Economics Questions

Re: Did the Fed go too far?

Webster — Sat, 29 Sep 2007 16:25:18 GMT

I agree. Not being an anarchist is not prima facie evidence of supporting any market intervention; for three or four years I was a minarchist who opposed any government intervention in the economy and I saw no contradiction. I will not accept that Mises supported state intervention in the economy without a direct quotation.

Re: Did the Fed go too far?

Niccolò — Sat, 29 Sep 2007 06:49:28 GMT

John Dolce, find me one person here other than the gentleman we are both replying to that would agree with him.

I do not think you will be able to.

Mises.org is an Anarchist site or at least one that finds many sympathies with Anarchism and if not offically pronounced Anarchist, quite blatantly de facto Anarchist.

Whoever believes Mises advocated intervention other than through defense of property rights (not through market safety mechanisms) has not read anything by Mises.

Re: Did the Fed go too far?

Niccolò — Sat, 29 Sep 2007 06:46:16 GMT

mattenglish:
yes, rate cuts HAVE helped in the past, including the early 2000s you mentioned.
So, is it just a self-fulfilling prophecy then, that eventually the economy will restore capital?

Didn't work the first 12 times, but that number 13 was the lucky charm!

your interpretation of Mises wanting NO government intervention in the economy is mere ignorance. it must be drastically reduced, but still available.

"Economic interventionism is a self-defeating policy. The individual measures that it applies do not achieve the results sought."

"Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps."
"On the unhampered market there prevails an irresistible tendency to employ every factor of production for the best possible satisfaction of the most urgent needs of the consumers. If the government interferes with this process, it can only impair satisfaction; it can never improve it."

Now, provide your quotes of Mises contradicting himself by advocating fascism.

The FDA is a joke, but if....

Oh God... More "if,then" hypothetical dribble. When does it end?

we had NO intervention, WE would have had scores of "THALIDIMIDE baby" like disasters over the past innovative years in the drug industry.
Really? Care to prove that?
By the way, here is an article about the very subject on the Mises.org website.

yes, in 99% of cases, the market can sort out the good from the bad; but the thalidimide case is an example where we cannot wait for the market to reveal disasterous mistakes that may take years to uncover with thousands of deaths or disabilities in the wake
Oh yeah? Why not?

How is the government - which can not possibly act in rational manners as proven by Mises, btw - any more adapt to doing so than the market?

PURE libertarianism is anarchism.

Mises.com wants DRASTIC reduction of government intervention, NOT complete elimination of it.

No. Mises.org wants pretty much an elimination of it. You do realize Lew Rockwell, the president of the Ludwig von Mises Institute is a market anarchist, do you not?

Please, go back to Chicago.

Re: Did the Fed go too far?

Webster — Sat, 29 Sep 2007 01:23:00 GMT

Thaladimide babies occured because a disfunctional government agency caused people to think that they did not need to pay attention to the safety of drugs, while in reality the government agency was not doing what people thought that it was doing. It is similar to the case of FDIC and the S&L meltdown in the 80s: people thought that the government would bail them out if their bank went under (as it did, unfortunately) so they paid no attention to risk. If, in the Thaladimide case, nothing could have determined the safety of the drug beforehand, then no government intervention could preempt the problem. If prior investigation could have detected the problem, does any reason why the free market would not have found it exist? I do find it rather odd that you are using an example of the failure of a government agency as an example of why libertarianism would not work. In any case, it could not do worse than the FDA.

If Mises stopped short of advocating complete noninvervention in the economy, then I disagree with him on that point.

Re: Did the Fed go too far?

johndolce — Sat, 29 Sep 2007 00:04:42 GMT

Do you speak for all of Mises.com? I am not so sure all would agree. I doubt many here support any existence of the Fed reserve. Anarchism is a good thing.

Re: Did the Fed go too far?

mattenglish — Fri, 28 Sep 2007 22:23:39 GMT

yes, rate cuts HAVE helped in the past, including the early 2000s you mentioned.

your interpretation of Mises wanting NO government intervention in the economy is mere ignorance. it must be drastically reduced, but still available. The FDA is a joke, but if we had NO intervention, WE would have had scores of "THALIDIMIDE baby" like disasters over the past innovative years in the drug industry.

yes, in 99% of cases, the market can sort out the good from the bad; but the thalidimide case is an example where we cannot wait for the market to reveal disasterous mistakes that may take years to uncover with thousands of deaths or disabilities in the wake.

PURE libertarianism is anarchism.

Mises.com wants DRASTIC reduction of government intervention, NOT complete elimination of it.

Re: Did the Fed go too far?

Niccolò — Fri, 28 Sep 2007 21:33:54 GMT

mattenglish:
i am unsure as to what you mean...the rate cut was a mere 10 days ago...much too early to state it's effects, much less to state it has worked in the OPPOSITE direction!!!?!!

it is not an exact science, but to say monetary policy has NEVER worked is a bit naive.... minimal government intervention in economic policy does NOT mean NO intervention.

You don't need to look into a crystal ball when you have a videotape of past events. Did rate cuts work in Japan? Did the first twelve rate cuts work in America during the early 2000's? What of Hoover in the 1930's?

Still no?

When are people going to drop the fallacy of "reflation" and get it through their heads that the problem is not liquidity, its capital.

You can cut your rates like a tree, but it won't matter if there are no more trees to cut.

Btw. You're probably one of the only people on the Mises website that would say that. We want NO intervention in the economy. None. Zero. Period.

Re: Did the Fed go too far?

mattnellans — Fri, 28 Sep 2007 20:21:29 GMT

The FED goes to far if it does anything at all.

Re: Did the Fed go too far?

johndolce — Fri, 28 Sep 2007 19:06:33 GMT

The discount rate was cut 10 days ago. They dropped the fed funds rate in Aug to prop up the crashing markets. What the chart shows is they are likely offsetting the drop with decreased FOMC purchases. Secondly, how do you define "worked"? In the Keynseian sense all Fed action works in regards to "stimulating" economic activity by creating dollars out of thin air. It does not work in the sense that the corresponding boom/bust cycles achieve the stated fed goal of price stabilization.

Re: Did the Fed go too far?

mattenglish — Fri, 28 Sep 2007 16:14:06 GMT

true, greenspan was seen as a god.

what is so ironic is that just as his book came out, he has been taking media heat for his "home for everyone" policy in his last few years, which has helped create this sub-prime mortgage debacle. i feel history will judge him in a somewhat lesser light due to that approoach in his later years.

Re: Did the Fed go too far?

mattenglish — Fri, 28 Sep 2007 16:09:10 GMT

i am unsure as to what you mean...the rate cut was a mere 10 days ago...much too early to state it's effects, much less to state it has worked in the OPPOSITE direction!!!?!!

it is not an exact science, but to say monetary policy has NEVER worked is a bit naive.... minimal government intervention in economic policy does NOT mean NO intervention.

Re: Did the Fed go too far?

Niccolò — Fri, 28 Sep 2007 05:41:20 GMT

mattenglish:
No, i do not think the Fed went too far with the 1 point rate cut. The housing market will have a huge effect on the overall economy, and this cut will ease the problem.

What WOULD be going too far are the various legislative schemes being considered that would bailout the ill-advised lenders and investors. They MUST learn their lesson, or history will quickly repeat itself.

Really? Then why has it worked in the opposite direction?

Why doesn't it ever work?

Should he have gone farther? Two points? Five? Ten?

When does the logic step in?

Re: Did the Fed go too far?

csullivan — Fri, 28 Sep 2007 05:30:54 GMT

Doesn't the Fed go too far anytime is convenes? :)

While it is nice to see the Fed looked upon in a very slightly less trusting manner, I wonder how much of that has to do with Bernanke? The media adored (and still adores, as evidenced by the last few weeks) Alan Greenspan. His predictions are still taken without so much as a "really?" from the media.

Re: Did the Fed go too far?

mattenglish — Thu, 27 Sep 2007 20:37:17 GMT

No, i do not think the Fed went too far with the 1 point rate cut. The housing market will have a huge effect on the overall economy, and this cut will ease the problem.

What WOULD be going too far are the various legislative schemes being considered that would bailout the ill-advised lenders and investors. They MUST learn their lesson, or history will quickly repeat itself.

Re: Did the Fed go too far?

johndolce — Thu, 27 Sep 2007 14:57:24 GMT

What is also lacking in the general media coverage is that despite the earlier cut the the fed funds, the adjusted monetary base continued to drop. Gary North wrote a great article about this. Despite all the lip service otherwise, probably to prop up the market, it appears the Fed is still pursuing a disinflationary policy.

http://research.stlouisfed.org/publications/usfd/page3.pdf