Netphoria Message Board


Go Back   Netphoria Message Board > Archives > General Chat Archive
Register Netphoria's Amazon.com Link Members List Mark Forums Read

 
 
Thread Tools Display Modes
Old 11-04-2008, 05:33 AM   #991
Future Boy
The Man of Tomorrow
 
Future Boy's Avatar
 
Posts: 26,965
Default


 
Future Boy is offline
Old 11-04-2008, 06:33 AM   #992
Ever
Minion of Satan
 
Ever's Avatar
 
Location: ☆.。.:*・゜`★
Posts: 8,203
Default

I've decided not to quote you anymore as there is too much redundant text floating around and I'm OCD about redundancy so I'll just respond to you with paraphrasing and the like. I hope this doesn't hinder our discourse.

I find it amusing, Debaser, how utterly baffled you are at seeing a right-winger who seems to have compassion for his fellow man.

And before I proceed to utterly destroy the argument which you didn't even write let me just correct your statements preceding it a bit just in case anyone reading (as rare as that might be) takes your word for given. Fiat money is accepted by most economists today, true, but not the Keynesian way of using fiat money. The methods used today have changed. It is now the Chicago School monetarism and the Friedman way which has taken over. Let it also be noted that towards the end of his life Friedman came to the conclusion that a commodity based currency was the way to go.

The first part of the argument you linked seems to cite the need to expand the money supply to keep up with economic activity. It claims and sticks to the Keynesian idea that it is spending that fuels the economy. It moves on to antagonize saving and thriftiness and cites the need for government to inflate the money supply due to "sticky prices".

Let us look more closely at this term "sticky prices". The theory goes that due to psychological factors people are less willing to lower wages, less willing to lower prices and due to the way we draw up contracts over longer periods of time prices of goods are sticky. Now the problem with this theory is that it is no fact of nature. It is simply based of a few observations here and there and again the ever underlying assumption that people can't change rather there has to be someone looking after them and that everyone needs a babysitter. It neglects to take into account that it is the responsibility of the capitalist to lower the wages, to lower the price, to have a flexible pay as he predicts the market in order to maintain productivity and the gain of more capital or wealth. It's no hard task to understand that the capitalist has the responsibility of looking after the modes of production, the price of raw materials and the price of goods if he wishes to remain competitive in the market place during a period of no inflation or deflation. However, suddenly when deflation (which is a normal market force because yes the supply and demand changes everything and yes this includes money) is involved this is somehow hard to fathom? All of a sudden it becomes hard to comprehend that the failing business owner is, after all, failing because of his own lack of initiative? I mean here is a man keeping his prices artificially high and of course he's not selling anything and suddenly the solution is to give everyone a bunch of money to keep this price high? To trick everyone into buying a product they don't want at an inflated price with money they haven't made? Call me crazy but I always thought that the man selling milk for four dollars a liter when he can be selling for two deserves to be punished by any competitor that brings the product to the people for a better price. And that's not even taking into account the millions of problems that come out of creating money out of thin air. I have already outlined the dangers of money created out of nothing and how it diverts capital from productive uses to unproductive uses with the baker and the potato farmer example. I will proceed to talk about this in depth shortly, but for now I want to point out a few more arguments against price stickiness. Let us address the wage issue for a moment

In a Keynesian textbook you'll see something like this



As you can see as aggregate demand falls wage stickiness prevents the economy from working at potential output or full employment.

Fair enough, that is the Keynesian theory after all. Now what happens when you get rid of all these silly minimum wage laws and the legal power of unions to have control over wages? Well you get something like this



As can be seen when demand falls so do wages and the economy works at full output and full employment. Also note here that the proper way to deal with the problem of "sticky prices" is not by more regulation of the markets but less. Not by more government but less. Not by thinking people are retards and need big brother ever watching them, ever guiding them but instead by trusting them to act rationally and reasonably.

Now that there is no question that the concept of "sticky prices" was a very unsound theory based on assumptions and observations which fail to take innumerable factors into account or, if not that, a complete myth, let's look at the problem with the Keynesian way of alleviating this "problem". Mainly inflation. Before anyone shouts at me "But Avram, prices haven't gone up! No inflation is happening!" I will proceed to give you a definition of inflation. Inflation is not rising prices or wages or anything. This is merely the result of inflation. Inflation is the increase in money supply. So now what happens when we see a Keynesian increase in money supply during a recession (which btw can pretty much exclusively happen only as a result of inflation) Well you get exactly what Keynes promises; an increase in consumption. Everyone's buying everything everyone is fueling the economy all these unaffordable things are now affordable but no one is paying attention to whether all this is sustainable, whether people actually want these products at this price or whether any actual real wealth is being produced. I mean you can print out a bunch of money, create "wealth" out of thin air and get people to go dig holes for hours and pay them for it now that you don't have to do anything actually productive to make money or give people money. What happens here? Well in the end you get a whole bunch of holes in the ground and a whole bunch of money in everyone's hand but all it can buy is holes in the ground. This is referred to as malinvestment or a misallocation of resources - when an artificial rise in money supply distorts the actual worth of things as determined by natural social interaction and exchange. Sure in reality it's not digging holes in the ground but it's some other form of unsustainable overvalued public sector work. When it's not public sector work its misallocation in the hands of those private citizens who get the money hot from the printing press first.

So who benefits from this Keynesian expansion of money? It certainly isn't the economy as a whole which is now set up for an even longer and worse recession. It certainly isn't anyone who wants to combat unemployment or move output to its highest potential. It is, simply put, whoever's price of goods they are selling rises faster than the price of the goods they buy as the money moves from the hands of one recipient to the other. Those who get the money last are the ones who lose out. The people at the end of the chain find that the prices of the goods they buy have increased while the prices of the goods they sell have hardly moved. Here, Debaser, is your "distribution of wealth" by the benevolent hand of guiding big brother economist in the federal reserve and the Keynesian planner. In today's society the people who get the money first are big banks and the government. Those who get it last are the poor and the middle class.

The end result of the Keynesian business cycle theory is akin to building a large tower and realizing there are cracks in the foundation. Instead of fixing the problem with cement and iron and ensuring the tower has a solid foundation it is painted over. A nice wash of white and no one can see the problem. Later a bigger crack appears and you just paint it again. Even bigger? No problem paint (or ink and paper) is inexpensive. Eventually what happens, Debaser, is it all falls down. It comes crumbling. The problem we have today is being painted over yet again. It's just going to make the correction longer and more painful for everyone just like the Keynesian policies of the great depression. We have a completely de-industrialized nation ruined by regulations, bureaucracy and a government determined to prop up failed businesses and failed institutions which no sane capitalist entrepreneur would look at as a suitable place for his new and innovative enterprise.

The social effects of this policy of easy money and the idea that it is consumption and not saving that fuels the economy is even more disastrous than the economic effects. This is where consumerism comes from. As a leftist, Debaser, I'm sure you cannot and do not approve of consumerism. Consumerism destroys work ethic and creates a false set of entitlements. All of a sudden no one is being thrifty no one is making the right decisions and people are encouraged to spend, spend, spend. You already have three cars? Who cares buy a fourth you can afford it, you can back it on the equity of your house. Money grows on trees around here. How about those plasma TVs? Man, better take about four of them or they'll be gone by tomorrow. Then suddenly surprise surprise when the illusion ends? Suddenly it's a recession? Suddenly government has to come in and print us some more money so we can continue living beyond our means for a few more years ever misallocating resources, ever destroying the foundations of our economy, and ever delaying the inevitable collapse of the system? I mean surely you can see some lack of social justice when a hard working man in Jakarta or something works sixteen hours a day in some sweatshop to make some kind of shoe to buy his next meal which a fat over-eating over-consuming ultra-obese American with five SUVs and a kazillion plasma TVs, video games and dvd movies buys with his welfare check. How about the Keynesian solution to this problem, lets raise the Jakartan man's minimum wage and print money to pay for it, hell lets print money for everyone ,the more he consumes the better right? Eventually moving such bad work overseas with your minimum wage laws and your unions and your regulations and taxes comes back and bites you in the ass like we're seeing now. I mean this whole mercantilist arrogance that such work is beyond that of proud Americans is not helping anyone let alone the America that was once truly proud of its can do attitude, its liberties and the simple notion that man should be worth the sweat on his brow.

That moves me on to the other idea expressed in this essay that somehow saving is bad for the economy. That somehow handling your own retirement, your own insurance, putting money away for a rainy day is bad for our economy. That once again people can't be trusted with their money so we need to devalue the dollar so they are compelled to put it in the hands of the wise Wall Street investment bankers and the large insurance firms cause they know what's best for everyone. To the contrary. Saving or "Hoarding" as Keynesians refer to it is not bad for the economy. All the time you hear people saying we need anti-trust laws this we need anti-trust laws that to stop monopoly to keep "barriers of entry" down. Rubbish, all anti-trust laws have ever done is hinder competition, ironically grant monopolies, prop up failing businesses, which obviously aren't offering the consumer what they want, and otherwise distort the markets. And how about the biggest barrier of entry of all? That of course is stopping the little guy from accumulating wealth so he can get the capital to secure the means of production by devaluating his dollar. What about that barrier of entry? Saving is the essential necessity of capitalism. Not spending, not consuming, not squandering wealth. Gaining capital and investing it and producing that's what we need more of if you want to grow the economy.

Now to move on and identify other parts of the essay which need addressing.

The second part of the argument in this essay seems to say the great depression was the result of fractional reserve banking. Well yes, well observed Mr. essay writer it very well was. No Austrian economist would ever advocate fractional reserve banking because under the ethics of private property it is fraud. However the essay then draws the incorrect conclusion that it is up to the government to bailout these fraudsters much like they're doing today by printing them and giving them more money. Yet again here is the market saying "look these people are bad people, they're doing bad things and ruining the prosperity of everyone" and the benevolent hand of the government coming in, picking them up, cradling them and saying "There, there. Big brother's home, everything is going to be ok". All the bank holiday, the hundreds and thousands of new regulatory acts, and the nationalization of the economy (loosely resembling such extremes as Mussolini's fascist Italy) under the guise of the National Recovery Act did was prolong the depression for another eight years with its Keynesian values and Marxist do-goodism. If the market was just allowed to correct itself and we got rid of this notion of fractional reserve banking and a central bank all the hardship would have come to an end much much quicker.

The essay then moves on to critique a heavily regulated and controlled gold standard such as the Bretton-Woods system. This critique makes some nice points. It's a shame the type of money "gold bugs" advocate isn't a gold standard or even gold itself so all that good argument is really in vain. Instead what's being promoted here is a market defined, commodity based money. That is: competing coinages and currencies which would determine, in a natural way, what is used as a medium of exchange.

I will address some of the things you said in direct reply to me later. There are some real important issues and ideas you brought up that I want to comment on and make myself clear on. lol I just hope you care enough to read all that and not just shrug it off. Everyone shrugs everything off these days

Last edited by Ever : 11-04-2008 at 06:49 AM.

 
Ever is offline
Old 11-24-2008, 04:34 PM   #993
ravenguy2000
NO FATS
 
ravenguy2000's Avatar
 
Location: NO FEMS
Posts: 29,003
Talking


 
ravenguy2000 is offline
Old 01-05-2009, 10:06 AM   #994
Trotskilicious
Banned
 
Trotskilicious's Avatar
 
Location: I believe in the transcendental qualities of friendship.
Posts: 39,439
Default

best new poster 2009

 
Trotskilicious is offline
Old 06-09-2009, 06:47 PM   #995
ravenguy2000
NO FATS
 
ravenguy2000's Avatar
 
Location: NO FEMS
Posts: 29,003
Default

She's bragging about how the citizens of Alaska share the benefits of their state's natural resources, and then calls Obama a socialist. Not to mention they get way more from the feds than they contribute, tax wise.

Donklephant Blog Archive Palin Still Doesn’t See How “Socialist” Alaska Really Is?

 
ravenguy2000 is offline
Old 06-09-2009, 07:24 PM   #996
Nimrod's Son
Master of Karate and Friendship
 
Nimrod's Son's Avatar
 
Location: in your butt
Posts: 72,975
Default

that guy George in the comments got it right on. that isn't socialism.

 
Nimrod's Son is offline
 


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is Off
HTML code is On
Google


Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
McCain is pretty awful huh. Debaser General Chat Archive 455 11-04-2008 01:13 AM
"Terminator: The Sarah Connor Chronicles" Ugly General Chat Archive 32 08-14-2007 05:28 PM
McCain hires Terry Nelson as campaign manager; emerging as establishment candidate Effloresce General Chat Archive 50 12-08-2006 02:37 PM
McCain gearing up to run, it seems... Effloresce General Chat Archive 23 11-14-2006 02:34 PM


All times are GMT -4. The time now is 02:03 PM.




Smashing Pumpkins, Alternative Music
& General Discussion Message Board and Forums
www.netphoria.org - Copyright © 1998-2022