Nope. He'd be ignored, and besides that forum is pretty much dead. Right here.
Well not so much begging for help (my mistake) as making his trolling publicly known.
Inquisitor:Nope. He'd be ignored, and besides that forum is pretty much dead. Right here.Well not so much begging for help (my mistake) as making his trolling publicly known.
The Origins of Capitalism
And for more periodic bloggings by moi,
Leftlibertarian.org
I just noticed another error in his post; Bryan Caplan is an anarcho-capitalist, not a minarchist.
Inquisitor: I just noticed another error in his post; Bryan Caplan is an anarcho-capitalist, not a minarchist.
That is not a mistake. It is actually part of a masterplan to corner you and prove austro-economics wrong.
Deist:Nathyn, you told me that you are not marxist but other then that I am not sure where you are coming from on issues. You use Monetarist arguments who are generally pro capitalist and Keynesian arguments as well yet you seem to have a generally negative view of capitalism. Even Keynesians realized the need for capitalist institutions. Overall you seem to draw upon oppossing and inconsistent view points to make your arguments. I am assuming your an anarcho socialist of some sort but that is only because you mentioned something about the rich history of freedom in that political viewpoint. I would appreciate it if you did make your views understood to me. And no I am not saying you have to fit into an exact political philosophy but it just seems to me you will throw any possible economic argument out there to support what your proposing, which just makes it come off as ad hoc.
Nathyn, you told me that you are not marxist but other then that I am not sure where you are coming from on issues. You use Monetarist arguments who are generally pro capitalist and Keynesian arguments as well yet you seem to have a generally negative view of capitalism. Even Keynesians realized the need for capitalist institutions. Overall you seem to draw upon oppossing and inconsistent view points to make your arguments. I am assuming your an anarcho socialist of some sort but that is only because you mentioned something about the rich history of freedom in that political viewpoint. I would appreciate it if you did make your views understood to me. And no I am not saying you have to fit into an exact political philosophy but it just seems to me you will throw any possible economic argument out there to support what your proposing, which just makes it come off as ad hoc.
We define Capitalism different. There is a difference between "an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth" and "omg govt is evil, abolish teh govts!!1"
I am a Capitalist. I live in a Capitalist country. I agree with New Keynesianism, but I think that Monetarism is a good way of explaining Keynesian concepts to Libertarians.
I'm not an Anarchist, because I think the government has a useful role to play, but I admit I do have some Left-Libertarian and Marxist Anarchist leanings, because I like Henry George and Proudhon, though I'm not a Georgist or a Mutualist. I acknowledge the existence of both market failure and government failure -- as any decent economist should. While I've typically considered "voluntary taxation," absurd and am an American Liberal (who likes John Rawls), I like Nozick also and it occurred to me recently that Nozick's voluntary taxation might be compatible with Rawls' social justice if the government was made a publicly traded corporation, where only citizens can donate. Despite this, I refuse to call myself a "Libertarian" because of how it's associated with radicals like you.
"Austrian economics and freedom are not synonymous." -JAlanKatz
Nathyn:omg govt is evil, abolish teh govts!!1
omg govt is evil, abolish teh govts!!1
Nathyn, I've heard good things about this program.
If you think it is only the Austrians who question market failure, you have another thing coming for you. Many of the public choice economists have problems with it too. The public choice school and the Austrian school are perhaps the most closely aligned, in spite of criticisms the one has for the other from time to time. But I'm sure you knew that. I am also sure you're aware that many major Austrians are minarchists, being as well-informed as you are.
Nathyn, if you truly lived in a capitalist system, 60% of your tax dollars would not go to social programs which have a stated goal of redistributing wealth. Furthermore, if you truly lived in a capitlaist system, then we would not have the unnecessary overregulation of business that we have today, nor would such things as Eminent Domain or socialized medicine even be questions. They would already be answered by government with a flat-out, "no." The fact is, however, that we do have welfare, we do have politicians who seek media censorship, we do have calls for government ownership of the presses, we even have had good old Nancy Pelosi state that she wishes to, "level out wages in America." If all that is "capitalism" then I would like to know since when capitalism and socialism became synonymous. You will find that many of us here - and in fact, quite a number of Austrian economists - do not seek abolition of government. What we seek is for government to get its nose out of our lives.
Then there are those others who believe (accurately or not is not the point of discussion here) that government will always grow too large and will always seek to control the lives of the people, and therefore government always turns bad eventually. Therefore, the best way to keep government from turning bad is simply not to have one. At all.
Edit:By the way, if government is oh so good, then why is it that the only time most people have any interaction with government, it is of the extremely negative kind? How often do governments invade foreign nations without provocation? Or fabricate provocation? How often have governments (even the US government) deliberately and knowingly lied to their people? Government has throughout time been rampant with true racism, with eugenics programs, with persecution of disenfranchised classes, with class systems, et cetera. Is government inherently evil? I'm sorry, but I cannot think of any government the world over which does not have at least a few dark marks on it.
Nathyn: We define Capitalism different. There is a difference between "an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth" and "omg govt is evil, abolish teh govts!!1" I am a Capitalist. I live in a Capitalist country. I agree with New Keynesianism, but I think that Monetarism is a good way of explaining Keynesian concepts to Libertarians.
Nathyn, are you sure you live in a Capitalist country? At what point does government control and regulation of the means of production, distribution, and exchange of wealth become excessively burdensome and non-capitalist? How much ownership can a legitimate owner lose and still be considered a "free person"? The only difference between a lesser coercive act and a greater coercive act is the degree of injustice done.
Nathyn:...inherent in Austrian economics is the assumption of the labor theory of value and a reject of marginalism.
Not wanting to reject the 'mainstream' I feel I must start out my argument with an ad hominem attack since that seems to be their way...
That is complete BS and you are an idiot for even suggesting that the labor theory of value is contained in Austrian economics. Never heard of Marginal Utility as a valuation theory?
Nathyn:This process: the cumulative development of a medium of exchange on the free market—is the only way money can become established. Money cannot originate in any other way, neither by everyone suddenly deciding to create money out of useless material, nor by government calling bits of paper "money." For embedded in the demand for money is knowledge of the money-prices of the immediate past; in contrast to directly-used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium for exchange to the previous demand for direct use (e.g., for ornaments, in the case of gold[1] ). Thus, government is powerless to create money for the economy; it can only be developed by the processes of the free market.I was completely confused by this statement, but until I saw another Austrian here make the same argument, it occurred to me what it was: an assumption of the LTV.
This process: the cumulative development of a medium of exchange on the free market—is the only way money can become established. Money cannot originate in any other way, neither by everyone suddenly deciding to create money out of useless material, nor by government calling bits of paper "money." For embedded in the demand for money is knowledge of the money-prices of the immediate past; in contrast to directly-used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium for exchange to the previous demand for direct use (e.g., for ornaments, in the case of gold[1] ). Thus, government is powerless to create money for the economy; it can only be developed by the processes of the free market.
I was completely confused by this statement, but until I saw another Austrian here make the same argument, it occurred to me what it was: an assumption of the LTV.
From An Introduction to Economic Reasoning with some snipage:
He noted that the value of money today depends on the value of money yesterday. When people are trying to value gold, they must estimate the purchasing power of gold. Their only basis for doing so is the value of money yesterday.Note that Mises did not mean that the value of money today equals its value yesterday. If that were his contention, Mises’s theory would be false. It would have the consequence that the value of money never changes (can you see why?), which is contrary to obvious fact. Mises is saying that people must use the value of money yesterday as the basis for estimating its value today.Here precisely lies Mises’s genius as a monetary theorist. He showed that his account of the value of money by its value on the previous day does not entail an unsatisfactory regress. What happens when we keep pushing back the explanation? The value of gold at t depends on its value at t-1, which depends on its value at t-2 . . . Eventually, we reach a day in which gold had no value as an instrument for obtaining other commodities. The purchasing power component of its value drops out, and the value of gold on “day one” depends entirely on its use for non-monetary purposes.Without a value on day one, there would be no means available by which people could estimate the purchasing power of money. And it is essential that they be able to do this in order for money to serve as a medium of exchange.
Note that Mises did not mean that the value of money today equals its value yesterday. If that were his contention, Mises’s theory would be false. It would have the consequence that the value of money never changes (can you see why?), which is contrary to obvious fact. Mises is saying that people must use the value of money yesterday as the basis for estimating its value today.
Here precisely lies Mises’s genius as a monetary theorist. He showed that his account of the value of money by its value on the previous day does not entail an unsatisfactory regress. What happens when we keep pushing back the explanation? The value of gold at t depends on its value at t-1, which depends on its value at t-2 . . . Eventually, we reach a day in which gold had no value as an instrument for obtaining other commodities. The purchasing power component of its value drops out, and the value of gold on “day one” depends entirely on its use for non-monetary purposes.Without a value on day one, there would be no means available by which people could estimate the purchasing power of money. And it is essential that they be able to do this in order for money to serve as a medium of exchange.
Perhaps if you don't understand something you should seek out alternative sources that explain it better instead of just making bad guesses, don't you think?
Nathyn:The result of this backwards view (literally) is that he assumes demand for money cannot increase, but then he contradicts himself by saying that free banking would be the best way to handle money.
You assume that he is assuming that demand for money can't increase when he is in fact showing that the value of money can be determined in the exact same way as any other commodity. Basically that money isn't special.
Nathyn:That statement doesn't seem to backed by a shred of evidence and it demonstrates the poor scholarship of the Austrians.
I'm starting to get the general impression that you are the only one who is demonstrating poor scholarship...
Nathyn:For instance, take the Iraq war and Afghanistan wars. They're a large part of the budget, but non-war related spending far exceeds them and this has held true, historically.
Doesn't that actually prove the point that monetary policy is the primary tool of state aggrandizement? War isn't as you openly admit so it must be something else, huh?
And these are really minor wars compared to the world wars where the whole world wide economy was subjugated to the war effort.
But yes, you are quite correct in stating that the powers of the government hasn't grown in the least because of the War on Terror. No new layers of bureaucracy such as the Dept. of Homeland Security, no federalizing and militarization of the police forces and certainly no encroachment of basic rights by the very same government that is supposed to guard them.
Nope, the War on Terror hasn't led to the growth of the State at all.
Nathyn:Why exactly would such an evil government continually distribute funds from the wealthy to the poor?
Because it's in their (the State's) best interest to have a big budget. And they distribute much, much more money to the wealthy than they do to the poor through their corporate welfare programs and such.
It would be more accurate to say that they distribute money from the middle class to both the rich and the poor. Oh, and farmers, don't forget the farmers.
A slight hijack, but doesn't redistribution occur within income bands, not between them? Rothbard noted this in For a New Liberty based on Tax Foundation statistics (and I checked more recent ones, noting little change.) The statistics indicate the poorest and richest having the highest tax incidence, with little variation in all the bands between. Basically it's redistribution from the productive to the non-productive, as opposed from rich to poor. Correct me if I'm wrong.
Another one to toss in the list: The claim that economies should be modeled based on "human action" is particularly presumptuous, since it seems to totally ignore the impact ecology has on human action and thus, while assuming scarcity to be true, implicitly rejects it by suggesting human beings all seeking their own utility can't lead to a reduction in overall resources, which diminishes future potential for utility.
Though theories like "peak oil," (or even worse, "peak food", like Malthus) are clearly nonsense, there is a lot of evidence to support this. See Wikipedia's list of extinct animals.
A biology professor I spoke with gave an even better example: The natives of Easter Island appeared to have died out due to lack of wood, since the island is totally devoid of trees, but archaelogical evidence suggests that in some time in the distant past, their society and culture just vanished.
Nathyn: Another one to toss in the list: The claim that economies should be modeled based on "human action" is particularly presumptuous, since it seems to totally ignore the impact ecology has on human action and thus, while assuming scarcity to be true, implicitly rejects it by suggesting human beings all seeking their own utility can't lead to a reduction in overall resources, which diminishes future potential for utility.Though theories like "peak oil," (or even worse, "peak food", like Malthus) are clearly nonsense, there is a lot of evidence to support this. See Wikipedia's list of extinct animals.A biology professor I spoke with gave an even better example: The natives of Easter Island appeared to have died out due to lack of wood, since the island is totally devoid of trees, but archaelogical evidence suggests that in some time in the distant past, their society and culture just vanished.
Learn nominal prices first, then we'll talk.
Niccolò: Nathyn: Another one to toss in the list: The claim that economies should be modeled based on "human action" is particularly presumptuous, since it seems to totally ignore the impact ecology has on human action and thus, while assuming scarcity to be true, implicitly rejects it by suggesting human beings all seeking their own utility can't lead to a reduction in overall resources, which diminishes future potential for utility.Though theories like "peak oil," (or even worse, "peak food", like Malthus) are clearly nonsense, there is a lot of evidence to support this. See Wikipedia's list of extinct animals.A biology professor I spoke with gave an even better example: The natives of Easter Island appeared to have died out due to lack of wood, since the island is totally devoid of trees, but archaelogical evidence suggests that in some time in the distant past, their society and culture just vanished. Learn nominal prices first, then we'll talk.
I misspoke. You were right, btw.
See? I'm humble enough to admit when I'm wrong.
Nathyn: A biology professor I spoke with gave an even better example: The natives of Easter Island appeared to have died out due to lack of wood, since the island is totally devoid of trees, but archaelogical evidence suggests that in some time in the distant past, their society and culture just vanished.
The natives of Easter Island died out from lack of wood? Great science there, Nathyn. You should publish a paper on it and become a famous scientist.
Nathyn:while assuming scarcity to be true, implicitly rejects it by suggesting human beings all seeking their own utility can't lead to a reduction in overall resources
Okay, serious response. Economics in general, and Austrian economics in particular, make no such assertion. They show that people don't trade unless both parties believe they benefit, and they show things like a decrease in the supply of some good or service, all other things being equal, will lead to higher prices, thus providing incentives for improved production, substitutes, etc. This does not mean that overall resources can't be reduced. It does mean people have strong incentives for making improvements, substitutions, etc. Given the history of the world, such overall reductions just haven't happened except under uncommon situations (Easter Island? Maybe, maybe not.) Most shortages that have occurred have occurred because of restrictions and regulations in trade.
Somebody could start a "Fallacies about Economics" based solely upon your numerous posts...
macsnafu: Nathyn: A biology professor I spoke with gave an even better example: The natives of Easter Island appeared to have died out due to lack of wood, since the island is totally devoid of trees, but archaelogical evidence suggests that in some time in the distant past, their society and culture just vanished. The natives of Easter Island died out from lack of wood? Great science there, Nathyn. You should publish a paper on it and become a famous scientist. Nathyn:while assuming scarcity to be true, implicitly rejects it by suggesting human beings all seeking their own utility can't lead to a reduction in overall resources Okay, serious response. Economics in general, and Austrian economics in particular, make no such assertion. They show that people don't trade unless both parties believe they benefit, and they show things like a decrease in the supply of some good or service, all other things being equal, will lead to higher prices, thus providing incentives for improved production, substitutes, etc. This does not mean that overall resources can't be reduced. It does mean people have strong incentives for making improvements, substitutions, etc. Given the history of the world, such overall reductions just haven't happened except under uncommon situations (Easter Island? Maybe, maybe not.) Most shortages that have occurred have occurred because of restrictions and regulations in trade. Somebody could start a "Fallacies about Economics" based solely upon your numerous posts...
People don't trade if they don't see a benefit. Whether this actually leads to satisfaction of utility in the long-run is not established.
Such overall reductions have happened in a fair amount of cases. Just take a look at this:
http://en.wikipedia.org/wiki/List_of_extinct_animals
http://en.wikipedia.org/wiki/Timeline_of_extinctions
A lot of those animals would still be capable of being used as resources today were it not for them being hunted to extinction or near-extinction. American bison are an excellent example, since they provide more meat than cows while also greater strength than horses. You see the same thing in India and Africa, where certain tigers and elephants are being poached to near-extinction. In the meantime, it's true that the natives are desperate to just make a living. However, in the long-run, once the tigers and elephants are gone entirely, the people will be even worse off than had the governments restricted hunting and fishing to ensure its sustainability, the way they do in America.
Screw extinct animals. Nathyn, when you can build me a house out of Spotted Owls, let me know. If a species was so valuable, surely some capitalist would have preserved a few specimens, and, owning the only such specimens in the world, would have made a ton of money back? Get real.
Species have gone extinct for billions of years. In fact, Mother Nature has gleefully inflicted catastrophes that have wiped out 90% of all species in one blow. And there are new mutated species constantly being generated, e.g. I once had a Cornish Rex cat as a pet; it is a mutation only a few decades old. I pray for increasing environmental damage from man, as it will spur nature into developing more novel species. And we now can create genetically-modified organisms. Why hunt down an animal when you can design one from scratch? I'm sure we'll soon be able to recreate previously extinct organisms like dinosaurs and who knows what else in the future.
Nathyn:People don't trade if they don't see a benefit. Whether this actually leads to satisfaction of utility in the long-run is not established.
How are you measuring "long-run satisfaction of utility," and by whose standards?
Nathyn:Such overall reductions have happened in a fair amount of cases. Just take a look at this:http://en.wikipedia.org/wiki/List_of_extinct_animals http://en.wikipedia.org/wiki/Timeline_of_extinctionsA lot of those animals would still be capable of being used as resources today were it not for them being hunted to extinction or near-extinction.
A lot of those animals would still be capable of being used as resources today were it not for them being hunted to extinction or near-extinction.
Blaming man as the sole extinguisher of animal life is a nice fallacy, but it doesn't actually address it as an economic issue.
Apparently, the animals, though you may find them delicious or cost effective for their abililty to pull heavy things, did not survive the test of natural selection. In relation to their ability to withstand economic tests, apparently they were either not cost effective, were not capable of being domesticated, or ignorance drove people to kill them off purposefully - think about the American wolf.
Is this aesthetically displeasing? It certainly is.
Is it an economic inefficiency or a market failure? No, because the standard for economic well being is essentially a human concept. Animals do not think about resource allocation, investment, or conscious trading. If a particular species does not serve as particularly profitable for enough human beings, then like Pepsi crystal, it will become extinct.
Nathyn:However, in the long-run, once the tigers and elephants are gone entirely, the people will be even worse off than had the governments restricted hunting and fishing to ensure its sustainability, the way they do in America.
If you suggest that the reason for the extreme poverty in Africa is poaching of animals, then you're really on the edge of insanity.
The natives of Easter Island never died out. You can meet them even today if you go there. In any case, besides the influence of natural ice-age/global-warming cycles, the trees on Easter Island were largely taken down to facilitate the erection of huge stone statues. That, obviously was a "government" religious institution. . . undertaken perhaps to call upon the ancenstral spirits to bring back rains as the climate cycle brought draught to the island. As usual, the government barked up the wrong tree (literally this time), and the felling of trees in order to build bigger and bigger statues eventually deforested the entire island in the midieval little ice-age cycle (which meant draught in that lattitude).
Nathyn:A lot of those animals would still be capable of being used as resources today were it not for them being hunted to extinction or near-extinction. American bison are an excellent example, since they provide more meat than cows while also greater strength than horses. You see the same thing in India and Africa, where certain tigers and elephants are being poached to near-extinction. In the meantime, it's true that the natives are desperate to just make a living. However, in the long-run, once the tigers and elephants are gone entirely, the people will be even worse off than had the governments restricted hunting and fishing to ensure its sustainability, the way they do in America.
There's been a certain lack of property rights involved in the extinction of certain animals. This is especially obvious in the case of the regulations of ivory trading. Instead of allowing property rights and courts to settle the problem, ivory trade was banned and created more problems. The ban has since been lifted in recognition of the problems it created, but property rights have still not been emphasized to address the issue.
http://www.american.edu/ted/ivory.htm
Or compare privately-owned woodlands to public woodlands, and tell me which has been managed better, and caused fewer problems.
Since Austrian economics stresses property rights, it's the solution, not the problem, of well-managed natural environments (ecologies?).
Nathyn:It's been over a century since it was first said that expanding the money supply would cause widespread depression and monetary collapse. On the contrary, recessions have been regular, not particularly tied to monetary decisions, prices have been stable, the economy prosperous, and the Federal Reserve trustworthy. It was this reason that Greenspan said in the 50's we should have a gold standard but acknowledges the benefits of fiat today.
It's been over a century since it was first said that expanding the money supply would cause widespread depression and monetary collapse. On the contrary, recessions have been regular, not particularly tied to monetary decisions, prices have been stable, the economy prosperous, and the Federal Reserve trustworthy. It was this reason that Greenspan said in the 50's we should have a gold standard but acknowledges the benefits of fiat today.
adjusted for inflation, the sp500 lost more than 60% of its value during the 1968-1982 bear market. (http://www.frbsf.org/publications/economics/letter/2003/el2003-09.html).
i haven't seen any adjustment made for the 1929-32 bear market deflation (the 90% nominal loss would be a deal less in real terms), but i suspect there is only a small difference in the amount of wealth destruction in these two crises.
the seventies don't enjoy the same notoriety as the thirties thanks to the miracle of inflation! unemployment didn't rise to the same extent because real wages didn't rise as dramatically as had been the case in the thirties.
Nathyn:It's been over a century since it was first said that expanding the money supply would cause widespread depression and monetary collapse. On the contrary, recessions have been regular, not particularly tied to monetary decisions, prices have been stable, the economy prosperous, and the Federal Reserve trustworthy.
Yes, the robber spent the victim's money well, no? Why is it that it just so happens that robbers are better stewards of the victims property than the victims? It's kinda weird that when a robber robs there is a net gain in prosperity. Maybe I'm being myopic. Maybe I'm only seeing a robber as a robber. Afterall, he's not robbing 24-7, right? I mean, there are other qualities he possesses.
Maybe I'm just too fixated on the robbing and not on the charity work he does. We must consider ALL of a persons actions. Hey, if I were dying in a hospital bed, I'd embrace a robber that gets the goods to have me treated. He would be my hero. It would then be hypocritical for me to only want him to rob for me. I should be robbed as well. Ah, it's the golden rule: Rob others only as you'd have them rob you! Also, I wouldn't mind a little killing if it made me more prosperous. But I don't know if I can abstain from hypocrisy and live to tell about it...
This paradox(?) reminds me of another. It is said that even evil works for the good of God. So evil is good? So robbery is good?
Romans 3:5-7 http://www.biblegateway.com/passage/?book_id=52&chapter=3&version=31&context=chapter
5 But if our unrighteousness brings out God's righteousness more clearly, what shall we say? That God is unjust in bringing his wrath on us? (I am using a human argument.)
6 Certainly not! If that were so, how could God judge the world?
7 Someone might argue, "If my falsehood enhances God's truthfulness and so increases his glory, why am I still condemned as a sinner?"
"The best way to bail out the economy is with liberty, not with federal reserve notes." - pairunoyd
"The vision of the Austrian must be greater than the blindness of the sheeple." - pairunoyd
as i pointed out above, the seventies crisis was as bad as the thirties in terms of stock market losses. the money supply dropped by around one third from 1929-32, so the nominal loss of 90% on both the djia and sp500 would translate to approximately a 60% loss in real terms. this figure is the same as the loss sustained by the indices over the 1968-1982 bear market, adjusted for inflation.
Hi.
Nathyn:We haven't had another Depression.
We haven't had another Depression.
It could be argued that the banks and the central bank created circumstances for the depression.
The boom leading to the Great Depression was falsely stimulated by loose economic policy and lax lending standards. Borrowed money fueled speculation.
The crash and following depression were a natural effect of this.
If the powers that be get it wrong, we may see one soon, with the credit crunch and all that.
On average, we've had rates of inflation of just a few percent a year.
Government statistics can't be taken on face value. The have been altered since the 90s by hedonics.
Please look at the shadowstats website ( http://www.shadowstats.com ) for more realistic statistics.
That's "stable," certainly better than the banking crises we faced before fiat.
The crises served a good purpose. They kept the banks honest.
Over a thousand years of history has shown that no fiat issue has stood the test of time.
On the other hand, gold gave price stability for over 200 years in Great Britan, since the time of Isaac Newton.
There is no need for central banks to manage economies with gold coin as money and banks only lending whats in the vault.
The truth is, the root of instability in our economy is that the system is largely based on debt.
Over 90% of our money supply today was created by banks lending money into existance and fractional reserve banking.
Because of interest being charged on debt, there is never enough money in the system. It needs to be created at increasing rates.
At some point, the debt mountain colapses (a depression) or the debt is inflated away, destroying the currency as a store of value.
Not exactly stable
It helps to understand banking as well as the economy.
I wish to add one more point - the public themselves are one of the root causes of inflation.
They choose to borrow now, instead of save patiently. Borrowing swells the money supply, because that's the way bank balance sheets work.
If people collectively never borrowed, there would be no peaks and troughs in the credit cycle.
Depressions happen when saving is in vogue, inflation goes with borrowing or leverage.
Please have no bad feelings for banks or bankers. They are people, just like us.
I would disagree with the previous poster.
In a commodity monetary system, with 100% reserve banking, that would not happen. Only money that was deposited in a TIMED savings account would be eligible to be borrowed by others. So all borrowed money would just be the saved money of others, there would be NO increase in the monetary supply. That can only happen in a fractional reserve system. A 100% reserve system makes inflation impossible. With the sole exception being if more of the monetary commodity is actually coined and put into circulation and that would only happen if it was more profitable to coin new money rather than using the commodity in a non monetary usage.
I've been reflecting on the term 'inflation' and the more I do so, the more ridiculous it seems when applied to prices. The supply of something (i.e. money) can inflate. Prices? Not really. They can rise or fall, but not 'inflate'.
recessions have been regular, not particularly tied to monetary decisions, prices have been stable, the economy prosperous, and the Federal Reserve trustworthy.
Hahahahahaha!!!!
In the century since the Federal Reserve was founded, the economy has fallen hard half a dozen times, the currency has lost 98% of its buying power, monetary policy has been directly responsible for every economic downturn from the Great Depression to "stagflation", double-digit inflation and the sub-prime lender crash.
It is educational to note that the "Great Depression" only occurred after the establishment of the Fed, a fact which itself demolishes everything Nathyn presents.
The failure of the predictions of Austrian economics to materialize...
Excepting that everything that has happened has been predicted by Austrian economics, especially the supposedly impossible "stagflation" of the 70's, after the fake gold standard was dropped.
"A cult-like worship of Mises and Rothbard, much like what Rothbard accused Ayn Rand of over the "Rand Collective" but running the "Mises Institute" along with Mises' late wife" - Nathyn
The Mises Institute and its followers certainly do not worship Mises. Austrian anarcho-capitalists explicitly reject Mises's minarchism, especially his support for conscription in certain situations and his advocacy of some taxation. We, especially Rothbard, also reject Mises's Kantian epistemological influences in his praxeology. Rothbard successfully Aristotelianized and rationalized praxeology in Man, Economy, and State.
Mark B.: I would disagree with the previous poster. In a commodity monetary system, with 100% reserve banking, that would not happen. Only money that was deposited in a TIMED savings account would be eligible to be borrowed by others. So all borrowed money would just be the saved money of others, there would be NO increase in the monetary supply. That can only happen in a fractional reserve system. A 100% reserve system makes inflation impossible. With the sole exception being if more of the monetary commodity is actually coined and put into circulation and that would only happen if it was more profitable to coin new money rather than using the commodity in a non monetary usage.
In a commodity monetary system, with 100% reserve banking, that would not happen. Only money that was deposited in a TIMED savings account would be eligible to be borrowed by others.
So all borrowed money would just be the saved money of others, there would be NO increase in the monetary supply. That can only happen in a fractional reserve system. A 100% reserve system makes inflation impossible.
With the sole exception being if more of the monetary commodity is actually coined and put into circulation and that would only happen if it was more profitable to coin new money rather than using the commodity in a non monetary usage.
My apologies about the point suggesting lending causes money stock expansion in general - full reserves are an exception.
It was meant for the status quo.
CurtHowland: The failure of the predictions of Austrian economics to materialize...Excepting that everything that has happened has been predicted by Austrian economics, especially the supposedly impossible "stagflation" of the 70's, after the fake gold standard was dropped.
We can add to this some even more significant examples. Have you read Mises' Economic Calculation in the Socialist Commonwealth? It was written in 1920, but could have been written as a post-mortem of any and every socialist state that has risen and fallen to date. The fall of the Eastern Block happened just as Mises explained it would. Neo-classicists would do well to read Mises' explaination of the subjective nature of value - then they can stop trying to reduce human economic behavior to a set of equations.
And what of The Middle-of-the-Road Policy Leads to Socialism? Is our society not following the exact path that Mises predicted in 1950? The state has in fact usurped more power in its quest to undo the harm it has already done by usurping power over our economic lives in the first place. Very closely related to this is the fact (which Mises doesn't mention) that the Neo-classisists have to keep changing their theories and equations every time a turn of events causes the data not to fit their theories and equations. A good example of this is when the Keynesians invented the AS-AD model to explain the stagflation that had disproven the Phillips curve. Another is the fact that many monetarists still believe that monetary aggregates can still be used as a reliable tool for monetary policy, if they just "tweak" the equations whenever the data doesn't fit the model.
In short, the Austrian school has not waivered from its central tennants over time, whereas the Neo-classicists have been forced to rethink theirs many times.
The rate of economic progress during the 65 year period after the Civil War and before the Great Depression and the New Deal was much faster than after it. Try to look at the statistics for the consumption of energy and raw materials, such as steel, to see that.
Continuos expansion of the agregate money supply is better than an erratic agregate money supply, because it enables agents to ajust their actions to a predictable monetary rate of expansion. But any variation (expansion and contraction) of the agregate monetary mass has negative effecs on the allocation of resources because of the cantillon effect (distortion of relative prices).
Nathyn: Another one to toss in the list: The claim that economies should be modeled based on "human action" is particularly presumptuous, since it seems to totally ignore the impact ecology has on human action and thus, while assuming scarcity to be true, implicitly rejects it by suggesting human beings all seeking their own utility can't lead to a reduction in overall resources, which diminishes future potential for utility.
Lack of regard for scientific method (using Praxeology as a theoretical framework and objecting to Positivism, while using the empirical method in practice, misunderstanding the distinction between mainstream science and logical positivism)In particular, Praxeology rejects the social sciences, it ignores psychological and sociological impacts on human behavior with poor justification, and relies on far more assumptions than merely "Humans act."
I won't touch these, I'm no expert.
In practice, Praxeology tends to be used to ignore blatant physical evidence, not merely as an objection to abstract empirical proofs, like statistical analysis of economic behavior
In looking at history I find that Austrian economics tends to get proven right in the long run. Even decades of data points seems insufficient to accurately model something as complicated as an economy.
A cult-like worship of Mises and Rothbard, much like what Rothbard accused Ayn Rand of over the "Rand Collective" but running the "Mises Institute" along with Mises' late wife
When you don't have an answer to the message, attack the messenger.
Skewing economic history so as to give Austrian economics more credit than it deserves (diminishing the role of Neoclassical economics, misinterpreting Neoclassical concepts to conflate the contributions of Austrian economics
I don't care about economic history or who takes credit for what. I care about understanding the economy. I'll take your word on this.
Spreading their ideas through the use of propaganda to non-economists rather than attempting to get published in academic journals
Generally poor scholarship, since much of their papers are redundantly critical of Keynesianism, redundantly self-congratulatory (hubristic), and sloppy usage of citations
A misunderstanding of and general unwillingness to investigate mainstream concepts
When you don't have an answer to the message, attack the messenger. I don't watch American Idol. It's more mainstream then a lot of economic theory. There was an old book in my college from the late 19th century that talked about how ether was inbetween all particles and controled the whole universe. That was the mainstream believe at one point, and thats in a discipline where they can actually do experiments and test hypothesis. Being mainsteam is nothing, only truth matters.
In particular -- and Friedman would agree with me on this -- its monetary theory should be regarded as crankery and seems to be supported by conspiracy theorism (the Jewish Bankers, the Illuminati Bankers, and the New World Order)
The above, all seemingly intended to support Market Anarchism, which Austrians accept based on axiom. While Austrian economics is strictly a school of economics, it is used to support an entire worldview.
Keynsian is meant to support massive government interventionism. What is your point?
Much of this has been covered by Bryan Caplan, Justin Raimondo, Milton Friedman, David Friedman, Robert Nozick and others who are Libertarians themselves and don't have a particularly pro-government bias. It's been over a century since it was first said that expanding the money supply would cause widespread depression and monetary collapse. On the contrary, recessions have been regular, not particularly tied to monetary decisions, prices have been stable, the economy prosperous, and the Federal Reserve trustworthy. It was this reason that Greenspan said in the 50's we should have a gold standard but acknowledges the benefits of fiat today. The failure of the predictions of Austrian economics to materialize -- like the failure of Marx's predictions about Capitalism to materialize -- have driven them out of the mainstream and towards political extremism, even though in their roots, the historical Austrian school contributed substantially to economic theory.
Much of this has been covered by Bryan Caplan, Justin Raimondo, Milton Friedman, David Friedman, Robert Nozick and others who are Libertarians themselves and don't have a particularly pro-government bias.
The failure of the predictions of Austrian economics to materialize -- like the failure of Marx's predictions about Capitalism to materialize -- have driven them out of the mainstream and towards political extremism, even though in their roots, the historical Austrian school contributed substantially to economic theory.
Huh. It's been proven right for decades. It was right about the depression. It was right about the 70s. It was right about dot com. It was right about the housing bubble. While the Keynsians and the interventionists where proven dead wrong. Your boy Greenspan thought ARMs were awesome and that credit derivatives are super duper. Why should we listen to him?
Back in the real world the market is punishing the dollar for our excesses. The great moderation you speak of was bought by surrendering our place as world reserve currency. The market is punishing us for it and smart traders like George Soros and Jim Rogers know the gig is up.