Debt Ceiling issue

[Fole_Penalt]

The last time people followed Austrian economists during a financial crisis was in 1930s. Just saying...

I wanted to wait for Kaz to reply first. He had a reasonable reply but did not quite get it right. No it is not that there is any correlation what so ever. Instead it is exactly the opposite of what you wrote. The 1930s crisis was specifically caused by not following Austrian school of economics. The crisis itself is a validation of the Austrial School of Economics.

It has now been established beyond debate that the 1930s depression was caused by the Federal Reserve. Well before Friedman it was Hayek and Rothbard, both Austrian School economists that showed that the depression was caused by the Federal Reserve. Friedman provided more quantitative proof. Federal Reserve itself is fundamentally against the Austrian school.

What is true is that while I consider Keynes to be wrong on many issues, but his missteps are minor compared to those of people who claim to be his followers who never understood Keynes let alone his mistakes. Forget about modern Keynesians actually understanding the corrections made to Keynes ideas by Friedman. Instead it is emotionally rooting for your team. So I am not surprised at your statement above.

 

[Mahdi]

I wanted to wait for Kaz to reply first. He had a reasonable reply but did not quite get it right. No it is not that there is any correlation what so ever. Instead it is exactly the opposite of what you wrote. The 1930s crisis was specifically caused by not following Austrian school of economics. The crisis itself is a validation of the Austrial School of Economics.

Really, who claims that? Any sources?

It has now been established beyond debate that the 1930s depression was caused by the Federal Reserve. Well before Friedman it was Hayek and Rothbard, both Austrian School economists that showed that the depression was caused by the Federal Reserve. Friedman provided more quantitative proof. Federal Reserve itself is fundamentally against the Austrian school.

Yes, by the federal reserve not providing liquidity to banks during the bank run. That's generally established. It's also generally established that the depression was not CAUSED by the Fed but the Fed failed to come up with the right policies.

What is true is that while I consider Keynes to be wrong on many issues, but his missteps are minor compared to those of people who claim to be his followers who never understood Keynes let alone his mistakes. Forget about modern Keynesians actually understanding the corrections made to Keynes ideas by Friedman. Instead it is emotionally rooting for your team. So I am not surprised at your statement above.

I only root for Barcelona, that's my only team. But whatever. So I'm Team Keynes, can I say you're Team Austria? You're only good at skiing, for everything else, no one takes you serious.

 

[Fole_Penalt]

I know about Friedman, I am talking about the influences of the Fed. Where I disagree with Friedman, and I suppose so do Austrian economists, is that the market knows better to regulate than a private entity - i.e. the Fed. This is quite ironic, since Friedman himself is a huge supporter of free markets in pretty much every other facet of life.

Don't get confused by hype. Your post implies that you think, probably because of wrong statements by Mahdi, that Friedman was for the Fed. Friedman was explicitly against the Fed. He has article after article and chapter after chapter on this. No famous economist, absolutely no one, comes close to understanding money itself better than Friedman. Instead, Friedman correctly was of the thought that just having correct theories is not enough; you have to be pragmatic and prescribe what actually will be implemented in reality. In this context he suggested that when money supply shrinks the Fed must act to increase money supply instead of letting the money supply shrink further.

 

[Kaz]

I wanted to wait for Kaz to reply first. He had a reasonable reply but did not quite get it right. No it is not that there is any correlation what so ever. Instead it is exactly the opposite of what you wrote. The 1930s crisis was specifically caused by not following Austrian school of economics. The crisis itself is a validation of the Austrial School of Economics.

Well, there is correlation in that it was used less or there appears it had less prominence in global economics after this period. I would agree with you that the Fed caused it (surprise surprise) but IIRC even Friedman didn't see its existence as incongruent to a properly ran economy. IIRC he said that they followed the wrong strategies and not that it should not exist - which is why I slowed down on my rhetoric.

But yes, the general contemporary thought on the matter does seem to put the blame square on the shoulders of the Fed - regardless of whether you think it should exist or not. Lots of Keynesian supporters (the modern ones I guess) love using it as an example of failure without actually knowing that it couldn't occur under Austrian economics because there would be no Fed to begin with.

 

[Kaz]

Don't get confused by hype. Your post implies that you think, probably because of wrong statements by Mahdi, that Friedman was for the Fed. Friedman was explicitly against the Fed. He has article after article and chapter after chapter on this. No famous economist, absolutely no one, comes close to understanding money itself better than Friedman. Instead, Friedman correctly was of the thought that just having correct theories is not enough; you have to be pragmatic and prescribe what actually will be implemented in reality. In this context he suggested that when money supply shrinks the Fed must act to increase money supply instead of letting the money supply shrink further.

I'd have to read up on that - or if you could provide reading I would appreciate it. Economics is not really my area of study but I had been under the impression that Friedman wasn't against the idea of the Fed like the Austrian economists would be. They are very close in many other instances though - i.e. free markets.

 

[Mahdi]

Don't get confused by hype. Your post implies that you think, probably because of wrong statements by Mahdi, that Friedman was for the Fed. Friedman was explicitly against the Fed. He has article after article and chapter after chapter on this. No famous economist, absolutely no one, comes close to understanding money itself better than Friedman. Instead, Friedman correctly was of the thought that just having correct theories is not enough; you have to be pragmatic and prescribe what actually will be implemented in reality. In this context he suggested that when money supply shrinks the Fed must act to increase money supply instead of letting the money supply shrink further.

And where did I claim that Friedman was FOR the Fed?

My reply was regarding this part..

It depends on your economic philosophy. I lean more towards an Austrian economic philosophy and think it'd have been better to simply liquidate the debt than to have printed all this money and effectively shat on the currency while the bankers take their huge bonuses/corps - an ironic reward considering they played such a huge hand in all this.

Just ask yourself, WWMFD? Well, he wouldn't do that because essentially, that's what the Fed did during the Great Depression and he wrote against it.

 

[Kaz]

For 40 years we were told corporate tax cut, tax break for richest on the top and deregulation is name of the game and it would bring more employment and general prosperity. Results are right in front us. Greater disparities, ever widening gap between rich & poor. Crumbling infrastructures, an outdated educational system an elitist health care system. That philosophy in the process also created one of the biggest corporate welfare system in the world. Tragically, one of the biggest corporate welfare system in a country that always adamantly preached self-reliance and hated government “hand-outs” and welfare measures.
Most probably there will be last minute deal on debt ceiling issue but that won’t be the end of this sad saga.

[video=youtube;YmqoCHR14n8]http://www.youtube.com/watch?v=YmqoCHR14n8[/video]

[video=youtube;5Wx5PYZIWcQ]http://www.youtube.com/watch?v=5Wx5PYZIWcQ&feature=related[/video]

[video=youtube;dmzZ8lCLhlk]http://www.youtube.com/watch?v=dmzZ8lCLhlk&feature=related[/video]

[video=youtube;rCdgv7n9xCY]http://www.youtube.com/watch?v=rCdgv7n9xCY[/video]

 

[Kaz]

For Mahdi:
[video=youtube;dgyQsIGLt_w]http://www.youtube.com/watch?v=dgyQsIGLt_w[/video]

 

[Fole_Penalt]

I'd have to read up on that - or if you could provide reading I would appreciate it. Economics is not really my area of study but I had been under the impression that Friedman wasn't against the idea of the Fed like the Austrian economists would be. They are very close in many other instances though - i.e. free markets.

Try this for example,

http://whatwouldthefoundingfathersd.../milton-friedman-abolish-federal-reserve.html

If you read any of his books, he at length explains why he is absolutely against the Fed. He also explains, at length, that one must be for what can be implemented in the real world and not just have theories even if they are right.

I fully agree with him on both accounts.

 

[Kaz]

Try this for example,

http://whatwouldthefoundingfathersd.../milton-friedman-abolish-federal-reserve.html

If you read any of his books, he at length explains why he is absolutely against the Fed. He also explains, at length, that one must be for what can be implemented in the real world and not just have theories even if they are right.

I fully agree with him on both accounts.

I love this guy. So damn smart and coherent.

 

[Mahdi]

For Mahdi:

what does this have to do with him believing that a) The FED did not CAUSE the crisis but failed to come up with the adequate policies b) the FED should have supplied the economy and banks with money and not what you suggested c) this discussion at hand?

Everything else is debatable and I frankly don't care about it. But you suggested

It depends on your economic philosophy. I lean more towards an Austrian economic philosophy and think it'd have been better to simply liquidate the debt than to have printed all this money and effectively shat on the currency while the bankers take their huge bonuses/corps - an ironic reward considering they played such a huge hand in all this.

and then you tried to relate it to anything Friedman claimed, while he suggested rather the opposite and actually blamed your suggestion for the failure?

Whether a Fed is needed, whether every bank should print its money, whether we should trade apples with cars, honestly, I really don't care, to each his own. Whether Keynes was right, Friedman was right, Hayek was right, doesn't matter to me. The simple point is that what you suggested was tried in 1930 and it led to the great depression and Milton Friedman suggested the exact opposite. Now for everything else, I really don't care to debate. if you and Fole_Penalt want to debate the sense of a central bank or the lack of it, feel free. If you want to debate a return to a gold standard...ok..whatever. But please, what Friedman claimed is not what you suggest.

 

[Fole_Penalt]

what does this have to do with him believing that a) The FED did not CAUSE the crisis but failed to come up with the adequate policies b) the FED should have supplied the economy and banks with money and not what you suggested c) this discussion at hand?

Everything else is debatable and I frankly don't care about it. But you suggested



and then you tried to relate it to anything Friedman claimed, while he suggested rather the opposite and actually blamed your suggestion for the failure?

Whether a Fed is needed, whether every bank should print its money, whether we should trade apples with cars, honestly, I really don't care, to each his own. Whether Keynes was right, Friedman was right, Hayek was right, doesn't matter to me. The simple point is that what you suggested was tried in 1930 and it led to the great depression and Milton Friedman suggested the exact opposite. Now for everything else, I really don't care to debate. if you and Fole_Penalt want to debate the sense of a central bank or the lack of it, feel free.

Na Mahdi jaan, you do not quite understand what happened, you have some general idea and have picked a team but do not know the specifics.

The 1930s depression was caused by the Fed as I correctly stated before. This is no longer in the realm of debate. The key word is depression, not recession. These have their own definitions. It started with a recession (whether this was caused by the Fed or not is up for debate, but I believe even the recession was caused by the Fed as are most recessions.) The Fed took a minor recession and turned it into a depression.

Secondly, you seem to think that the recession was turned into depression because the Fed did not flood the markets with money. Wrong. The recession was turned into depression because the Fed actively drained money from the economy when the money supply had already shrank by 3%. As a result the money supply shrank by nearly 30%.

The idea is not to increase money supply but to keep it stead to modestly growing. When Friedman first suggested (and now everyone is following) that the Fed should have printed money, it is so that the money supply would remain steady instead of shrinking. The reason he is against the Fed in the first place is that the Fed, will mostly get it wrong; secondly that when such an important task is left to a group of people, regardless of who they are, there will be without a single exception abuse of power hence corruption.

And let me add to Friedman, printing money is not like going out, knocking on the door, and giving cash to each household. There is always a means of doing so. For example, mortgages are given out to people at below market rate, or loans are given to banks at below market rate. If you think the Fed and the government will be equitable in doing so then you are dreaming. They have been, are, and will always be corrupt, for as long as this heaven and earth lasts. Even if they were angels and wanted to be equitable, they are not smart enough. As a result, money is distributed to friends and family first (for example in the case of the recent crisis the financial institutions) and what scrap is left, for all the "well-intentioned" programs will always result in bad economic activity and an increase in inequity (i.e. the mortgage refinancing acts etc. in the recent crisis)

What is better is to simply increase money supply by a fixed amount each year and that is it, this is what Friedman suggested. There are even better solutions.

These suggestions do not have a chance in hell to be implemented in the real world in the near term. Therefore, one must try to push through what can be done in the context of reality. For example, in such a case, it is much preferable for the Fed to try to print money when money supply is shrinking instead of letting money supply retraction to accelerate, what happens due to the factional reserve system.

 

[Kaz]

what does this have to do with him believing that a) The FED did not CAUSE the crisis but failed to come up with the adequate policies b) the FED should have supplied the economy and banks with money and not what you suggested c) this discussion at hand?

Everything else is debatable and I frankly don't care about it. But you suggested

and then you tried to relate it to anything Friedman claimed, while he suggested rather the opposite and actually blamed your suggestion for the failure?

Whether a Fed is needed, whether every bank should print its money, whether we should trade apples with cars, honestly, I really don't care, to each his own. Whether Keynes was right, Friedman was right, Hayek was right, doesn't matter to me. The simple point is that what you suggested was tried in 1930 and it led to the great depression and Milton Friedman suggested the exact opposite. Now for everything else, I really don't care to debate. if you and Fole_Penalt want to debate the sense of a central bank or the lack of it, feel free. If you want to debate a return to a gold standard...ok..whatever. But please, what Friedman claimed is not what you suggest.

The connection is fairly obvious, I would have thought. What you suggested re Austrian economics being responsible for the Fed is pretty much debunked by Friedman in that video.

I've viewed your politics and economics on this board and you are more in line with a government taking action rather than letting the free market fix any problems itself. That's where my first quote comes in when I reply to Mehran - that he thinks some people think worse would have happened if the government did not intervene. You, at the time I am fairly sure, were advocating the bailouts and cited your hero Krugman several times.

What I suggested and the philosophy behind it was definitely not the reason the Great Depression occurred. If Friedman was so adamant about the Fed's failures - and evidently he would rather it be abolished - then he is very much in my line of thinking. For without the Fed there could never be such printing of money to bail everybody out.

Really, the Fed did cause the crisis - most would concede if not the recession then the Depression. If it controls the increase and decrease of the money supply, then by it existing it would have needed to do something because it controls this facet of the economy. It's like comparing a river with a tap. If there is water or there isn't in the former it is simply nature. In the latter, if it's not on it's off and if it's not off it's on. Friedman explaining this dilemma is not an endorsement of the federal reserve system and certainly is not a refutation of the Austrian economic philosophy - because to put it simply, there is a tap...it has little to do with that philosophy.

It's like blaming catenaccio when the team in question plays with no defenders to begin with.

 

[Mahdi]

Na Mahdi jaan, you do not quite understand what happened, you have some general idea and have picked a team but do not know the specifics.

The 1930s depression was caused by the Fed as I correctly stated before. This is no longer in the realm of debate. The key word is depression, not recession. These have their own definitions. It started with a recession (whether this was caused by the Fed or not is up for debate, but I believe even the recession was caused by the Fed as are most recessions.) The Fed took a minor recession and turned it into a depression.

Yes, by applying the wrong policies. had they applied the right policies, it might not have happened. Which was my point kind of. They made things worse.

Secondly, you seem to think that the recession was turned into depression because the Fed did not flood the markets with money. Wrong. The recession was turned into depression because the Fed actively drained money from the economy when the money supply had already shrank by 3%. As a result the money supply shrank by nearly 30%.

By raising interest rates and because back then the Gold standard was still in works. Yes. I know that.

The idea is not to increase money supply but to keep it stead to modestly growing. When Friedman first suggested (and now everyone is following) that the Fed should have printed money, it is so that the money supply would remain steady instead of shrinking.

And I claimed what exactly?

The reason he is against the Fed in the first place is that the Fed, will mostly get it wrong; secondly that when such an important task is left to a group of people, regardless of who they are, there will be without a single exception abuse of power hence corruption.

Ok, but at the end of the day, there will always be a group of people or a group of banks who will make the decisions. If it wasn't for the Fed now, it would be for Lloyd Blankfein, Ackermann, Weber, Bob Diamond or whoever else is at the head of the big 10 banks to make the decisions. Now we could argue that the Fed has caused this huge banks and what not, but even before there was the Fed or the whole central banking system, you always had an oligopoly of banks and dictating the money of the world. So whether the group of people who influence the monetary policy of a country are with the Fed or whether you prefer them to be heads of banks, that's your choice. (Given that, I also believe that a fed free system would be able to work but only overseen by a strong law framework and fair-play rules. But since we don't believe in the moral good of people, I guess that wouldn't work then either.)

And let me add to Friedman, printing money is not like going out, knocking on the door, and giving cash to each household. There is always a means of doing so. For example, mortgages are given out to people at below market rate, or loans are given to banks at below market rate. If you think the Fed and the government will be equitable in doing so then you are dreaming. They have been, are, and will always be corrupt, for as long as this heaven and earth lasts. Even if they were angels and wanted to be equitable, they are not smart enough. As a result, money is distributed to friends and family first (for example in the case of the recent crisis the financial institutions) and what scrap is left, for all the "well-intentioned" programs will always result in bad economic activity and an increase in inequity (i.e. the mortgage refinancing acts etc. in the recent crisis)

What is better is to simply increase money supply by a fixed amount each year and that is it, this is what Friedman suggested. There are even better solutions.

These suggestions do not have a chance in hell to be implemented in the real world in the near term. Therefore, one must try to push through what can be done in the context of reality. For example, in such a case, it is much preferable for the Fed to try to print money when money supply is shrinking instead of letting money supply retraction to accelerate, what happens due to the factional reserve system.

A couple of things...if you don't believe in the moral soundness of a few, then by all means, there shouldn't be a belief in the moral soundness of many either. You might believe that eventually the correcting forces upon many will be more likely than that of few, but that's about it.
Further, the importance of the Fed as a supplier of money will diminish in the future even more. With further technological developments, we will see "electric money" providing new means of supply for payment, supply for transaction goods and a "money supply system" not based on printing for printing it but based on a commodity and goods basket of what is produced in a country. So in my view, in the future, the money supply by the Fed will be of even less importance as transactions will be done even more electronically and virtually and that will determine the payment of goods(still with me or not?). The central bank should in the future be reduced to an anti-cartel institution and nothing else. That at least is my belief and I believe that it will happen over time. That's why to me the argument about the monetary base, Fed printing money and everything else misses the point a bit about real problems in the economy right now. And as said, at the end of the day, I neither believe that governments do it all right and are smart and neither do I believe that corp-orates have the interest of people at their heart. However, in democracies, governments can be voted against and there are more correctional facilities than there are with corporations.

The connection is fairly obvious, I would have thought. What you suggested re Austrian economics being responsible for the Fed is pretty much debunked by Friedman in that video.

Again, I used your quote that you connected to the Austrian school. If the Austrian school suggests that, then you are basically shrinking the money supply and hence it's not in accordance with what Friedman believed in. If the Austrian school doesn't suggest that, then it doesn't.

I've viewed your politics and economics on this board and you are more in line with a government taking action rather than letting the free market fix any problems itself.

I don't believe in governments, but given that the free market is ruled and led by people, I don't believe in free markets either, at least free markets as they are now. Right now, free markets are controlled by a couple of players and we have quasi-oligopolies and I don't believe that these people have the interest of the people more in their thoughts than the government of a country. If you like it, it's about who I trust more. I don't trust Merkel as I consider her inept, I don't trust Sarkozy, I don't trust Cameron, I don't trust Austria's government, I don't trust Orban, I don't trust the Tea Party. I trust Steve Jobs to a degree and I trust Buffet and Soros to a degree too. I don't trust Ackermann and Blankfein, I however would trust Stanley Fisher. And I kind of still trust Obama, while I would like to trust Ron Paul but I believe that his policies wouldn't work in the world we live in know. To me, it's an issue of trust. Generally, I don't trust people to do the right thing, hence I'm skeptic at anything led and ruled by people. I also believe that the current political class is rather average because at some point the smart people went into the world of business and the more inept people went into politics. Anyway, this is my system of belief. I hope it's clear.
I could post my result from political compass if you're still skeptical btw.

That's where my first quote comes in when I reply to Mehran - that he thinks some people think worse would have happened if the government did not intervene. You, at the time I am fairly sure, were advocating the bailouts and cited your hero Krugman several times.

Opinions change over time. My opinion about Krugman has changed over the past 2-3 years too. I however still consider him right on most cases. anyway, with regards to the bank bailouts, again, that's a double edged sword. It would have been interesting to see what would have happened with Lehman, Morgan Stanley, BofA and Citi defaulting. It certainly was a moral-hazard situation. Overall, we will never know what would have happened as the government intervened and we don't know what would have happened had the government not intervened. I mean, it's the same case as using a condom and preventing HIV and STDs. You might not use condoms and have more fun, maybe HIV is overrated, maybe you will even have HIV but never get AIDS etc. but why risk it?

What I suggested and the philosophy behind it was definitely not the reason the Great Depression occurred. If Friedman was so adamant about the Fed's failures - and evidently he would rather it be abolished - then he is very much in my line of thinking. For without the Fed there could never be such printing of money to bail everybody out.

Look, as said before, I don't care about the Fed. I care about your suggestion which in essence is a shrinkage of liquidity. And here, my scenario for you: We have 2007 and the 8th largest bank in the world goes bust, 3 other banks with huge exposure to that bank get into trouble as well and people start to worry about their money and everyone wants to withdraw money from the banks by whatever mean. You also have no central bank. What's your suggestion to happen? And please don't tell me this wouldn't have happened because there's no Fed or anything.

Really, the Fed did cause the crisis - most would concede if not the recession then the Depression. If it controls the increase and decrease of the money supply, then by it existing it would have needed to do something because it controls this facet of the economy. It's like comparing a river with a tap. If there is water or there isn't in the former it is simply nature. In the latter, if it's not on it's off and if it's not off it's on. Friedman explaining this dilemma is not an endorsement of the federal reserve system and certainly is not a refutation of the Austrian economic philosophy - because to put it simply, there is a tap...it has little to do with that philosophy.

The one guy that caused this crisis, the former president of the Fed Greenspan, actually believed that too, wanted to limit the role of the Fed, believed in the intelligence of markets, etc. and so on. That's also why he was against Glass-Steagall act, he was against any kind of regulation on financial instruments and actually for good or bad, his policies were turning the Fed more irrelevant than ever as he also believed in some tap water and what not.

It's like blaming catenaccio when the team in question plays with no defenders to begin with.

It's not about defenders or attackers with Catenaccio, it's about who you are, understanding what catenaccio is about, how much future it has, how relevant it is, and you you play with and against.

 

[Kaz]

Again, I used your quote that you connected to the Austrian school. If the Austrian school suggests that, then you are basically shrinking the money supply and hence it's not in accordance with what Friedman believed in. If the Austrian school doesn't suggest that, then it doesn't.

How does what I suggested decrease the money supply? What I suggest is that the natural corrections be made by the market. That whatever assets are left are sold as per what they are actually worth. Whatever good is left should be built upon. I fail to see how buying up worthless assets relates to what Friedman believed in. Are you suggesting that both depressions (if you call what is currently going on a depression) are the same and hence had to have the same action by the Fed?

I don't believe in governments, but given that the free market is ruled and led by people, I don't believe in free markets either, at least free markets as they are now. Right now, free markets are controlled by a couple of players and we have quasi-oligopolies and I don't believe that these people have the interest of the people more in their thoughts than the government of a country. If you like it, it's about who I trust more. I don't trust Merkel as I consider her inept, I don't trust Sarkozy, I don't trust Cameron, I don't trust Austria's government, I don't trust Orban, I don't trust the Tea Party. I trust Steve Jobs to a degree and I trust Buffet and Soros to a degree too. I don't trust Ackermann and Blankfein, I however would trust Stanley Fisher. And I kind of still trust Obama, while I would like to trust Ron Paul but I believe that his policies wouldn't work in the world we live in know. To me, it's an issue of trust. Generally, I don't trust people to do the right thing, hence I'm skeptic at anything led and ruled by people. I also believe that the current political class is rather average because at some point the smart people went into the world of business and the more inept people went into politics. Anyway, this is my system of belief. I hope it's clear.
I could post my result from political compass if you're still skeptical btw.

You should look at the Friedman videos I posted. I forget which one but it directly addresses these concerns. Wait, I think it is the Robber Baron video.

He suggests that during the 19th century where there was far more freedom and less government intervention that people only really got rich because they sold something people needed. There was far more invention and progress. Nowadays, many people get rich by creating a concern and bringing it to the national attention - to have it publicly funded. He goes further to say that many of the functions of government were rarely, if ever, needed so much at the time that the public themselves protested them in - I think he referred to Social security as an example. He said they had to be sold to the public because most sane people wouldn't forgo their liberty/or money in order to fund them. Which is the irony considering these days if you say close down the Department of Education or to let people opt out of Social security they'll think you're crazy as they think without these things people can't live or thrive. Anyway, watch the video, it's enlightening.

Personally, I believe that the government, and specifically politicians, simply do not have the capacity to decide what is good for all. It is simply an impossible task. Formulating policy to achieve certain aims can only go so far but they are in large part wasteful and they are damned to that end. People know what they need and letting them get to it is far more efficient and moral.

Apart from that, I think it is incredibly dangerous to let the size of government's scope to widen. For god save us when the big industries are in a position to influence the government towards its own aims. America is an example of special interests - whether it be the drug companies, the military-industrial complex or the banks, to name a few - running amok and ruining peoples' livelihood and liberty. If something is needed so much by the wide majority, then let it gain that majority by the free market. At least then only those who opted into these programs or ventures are at the whims of these industries, rather than the whole country.

As for trusting politicians, apart from Paul and possibly Kucinich I don't think you can trust them. Even when I do not agree with Paul, I trust him to do what he says because his voting record shows he is willing to be that 1 dissenter out of all voters simply to stay consistent to his ideology. I agree with him and on lots of things and more importantly on the most important and pressing issues - the wars and the fed.

Opinions change over time. My opinion about Krugman has changed over the past 2-3 years too. I however still consider him right on most cases. anyway, with regards to the bank bailouts, again, that's a double edged sword. It would have been interesting to see what would have happened with Lehman, Morgan Stanley, BofA and Citi defaulting. It certainly was a moral-hazard situation. Overall, we will never know what would have happened as the government intervened and we don't know what would have happened had the government not intervened. I mean, it's the same case as using a condom and preventing HIV and STDs. You might not use condoms and have more fun, maybe HIV is overrated, maybe you will even have HIV but never get AIDS etc. but why risk it?

To be frank, I think that analogy is misleading. You either have AIDS or you don't; there doesn't really appear to be much of a spectrum.

This problem had such a thing. Proponents of the idea that we should let corrections occur naturally were saying: things will go bad, but eventually will get better; whereas if you bailed people out, things will get better then go much worse than if it had simply let it fix itself naturally.

America had done far too much cheating for far too long; it had to pay the price. Now the debt is not the only problem but the value of the currency.

Look, as said before, I don't care about the Fed. I care about your suggestion which in essence is a shrinkage of liquidity. And here, my scenario for you: We have 2007 and the 8th largest bank in the world goes bust, 3 other banks with huge exposure to that bank get into trouble as well and people start to worry about their money and everyone wants to withdraw money from the banks by whatever mean. You also have no central bank. What's your suggestion to happen? And please don't tell me this wouldn't have happened because there's no Fed or anything.

I'm not an economist but I would do as I would for any private company or entity: let it be responsible for its failures. Let the smaller banks, or smarter banks, take over and buy up what is still valuable. What is the point of buying up worthless assets? The cost of these failures are now on the shoulders of every American and probably their future generations. Yet the administration of these funds are still in the hands of the same inept and corrupt people.

The problem is not just the bailing out, but the policies that created the bubble and the reliance on the Fed. The reality is you can never pay the debt by printing more money - you are creating more debt as you print the money. It is akin to digging your way out of a hole.

This is where you and I differ in our view of government in its role. It can never properly create jobs and it will never truly bring about equality. Whenever it tries to create an industry it does so too expensively and if tries to give one set of people equality in some facet it eventually ends up meaning undermining another part of that society.

I believe in the ingenuity of people and their ability to create something where something didn't exist. To work in their own interests to make the right decisions and to try to profit from those decisions. I believe in the market to provide an arena so that the best survive and those that don't die. That is best for all as it means the best allocation of resources as we have the most able people administering it.

The one guy that caused this crisis, the former president of the Fed Greenspan, actually believed that too, wanted to limit the role of the Fed, believed in the intelligence of markets, etc. and so on. That's also why he was against Glass-Steagall act, he was against any kind of regulation on financial instruments and actually for good or bad, his policies were turning the Fed more irrelevant than ever as he also believed in some tap water and what not.

I am not really sure about that and I don't follow it closely enough to follow. But I'm sure Greenspan changed a lot during his tenure. He was more a Gold guy before IIRC.

It's not about defenders or attackers with Catenaccio, it's about who you are, understanding what catenaccio is about, how much future it has, how relevant it is, and you you play with and against.

I am simply trying to give you a clear analogy. You can't blame something on a system where its tenants are not being followed - i.e. blaming the Great Depression on Austrian Economics or blaming the housing bubble on free markets.

 

[lordofmordor]

I dont disagree with you on cutting budget deficit but it needs to come from a place that does not hurt the economy. No one wants to see 10% get unemployed. Tax cuts on the very wealthy is a way to go as it has shown they are not spending the money and not helping the economy. Close the tax hole loopes, etc...

After Clinton, when Gore was fighting to put the extra surplus into paying for the debt, Bush and Republicans won on giving it as tax cuts, most of which went to the very top wealthy. People did not learn and the same people are again causing destruction. Unfortunately, it is media, as another article nicely pointed it out.

This country is in serious problem either way. You have lobbyists on one hand, Tea party people on another, republicans who are trying to do everything possible to see Obama fail at any cost, media who is run by the corporations, oil and financial companies with direct control into white house and congress, etc.. and you have laws being made at the pivotal time in the history of the US that has nothing to do with what is good for this country.

No.
What I wrote is quite the opposite of your statement below that you happen to think that is in agreement to mine. The price of not cutting the budget deficit is far greater than any short-term gain from funding additional government activity at this point. As I noted yesterday, and investors are finding out today and will become even more convinced soon, this is a serious issue with serious consequences. Bond rates will rise and this will hurt the US much, much more than any good that government stimulus will provide.

 

[Mahdi]

How does what I suggested decrease the money supply? What I suggest is that the natural corrections be made by the market. That whatever assets are left are sold as per what they are actually worth. Whatever good is left should be built upon. I fail to see how buying up worthless assets relates to what Friedman believed in. Are you suggesting that both depressions (if you call what is currently going on a depression) are the same and hence had to have the same action by the Fed?

Inevitably, by letting one bank die and doing nothing about the liquidity shortage, you will cause a bank run and due to interbank lending and interbank exposure you shrink the liquidity of those banks and hence their money supply, hence risk default of more banks and therefore also liquidity of industries related to banks, hence further liquidity shortage. The TARP bailouts were another issue but that was done by the government, not the Fed as far as I know and while a troubling issue, they worked to a degree and kept the banking system floating. TARP from a moral perspective was troublesome, from a policy perspective, it did what it tried to achieve. The fact that banks and bankers are greedy bastards is a given, hence my reservation to let these people have even more control and believing that in the current state markets know better.

He suggests that during the 19th century where there was far more freedom and less government intervention that people only really got rich because they sold something people needed. There was far more invention and progress. Nowadays, many people get rich by creating a concern and bringing it to the national attention - to have it publicly funded. He goes further to say that many of the functions of government were rarely, if ever, needed so much at the time that the public themselves protested them in - I think he referred to Social security as an example. He said they had to be sold to the public because most sane people wouldn't forgo their liberty/or money in order to fund them. Which is the irony considering these days if you say close down the Department of Education or to let people opt out of Social security they'll think you're crazy as they think without these things people can't live or thrive. Anyway, watch the video, it's enlightening.

Personally, I believe that the government, and specifically politicians, simply do not have the capacity to decide what is good for all. It is simply an impossible task. Formulating policy to achieve certain aims can only go so far but they are in large part wasteful and they are damned to that end. People know what they need and letting them get to it is far more efficient and moral.

from a political perspective I don't agree with Friedman. I believe that certain goods that no one else would be willing to provide as they cost too much, like health insurance for old and sick, disabled, communication and transport service for rural areas and such, need to be provided by someone and that someone is always the government in the end(or an NGO). I also don't believe that people as an example know what's best when it comes to their children's education and should be given full autonomy, as in most cases they don't have the time to bother, don't know what is important etc. and hence get too much control over a kid, but that's me. You may argue that the government doesn't know either, but you can't really compare the influence parents can have over a kid with that of government, if so all kids in Iran would be complete brainwashed idiots. Again, I don't trust (all) people, at least whenever I see an information asymmetry involved with people but they say they know, I don't trust them to know better. Friedman doesn't believe in imperfect markets and information asymmetry though, but those are given. But anyway, again, that's me. This again takes me to my next view that I don't trust in huge sovereigns and nations but I believe in local communities. I think the worst thing that has happened over the past 200 years is this doctrine of having big centralized nations where someone sitting somewhere decides over what should happen 500 kms away he has no clue of.
My ideal form would be a lose union of many independent city-states and regions where those city states provide people with the basic safety facilities needed and outsource a lot of issues to NGOs. No huge countries with capitals remotely away, no nothing.

Apart from that, I think it is incredibly dangerous to let the size of government's scope to widen. For god save us when the big industries are in a position to influence the government towards its own aims. America is an example of special interests - whether it be the drug companies, the military-industrial complex or the banks, to name a few - running amok and ruining peoples' livelihood and liberty. If something is needed so much by the wide majority, then let it gain that majority by the free market. At least then only those who opted into these programs or ventures are at the whims of these industries, rather than the whole country.

Ever since the Reagan administration the role of government on political life has lessened more and more and got more deregulated, from finance to TV. I don't really think that this was for the better of the people.

To be frank, I think that analogy is misleading. You either have AIDS or you don't; there doesn't really appear to be much of a spectrum.

well, I had once a better analogy but forgot it. Eitherway, the point is that there are lots of people who still believe that AIDS is a myth and doesn't really exist(anymore) or is a disease for homosexuals only. if you ask them why, their explanation is sometimes that they fuck around as they like but nothing has happened or that e.g. Magic Johnson has been living with AIDS for years now, so AIDS is overrated. Now, they might get away with this forever, or they might not. But by using the condom, you don't let the risk to find it out happen. Same here....you protected the economy from a liquidity trap and it never got that bad. You could have not saved those banks but you did. What would have happened if not, we won't know. Btw. I'm on the other hand 100% against the European bailouts for Greece as Greece is bankrupt and kept alive for no reason and a restructuring would be an easier way or them breaking away from Euro. I don't believe in any ideology or political mean, I believe that no one really knows what's right but economics is still more trial and error.

This problem had such a thing. Proponents of the idea that we should let corrections occur naturally were saying: things will go bad, but eventually will get better; whereas if you bailed people out, things will get better then go much worse than if it had simply let it fix itself naturally.

The question is always about the cost of letting it fix itself. I could also let a 8 year old kid fix himself and experience life. I actually believe that these kids will turn out with 25 kind of street wise and mature...but not all of them and I wouldn't risk it with my own kids. Same here...I would have liked to see what happens with 3-4 banks going bust and the financial system correcting itself. However, there might have been a chance, that right now I would be unemployed for over 3-4 years and having no chance of any job in next 3 years either.

America had done far too much cheating for far too long; it had to pay the price. Now the debt is not the only problem but the value of the currency.

Euro and Swiss Francs are right now stronger than the Dollar, neither Europe nor Switzerland is doing particularly good right now. Poland devalued its currency and does fine. Dollar compared to European currencies was cheaper under Clinton than now. values of currencies are overrated. And given the huge trade deficit the US got, a weak dollar is for their benefit.

I'm not an economist but I would do as I would for any private company or entity: let it be responsible for its failures. Let the smaller banks, or smarter banks, take over and buy up what is still valuable. What is the point of buying up worthless assets? The cost of these failures are now on the shoulders of every American and probably their future generations. Yet the administration of these funds are still in the hands of the same inept and corrupt people.

Well, the point is that the banking system is connected. Let's say you let Merrill Lynch, Lehman, Citi, Wachovia and WaMu go bust at the same time in the US. That's roughly 20-30% of the financial sector. Given that Morgan Stanley, Bank of America, BNY mellon, Goldman etc. and a couple smaller banks have ON dealings and exposure to those banks, about 55-60% of the US banking system would have been affected. Who's left to do anything?
Say Coca Cola goes bust tomorrow, then Atlanta will be hit hard, but Pepsi will probably step in, Red Bull too and even the distributors will just distribute something else and everything is sorted out in 10 days. That's why you can't compare it. However, Glass-Steagall, regulation of risky assets and exposure etc could have prevented much of the financial crisis as we know now.

The problem is not just the bailing out, but the policies that created the bubble and the reliance on the Fed. The reality is you can never pay the debt by printing more money - you are creating more debt as you print the money. It is akin to digging your way out of a hole.

Debt matters whenver you can't pay it back. Printing money matters when your economy can't back it up.

This is where you and I differ in our view of government in its role. It can never properly create jobs and it will never truly bring about equality. Whenever it tries to create an industry it does so too expensively and if tries to give one set of people equality in some facet it eventually ends up meaning undermining another part of that society.

I don't think that I claimed that a government can create sustainable jobs. it can only provide jobs on a short term basis but whenever you have 10% unemployment, you might try that. it can however provide the right surrounding and situation for job growth. But I guess I made clear that I don't believe in the current form of governments and nations. But just in case of the US, the US doesn't have a decent working rail system, never mind fast trains. Given the carbon emissions, a good working rail system would be strongly needed in the US for future commutes between cities with less than 500kms distance. The US, just as an example, could start working on that, or if not the US, ten private companies could realize that this would be the future and start working on a fast rail network system. By my estimation, you could create MANY jobs by a better rail network system, from engineers, to construction to entrepreneurs opening up shops at railway stations to whatever. Whoever does that would do a lot for the good of the US. That would be one example. Now whether private companies do this or the government, I frankly don't care.

I believe in the ingenuity of people and their ability to create something where something didn't exist. To work in their own interests to make the right decisions and to try to profit from those decisions. I believe in the market to provide an arena so that the best survive and those that don't die. That is best for all as it means the best allocation of resources as we have the most able people administering it.

maybe..but not as it is right now..

I am not really sure about that and I don't follow it closely enough to follow. But I'm sure Greenspan changed a lot during his tenure. He was more a Gold guy before IIRC.

the point is that Reagan and Greenspan were both huge fans of no government and free markets and their policies tried to go that way and it didn't get better.

I am simply trying to give you a clear analogy. You can't blame something on a system where its tenants are not being followed - i.e. blaming the Great Depression on Austrian Economics or blaming the housing bubble on free markets.

See above.

 

[Kaz]

Inevitably, by letting one bank die and doing nothing about the liquidity shortage, you will cause a bank run and due to interbank lending and interbank exposure you shrink the liquidity of those banks and hence their money supply, hence risk default of more banks and therefore also liquidity of industries related to banks, hence further liquidity shortage. The TARP bailouts were another issue but that was done by the government, not the Fed as far as I know and while a troubling issue, they worked to a degree and kept the banking system floating. TARP from a moral perspective was troublesome, from a policy perspective, it did what it tried to achieve. The fact that banks and bankers are greedy bastards is a given, hence my reservation to let these people have even more control and believing that in the current state markets know better.

Why give the failing banks anything? Could you not increase the money supply without giving these negligent lenders any hand?

Would also love FP's take on this.

from a political perspective I don't agree with Friedman. I believe that certain goods that no one else would be willing to provide as they cost too much, like health insurance for old and sick, disabled, communication and transport service for rural areas and such, need to be provided by someone and that someone is always the government in the end(or an NGO). I also don't believe that people as an example know what's best when it comes to their children's education and should be given full autonomy, as in most cases they don't have the time to bother, don't know what is important etc. and hence get too much control over a kid, but that's me. You may argue that the government doesn't know either, but you can't really compare the influence parents can have over a kid with that of government, if so all kids in Iran would be complete brainwashed idiots. Again, I don't trust (all) people, at least whenever I see an information asymmetry involved with people but they say they know, I don't trust them to know better. Friedman doesn't believe in imperfect markets and information asymmetry though, but those are given. But anyway, again, that's me. This again takes me to my next view that I don't trust in huge sovereigns and nations but I believe in local communities. I think the worst thing that has happened over the past 200 years is this doctrine of having big centralized nations where someone sitting somewhere decides over what should happen 500 kms away he has no clue of.
My ideal form would be a lose union of many independent city-states and regions where those city states provide people with the basic safety facilities needed and outsource a lot of issues to NGOs. No huge countries with capitals remotely away, no nothing.

I think anything and everything has a certain cost associated to it. It reminds me of the video where a kid tried to relate the cost of a human life to Ford's car manufacturing when debating with Friedman. Anyway, I also find it morally wrong to make others pay for something I may need - even if that means I'll be paying less for it. In a society akin to the 19th-early20th-century where free markets ruled far more openly, charity was at its highpoint. If people want to help, they can do so - it is almost always more efficient than socialised programs anyway.

I think you underestimate the ingenuity of people to find a way to make it cheaper. I am sure in the early 19th century if you said carriages can run without horses - i.e a car - they would have thought you mad. But guess what? It happened; as did pretty much every other worthwhile advancement and precisely because of the motive to create a profit or fix a problem. When you subsidise something you inevitably get more of it - more costs, more problems, and few (if any) solutions.

I agree with you re the local government argument. Government is best served at that level because it is far more specific and apt to the constituents it serves.

Ever since the Reagan administration the role of government on political life has lessened more and more and got more deregulated, from finance to TV. I don't really think that this was for the better of the people.

I don't think you'll find all people agreeing with that and many would argue quite the opposite.

well, I had once a better analogy but forgot it. Eitherway, the point is that there are lots of people who still believe that AIDS is a myth and doesn't really exist(anymore) or is a disease for homosexuals only. if you ask them why, their explanation is sometimes that they fuck around as they like but nothing has happened or that e.g. Magic Johnson has been living with AIDS for years now, so AIDS is overrated. Now, they might get away with this forever, or they might not. But by using the condom, you don't let the risk to find it out happen. Same here....you protected the economy from a liquidity trap and it never got that bad. You could have not saved those banks but you did. What would have happened if not, we won't know. Btw. I'm on the other hand 100% against the European bailouts for Greece as Greece is bankrupt and kept alive for no reason and a restructuring would be an easier way or them breaking away from Euro. I don't believe in any ideology or political mean, I believe that no one really knows what's right but economics is still more trial and error.

I think you're assuming too much; as your idea is predicated on the belief that the device (condom) is going to keep you safe. Opponents to the bailouts were saying that it would just make things even worse (the condom exacerbating the AIDS, or something).

The question is always about the cost of letting it fix itself. I could also let a 8 year old kid fix himself and experience life. I actually believe that these kids will turn out with 25 kind of street wise and mature...but not all of them and I wouldn't risk it with my own kids. Same here...I would have liked to see what happens with 3-4 banks going bust and the financial system correcting itself. However, there might have been a chance, that right now I would be unemployed for over 3-4 years and having no chance of any job in next 3 years either.

I think this is where our two sides oppose itself on an ideological basis. For me there is a famous Japanese analogy that is apt. They say feed someone fish and you will be feeding that person forever. Teach him to fish and he can feed himself forever.

I've only lived a bit over 2 decades on this planet and I have witnessed almost without fail it is the people who have had to endure some hardship or who have been willing to forgo gratification at the present to get it in the future that are the most successful. This is why many on my side disagree with the welfare state. Its intentions are good, but inevitably lead to worse - as Friedman uses countless examples to show. They make people dependant on the generosity of others and lead to a stagnation in terms of improvement. Simply put; the world is not fair and the quicker people stand on their own two feat the better it is for themselves. When you have active participants in a society the society itself becomes far more abundant in wealth and it makes progress far less troublesome. That is not to say that there aren't truly needy causes; but that even these are served better in a society where it is far more wealthy and charity can be delivered with true voluntariness and effectiveness.

Euro and Swiss Francs are right now stronger than the Dollar, neither Europe nor Switzerland is doing particularly good right now. Poland devalued its currency and does fine. Dollar compared to European currencies was cheaper under Clinton than now. values of currencies are overrated. And given the huge trade deficit the US got, a weak dollar is for their benefit.

But that is if the US actually created a lot. It doesn't much anymore. It is a state riddled with debt that continues to print money to pay that debt and makes it even harder to meet obligations. The printing of the money is also a tax via inflation on the people. If it was a case of either meeting debt obligations OR the currency being of low value then it would be different. Right now one is exacerbating the other.

Well, the point is that the banking system is connected. Let's say you let Merrill Lynch, Lehman, Citi, Wachovia and WaMu go bust at the same time in the US. That's roughly 20-30% of the financial sector. Given that Morgan Stanley, Bank of America, BNY mellon, Goldman etc. and a couple smaller banks have ON dealings and exposure to those banks, about 55-60% of the US banking system would have been affected. Who's left to do anything?
Say Coca Cola goes bust tomorrow, then Atlanta will be hit hard, but Pepsi will probably step in, Red Bull too and even the distributors will just distribute something else and everything is sorted out in 10 days. That's why you can't compare it. However, Glass-Steagall, regulation of risky assets and exposure etc could have prevented much of the financial crisis as we know now.

This is why there shouldn't be govt. actions intervening and coming in at the end. You are relying on the same body that created the problem to fix it. Inevitably, this system has to be rejected IMO. It is also a hugely dangerous precedent to set when you have a certain amount of industries or companies, etc, that are "too big to fail". IMO there should never be that acknowledgement. Just as a mom and pop store has to deal with balancing their books so should multi-national corporations. By bailing all these guys out you are in effect always giving them an escape route. And if you put conditions on them to pay back the people or make public some part of them, you are in effect socialising the world.

Debt matters whenver you can't pay it back. Printing money matters when your economy can't back it up.

I've touched on this in the above. But even the very act of printing money creates debt.

I don't think that I claimed that a government can create sustainable jobs. it can only provide jobs on a short term basis but whenever you have 10% unemployment, you might try that. it can however provide the right surrounding and situation for job growth. But I guess I made clear that I don't believe in the current form of governments and nations. But just in case of the US, the US doesn't have a decent working rail system, never mind fast trains. Given the carbon emissions, a good working rail system would be strongly needed in the US for future commutes between cities with less than 500kms distance. The US, just as an example, could start working on that, or if not the US, ten private companies could realize that this would be the future and start working on a fast rail network system. By my estimation, you could create MANY jobs by a better rail network system, from engineers, to construction to entrepreneurs opening up shops at railway stations to whatever. Whoever does that would do a lot for the good of the US. That would be one example. Now whether private companies do this or the government, I frankly don't care.

Again, this is where we diverge. I do care. Because when government tries to do these things it inevitably makes it cost more than it should. It has no real incentive as private companies would to keeping costs as low as possible. Maybe I should phrase that differently; it would love to keep costs down but because of its allocation of resources it is far less worried or feels far less responsible for prices. Essentially, this:

[video=youtube;5RDMdc5r5z8]http://www.youtube.com/watch?v=5RDMdc5r5z8[/video]

the point is that Reagan and Greenspan were both huge fans of no government and free markets and their policies tried to go that way and it didn't get better.

See above.

You tried to point out that their tendencies towards the free markets inevitably failed because it couldn't happen even with the efforts of these men. But the reality is it was bound to fail because they did not make real fundamental change - i.e. abolishing the fed or creating a rival currency or tying it to a commodity. When you have the Fed itself issuing money the way it does, you cannot really have a free market as the very purpose of it is to centrally plan and fund government programs.

 

[Mahdi]

Why give the failing banks anything? Could you not increase the money supply without giving these negligent lenders any hand?

I will give you an examples:

Let's say Bank X has an ON or 7 day deposit at Citi of over 10 Million Dollars, Bank Y has a 8 Million 7 day deposit at Bank X and Bank G has a 8 day deposit at Bank Y. Citi goes bust, the 10 Million Dollar of Bank X are gone. Since the 10 Million Dollar of Bank X were about 5 of Bank Y, Bank X has trouble to, and same for Bank G. Nevermind that because Citi went bust, the 60% of customers of BanK X, Y and G decided to pull all their money out of those banks. What do you have? Now make this example bigger with 1000s of daily FX, CDS, Overnights and what not transactions. And who should raise the money supply and give it to whom?

I think anything and everything has a certain cost associated to it. It reminds me of the video where a kid tried to relate the cost of a human life to Ford's car manufacturing when debating with Friedman. Anyway, I also find it morally wrong to make others pay for something I may need - even if that means I'll be paying less for it. In a society akin to the 19th-early20th-century where free markets ruled far more openly, charity was at its highpoint. If people want to help, they can do so - it is almost always more efficient than socialised programs anyway.

And I don't see anything wrong with it and I don't believe in charity for a million and one reasons.

I think you underestimate the ingenuity of people to find a way to make it cheaper. I am sure in the early 19th century if you said carriages can run without horses - i.e a car - they would have thought you mad. But guess what? It happened; as did pretty much every other worthwhile advancement and precisely because of the motive to create a profit or fix a problem. When you subsidise something you inevitably get more of it - more costs, more problems, and few (if any) solutions.

That's a different issue. The fact that technological development at some point will make lots of things redundant, is a given. But until then, I believe that a person living in a rural area with 100 people should be provided with all the necessary facilities like emergency, mail delivery, telecommunication and such stuff as everyone else at a cost level that is affordable to him. Whoever provides that, I don't care.

I don't think you'll find all people agreeing with that and many would argue quite the opposite.

Agree what? That Reagan was a supporter of big government and government control? Read Sleepwalking through history. Great book.

I've only lived a bit over 2 decades on this planet and I have witnessed almost without fail it is the people who have had to endure some hardship or who have been willing to forgo gratification at the present to get it in the future that are the most successful. This is why many on my side disagree with the welfare state. Its intentions are good, but inevitably lead to worse - as Friedman uses countless examples to show. They make people dependant on the generosity of others and lead to a stagnation in terms of improvement. Simply put; the world is not fair and the quicker people stand on their own two feat the better it is for themselves. When you have active participants in a society the society itself becomes far more abundant in wealth and it makes progress far less troublesome. That is not to say that there aren't truly needy causes; but that even these are served better in a society where it is far more wealthy and charity can be delivered with true voluntariness and effectiveness.

Sweden, Norway, Finland, Denmark, Germany...all welfare states. Don't think their people do too bad.

But that is if the US actually created a lot. It doesn't much anymore. It is a state riddled with debt that continues to print money to pay that debt and makes it even harder to meet obligations. The printing of the money is also a tax via inflation on the people. If it was a case of either meeting debt obligations OR the currency being of low value then it would be different. Right now one is exacerbating the other.

Well, it still has some industry. And inflation in the US is at a pretty low level for over 3 years now, despite a lot of money printing.

Again, this is where we diverge. I do care. Because when government tries to do these things it inevitably makes it cost more than it should. It has no real incentive as private companies would to keeping costs as low as possible. Maybe I should phrase that differently; it would love to keep costs down but because of its allocation of resources it is far less worried or feels far less responsible for prices. Essentially, this:

Not true. France and Germany have as an example some of the best railway services in the world and they are public and led by the government. UK has a private rail service. What has happened is that in order to keep costs low, the British railway system is a huge mess in punctuality, service and everything else.

You tried to point out that their tendencies towards the free markets inevitably failed because it couldn't happen even with the efforts of these men. But the reality is it was bound to fail because they did not make real fundamental change - i.e. abolishing the fed or creating a rival currency or tying it to a commodity. When you have the Fed itself issuing money the way it does, you cannot really have a free market as the very purpose of it is to centrally plan and fund government programs.

My point is that as it is now and as it was in the past, with or without a Fed, the free market with no government intervention at all usually led to the creation of oligopolies. But that was mainly because the rules were not set right. Now, I'm a fan of Hernan De Soto and believe that capitalism and free markets can only work if the legal framework is right.
With regards to the Fed, again, as said, I believe that in the future the value and importance of the Fed due to new electronic means of payment and hence new forms of payment and a breakup of the quasi-monopoly of the central bank as a payment supplier, will become even less and less and the Fed turn into a signalling station or control institution. But that's my belief based on the simple fact that more and more people are touching less and less money and payments are becoming more and more virtual.

 

[Chinaski]

It's not like if not Obama, then Pailin. I'm really hoping for a strong third-party candidate to surface before the election especially with another financial meltdown on the horizon.

Az man be to nasihat: Dont waste your time with politics and political parties. They are just there to keep up fools believing in democracy. Bush, hossein obama, palin, kooft zahre maar, they are nothings. If you still believe the american president is the most powerfull politician of the world you are still living in in lala land. All these puppets called presidents are getting fooled themselves as they belive they have the power to really change something. In reality, they just serve or better say the HAVE to serve certain much more powerfull forces who control the money, markets and the capital. These guys decide in what direction a president has to operate. Dast az paa khataa koni, hamoon balaai ro saret miaaran ke sare kennedy aavordan, ye goolle haroomet mikonan, yaa havaapeymaato mindaazan, kheyli raahatam ye badbakhtiro gir miaaran, vaasash parvande joor mikonan, hamechiro mindaazan gardanesh.

Dont expect anyone to help you or your cause only because you naively gave him your vote. Hamashoon ye pokhan, all over the world. hameye in kheyme shab baaziaaye siaasi too donyaaye gharb faghat be in dalil hanooz ejraa mishe chon hanooz mellat khaaman, hanooz daaran kheyli raahat ideeye democracy o aazadi ro be khorde melyoon haa saade loh midan faghat va faght be in dalil ke bekeshaneshoon paaye sandoghe ray o system ro democratic jelveh bedan. hamin. Hichki be tokhme chapesham nist ke manaafe to yaa mellati ro azash defaa kone. Faghat baayad chance biaari ke manaafe oonai ke ghodrate tasmim daaran, shaansaki be manaafe shakhsiye to ham bokhore vagarna vel moatali.