Quote: Original post by laeuchli
I dont see why businesses created by loans of fractional reserve dollars are any more or less a real creation of capital, then a buisness created by a loan of dollars from a bank that is fully reserved. Dollars are artificial, and they enter the system faster or slower depending on what rate of reserve the central bank requires. Its not clear why 100% rate of reserve is automatically the best rate no matter what the circumstances. You are claiming that making it eaiser for banks to give loans distorts market signals in a way thats always undesirable, but I dont see how that can be true. What if there are X amount of good loans to be made, Y amount of loanable nondeposit assets(whatever those might be), and Z amount of total deposits and W amount of deposits that need to kept on hand on average. Are you saying that it never occurs that (X>Y), and that (Z>W)? To me it seems that this occurs all the time, under both regulated and deregulated markets, and if you dont allow fractional reserves in this case, then you are preventing the creation of desirable captial.

As far as I can see theres nothing wrong with fractional reserve banking per se, simply people misadminster it occassionally. This hardly seems to be an arguement to toss the whole system, since any paticular system would be misadjusted on occasion. I suppose one could attempt to claim that there would have been more real capital created over the past X years, if a different system had been used, but this seems like a difficult arguement to make to me. Do you have any paticular model that could demonstrate this?

This is such a huge topic, and especially difficult to discuss when our perspectives and base premises are so different. I've noticed that most of your posts seem to interchange capital, money, and specie, when they're each a distinct item.

Maybe we can start with a premise we both agree on and go from there.

Let's start with your statement,

Quote:
"I dont see why businesses created by loans of fractional reserve dollars are any more or less a real creation of capital, then a buisness created by a loan of dollars from a bank that is fully reserved."

Premise-
Capital is a realized sum of productive action, employed in a wealth creation venture.

Imagine a prehistoric man living day to day found a great hunting spot and got enough food to last him a week; so he has gained a weeks worth of wealth(time) for other ventures. If he uses that wealth of time to scout out other great hunting spots, or perfect his tools, or some other venture that makes him a more efficient actor then that wealth of time becomes capital, and he's employing that capital in the expectation that this investment will yield him additional wealth(time) in the future. He is deferring gratification of existing wealth to employ it in a wealth creation scheme.(this is predicted by the time preference theory of economics)

If he instead uses this time to lounge about the cave and feasts like a king for a few days until he runs out then he is consuming his wealth, thus the weeks worth of time is not capital but a perishable commodity.

So capital is different from money as you make obvious in this line,

Quote: Dollars are artificial, and they enter the system faster or slower depending on what rate of reserve the central bank requires.

Dollars are artificial, but capital is a non-tangible product. The two are distinct.

So back to our cave man, that I'll name Caveman(A);

This time he's still living hand to mouth and day to day because he never found that great hunting ground. The time requirements of basic food leave him no time to scout additional locations or to work on his hunting tools which are slowly falling in to disrepair.

His neighbor instead finds this great hunting ground and has a weeks worth of food, which equates to a wealth of 1 weeks time. This caveman, Caveman(B) is awful at making hunting tools but knows that Caveman(A) is great at it. Caveman(B) offers to give Caveman(A) the weeks worth of food in exchange for Caveman(A) making him a great set of hunting tools that will help him bring in more food. Caveman(B) is now turning his wealth(time) in to capital. His expectation is that while he'll still have to hunt for the remaining week, he'll end the week with a new set of tools that he wouldn't have otherwise had.

If he offers the same food in exchange for Caveman(A) to sing and dance for him then he is spending his wealth, and his wealth is not capital.

If Caveman(B) offers Caveman(A) food that he does not have, or scrolls out the prehistoric words for "1 weeks worth of food" on a stone slab, then Caveman(A) still goes hungry.

So can we both agree that capital is a realized sum of productive activity, employed in a wealth creation venture and that banks that use the fractional reserve system can create specie(whether physical dollars or electronic), but not actual capital?

If we can agree on that premise, and you haven't died of boredom I can explain myself after.

Quote: Original post by laeuchli
There have been any number of economies with inelastic money supplies, and they've had thier own stream of booms and busts. Such economic problems will exisit no matter what fincial system you choose to operate under. You could attempt to argue that there are paticularly more of them under the fractional reserve I suppose, but I think that would be pretty hard to argue, at least from a historical perspective.

Please point to a single example where a money system based on something of real value, a currency that can't be artificially grown and shrunk, had booms, busts, inflation and bank failures?

When people trade with something that has real value, like historically metals or tobacco or cigarettes, the economic booms, busts and inflation we see today simply do not happen because the forces of supply and demand are allowed to operate as they should.

Look at the Byzantine Empire. They had a money supply based on gold, and they had strict punishments for bankers who shaved off gold clippings from the coins or attempted to dilute their true value (a common practice at the time which always led to inflation), the Byzantine empire became the commerce center of the world and not once in 800 years (!) did its money devalue.

Quote: Original post by LessBread
Speaking of the Federal Reserve, here's look at an alternative approach: David Korten: “Agenda for a New Economy: From Phantom Wealth to Real Wealth”

Quote:
...
Now, the other piece that we need to deal with is the whole question of how we create money, which is not very much publicly discussed. But moving from the current system, where we essentially rely on banks to create money by lending it into existence, which creates all kinds of financial instability, and it also means that, in a sense, every economic transaction, we’re paying rent to the bank for the money, when it’s quite possible for government to spend the money into existence, as it is needed, to build a much more stable money supply. And that means that—you know, that lowers taxes.
...

Korten talks a lot about the importance of community but I'm not sure how he defines it. Communities are typically very localized. A community-oriented approach is great in that case, but if he's trying to define community as being something larger -- something on the national or international level -- then this is a recipe for disaster. If it's beyond the scope of what I can readily experience and empathize with, it's not part of my community, and that's the whole problem: society is a supra-communal entity, and community-oriented approaches are inadequate for managing anything but, well, actual communities.

Near this quote about money, Korten talks about turning the banks into community-oriented organizations. Banks already exist in communities. Is he suggesting stripping banks of their national and international presence? A robust financial infrastructure is necessary to facilitate international business. Private organizations are now becoming truly multinational.

Quote:
But Lenovo went further than hiring international managers. “We are proud of our Chinese roots,” says Mr Yang, but “we no longer want to be positioned as a Chinese company. We want to be a truly global company.” So the firm has no headquarters; the meetings of its senior managers rotate among its bases around the world. Its development teams are made up of people in several centres around the world, often working together virtually. The firm’s global marketing department is in Bangalore.

His remark about the government "spending money into existence" needs further elaboration. Printing money "as needed" doesn't strike me as a sound basis for a monetary system.

Quote: Original post by Dreddnafious Maelstrom

Quote: Original post by trzy

Quote: Original post by Daerax
capn_midnight argument is flawed due to being underpinned by the notion that "We have a liquidity crisis because savings are at an all time low". This would be accurate if banks actually only loaned money they had.

But banks create money out of thin air, thanks to extremely lenient modern fractional reserve requirements, banks can lend vast sums of money they dont have. So called investment banks exacerbated it further by inventing incomprehensible financial instruments which allowed the creation of imaginary money to accelerate unchecked. Any such inflationary boom must be followed by a deflationary spiral as the bubble pops and credit suddenly contracts inducing illiquidity due to runs, insolvency and the very fact that the money supply in use was in excess of the real total money available. Indeed it is the current nature of credit fueled economic expansion that makes deflation a bigger deal than inflation. As the real value of money increases so does the value of debt, making everyone who is in debt a lot poorer. With western governments and citizens such an occurrence would be disastrous, with closures and cuts and losses as one after the other defaulted leading to the decimation of the entire economy's productive capacity.

The fundemental flaw is in fractional reserve banking and its inflationary boom-bust nature, the so called business cycle.

I wonder though, loose money supplied fueled by credit also means greater social mobility and greater profit and gains played on risk. If money was a lot harder to come by, then class structures would arguable be even more rigid. So its a tough choice.

There's nothing inherently wrong with fractional reserve banking. The money supply ought to be able to accommodate productivity (which is what lending is supposed to finance.) When the debt is repaid, everything works out nice and neatly. The current financial crisis is not a normal bust cycle, it's the unraveling of an unsustainable economic model and lifestyle fueled by cheap credit. America's economy has been taking on the savings of other nations but rather than producing wealth, we've been speculating on stocks and trading houses back and forth.

What made all of this especially bad was the huge amount of leverage used to finance these investments. When it turned out that it was all just an overinflated bubble, everything came crashing down. America's entire way of life is being downsized, probably for good.

There actually is something wrong with fractional reserve banking. Sustainable productivity growth is based on capital, not the illusion of capital. It is this illusion that reduces the opportunity cost of malinvestment and creates bubbles.

Examples of a society that has followed this approach?

By the way, maybe you could answer a question that has been bothering me for a while: what's the purpose of modern stock markets? Companies issue stock in order to raise money for capital. The idea is that by being a shareholder in a company, you are entitled to reaping some of the profit generated by your investment. But once all these stocks are sold off and in the market, and once companies no longer offer dividends, what's the point of endlessly selling them back and forth? Are the large institutional investors who hold major stakes in companies making an actual profit (ie., tapping into the profit stream of the company), thereby making this a market for the big players?

Quote: Original post by Dreddnafious Maelstrom

Quote: Original post by laeuchli
I dont see why businesses created by loans of fractional reserve dollars are any more or less a real creation of capital, then a buisness created by a loan of dollars from a bank that is fully reserved. Dollars are artificial, and they enter the system faster or slower depending on what rate of reserve the central bank requires. Its not clear why 100% rate of reserve is automatically the best rate no matter what the circumstances. You are claiming that making it eaiser for banks to give loans distorts market signals in a way thats always undesirable, but I dont see how that can be true. What if there are X amount of good loans to be made, Y amount of loanable nondeposit assets(whatever those might be), and Z amount of total deposits and W amount of deposits that need to kept on hand on average. Are you saying that it never occurs that (X>Y), and that (Z>W)? To me it seems that this occurs all the time, under both regulated and deregulated markets, and if you dont allow fractional reserves in this case, then you are preventing the creation of desirable captial.

As far as I can see theres nothing wrong with fractional reserve banking per se, simply people misadminster it occassionally. This hardly seems to be an arguement to toss the whole system, since any paticular system would be misadjusted on occasion. I suppose one could attempt to claim that there would have been more real capital created over the past X years, if a different system had been used, but this seems like a difficult arguement to make to me. Do you have any paticular model that could demonstrate this?

This is such a huge topic, and especially difficult to discuss when our perspectives and base premises are so different. I've noticed that most of your posts seem to interchange capital, money, and specie, when they're each a distinct item.

Maybe we can start with a premise we both agree on and go from there.

Let's start with your statement,

Quote:
"I dont see why businesses created by loans of fractional reserve dollars are any more or less a real creation of capital, then a buisness created by a loan of dollars from a bank that is fully reserved."

Premise-
Capital is a realized sum of productive action, employed in a wealth creation venture.

Imagine a prehistoric man living day to day found a great hunting spot and got enough food to last him a week; so he has gained a weeks worth of wealth(time) for other ventures. If he uses that wealth of time to scout out other great hunting spots, or perfect his tools, or some other venture that makes him a more efficient actor then that wealth of time becomes capital, and he's employing that capital in the expectation that this investment will yield him additional wealth(time) in the future. He is deferring gratification of existing wealth to employ it in a wealth creation scheme.(this is predicted by the time preference theory of economics)

If he instead uses this time to lounge about the cave and feasts like a king for a few days until he runs out then he is consuming his wealth, thus the weeks worth of time is not capital but a perishable commodity.

So capital is different from money as you make obvious in this line,

Quote: Dollars are artificial, and they enter the system faster or slower depending on what rate of reserve the central bank requires.

Dollars are artificial, but capital is a non-tangible product. The two are distinct.

So back to our cave man, that I'll name Caveman(A);

This time he's still living hand to mouth and day to day because he never found that great hunting ground. The time requirements of basic food leave him no time to scout additional locations or to work on his hunting tools which are slowly falling in to disrepair.

His neighbor instead finds this great hunting ground and has a weeks worth of food, which equates to a wealth of 1 weeks time. This caveman, Caveman(B) is awful at making hunting tools but knows that Caveman(A) is great at it. Caveman(B) offers to give Caveman(A) the weeks worth of food in exchange for Caveman(A) making him a great set of hunting tools that will help him bring in more food. Caveman(B) is now turning his wealth(time) in to capital. His expectation is that while he'll still have to hunt for the remaining week, he'll end the week with a new set of tools that he wouldn't have otherwise had.

If he offers the same food in exchange for Caveman(A) to sing and dance for him then he is spending his wealth, and his wealth is not capital.

If Caveman(B) offers Caveman(A) food that he does not have, or scrolls out the prehistoric words for "1 weeks worth of food" on a stone slab, then Caveman(A) still goes hungry.

So can we both agree that capital is a realized sum of productive activity, employed in a wealth creation venture and that banks that use the fractional reserve system can create specie(whether physical dollars or electronic), but not actual capital?

If we can agree on that premise, and you haven't died of boredom I can explain myself after.

I think I am still a little unclear on the distinction you are trying to make, esp. when you say that banks can create specie, but not acctual capital. As far as I can see, capitial is anything I can use, that people will accept in exchange for furthering my buisness venture(as in your caveman example, the meat is used to buy tools to further his hunting). How does this differ from your definition as a realized sum of productive activity?

If capitial is something I can use to further my buisness, and the bank gives me a loan in dollars, and people are happy to accept those dollars, and they take those dolalrs in exchange for say, building me a factory, then the bank has loaned me capital. If the bank is allowed to operate under a fractional reserve system, how is that distinct from creating capitial? How is people doing something for me for dollars, different then if people do something for me for meat? I agree that if the bank makes me a loan and I use it to buy a hi-def TV that I use to play video games the money isnt being used as capital, just as the caveman with alot of time who squanders it, isnt using it as capital. I didnt mean to imply that all money created functions as capital.

In your caveman example, the cavemen are using meat for money. In the example, the Cavemen arent willing to accept stone slabs in exchange for meat(due to insufficant backing of meat), which I suppose is quite sensable of them. But its not clear to me how that applies to the topic at hand, and it seems to me that cavemen(or thier early decendents) were quite willing to accept something similar(gold slabs), without backing in meat. So if you got some gold, and stamped 5 meat on it,people would do things that would further your business for you, and thus the slabs counted as capital.

Quote: Original post by Dreddnafious Maelstrom

Quote: Original post by LessBread
It's not magic, it's economics.

This while defending the policies of a man that believed the economy was guided by animal spirits, classic.

Animal spirits? Are you talking about Reagan's "voodoo economics"? Wait, no, you're taking Keynes remarks out of context and spinning them into saying something they didn't mean. Typical. Here's what Keynes actually wrote:

The General Theory of Employment, Interest and Money, Chapter 12. The State of Long-Term Expectation, Section VII

Quote:
Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits — of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come. Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die; — though fears of loss may have a basis no more reasonable than hopes of profit had before.

Quote: Original post by Dreddnafious Maelstrom

Quote:
It seems to me that the savings of the people who acted responsibly during this whole mess was destroyed by the whole mess.

Not yet they haven't, but they will be once the stimulus strikes full bore.

Sorry, but you're deluded. Retirement Savings Lose $2 Trillion in 15 Months (October 8, 2008)

Quote: Original post by Dreddnafious Maelstrom

Quote:
First you say there are no funds to loan, then you say that the banks are hoarding the money the government gave them to loan.

The term "funds" is ambiguous. There is no capital to loan.

That was the term capn_midnight used (link), which you might have noticed had you not decontextualized my remarks.

Quote: Original post by Dreddnafious Maelstrom

Quote:
In that case, the root cause was crumbling wages. People didn't save because they had nothing left over to save because their wages had been falling for thirty years.

The root cause was a weak dollar policy that favored debt over capital, what follows is human nature.

You're ever the monetarist! The real fight starts after the stimulus is enacted

Quote:
...
Those who support the stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing deep structural flaws in the economy. We are the structuralists. These two camps are united behind the current stimulus, but may not be for long. Cyclists blame the current crisis on a speculative bubble that threw the economy's self-regulating mechanisms out of whack. They say that we can avoid future downturns if the Fed pops bubbles earlier by raising interest rates when speculation heats up.

But structuralists see it very differently. The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours.

When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. When you consider that consumers make up 70 percent of the economy, the magnitude of the problem becomes apparent.

What happened to the money? According to researchers Thomas Piketty and Emmanuel Saez, since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don't spend as much of their income as the middle class and the poor do -- after all, being rich means that you already have most of what you need. That's why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It's not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation's income.)
...

Quote: Original post by Dreddnafious Maelstrom

Quote:
You think we should drink more market fundamentalist kool-aid? Really? If everyone puts their money in the bank, the economy will collapse. Seriously. It seems to me that you're tracing the economic policy of the Hoover administration.

Companies that are viable only in a bubble will fall unless they are permanently propped up by tax payer money. They need to fall or else be nationalized and offer their products as a public good.

I wasn't talking about propping up companies, I was talking about getting money circulating through the economy again. Consumers Are Saving More and Spending Less

Quote:
...
Putting away money and paying down debt may be good for one family’s kitchen-table economics, but the broader economy suffers in the short term when millions of families do it.

A dollar saved does not circulate through the economy and higher savings rates translate into fewer sales and lower revenue for struggling businesses. As Congress considers an $800 billion package of tax cuts and spending plans, policy makers said that the most effective stimulus was money that would be spent quickly.
...

Quote: Original post by Dreddnafious Maelstrom

Quote:
Regulations? Really? Now you're sounding like me.

Rather, we need to reaffirm the constitutional mandate of sound money. That is legal tender laws only apply to gold and silver then you can let the market sort the rest out. I'm not sure that would be considered a regulation, more like a vast deregulation.

Back to the 19th century!!!

Quote: Original post by Dreddnafious Maelstrom

Quote:
Actually, the fiscal irresponsibility began with Ronald Reagan. It began to turn around with Bush 41, but he "lied" about taxes and lost favor with his party. Clinton picked up the ball to institute "Pay-Go" and managed at least to balance the budget on paper. Then Bush 43 took over and ran the country into a ditch. Closing the Dept of Education is a terrible approach to improving literacy rates, but don't let that get in the way of promoting your ideological agenda.

I won't quibble about your partisan hackery(Go team), but standardized test scores have gone down in an inverse relation with the dept of education's budget.

Correlation is not causation.

Quote: Original post by Dreddnafious Maelstrom

Quote:
Pour on the kool-aid! When all you've got in your tool kit is tax cuts, every problem calls for more tax cuts!! And where did you come up with that half baked notion that income tax promised to end after WWII? You're right that income taxes are taxes on the poor and middle class. They're part of the mechanism for redistributing wealth upwards to those that don't need it.

What a well reasoned and civil response, by all means continue to lecture me about the civility of my responses.

You can dish it out but you can't take it... [grin] Budget Surplus? Tax Cut! Budget Deficit? Tax Cut! High Energy Prices? Tax Cut! Deep Recession? More Tax Cuts! For some people, the answer to every question is...a tax cut!

Quote: Original post by Dreddnafious Maelstrom

Quote:
Your plans would wreck the country and the globe for that matter.

Your plans are wrecking the globe now, nothing wrong with trying a different tact.

A different tact? You're advocating tax cuts and a return to the gold standard. What a joke. Sorry, but you should be laughed off the stage for trotting out those worn out gags.

Here's a brief run down of the available tools.

Depression economics: Four options

Quote:
WHEN an economy falls into a depression, governments can try four things to return employment to its normal level and production to its 'potential' level. Call them fiscal policy, credit policy, monetary policy and inflation.
...
The problem with monetary policy is that, in responding to today's crisis, the world's central banks have bought so many safe government bonds for so much cash that the price of safe wealth in the near future is absolutely flat - the nominal interest rate on government securities is zero. Monetary policy cannot make safe wealth in the future any more valuable. And this is too bad, for if we could prevent a depression with monetary policy alone, we would do so, as it is the policy tool for macroeconomic stabilisation that we know best and that carries the least risk of disruptive side effects.

The third tool is credit policy. We would like to boost spending immediately by getting businesses to invest not only in projects that trade safe cash now for safe profits in the future, but also in those that are risky or uncertain. But few businesses are currently able to raise money to do so.
...

This brings us to the fourth tool: fiscal policy. Have the government borrow and spend, thereby pulling people out of unemployment and pushing up capacity utilisation to normal levels. There are drawbacks: the subsequent dead-weight loss of financing all the extra government debt that has been incurred, and the fear that too rapid a run-up in debt may discourage private investors from building physical assets, which form the tax base for future governments that will have to amortise the extra debt.

But when you have only two tools left, neither of which is perfect for the job - credit policy and fiscal policy - the rational thing is to try both, at the same time. That is what the Obama administration in the United States and other governments are attempting to do right now.

Quote: Original post by LessBread
Animal spirits? Are you talking about Reagan's "voodoo economics"? Wait, no, you're taking Keynes remarks out of context and spinning them into saying something they didn't mean. Typical. Here's what Keynes actually wrote:

The General Theory of Employment, Interest and Money, Chapter 12. The State of Long-Term Expectation, Section VII

Yeah, animal spirits, that's the cause of our financial woes, just ask Maynard.

Quote:
Sorry, but you're deluded. Retirement Savings Lose $2 Trillion in 15 Months (October 8, 2008)

I'm deluded, of course, and you're looking at the tip of the iceberg and assuming it's the arctic continental shelf. That's a drop in the bucket of what is to come.

Quote:


Those who support the stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing deep structural flaws in the economy. We are the structuralists. snip...

That article misses the point entirely, they call themselves structuralists, what a laugh. The problem is systemic, they got that much correct at least, but seperating the economic philosophies into 2 camps and then chunking stones at the one they disagree with is pre-school level.

It's sops like that that make econ the dismal science.

Quote:
I wasn't talking about propping up companies, I was talking about getting money circulating through the economy again. Consumers Are Saving More and Spending Less

Quote:
...
Putting away money and paying down debt may be good for one family’s kitchen-table economics, but the broader economy suffers in the short term when millions of families do it.

A dollar saved does not circulate through the economy and higher savings rates translate into fewer sales and lower revenue for struggling businesses. As Congress considers an $800 billion package of tax cuts and spending plans, policy makers said that the most effective stimulus was money that would be spent quickly.
...

Macro economics are micro economics, writ-large. Trying to disconnect the two belies an ignorance of the fundamentals. Most of the topical treatments you see on the issue, including this one is about how to prolong the bubble, not how to weather the coming market correction.

Quote:
You can dish it out but you can't take it... [grin] Budget Surplus? Tax Cut! Budget Deficit? Tax Cut! High Energy Prices? Tax Cut! Deep Recession? More Tax Cuts! For some people, the answer to every question is...a tax cut!

You weren't even "dishing it out" to me. You're just trying to paint someone that doesn't belong to the same school of "thought" as you as a unthinking fanatic, which of course reflects on you more than them.

Your argument amounts to, "If you disagree with me you're stupid or willfully ignorant." Smart, well informed, and well intentioned people can disagree on serious subjects.

Quote:
A different tact? You're advocating tax cuts and a return to the gold standard. What a joke. Sorry, but you should be laughed off the stage for trotting out those worn out gags.

I'm not advocating anything specifically. You're once again playing playground because apparently without your list of links, and me too articles you like to point to you don't have anything of merit to add to the subject.

Quote: Original post by think_different
This elastic money supply is the real root of economic troubles. Remember that ever since banks began using a fractional reserve we've seen a near constant roller coaster of booms, busts, inflation, and bank failures. You never see this in the rare cases in history of sound banking principles (like the Bank of Amsterdam, and Hamburg).

Tangential to this, I find a bit interesting that the ever increasing speculations of either some Euro zone states going into bankruptcy or Euro zone losing some members (i.e. Greece and/or Italy) are running wild precisely since devaluation or printing money (or both) is not an option currently. Euro isn't really a reserve currency either and there is a lot of trouble for the European Central Bank to co-ordinate any actions without the "EU constition".

<edit
Angela Merkel has according to Der Spiegel made a comment in a bankers' seminar that even states can go bankrupt which futher has increased rumors. Though most probable outcome is that stronger econmies will bail the weaker ones out.

Quote: Original post by Dreddnafious Maelstrom

Quote: Original post by LessBread
Animal spirits? Are you talking about Reagan's "voodoo economics"? Wait, no, you're taking Keynes remarks out of context and spinning them into saying something they didn't mean. Typical. Here's what Keynes actually wrote:

The General Theory of Employment, Interest and Money, Chapter 12. The State of Long-Term Expectation, Section VII

Yeah, animal spirits, that's the cause of our financial woes, just ask Maynard.

It looks like Keynes hurts your rational choice conception of economics.

Quote: Original post by Dreddnafious Maelstrom

Quote:
Sorry, but you're deluded. Retirement Savings Lose $2 Trillion in 15 Months (October 8, 2008)

I'm deluded, of course, and you're looking at the tip of the iceberg and assuming it's the arctic continental shelf. That's a drop in the bucket of what is to come.

Yes, you're deluded. You said they had not yet started losing their savings, when in fact they have, courtesy of Capitalism's finest gambling establishments.

Quote: Original post by Dreddnafious Maelstrom
That article misses the point entirely, they call themselves structuralists, what a laugh. The problem is systemic, they got that much correct at least, but seperating the economic philosophies into 2 camps and then chunking stones at the one they disagree with is pre-school level.

It's sops like that that make econ the dismal science.

You missed the point entirely. Perhaps because I didn't highlight the relevant portions. the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours.

When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. So much for weak dollar policy etc.

Quote: Original post by Dreddnafious Maelstrom

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I wasn't talking about propping up companies, I was talking about getting money circulating through the economy again. Consumers Are Saving More and Spending Less

Macro economics are micro economics, writ-large. Trying to disconnect the two belies an ignorance of the fundamentals. Most of the topical treatments you see on the issue, including this one is about how to prolong the bubble, not how to weather the coming market correction.

Once again you missed the point. A dollar saved does not circulate through the economy and higher savings rates translate into fewer sales and lower revenue for struggling businesses. Meanwhile, your "do nothing" solutions are going to leave a lot of people homeless, in bread lines and in the morgue. Heckuva job!

Quote: Original post by Dreddnafious Maelstrom

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You can dish it out but you can't take it... [grin] Budget Surplus? Tax Cut! Budget Deficit? Tax Cut! High Energy Prices? Tax Cut! Deep Recession? More Tax Cuts! For some people, the answer to every question is...a tax cut!

You weren't even "dishing it out" to me. You're just trying to paint someone that doesn't belong to the same school of "thought" as you as a unthinking fanatic, which of course reflects on you more than them.

If I wasn't dishing it out to you, then why were you crying about it? Meanwhile, it's glaringly obvious that only unthinking fanatics continue to chant the decades old tax cuts mantra long after tax cuts have failed to provide their promised results.

Quote: Original post by Dreddnafious Maelstrom
Your argument amounts to, "If you disagree with me you're stupid or willfully ignorant." Smart, well informed, and well intentioned people can disagree on serious subjects.

It's not that you disagree with me, it's that you're not well informed (you got that timing of the loss in savings completely wrong in order to assert an ideological prediction) and you're relying on the same old prescriptions that got us into this mess in the first place.

Quote: Original post by Dreddnafious Maelstrom

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A different tact? You're advocating tax cuts and a return to the gold standard. What a joke. Sorry, but you should be laughed off the stage for trotting out those worn out gags.

I'm not advocating anything specifically. You're once again playing playground because apparently without your list of links, and me too articles you like to point to you don't have anything of merit to add to the subject.

Would you like me to concoct bullshit stories about cavemen instead?