prices will increase."
True, but it seems you missed my [badly made] point- demand cannot be predicted; government only controls one side of the equation- the supply side.
"Past experience is very unreliable at predicting future performance."
Yes, I agree, and in my defense I never said that it could never happen- I only observed that percentages appear to be on the side of the person[s] who assume that the government will nearly always increase the money supply [given the fundamental nature of all governments].
Just a wild guess here, and no offense intended, but it appears you have a little more faith in governments than I do [to do "the right" thing], although, conversely, it can be argued that I have a lot more faith than you in the government doing what it nearly always does- continually increasing the money supply.
And here we are.
Regards, onebornfree.
For more information about onebornfree, please see profile.[ i.e. click on forum name "onebornfree"].
"True, but it seems you missed my [badly made] point- demand cannot be predicted; government only controls one side of the equation- the supply side." -onebornfree
Actually, the government can quasi control demand as well. For example, in the U.S., the government has pretty much made FRNs the only legal currency. Granted, people do still barter, but it is on a very limited scale. Some few use silver and gold too, but again, on a very small scale. I would guess this is what happened in Germany, otherwise, why would people have kept using worthless pieces of paper?
"Just a wild guess here, and no offense intended, but it appears you have a little more faith in governments than I do [to do "the right" thing], although, conversely, it can be argued that I have a lot more faith than you in the government doing what it nearly always does- continually increasing the money supply. " -onebornfree
I don't know why you think not increasing the money supply is the "right" thing. The right thing would be for government to quit taxing people. And I am 99.99% sure that is not going to happen anytime soon.
Regardless, neither Austrian economics, nor any other economics, can predict what new stupid rules governments will come up with. That is my main point. Who can know what the next industry is that the government will favor or punish? Who could have predicted the government would outlaw fluorescent light bulbs or 5 gallon toilets? Who could have predicted the government would bail out big banks ten years ago, let alone a year before it did? Who could have predicted the Fed would lower the discount rate to 0%? The answer to all of these questions, is that no one could have. No one knows the future, and there are no theories that can predict the future.
A good quote from our not-so-popular figure:
"Markets can remain irrational a lot longer than you and I can remain solvent." - John Maynard Keynes
I don't follow markets too much but I tuned in to see what would happen after this Greece thing and it seems like a pretty bad day
Edit: never mind. It was crazy though HUGE crazy swings in the matter of minutes. Looked like the market was in free fall for a little bit though.
Joe: I don't follow markets too much but I tuned in to see what would happen after this Greece thing and it seems like a pretty bad day Edit: never mind. It was crazy though HUGE crazy swings in the matter of minutes. Looked like the market was in free fall for a little bit though.
The spike down seemed to be computer trading programs hitting their price floors and dumping, according to the rumor. My floor was s&p 1146, but since I monitor my stocks I didn't sell any. Its at a key decision point right now though, either its a good time to buy or hte worst time.
I picked a good day (yesterday) to load up on leveraged silver ETF's!!!!! Holy crap.
Anyway, the market isn't doing as bad as people are making out, because the dollar is rallying. The price changes in the stock market logically precede changes in prices of consumer goods, but in terms of real purchasing power, I don't think stocks have really fallen too much.
I do believe they SHOULD fall.
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