Economics Questions

Re: ABCT in a few minutes

Kelvin Silva — Tue, 15 May 2012 03:45:34 GMT

I had also the same scenario when camping with my boyscout troop.

Basically what i said is:

When people save money, it is put into banks- the banks have money in them so they can loan it out to others easier, therefore lowering interest rates

When people spend money, they take it out of their bank and the bank has less money, interest rates will be higher

The two things above happen in an economy that is not hindered by the federal reserve/

Now, you are a company, you make product x, you see that interest rates are low- people saving money, you take advantage of this situation and start using your resources on another factory or orhter means to expand your buisness.

You can do this easily since demand for your product isnt as high since everyone is saving, and your resources are well spent.

Now if the interest rate is high, people are spending on items. You use your resources to further mass prouce your items instead of investing in the long term as the above suggested.

Now, with the federal reserve, the currency is inflated, it goes to the banks, it artificially sets interest rates low (since banks have lots of money). Now, the people could be spending alot and the interest rates could be low. You as a company sees the low interest rates, and start spending your resources on another factory. You don't know that people are wanting to buy lots of products because of the artificial interest rates. All the snatching for resources (your investment in a new factory etc. and the peoples demand for mass production of your products) reveals that there is too few.

Because of this mishap created by the central bank, your company fails to make ends meet, and needs to lay off workers, cut costs, etc, this is called the bust, in which the free market corrects itself.

To make a further analogy, you are a hosue builder, you know you have a x amount of bricks to build houses. In the free market withotu central bank, you know exactly when and how many houses to build according to the resources that you have. Under a economy with brick(money) manipulation, you are always unsure how many bricks you have, so there is a chance that you build an unfinished house (boom is building the house, bust is when you realize that you dont have bricks for the house)

So, thats basically what i said.

Re: ABCT in a few minutes

John James — Mon, 14 May 2012 14:09:17 GMT

Aristippus:
I also just want to say that I really hate threads on this forum that are more than one page long but don't appear so from the forum index...

Have you figured out the pattern yet?

(It's "question" threads that do that.)

Re: ABCT in a few minutes

Aristippus — Mon, 14 May 2012 14:07:15 GMT

Yeah, it didn't even mention how interest rates are related to credit expansion and how these effect investment decisions and, at the cessation of credit expansion, liquidation of malinvestments. Also, the video didn't emphasise that the boom is necessarily unsustainable since it must result in a) the end of credit expansion, resulting in a higher interest rate and liquidation of revealed malinvestments or b) hyperinflation and the crack-up boom. The central bank doesn't 'run out of money', it either decides to cease credit expansion or its issues lose their purchasing power completely and a flight into real values follows. The 'stimulus' part of the video wasn't really necessary or accurate.

I also just want to say that I really hate threads on this forum that are more than one page long but don't appear so from the forum index...

Re: ABCT in a few minutes

John James — Mon, 14 May 2012 13:24:00 GMT

I think they were too ambitious with the "5 minute" limit. That moves way too fast. (And technically, the "video" part was done in 4 minutes anyway. All the rest was just supplemental text, which could easily be called "additional material". The video even says "fin" at the 4 minute mark). I'd pick slower music to slow it down a bit, and it would be pretty good. The way it is now there's no possible way virtually anyone (let alone someone who's never heard of ABCT before) would be able to follow that without constantly stopping the video.

Also, I think the "eventually the government runs out of money" slide is a mistake. Honest people will get confused ("but you just told me they could print it out of nowhere?"..."Why would they stop bringing in taxes?") and people looking to "debunk" any sort of pro-free market video would easily say "Runs out of money? Taxes...hello. The government never runs out of money. What a bunch of bollocks."

Re: ABCT in a few minutes

Peter Sidor — Mon, 14 May 2012 08:21:45 GMT

There's a nice little video that does exactly the stated, in pictures:

The Business Cycle in 5 min

Re: ABCT in a few minutes

markb57 — Wed, 21 Mar 2012 19:20:46 GMT

This is great - quick and understandable!

Re: ABCT in a few minutes

Autolykos — Fri, 09 Dec 2011 22:59:12 GMT

Right, so where was I?

Neodoxy:
Can you give me any evidence that he's not promoting discussion? I've seen some really good discussion on the basis of Austrian Economics itself since he's come here and he's always had a reasonable tone despite some people not being so open to him. So what has he done to in any way harm discussion or in what instances has he done anything to warrant that response? I sometimes pop jokes like that but it would seem that no one has a problem with that because I'm pro Austrian. Maybe you should consider "giving him quarter" when it should be nice to think that you were trying to be the bigger man and give him better treatment and at very least the benefit of the doubt! He told a joke.

He appears to have been openly hostile to people in other discussion threads. At one point, when accused of making an ad hominem argument in another thread, he countered that claim by stating that he was actually engaging in full-on slander. If you'd like, I can find the post in question. Furthermore, he seems to have initiated the hostility (or worse) - at least typically.

That, in a nutshell, is why I acted the way I did toward him in this thread. I won't apologize for it. I don't care about "being the bigger man" against such as him, because I don't think that'll resonate with them - and they're the ones (not any audience) that I'm trying to resonate with.

Neodoxy:
There was nothing apparently snarky about it. And the fct that it was a year old thread and no one was waiting on the answer seems to make it less of a crime.

Obviously I disagree that there was nothing apparently snarky about it. What now?

Neodoxy:
Then you could try being polite first rather than being rude when you 'express your disaproval.'

I have - with other people, and in other threads. Typically I think I am polite. But I'm not afraid to "stoop to someone's level" if that's what I think it'll take to get through to him.

Re: ABCT in a few minutes

Wheylous — Tue, 29 Nov 2011 03:41:48 GMT

Yes, that link is quite great, though longer than 5 minutes (also, you need to be Tom Woods to pull it off with such ease and conviction).

Re: ABCT in a few minutes

A_PIIG — Tue, 29 Nov 2011 01:45:03 GMT

Thomas Woods does a cracking job explaining the theory in a short amount of time:

http://www.youtube.com/watch?v=wCmwRN5gjOo

Re: ABCT in a few minutes

Neodoxy — Sat, 26 Nov 2011 18:18:56 GMT

"Based on what I've seen of Marginal Interest around here, I don't exactly think he's promoting open discussion and a reasonable tone. So why should I give him any quarter?"

Can you give me any evidence that he's not promoting discussion? I've seen some really good discussion on the basis of Austrian Economics itself since he's come here and he's always had a reasonable tone despite some people not being so open to him. So what has he done to in any way harm discussion or in what instances has he done anything to warrant that response? I sometimes pop jokes like that but it would seem that no one has a problem with that because I'm pro Austrian. Maybe you should consider "giving him quarter" when it should be nice to think that you were trying to be the bigger man and give him better treatment and at very least the benefit of the doubt! He told a joke.

"Especially when he apparently came in to snark a year-old thread?"

There was nothing apparently snarky about it. And the fct that it was a year old thread and no one was waiting on the answer seems to make it less of a crime.

"But if a person indicates to me that he's not taking the discussion seriously - either any longer or from the get-go - I feel justified in expressing my disapproval."

Then you could try being polite first rather than being rude when you 'express your disaproval.'

Re: ABCT in a few minutes

Peter Sidor — Sat, 26 Nov 2011 18:06:26 GMT

The easiest way to recover a thread is to return to the original topic.

And since we're at it, nice summary, z1235! So what are your guy's ideas as to how to explain ABCT quickly and succintly?

Re: ABCT in a few minutes

Autolykos — Sat, 26 Nov 2011 17:59:02 GMT

...

Why would you make a joke like that (assuming it's really just a joke) in an otherwise serious discussion thread?

Re: ABCT in a few minutes

Marginal Interest — Sat, 26 Nov 2011 16:30:16 GMT

Well, last attempt at a joke I ever make. Levity has no place on this forum!

Re: ABCT in a few minutes

Autolykos — Sat, 26 Nov 2011 15:30:35 GMT

Based on what I've seen of Marginal Interest around here, I don't exactly think he's promoting open discussion and a reasonable tone. So why should I give him any quarter? Especially when he apparently came in to snark a year-old thread?

Furthermore, I'm surprised that you would accuse me of not promoting open discussion and a reasonable tone in general. I feel that I typically do promote these things. But if a person indicates to me that he's not taking the discussion seriously - either any longer or from the get-go - I feel justified in expressing my disapproval.

Re: ABCT in a few minutes

Neodoxy — Sat, 26 Nov 2011 04:16:08 GMT

"Apparently so."

Well that's a magnificent attitude. It's nice to see people around here promoting open discussion and a reasonable tone :)