Isn't it a bit misleading to make this claim? You seem to benefit from people's ignorance because I regularly come across people that buy into the conspiracy theory that the Fed prints money for personal gain, simply because they're confused by how the monetary system works.
Thorsten or whoever wrote this article actually took the time and effort to dig up a video clip of money being printed, to include it as part of the article:
http://www.mises.org/story/2810
When the Fed expands the money supply, it's done digitally. No new money is necessarily created and nobody has yet to even explain to me how Bernanke or any banker benefits from it. I don't really understand why people are so ignorantly paranoid of the Federal Reserve for "printing money," when it's the U.S. mint under the treasury department that's responsible for the physical issuing of currency.
Even if the Fed were abolished and we were on a gold standard, there's nothing stopping the government from devaluing the currency by reducing its convertibility or issuing counterfeit banknotes. But, just as under fiat, they probably wouldn't do so, because it's idiotic for them to de-value their own currency when their wealth is denominated in that currency. It would be like trying to get healthcare by shooting yourself in the foot.
As for Rothbard's analysis -- according to Rothbard, we should've never recovered from the Great Depression, we should never have stable prices, and we should inevitably face another Great Depression. The past 70 years have proven such theories wrong. Not just empirically, but blatantly factually. If Austrian predictions have not held historically true, then they do not hold presently true. Simply put, if you're wrong time and again (though you seem to revise history to show how your predictions have been correct), then any analysis put forth know has to be taken with a massive grain of salt.
During the money problems and stagflation of the 1980's, which were a great deal worse than what we face today, the Austrians were likely beating the drums of financial panic, but we recovered.
I would say, "We recovered then and we'll recover now," but it isn't even 100% certain if we're heading for recession yet.
A few days ago, someone here acknowledged that "the sky is falling" is a silly economic claim to make. If I remember correctly, it was Inquisitor. Will you stand by that claim, now that it's one of your own engaging in this silliness?
"Austrian economics and freedom are not synonymous." -JAlanKatz
Nathyn:As for Rothbard's analysis -- according to Rothbard, we should've never recovered from the Great Depression, we should never have stable prices, and we should inevitably face another Great Depression. The past 70 years have proven such theories wrong.
I can't recall that Rothbard anywhere said that the recovery from the Depression isn't possible. Moreover, what he did was he pointed out that Depression can't be encountered with the same measures that introduced it. Allthough the government in the U.S. tried to do it, they finally had to give in to the market forces and let the economy 'fall back' to a more sustainable level. In my opinion "Americas Great Depression" gives a pretty good picture of this situation.
Also after the Depression there certainly have been other 'fall backs' but perhaps just not as strong. Of course the government has gotten better and possibly more skilled in the meddling as well. Yet there have been several credit crises and the approach to the monetary system has been changed couple of times. All that Austrians are saying that inflation is inevitably followed by deflation and inflationary growth is followed with depression as soon as the boom stops. To say that recovery, i.e. new economic growth, after the boom has crashed would be like condemning mankind to stoneage for ever.
One night I dreamed of chewing up my debetcard - there simply is nothing like hard cash in your pocket!
Nathyn:When the Fed expands the money supply, it's done digitally. No new money is necessarily created...
The Fed buys treasury bills on the open market, and it pays for them with newly-created (or newly instantiated) money.
Nathyn:The past 70 years have proven such theories wrong.
The housing bubble is a textbook example of ABCT. I'm sure if you haven't pissed off Inquisitor enough yet, he'll post a link to a paper detailing the empirical evidence for ABCT.
Don Roberto: Nathyn:As for Rothbard's analysis -- according to Rothbard, we should've never recovered from the Great Depression, we should never have stable prices, and we should inevitably face another Great Depression. The past 70 years have proven such theories wrong. I can't recall that Rothbard anywhere said that the recovery from the Depression isn't possible. Moreover, what he did was he pointed out that Depression can't be encountered with the same measures that introduced it. Allthough the government in the U.S. tried to do it, they finally had to give in to the market forces and let the economy 'fall back' to a more sustainable level. In my opinion "Americas Great Depression" gives a pretty good picture of this situation.Also after the Depression there certainly have been other 'fall backs' but perhaps just not as strong. Of course the government has gotten better and possibly more skilled in the meddling as well. Yet there have been several credit crises and the approach to the monetary system has been changed couple of times. All that Austrians are saying that inflation is inevitably followed by deflation and inflationary growth is followed with depression as soon as the boom stops. To say that recovery, i.e. new economic growth, after the boom has crashed would be like condemning mankind to stoneage for ever.
In reaction to the deflation-driven problems of the Depression, the government established fiat, abolished the gold standard, and vastly increased government spending that never went down. If inflation is caused by government borrowing and expansion of the money supply, and expansion can only be corrected by a reduction in the money supply, then, how has America had steady, usually relatively low inflation, over the past century, without any deflationary recession correcting it?
During the World War II era, America had huge amounts of debt, but they ended up with substantial economic growth and the debt went down. This doesn't make any sense from an Austrian perspective.
Banks can borrow money, newly printed, just for them, from the Fed's "discount window" at the Fed's set discount window rate.
Grant: Nathyn:When the Fed expands the money supply, it's done digitally. No new money is necessarily created...The Fed buys treasury bills on the open market, and it pays for them with newly-created (or newly instantiated) money.
But new physical money doesn't necessarily need to be created in the process.
Grant: Nathyn:The past 70 years have proven such theories wrong.The housing bubble is a textbook example of ABCT. I'm sure if you haven't pissed off Inquisitor enough yet, he'll post a link to a paper detailing the empirical evidence for ABCT.
Why do Austrians so frequently use empiricism if they reject it?
Harksaw: Banks can borrow money, newly printed, just for them, from the Fed's "discount window" at the Fed's set discount window rate.
They very rarely do that, though, because the discount rate is higher than the market rate.
All this new money is coming from somewhere.
http://en.wikipedia.org/wiki/Money_supply#United_States
(Does anyone know why the Fed doesn't release M0 ? Where can I find data for M0 ? )
Nathyn:A few days ago, someone here acknowledged that "the sky is falling" is a silly economic claim to make. If I remember correctly, it was Inquisitor. Will you stand by that claim, now that it's one of your own engaging in this silliness?
Point to me where I made such a claim, please?
More appropriately, why do people with scant methodological understanding make such statements? Rejection of empiricism-positivism =/= entail rejection of empirical facts qua economic history or demonstrations of theory or components of certain theories or their use in the natural sciences. Get it through your skull already.
http://www.mises.org/journals/rae/pdf/rae3_1_1.pdf
http://www.mises.org/journals/qjae/pdf/qjae9_2_4.pdf
There is a third paper, to which I do not have access though.
Harksaw:All this new money is coming from somewhere.http://en.wikipedia.org/wiki/Money_supply#United_States (Does anyone know why the Fed doesn't release M0 ? Where can I find data for M0 ? )
It's coming from the growth of the demand and supply of money, stemming from real GDP growth. Take that above graph and correlate it with real GDP.
They don't release M0 for the same reason they don't release M3 anymore. It's a useless statistic.
Inquisitor:Nathyn:A few days ago, someone here acknowledged that "the sky is falling" is a silly economic claim to make. If I remember correctly, it was Inquisitor. Will you stand by that claim, now that it's one of your own engaging in this silliness?Point to me where I made such a claim, please?
It must not've been you, then. It was somebody here, though. I'll dig it up, later. It was in my thread on the Economist, essentially implying Americans are going to starve.
Inquisitor:Why do Austrians so frequently use empiricism if they reject it? More appropriately, why do people with scant methodological understanding make such statements? Rejection of empiricism-positivism =/= entail rejection of empirical facts qua economic history or demonstrations of theory or components of certain theories or their use in the natural sciences. Get it through your skull already. http://www.mises.org/journals/rae/pdf/rae3_1_1.pdfhttp://www.mises.org/journals/qjae/pdf/qjae9_2_4.pdfThere is a third paper, to which I do not have access though.
It doesn't make sense to use past observations to justify present theories, but to object to using present observations to validate or invalidate present theories.
Hayek's "vector error-correction model estimated with U.S. macroeconomic data" seems wholly inconsistent with praxeology, probably one of many reasons Caplan doesn't consider him an Austrian economist.
How does real GDP growth cause the money supply to increase?
Austrians use empirical studies usually to demonstrate a theory by way of concrete example, as these are easier to grasp mentally than theorems in their purer forms (and also to refute theorems that were in fact generated via empirical data.). Empiricism-positivism is far more than merely the use of empirical data; it is an entire epistemological theory that makes certain strong claims regarding knowledge, some of which are in fact self-refuting. Additionally, as I've mentioned before, a shift to Aristoteleanism as Rothbard envisioned would require certain methodological shifts in how Austrians proceed; Aristoteleanism does not even recognize the positivist-rationalist dichotomy.
Quantitative methods are perfectly fine in the domain of economic history, just so long as it is realized that for the data to be apprehended at all as economic, and not some other data, theorems are necessary to even begin to interpret it.
I'm not going to discuss this any further in this thread. As I said elsewhere, I am going to compile a large list of links on Austrian economics and political economy, which will contain material on these matters.
Nathyn:In reaction to the deflation-driven problems of the Depression, the government established fiat, abolished the gold standard, and vastly increased government spending that never went down. If inflation is caused by government borrowing and expansion of the money supply, and expansion can only be corrected by a reduction in the money supply, then, how has America had steady, usually relatively low inflation, over the past century, without any deflationary recession correcting it?
The business cycle doesn't tell you when the crash is going to happen, it just says that it's inevitable. It doesn't also say that small amounts of inflation aren't controllable to some point. But what this finally leads to is that more and more control is required to sustain the inflationary growth and at some point it won't be possible any more since one can't control the publics preferations, at least without a gun.
Nathyn:During the World War II era, America had huge amounts of debt, but they ended up with substantial economic growth and the debt went down. This doesn't make any sense from an Austrian perspective.
Since I'm not familiar with the detailed actions of the government during that time I'd rather not comment on it. You can't prove a theory with some isolated aspects of the complete complicated and mixed situation. It's like calling the problems of Depression to be deflation-driven although their roots were already in the earlier policy of the government.
Nathyn:As for Rothbard's analysis -- according to Rothbard, we should've never recovered from the Great Depression, we should never have stable prices, and we should inevitably face another Great Depression.
As for Rothbard's analysis -- according to Rothbard, we should've never recovered from the Great Depression, we should never have stable prices, and we should inevitably face another Great Depression.
perhaps you could actually substantiate these claims with specific rothbard quotes on these three distinct points. otherwise you'll forgive us a little scepticism after your memory lapse re:inquisitor.
and are you seriously arguing that prices have been stable over the long haul? plot ppi, cpi, stock indices, land prices, wages, etc. going back to the federal reserve system inception. the gradient is positive. i think you miss one of the points of the austrian school - that the money created by the central bank, as it flows through the economy, has differing and unpredictable effects on prices. in the seventies, stagflation saw flat bourses but rampant commodity prices. the eighties and nineties saw flat/declining commodities but roaring financial asset prices. the current decade, roaring financial assets and commodities.
finally, i can't think of any austrian who predicts a return of the great depression, in the sense of a deflationary crisis. any possible contraction in money supply would be met be central bank intervention. the austrians point out the unsustainability of the current system, but are at pains to show that intervention can delay the onset of recession only at the cost of making the bang worse when it arrives. name one austrian who doesn't think the present system doesn't end in hyperinflation. to freeze monetary supply growth and provoke a deflationary crisis would seem out of character with bernanke's statements and actions so far. as for timing the next recession...guesses anyone?
Harksaw:How does real GDP growth cause the money supply to increase?
It doesn't. It increases the demand for money. As more wealth is produced, more money is necessary to keep prices stable.
It's the Fed's job, along with the treasury, to increase the money supply at least on par with economic growth.
Inquisitor:Austrians use empirical studies usually to demonstrate a theory by way of concrete example, as these are easier to grasp mentally than theorems in their purer forms (and also to refute theorems that were in fact generated via empirical data.). Empiricism-positivism is far more than merely the use of empirical data; it is an entire epistemological theory that makes certain strong claims regarding knowledge, some of which are in fact self-refuting. Additionally, as I've mentioned before, a shift to Aristoteleanism as Rothbard envisioned would require certain methodological shifts in how Austrians proceed; Aristoteleanism does not even recognize the positivist-rationalist dichotomy.Quantitative methods are perfectly fine in the domain of economic history, just so long as it is realized that for the data to be apprehended at all as economic, and not some other data, theorems are necessary to even begin to interpret it. I'm not going to discuss this any further in this thread. As I said elsewhere, I am going to compile a large list of links on Austrian economics and political economy, which will contain material on these matters.
Don Roberto: Nathyn:In reaction to the deflation-driven problems of the Depression, the government established fiat, abolished the gold standard, and vastly increased government spending that never went down. If inflation is caused by government borrowing and expansion of the money supply, and expansion can only be corrected by a reduction in the money supply, then, how has America had steady, usually relatively low inflation, over the past century, without any deflationary recession correcting it?The business cycle doesn't tell you when the crash is going to happen, it just says that it's inevitable.
Don Roberto:It doesn't also say that small amounts of inflation aren't controllable to some point. But what this finally leads to is that more and more control is required to sustain the inflationary growth and at some point it won't be possible any more since one can't control the publics preferations, at least without a gun.
Don Roberto: Nathyn:During the World War II era, America had huge amounts of debt, but they ended up with substantial economic growth and the debt went down. This doesn't make any sense from an Austrian perspective.Since I'm not familiar with the detailed actions of the government during that time I'd rather not comment on it. You can't prove a theory with some isolated aspects of the complete complicated and mixed situation. It's like calling the problems of Depression to be deflation-driven although their roots were already in the earlier policy of the government.
newson: Nathyn:As for Rothbard's analysis -- according to Rothbard, we should've never recovered from the Great Depression, we should never have stable prices, and we should inevitably face another Great Depression. perhaps you could actually substantiate these claims with specific rothbard quotes on these three distinct points. otherwise you'll forgive us a little scepticism after your memory lapse re:inquisitor.and are you seriously arguing that prices have been stable over the long haul? plot ppi, cpi, stock indices, land prices, wages, etc. going back to the federal reserve system inception. the gradient is positive. i think you miss one of the points of the austrian school - that the money created by the central bank, as it flows through the economy, has differing and unpredictable effects on prices. in the seventies, stagflation saw flat bourses but rampant commodity prices. the eighties and nineties saw flat/declining commodities but roaring financial asset prices. the current decade, roaring financial assets and commodities.finally, i can't think of any austrian who predicts a return of the great depression, in the sense of a deflationary crisis. any possible contraction in money supply would be met be central bank intervention. the austrians point out the unsustainability of the current system, but are at pains to show that intervention can delay the onset of recession only at the cost of making the bang worse when it arrives. name one austrian who doesn't think the present system doesn't end in hyperinflation. to freeze monetary supply growth and provoke a deflationary crisis would seem out of character with bernanke's statements and actions so far. as for timing the next recession...guesses anyone?
Nathyn:As more wealth is produced, more money is necessary to keep prices stable.
This is exactly the place where the mistake is made. Why would one need stable prices? Besides it's an impossible cause anyway since prices reflect consumerpreferences and in the long run it isn't possible to stabilize them due to the uncertainty of the future.
Don Roberto: Nathyn:As more wealth is produced, more money is necessary to keep prices stable. This is exactly the place where the mistake is made. Why would one need stable prices? Besides it's an impossible cause anyway since prices reflect consumerpreferences and in the long run it isn't possible to stabilize them due to the uncertainty of the future.
Well, to clarify: Stable prices aren't necessary. A stable price-mechanism is.
If prices could instantaneously change to account for inflation & deflation as Austrians claim, no, they wouldn't be a problem. But they can't and this is empirically observable whenever the Fed makes a decision, there's some lag between how long it takes for that decision to have an effect.
Prices and wages are "sticky" and can't react quickly, if at all in some cases, to deflationary and inflationary pressures. As a result, deflation and high inflation, especially unexpected, causes disruptions in the productivity of markets.
In the long run, it's easy to have stable prices. Since in the long run, monetarist ideas about the quantity of money apply, if you just increase the money supply on par with economic growth, average inflation should be zero.
That won't happen in the long run, though, because if you keep inflation too low, you run the risk of deflation and small, steady inflation has the benefit of helping negotiate wages to a lower level.
Nathyn:That seems rather silly to me, if you don't believe in the methodology.
That seems rather silly to me, if you don't believe in the methodology.
Only because you're ignorant of what rationalism consists in. Rationalism does not insist that all a priori truths are analytic; positivism does, thus it cannot account for the synthetic a priori. Rationalism in fact provides a better basis for inductive methods than does positivism.
I.E., let's say that you don't believe divination is a valid form of investigation, as some primitive cultures and hippies believe.It would be absurd for me to try and explain Austrian economics using tarot cards or the I Ching.I suspect it's a form of capitulating to the mainstream, being that the earliest of Austrians didn't seem to use it at all, but now it's used extensively.
Given that Mises stated from the beginning that such empirical studies are valid in certain areas, I don't see how that is so. The only disagreement in the school is whether a Kantian (Mises' influence) or an Aristotelean basis (which Menger first furnished it with) better serves its purposes, with all the attendant consequences.
Inquisitor:Nathyn:That seems rather silly to me, if you don't believe in the methodology.Only because you're ignorant of what rationalism consists in. Rationalism does not insist that all a priori truths are analytic; positivism does, thus it cannot account for the synthetic a priori. Rationalism in fact provides a better basis for inductive methods than does positivism.
Again, you're mistaking "logical positivism" for "positivism." It's the former that's concerned with the analytic-synthetic distinction. Most modern philosophers of science think no such distinction exists.
Inquisitor:I.E., let's say that you don't believe divination is a valid form of investigation, as some primitive cultures and hippies believe.It would be absurd for me to try and explain Austrian economics using tarot cards or the I Ching.I suspect it's a form of capitulating to the mainstream, being that the earliest of Austrians didn't seem to use it at all, but now it's used extensively.Given that Mises stated from the beginning that such empirical studies are valid in certain areas, I don't see how that is so. The only disagreement in the school is whether a Kantian (Mises' influence) or an Aristotelean basis (which Menger first furnished it with) better serves its purposes, with all the attendant consequences.
Both are pretty poor justifications. Aristotle's scientific theory was ripped to shreds by Galileo's gravity experiment. In the case of Kant, the ridiculous metaphysical theories of existentialism, like what Heidegger believed, were the result of Kantian influence. Such a basis for science was discredited when a lot of philosophers denied that what Einstein and Heisenberg had discovered were true, based on believing in the validity of their internally consistent metaphysical theories. The logical positivists attacked rightly ridiculing it and the atom bomb gave them credibility, being that they'd managed to have such a massive breakthrough but, like Austrian economists, all that metaphysicians had achieved was rhetoric.
Later, Popper and others criticized the analytic-synthetic distinction, proposing alternative theories of science to logical positivism that are more influential today.
As for what those theories are and which one is correct, I don't know -- like I said, I only got about halfway through Professor Jeffrey Kasser's lectures on it, with the Teaching Company.
Generally, from what I understand, aside from logical consistency, key concepts that give creedence to a scientific theory are:
It's hard to come up with a solid "theory of all knowledge," but including all the factors above give a pretty good basis for whether one scientific theory is good or not.
Both are pretty poor justifications.
Not really.
Aristotle's scientific theory was ripped to shreds by Galileo's gravity experiment.
Which has what to do with his methodological contributions?
In the case of Kant, the ridiculous metaphysical theories of existentialism, like what Heidegger believed, were the result of Kantian influence.
Which impacts Mises' interpretation of Kant and overall position, how? (FYI, Heidegger was not a rationalist)
Both thinkers have been improved upon.
The logical positivists attacked rightly ridiculing it and the atom bomb gave them credibility, being that they'd managed to have such a massive breakthrough but, like Austrian economists, all that metaphysicians had achieved was rhetoric.
And yet again, what does this have to do with rationalism? BTW, the Austrians have gone a lot farther than 'rhetoric' (which, peculiarly, you associate with rationalism - why?)
Nathyn:When the Fed expands the money supply, it's done digitally. No new money is necessarily created and nobody has yet to even explain to me how Bernanke or any banker benefits from it.
Time will tell
finally, i can't think of any austrian who predicts a return of the great depression, in the sense of a deflationary crisis.
-then you haven't read any Frank Shostak. Also, in AGD, Rothbard argues exactly this point - that the Fed did try to keep the money supply from falling but since the pool of funding was depleted, banks wouldn't lend and consumers wouldn't borrow.
PS: On why I attributed the analytic-synthetic dichotomy to positivism, see:
http://www.mises.org/journals/jls/1_4/1_4_6.pdf (pp 1 - 2)
It is true that it is based in logical positivism, but given that this is the primary influence on positivism as applied in neoclassical economics (especially based on essays by Friedman etc, which the authors cite in the book itself), it is a pertinent feature. I mixed up which was a subset of which though.
Nathyn:But new physical money doesn't necessarily need to be created in the process.
I don't know if anyone has answered this later down the thread but when people say 'the Fed is printing money' they know full well that they aren't physically printing money. That's the Treasury's job. What do they call that, a euphemism? Sounds a lot better than 'the Fed is a bunch of immoral counterfeiters', no?
I also wouldn't be a responsible netizen if I didn't correct the grammar in your title;
teh feds iz printing teh moneys!!1
Nathyn, you got the Austrian Business Cycle wrong, you got Friedman vs. Rothbard wrong, in fact, pretty much every economic issue you've posted on you've gotten wrong.Maybe it's time to sit one out, eh?
The Origins of Capitalism
And for more periodic bloggings by moi,
Leftlibertarian.org
Nathyn:I regularly come across people that buy into the conspiracy theory that the Fed prints money for personal gain
I regularly come across people that buy into the conspiracy theory that the Fed prints money for personal gain
The Fed's recieves interest on the money it prints for the Federal Government. That interest goes to the stock holders of the Federal, who are...oh wait, the stockholders names are secret.
How did I know that a thread with this title would be made by you?
Peace
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
Nathyn:"In reaction to the deflation-driven problems of the Depression, the government established fiat, abolished the gold standard, and vastly increased government spending that never went down. If inflation is caused by government borrowing and expansion of the money supply, and expansion can only be corrected by a reduction in the money supply, then, how has America had steady, usually relatively low inflation, over the past century, without any deflationary recession correcting it? ."
Nathyn:"During the World War II era, America had huge amounts of debt, but they ended up with substantial economic growth and the debt went down. This doesn't make any sense from an Austrian perspective."
Nathyn:It doesn't. It increases the demand for money. As more wealth is produced, more money is necessary to keep prices stable.It's the Fed's job, along with the treasury, to increase the money supply at least on par with economic growth.
The money supply needn't increase, decrease, or exist at the same level to fluctuate perfectly. Any increase in the supply, ceteris paribus, will automatically adjust the price level of money downards, yes, however we do not live with all things remaining equal and an increase in the supply of money does not affect prices uniformly, nor does it affect prices to the quantity by which the supply of money has been increased. Moreover, if the supply increases simultaneously as the demand for goods increases/decreases then the results are further skewed. Given the complexity of the money system, one can see the impossibility of attempting to "stabilize prices" without some sort of demand-schedule, changing machine to alter the demand-schedule of all people everywhere.
Fundamental lessons in basic economics teach students that markets clear. They clear when demand rises, they clear when supply descends, they even clear when demand for cash rises as demand for eggs fall and supply of egg substitutes rise. IMAGINE THAT!A new science concerning price equilibrium... What shall we call this study of the economy? Marketology?
Btw. Nathyn, what college are you currently attending? I really want to see who your professors are, just so I can warn anyone that may coincidentally be thinking of going there.
eric lansing:finally, i can't think of any austrian who predicts a return of the great depression, in the sense of a deflationary crisis. -then you haven't read any Frank Shostak. Also, in AGD, Rothbard argues exactly this point - that the Fed did try to keep the money supply from falling but since the pool of funding was depleted, banks wouldn't lend and consumers wouldn't borrow.
my point is this - the great depression was the last genuine deflationary crisis in the world. try and find one instance of rothbard disputing this. there was contraction of the money supply in this episode - the gold standard ensured that there were limits to the countermeasures central banks could take.
nowhere did i say there couldn't be grave economic crises, just that they'd be met with decisive inflationary action from the fed, and therefore wouldn't accompanied by prolonged contraction in money supply. take japan, post-bubble. banks didn't want to lend, customers to borrow. sure, flat to negative cpi growth ensued, but look at money supply at you'll see it's no deflation.
and yes, i've read and continue to read shostak, but i think you'll find his "pool of real funding" is something different from money supply. in fact, i find this term of his rather opaque, and to my knowledge he is the only austrian to use it. he doesn't predict deflation, however. only that slowing money supply ("ams") can set off recession.
in the fiat money system, banks with damaged balance sheets can be bailed out via a positive yield curve. same thing happened in usa after fdr abolished the gold standard. the banks emerged from the thirties in good health. rothbard's america's greal depression only covers the crisis years 1929-32, ie. the deflation years.
Nathyn:There's no upward trend in inflation, in countries with fiat.
There's no upward trend in inflation, in countries with fiat.
so i'm assuming if inflation were a stable 2000% year after year, you would argue that is an economic success story? even better, if inflation started at 2000% per year and slowly dropped this would presumably be even better? the only difference between inflation of 2000%pa and 3%pa is the length of time required for distortions in the economic structure to become apparent (at least to the public). in countries like zimbabwe, the effects are so gross as to be visible almost on a real-time basis.
Nathyn: I don't have any specific quotes, just a generic assumption based on what I know of the man, kind of like how I think Marx would support the Democrats over the Republicans. He never said it himself, but you know if he was alive today, he'd be like Noam Chomsky.
I don't have any specific quotes, just a generic assumption based on what I know of the man, kind of like how I think Marx would support the Democrats over the Republicans. He never said it himself, but you know if he was alive today, he'd be like Noam Chomsky.
when you're trying to discredit someone like rothbard, or indeed the austrian school en masse, you'll have to come up with something meatier than just the odd "generic assumption", which i take to mean an educated guess. if i wanted to draw the link between marx and chomsky in a rigorous manner, i'd have to quote both, and argue specific points. off the cuff statements - marx supporting the democrats over the republicans (were he alive) - are little better than cliches.
Nathyn:I don't really understand why people are so ignorantly paranoid of the Federal Reserve for "printing money," when it's the U.S. mint under the treasury department that's responsible for the physical issuing of currency.
I don't really understand why people are so ignorantly paranoid of the Federal Reserve for "printing money," when it's the U.S. mint under the treasury department that's responsible for the physical issuing of currency.
to apologists for central banking, you're in good company. here's a couple of jewels:
"5. Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly."
Communist Manifesto #5,Karl Marx & Fred. Engels
"Lenin is said to have declared that the best way to destroy the Capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens... while the process impoverishes many, it actually enriches some... who are (then) the object of hatred."
John Maynard Keynes
The Bureau of Printing and Engraving, within the U.S. government, actually runs the printing presses and does the actual printing of Federal Reserve Notes which, although not dollars in and of themselves (according to the U.S. Treasury), are "denominated" in dollars......an important distinction. They are sold to the Federal Reserve at about 4 cents per note, regardless of denomination. The actual issuance of the notes takes place in the now familar fashion used by Benochio and the Fed. (I'm not talking about the "checkbook" method of money creation used by the Fed.) Earlier in our economic history, the dollar was a "thing", defined by a composition of certain units of measure related to metallic specie. Now it is only a unit of measurement.
The government is already printing counterfeit banknotes. They are notes payable
in other notes payable in other notes.
For anyone who believes that the Fed, or any central banking structure, is good for the long term health of the economy, perhaps you might try taking your wealth and investing in instruments that are denominated in U.S. dollars. How about U.S. Treasuries and other public debt instruments. I understand that the Chinese have about $1.43 Trillion of them that they are looking to unload, although the list of interested buyers is suffering its own decline these days. You may find some good buys there. The Chinese have made public their irritation toward the policy of Benochio and The Fed to continue to inflate more and more and to dissolve the value of the dollar-denominated debt which they currently hold. I would suggest going to Alan Greenspan to make him an offer on some of his dollar-denominated investments. Unfortunately, as of earlier this year, Mr. Greenspan announced that he has already moved his personal investments out of dollar-denominated assets. You could go with the Euro which, for the time being, is generally rising in value against the U.S. dollar....until the european central banking system decides to undertake policies similar to the Fed. I can't say, when or even if, such a thing will happen. However, history does have a rather unfortunate characteristic of repeating itself.
Best regards.
cstarsoft:You could go with the Euro which, for the time being, is generally rising in value against the U.S. dollar....until the european central banking system decides to undertake policies similar to the Fed. I can't say, when or even if, such a thing will happen.
You could go with the Euro which, for the time being, is generally rising in value against the U.S. dollar....until the european central banking system decides to undertake policies similar to the Fed. I can't say, when or even if, such a thing will happen.
'already happening. check out euroland monetary growth. plot the euro against gold/oil/crb and see phenomenon is not confined to the usa. admitedly the dollar is currently the skunk on the road, but sooner or later the other central banks will respond in kind. 'hope greenspan is in gold, the irony would be delicious.
As it is the holiday season, I will hold out a hope for Mr. Greenspan that his assets have long since been converted into a form that has some manner of protection from Benochio and Company as well as their counterparts across the pond.
It is depressing to see a monetary system, which proved itself as the best model of stabilty and value-storage for over 4000 years, replaced by a system of fiduciary currencies that are nothing more than a sorry invention of politics.