The Second Great Depression?

[AlexanderSextus]

Honestly I think if you pull back far enough, the fact is, the entire system of economics the US uses is the problem. it's inherently flawed. We need an economy based on Austrian School Economics. It wouldnt fix everything, but it would help.


Austrian economists maintain that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), they themselves induce inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.

Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.

Accordingly, many Austrian economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to sound money such as a 100 percent gold standard, or, less frequently, free banking.

Money could only be created by finding and putting into circulation more gold under a gold standard. This would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth (and inflation) would never spiral out of control. Dr. Alan Greenspan asserts that economic liberty and Ludwig von Mises asserts that civil liberties would be protected.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

Deficit spending is simply a scheme for the confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.


...just my $2.22, adjusted for inflation.

[Koga No Goshi]

Well then, guess what? You won't get one at all.




You must have made a killing after the first big selloff when the markets rebounded for a couple of days.

*Shrug*

[Spino]

Honestly I think if you pull back far enough, the fact is, the entire system of economics the US uses is the problem. it's inherently flawed. We need an economy based on Austrian School Economics. It wouldnt fix everything, but it would help.


Austrian economists maintain that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.

Given that all major economies currently have a central bank supporting the private banking system, almost all new money is supplied into the economy by way of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation.

According to the Austrian Business Cycle Theory, it is the central bank's policy of ineffectually attempting to control the complex multi-faceted ever-evolving market economy that creates volatile credit cycles or business cycles. By the central bank artificially "stimulating" the economy with artificially low interest rates (thereby creating excessive increases in the money supply), they themselves induce inflation (often focused in asset or commodity markets) and speculative investment, resulting in "false signals" going out to the market place, in turn resulting in clusters of malinvestments, and the artificial lowering of the returns on savings, which eventually causes the malinvestments to be liquidated as they inevitably show their underlying unprofitability and unsustainability.

Austrian economists therefore regard the state-sponsored central bank as the main cause of inflation, because it is the institution charged with the creation of new currency units, referred to as bank credit. When newly created bank credit is injected into the fractional-reserve banking system, the credit expands, thus enhancing the inflationary effect.

Accordingly, many Austrian economists support the abolition of the central banks and the fractional-reserve banking system, and advocate instead a return to sound money such as a 100 percent gold standard, or, less frequently, free banking.

Money could only be created by finding and putting into circulation more gold under a gold standard. This would constrain unsustainable and volatile fractional-reserve banking practices, ensuring that money supply growth (and inflation) would never spiral out of control. Dr. Alan Greenspan asserts that economic liberty and Ludwig von Mises asserts that civil liberties would be protected.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

Deficit spending is simply a scheme for the confiscation of wealth.

Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.


...just my $2.22, adjusted for inflation.

For years (hell, decades) anyone who even hinted that we ought to get rid of the Federal Reserve (an 'independent' central bank in its own right), fractional reserve banking and go back to the gold standard has been viewed as a being crazy as a moonbat. The populist view (supported enthusiastically by most of our elected leaders) is that the Fed has served as a bulwark against disaster, not a facilitator. Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

[Lemur]

This is amusing:

[Alexanderofmacedon]

I'll sum up my views instead of making you all read a lot.

We're in trouble. We've brought others into this trouble as well.

[AlexanderSextus]

For years (hell, decades) anyone who even hinted that we ought to get rid of the Federal Reserve (an 'independent' central bank in its own right), fractional reserve banking and go back to the gold standard has been viewed as a being crazy as a moonbat. The populist view (supported enthusiastically by most of our elected leaders) is that the Fed has served as a bulwark against disaster, not a facilitator. Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

Just because they thought he was crazy doesnt mean he actually was crazy. Hell, they're Neocons, they want us to give up as much freedom to them as we can. After all, like I said,

Dr. Alan Greenspan asserts that economic liberty would be protected and Ludwig von Mises asserts that civil liberties would be protected.

They dont want that to happen.

And as for the Democrats,

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold.

They dont want it to happen either.

Read this part again:

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.

[Koga No Goshi]

Just because they thought he was crazy doesnt mean he actually was crazy. Hell, they're Neocons, they want us to give up as much freedom to them as we can. After all, like I said

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

[Incongruous]

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

Or just the stupid Republican form of Democratic hawks?

[Koga No Goshi]

Or just the stupid Republican form of Democratic hawks?

The only Dem anywhere near bad enough to blend in with them is Lieberman.

[Papewaio]

Gold standard isn't actually a standard.

The worth of gold fluctuates based on emotion more so then most currency. Just look at how the gold price shot up after 9/11 and the wars that followed.

Gold isn't 100% non-useable for anything else. Gold can have a value other then arbitrary because it does have uses other then jewelry. It can be used in industry and as such its value can change with demand.

Not only can golds value change because of demand it can be supplied by other means then just from a bank. You can mine it, and as such all you are swapping is currency supplied by a government for currency supplied by a mine site. Not much of an improvement if any.

Now that is just looking at gold in the ground. If we get fusion going then we can filter the seas of the world for far more gold then we have mined yet. Add in space exploration and we can have so much gold that we could all be housed in it.

Gold has value because it is rare. In time that rarity only gets less and less. As such the gold standard is subject to the same inflationary pressures on a system as money.

Wishing for the gold standard is wishing for old times.

[Don Corleone]

The problem with the gold standard and the theory of sound money is that it constrains the power of wealth generation.

How is wealth generated?
Taxation? Nope, that's just a transfer of wealth.
Government spending? Ditto.
Wages? Ditto.
Creation of goods and services? Ditto.

At the end of the day, there is only one economic activity that actually creates wealth. That is the flow of capital investment. In an economic system where specie is based off faith in the monetary and fiscal policies, one need only be a member to participate in this system.

But in a system where specie is based off of some tangible good, like gold, access to that gold controls access to the credit system.

Let me give you an example of what might happen if we returned to the gold standard.

A few banks, like Morgan-Chase, maybe Citi-group, maybe Goldman would rush out and buy every last ounce of whatever the value-backing commodity is. They would then control access to said currency. If they find it more profitable to hoard it rather than flowing it around, they simply stop lending. Think about that for a second... Morgan Chase can decide that too many people own houses in this country and the very next day, they've dried up the money supply. In fact, this very phenomenon used to happen. Do you think "Potterville" is a fantasy creation of Hollywood in "It's a Wonderful Life"?

I understand the allure of 'sound currency theory', but in fact, instead of being controlled by the federal government, you're turning the power of your financial system over to those large enough and moneyed enough to purchase a stake in it.

You, me and everyone else with less than $50 million of assets is left out in the cold. It doesn't prevent tyranny, it shifts its source from an elected government to a few autonomous tycoons.

[ICantSpellDawg]

The only Dem anywhere near bad enough to blend in with them is Lieberman.

Lieberman isn't a Dem.

[drone]

I suppose this is the best thread for this one:
Not enough digits on the debt clock.

[Strike For The South]

I suppose this is the best thread for this one:
Not enough digits on the debt clock.

So we can claim victory? NO MORE DEBT!!!!!!!!!!!!!!!!!!!!!

[PanzerJaeger]

Neocons are pretty much bat-crazy. I think of them as elite businessmen with delusions that they can follow in the footsteps of Charlemagne. Except Charlemagne actually put funding into education didn't he? :) Of course, some people simply call them as close as you can get to an openly fascist party in the U.S. That works too.

Nobody told me that we were just making stuff up now.

Neoconservatism is a valid and well thought out ideology. What exactly is bat-crazy about it? Or fascist?

In any event, you do know many of them used to be democrats, don't you?

[Spino]

The only Dem anywhere near bad enough to blend in with them is Lieberman.

I don't want to burst your bubble but Bopa Magyar & PanzerJaeger hit the nail on the head. The Neo-Con movement within the Republican party can be directly attributed to the migration of Cold War era hawkish Democrats & like minded intellectuals to the Republican Party during the 80s & 90s. It was the total mismanagement & incompetency of the leadership of Johnson & McNamara during the Vietnam War and subsequent fallout that led directly to the creation of the modern Democratic party that you identify with. The fact that Lieberman, an archetypical Democrat in the Truman/Kennedy/Johnson mold, has become a virtual outcast within his own party shows you just how much the Democratic party has changed over the last 40 years.

[Crazed Rabbit]

Wow. Just wow.

A revelation for you?

If this had been the predominant philosophy at the time of the New deal, we'd still be there.

So very wrong. Roosevelt's high tax and high regulation policies stunted economic growth. The protectionism of nations also served to delay the whole world's recovery.

But go on with your fantasy world that ignores economic scholarship and history of the Great Depression. How you can ignore the fact that Keyne's theories kept us in the depression until the outbreak of world war 2 is fascinating.

It's also amusing how you sulk like the economy won't recover because we won't have new industries when the dems and socialists support the high taxes and regulations that make it so difficult to start new companies.

haahahahahahahah What a pile of rubbish you just came out with, ahahahah. The fact you really believe this crap amazes me everytime I see you type such a silly post. Amazing.

Anyway, yeah SMALL GOVT FOR THE WIN!! Its not like it has got us into this situation or anything!?!?!!!! NOES!!

Another socialist type with no real knowledge of what happened. But I guess it's hard to come up with a rational response when all your favorite socialists tell you the government solves everything and the depression was such a glaring example of that being complete bullocks.

Question: If Keyne's crap theories were so great, why did they do nothing to bring the US out of the depression?

Oh, but that'd involve facts, wouldn't it?

CR

[Fragony]

Take a look at how Ron Paul was received by his fellow Republicans during the debates... they all cast him those 'nutty as a moonbat' looks when he brought the subject up.

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

[yesdachi]

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

Ron Paul has some interesting ideas and wouldn’t make a worse president than the candidates we have except for the fact he acts like he is nutty as a moonbat. You can act all kinds of ways except nutty as a moonbat.

[Koga No Goshi]

I don't want to burst your bubble but Bopa Magyar & PanzerJaeger hit the nail on the head. The Neo-Con movement within the Republican party can be directly attributed to the migration of Cold War era hawkish Democrats & like minded intellectuals to the Republican Party during the 80s & 90s. It was the total mismanagement & incompetency of the leadership of Johnson & McNamara during the Vietnam War and subsequent fallout that led directly to the creation of the modern Democratic party that you identify with. The fact that Lieberman, an archetypical Democrat in the Truman/Kennedy/Johnson mold, has become a virtual outcast within his own party shows you just how much the Democratic party has changed over the last 40 years.

Ha ha, well, if we go back far enough, it was the Democrats defending slavery and the Republicans who wanted to end it. But trying to draw some illusory similarity between present-day Democrats and present-day Neoconservatives is really thin. And I am not sure how the party affiliation of some of these people back in 1954 would have any bearing on my statement that neocons are bat-crazy today.

On a more "on topic" note, would the crashes in the stock market serve as sufficient reason for any of the free market ideologues out there to change their mind about social security and/or privatization of all retirement programs? I mean, if you're 40, yeah, you can probably ride this out. But what about the people who are 68 today and had a lot of their money "responsibly" invested and have lost 25% of it in three months?

[yesdachi]

On a more "on topic" note, would the crashes in the stock market serve as sufficient reason for any of the free market ideologues out there to change their mind about social security and/or privatization of all retirement programs? I mean, if you're 40, yeah, you can probably ride this out. But what about the people who are 68 today and had a lot of their money "responsibly" invested and have lost 25% of it in three months?

If you are 68 today and didn’t have your money in a secure place you almost deserve to have lost 25% of it.

I would much rather be in control of my SS than letting the gov put it in the “lockbox”.

[drone]

If you are 68 today and didn’t have your money in a secure place you almost deserve to have lost 25% of it.

I would much rather be in control of my SS than letting the gov put it in the “lockbox”.

True. I know the money I'm paying in isn't going to any safe location. It's being used to fund this bailout, or the next one, or the one after that. Any GenX'er who expects to see his/her Social Security payout is in for a real shock.

[KukriKhan]

I suppose this is the best thread for this one:
Not enough digits on the debt clock.

I know that quoting this is 'so this morning - teh old'... but I still remember when we hit a trillion in debt. And I was an adult then!

[Xiahou]

True. I know the money I'm paying in isn't going to any safe location. It's being used to fund this bailout, or the next one, or the one after that. Any GenX'er who expects to see his/her Social Security payout is in for a real shock.

Absolutely! If I could invest even half of my SS taxes somewhere that the government can't get their hands on it, I'd be thrilled.

It's not going to happen though. Any attempts at meaningful entitlement reform are always shot down using the same tired old scare tactics....

...just my $2.22, adjusted for inflation.

I hear what you're saying, but I still dont think the gold standard is a good idea. Surely there are other alternatives?

[Koga No Goshi]

If you are 68 today and didn’t have your money in a secure place you almost deserve to have lost 25% of it.

I would much rather be in control of my SS than letting the gov put it in the “lockbox”.

This is so CIRCULAR.

"You can do better privately with your money than SS can."

"Privatize savings"

"You lost everything? Personal responsibility."

"Privatize retirement"

"Your retirement investment company wiped? Personal responsibility."

Please direct me to the nearest "secure place" to invest money, Yesdachi. No one who actually works in money has been saying there is such a place at the moment, just likely guesses of what will remain somewhat stable. Still gambling, in other words. Everyone is saying "don't invest, cash will be king." That's fine by me ,but I'm a "young guy." What if I were 68 today?

[Crazed Rabbit]

Koga, show me one 30 year period since SS started when investing in the stock market would have yielded a worse return than SS payments.

And divesting of risk in the last five years before you retire is pretty straightforward.

Please direct me to the nearest "secure place" to invest money, Yesdachi.

http://www.wellsfargo.com/
Or any FDIC insured bank.

CR

[Koga No Goshi]

Koga, show me one 30 year period since SS started when investing in the stock market would have yielded a worse return than SS payments.

And divesting of risk in the last five years before you retire is pretty straightforward.


http://www.wellsfargo.com/
Or any FDIC insured bank.

CR

Putting money in a bank =/= money in the stock market.

And what the 30 year trend looks like is utterly irrelevant if you happen to be 68 at the moment when the stock market tumbles precipitously. But, if we privatized everything, then those "casualties" who happened to be beyond working age and the ability to wait out a 10 or 15 year recovery stretch and see their assets fully recover will just be blamed for their "poor choices."

I don't consider that a better system for universal retirement solutions.

[AlexanderSextus]

I hear what you're saying, but I still dont think the gold standard is a good idea. Surely there are other alternatives?

Silver Maybe? um, it might not even have to be a metal, it could simply be a valuable commodity we have in abundance.

[AlexanderSextus]

Ron Paul has some interesting ideas and wouldn’t make a worse president than the candidates we have except for the fact he acts like he is nutty as a moonbat. You can act all kinds of ways except nutty as a moonbat.

he acts nutty as a moonbat by saying that maybe we need to get rid of keynesian economics?



oooooooookaaaaaaay.....

McCain acts nutty as a moonbat all the damn time!

Ron Paul would make a much better Prez than either candidate.

[AlexanderSextus]

What a loss he is not being the one running for president for the republicans. Bit too low on fanfare and hallelujah which are sadly too important in US elections which is a real shame. Can we have him?

NO! WE NEED HIM REALLY BAD!!!!!