I wouldn't buy it either, for the same reason I don't buy anything of value off the street. How does anyone know his coin is real? Or not stolen? And why would anyone sell a 1100 dollar coin for 50 bucks? It's called moral hazard.

This guy is an idiot. Plus he doesn't seem to realize how creepy he is.

Most of those activities you mentioned require the use of force, so they can't be done by private citizens, because the use of force is exclusive to government. Any other activity that doesn't require the use of force shouldn't be done by government because it can be done (and will tend to be done better) by the private sector.

How exactly is force the exclusive domain of the government? What about the polluter that is forcing you to breath lower quality air? I can't do anything about that. I need a government to enforce my property rights over the air. Yes, the government employs force. It's our only recourse against the force employed by concentrated capital.


If anarchy was the end result of libertarian ideals, they would be called anarchists. Corporate oligarchies are much more likely when government regulates the economy, and gets in bed with corporations. You have to realize that any "archy" requires government, force. It can't sprout out of markets where force is not allowed.

Please explain to me the law of nature which prevents corporate oligarchy in the absence of government force. Collusion is the rational selection for a small number of powerful agents. They reap the return, prevent entry into marketplaces, and price gouge when privy to exclusive control over an inelastic market (such as healthcare). You've been reading Ludwig too much... I'd recommend reading more of his brother Richard's work. He actually contributed to knowledge.


Does that overhead in the private sector have anything to do with excessive government regulation of the healthcare insurance market? Maybe it would be less of a burden to compete in a market that is almost 60% provided by government?

Hopefully not. I'm a single-payer kinda guy. Like I stated, healthcare is an inelastic market like police, fire, and water. As such, it should be provided by the government because the status quo of a small number of profit-driven actors in the market leads to price gouging.


Government and the Fed created the moral hazards that led to what you're attributing as the cause. A lot of people acted stupidly, you're saying it's cultural, that people "got greedy", ignoring the incentives and government guarantees that led people to believe there weren't any risks.

I'm not saying people got greedy (though the few did). I'm saying the majority of people got stupid. The laws that were in place to prevent the overextension of consumer credit were withdrawn. That is, they removed government intervention in the marketplace. That allowed unfortunate people to overextend themselves to the benefit of the few. Now, before you go off on some rant about the laws governing entrance into the sub-prime housing market, remember those laws would not have been nearly as dangerous had they not also repealed restrictions on debt securitization, turned a blind eye to insurance market regulation of CDS, and loosened fraction reserve restrictions. Those three de-regulatory events had, imo, far more reaching ramifications in this crisis. They removed the counter-party risk from debt initiators, and instead incentivized predatory lending. It was not government subsidy of the sub-prime market that distorted the incentives. It was the banks writing a junk bond, and slapping a smily face on it.


Ever hear of "cutting your losses"? There's no "sell high" here, the US can't pay back its lenders, not at the rate the US government is spending and willing to spend for the next few years, and not in a recession where government is ruining productivity. China will be part of the recovery effort alright, but they'll much rather do it without the US strapped to its back.
Think about it, if China lent the US more than a trillion dollars, it's better to lose that money than lend us 2 or 3 more trillions just to watch even more money go to waste. They don't need us.

Actually, they do. If our dollar were to suddenly become worthless, they would have no currency reserves. While I agree, they have the upper hand in this, they've already seen what a collapse of consumption on our soil does to their own economic growth. Without that growth, the chinese government doesn't have a political toothpick to stand on. I think you'd be surprised with the swings in currency valuation these days just how much higher the dollar could yet climb back. Our workforce is skilled, and increasingly well educated. In any event, it doesn't make sense to sell all at once. What they'll probably do is wait until the systematic risk has stabilized, and then slowly convert their treasury notes into special drawing rights at a rate which will not drastically undermine valuation of the dollar. I agree however, they will likely discontinue purchasing the debt, forcing us into "quantitative easing" (another winner from the PR team).


The Constitution is a good reference, most things the federal government does that are not expressly authorized in the Constitution are excesses.

So the market for nuclear weapons, particularly when wielded by militiamen, shouldn't be regulated?


NetRunner, is that you? I guess you think hyperinflation is a synonym for "awesome".
If you actually studied Austrian economics and you think it's "non-mathematical" and "BS", yes, we'll have to agree to disagree. You're beyond help.

Net who? No, I'm afraid there can be more than one educated progressive. I didn't say hyperinflation... I said inflation. Between 2 and 4% inflation is a good thing. If you disagree, you are beyond help.

As for the Austrian school, yes, it's BS. It's been discredited repeatedly. The predictions don't hold water, so they say "you can't use mathematics because people are too complicated." Even the Chicago school monetarists (many of whom worked with Von Mises) know it's BS. Once you run out of room with monetary policy what should you do is the only argument left. I think the Keynesians about have that fight won now that they've shown how to explain the late seventies.


Don't worry about that. Keep rules simple, no fraud, enforce contracts, no use of force. Everything else will tend to sort itself out. Also, don't be afraid of technology.

No force, but enforce contracts. Right. You show no regard for the existence of externalities, nor the rampant exploitation of the commons by the private sector. In fact, you explicitly removed that single section from my post indicating either your ignorance of basic economics, or an intentional dodging of the topic.

It's easy not to worry about how the rules are set up so long as they are benefitting you. Once you see that not everybody is getting a fair deal, you realize the moral, and even selfish reasons for entering a broader scoped social contract. In the end, we all benefit from a well educated, healthy society. We just need to put up the VC.

>> ^bmacs27:
Well, one could argue that government of any sort is government intervention in the economy. That's why anarchists and libertarians so often get confused. Think about it. There's a market for murder. There's a market for "protection". There's a market for "waste disposal". So really, the question always boils down to 'what specific government interventions into the marketplace are you for?'

Most of those activities you mentioned require the use of force, so they can't be done by private citizens, because the use of force is exclusive to government. Any other activity that doesn't *require* the use of force shouldn't be done by government because it can be done (and will tend to be done better) by the private sector.

To me, while anarchy seems like the end result of libertarian ideals... really it's rule by corporate oligarchy, with rampant exploitation of the commons.

If anarchy was the end result of libertarian ideals, they would be called anarchists. Corporate oligarchies are much more likely when government regulates the economy, and gets in bed with corporations. You have to realize that any "archy" requires government, force. It can't sprout out of markets where force is not allowed.

How about like this: Medicare operates with 3% overhead, non-profit insurance 16% overhead, and private (for-profit) insurance 26% overhead. Source: Journal of American Medicine 2007

Does that overhead in the private sector have anything to do with excessive government regulation of the healthcare insurance market? Maybe it would be less of a burden to compete in a market that is almost 60% provided by government?

I would disagree. We are currently in a financial crisis because an unbridled, short-term incentive laden banking industry leveraged itself into oblivion. Afterwards, they put a gun to our head and handed us the tab. In other words, print the dough, or the pitchforks and torches tear the whole joint down. The only reason their hustle didn't work indefinitely is because too many of US were spending money we didn't have. Changing that is going to take a cultural shift that is already beginning.

Government and the Fed created the moral hazards that led to what you're attributing as the cause. A lot of people acted stupidly, you're saying it's cultural, that people "got greedy", ignoring the incentives and government guarantees that led people to believe there weren't any risks.

Ever hear of buy low, sell high? No, I think China is more likely to just borrow against it, and start picking up their part of the consumption. They're already pulling the world out of this recession.

Ever hear of "cutting your losses"? There's no "sell high" here, the US can't pay back its lenders, not at the rate the US government is spending and willing to spend for the next few years, and not in a recession where government is ruining productivity. China will be part of the recovery effort alright, but they'll much rather do it without the US strapped to its back.

Think about it, if China lent the US more than a trillion dollars, it's better to lose that money than lend us 2 or 3 more trillions just to watch even more money go to waste. They don't need us.

Yes. Define excessive.

The Constitution is a good reference, most things the federal government does that are not expressly authorized in the Constitution are excesses.

Spending is serious business, it's inflation you all gotta relax about. Is it worth having the "why inflation is good for the economy" argument with you? Or would you rather go back to your non-mathematical Austrian school BS, and we can just agree to disagree?

NetRunner, is that you? I guess you think hyperinflation is a synonym for "awesome".

If you actually studied Austrian economics and you think it's "non-mathematical" and "BS", yes, we'll have to agree to disagree. You're beyond help.

I agree, it's difficult to write laws without unintended consequences. That is, you can always game the rules. One should not conclude from this, however, that you shouldn't try and write rules. Instead, you should just write them faster than the douche bags can game them. You always need more rules. Every time there is an advance in technology, you need more rules. Why? Technology makes it easier to game the rules, and exploit the commons, just like it makes it easier to do everything else.

Don't worry about that. Keep rules simple, no fraud, enforce contracts, no use of force. Everything else will tend to sort itself out. Also, don't be afraid of technology.

>> ^gtjwkq:
Who are these ordinary people you think the market wouldn't benefit? People are generally required to be more productive in a free society than in a govt regulated society, so I guess you're talking about mostly unproductive and unadaptive people? Why should they be benefitted at all, specially at the expense of others?

...

NetRunner: I also don't think we can count on charities to take on the problems of the poor adequately (...) People are too selfish to really worry about it.

You: Yikes, to me that phrase sums up a whole lot of misunderstanding about the nature of charity. What is the alternative, let the govt take care of poor people? By definition, that's not charity, I mean, you're not doing charity if you must pay taxes. If you're obligated to provide charity, then it's a duty, like as if you owe money to poor people, they can demand money from you. So, morally, you're either responsible for their condition or for pulling them out of it. Doesn't that feel backwards to you? Charity only works if it's voluntary.
If you think society is obligated to help poor or unproductive people, then you have a twisted understanding of how a society should work. Talk about moral hazard.

Really, it's that second to last sentence that highlights our differences. To me, I think no one deserves to live in abject poverty. No one should starve, no one should have to live on the streets, no one should have to go without medical care, and no one should have to beg for those basic human dignities.

I phrased my comment on charities carefully since I'm well aware of the cookie-cutter response from libertarians. Curious how you ignored the fact that I said they were insufficient to the cause, and just tried to change the subject to make some point about how it has to be voluntary for it to work. That argument is a bit silly, by the way. Tax-funded food stamps provide food to people, even if you don't have the option to take food away from the recipients by "opting out".

I find it deeply troubling that there are people, such as yourself, who think it morally superior to fight to deny people such basic human rights, largely on the objection that you should have the right to choose not to care.

Are you sure you know who the bad guys really are?

Yes, absolutely certain.

(...)it's about accountability. No one in government gets their job without either being elected, or being employed by someone who was elected.

How can anything be less accountable than govt? Govt is a monopoly, businesses usually have competitors. Businesses have to earn money, govt gets money through taxes. I think your logic could work if govt were small and transparent (I'd like that to be the case). When it's formed by so many agencies and departments, operates with such volume of convoluted laws and regulations, employs so much resources and so many people, this accountability you're talking about just isn't there or is extremely sluggish, I doubt anyone truly understands what happens in every level of our govt, and there's no way any majority of voters can keep track of all this. Its one of the reasons govt expands: So it can get away with abuse through obfuscation.

If you're desillusioned about banks, I hear ya. Banks would compete a lot more for your money if govt wasn't into banking, tieing up the market with so many regulations and stifling any incentive to compete. People and banks in general would be a lot more responsible with their money, because there wouldn't be any morally backwards federal institutions promising to bail them out, they wouldn't automatically trust any bank or investor just because a govt agency says they're OK.

I just don't think it's possible to have a market that is both unregulated and beneficent to ordinary people.

I don't think it's possible to have a market that is both highly regulated and productive.

Who are these ordinary people you think the market wouldn't benefit? People are generally required to be more productive in a free society than in a govt regulated society, so I guess you're talking about mostly unproductive and unadaptive people? Why should they be benefitted at all, specially at the expense of others?

With freedom comes responsability. Our society grew accustomed to being irresponsible because of govt slowly taking away many of our freedoms. Besides, in a growing and productive economy, the general improvement in quality of life leaves whoever is left behind a lot better off than most people in a stifled underdeveloped economy.

I also don't think we can count on charities to take on the problems of the poor adequately (...) People are too selfish to really worry about it.

Yikes, to me that phrase sums up a whole lot of misunderstanding about the nature of charity. What is the alternative, let the govt take care of poor people? By definition, that's not charity, I mean, you're not doing charity if you *must* pay taxes. If you're obligated to provide charity, then it's a duty, like as if you owe money to poor people, they can *demand* money from you. So, morally, you're either responsible for their condition or for pulling them out of it. Doesn't that feel backwards to you? Charity only works if it's voluntary.

If you think society is obligated to help poor or unproductive people, then you have a twisted understanding of how a society should work. Talk about moral hazard.

I'll be writing off Keynesians as being quacks if we wind up in a situation with high unemployment and high inflation, unless we have some sort of supply shock (e.g. OPEC decides to stop selling oil to us), or we wind up scaring the world into dumping the dollar before we recover.

How nice of you, cutting the keynesians so much slack. Deep down I think you know the world will dump the dollar before we recover because keynesians miscalculated how screwed up our economy is and how screwing up the dollar won't do us any good whatsoever. To me, keynesians are quacks already because they didn't see this blatantly obvious result to their policies. Reality will just confirm this when it happens.

It's not that government gets a free pass, it's that a corrupt government happens because of businesses influence.

I TOTALLY AGREE ABOUT GOVT BEING CORRUPT DUE TO BUSINESS INFLUENCE, YAY! If govt were smaller and didn't have any stake in the economy, businesses wouldn't bother entangling themselves with govt in the first place.

It's like back in the day, when the state and the church were in bed together, all sort of things would go haywire, society would lose freedoms of expression, religion, sexuality, the state would legislate morality and persecute dissidents, etc. Today we all know better: State and church should be separated. Society has yet to realize that the *state* and the *economy* should be separated for very similar reasons as well.

I guess what I don't understand is why you would trust government with nuclear missiles, police, courts, etc. but not control of currency.

When you talk about currency, you're actually talking about govt establishing a monopoly over the currency, which is completely unnecessary and detrimental to society, that shouldn't happen to begin with. It's like you asking me why I don't trust govt dictating who I can or cannot marry.

I cringe at the entire conservative "we must make policy about maximizing business growth, period" philosophy of governance. Mine is "we must make business growth beneficial to society".

So, society is a helpless victim to businesses, and you want govt to step in and help out. Even though govts, throughout history, with tyranny, warfare and welfare, have caused much more damage in terms of property and lives than any private business ever could.

Are you sure you know who the bad guys really are?

This recession has been long in the making, but the housing bubble, in a nutshell, was caused by the moral hazards generated by federal institutions taking an interest in the real estate market and the Fed keeping artificially low interest rates for so long. Everything else you mentioned is mostly a consequence.

I hear this a lot from Austro-libertarians. If this were true, banks should never work right, either. The people making the investment choices, and choices about loans are not the people who own the banks.

I can't tell whether you're terrible at making analogies or very good at making terrible analogies.

Banks are given money *voluntarily*, that means they'll tend to receive less money if they're careless with it (reputation?). You might ask, "So why would banks be careless with money given by govt? Don't they know that govt might not give them more money if they're careless too?".

Well, just look at the bailouts. Govt gave these banks billions even after they lost copious amounts of it. Either these banks are evil geniuses or, at the risk of sounding like a conspiracy theorist, I'd say there is some collusion between govt and big investment banks, wouldn't you agree?

The most risk they have to bear is getting fired, and often they get lavish severance packages even when they are fired, and are almost immediately rehired by another bank.

I agree, your accusations about the banking sector being inefficient are very plausible. Like I said, they're in bed together, govt and banks, it's probably the most highly regulated sector of the economy. The more regulated a sector of the economy is, the higher its costs, the bigger its potential for corruption and the worse its services are going to be.

I also think government spending is best directed at things that are unlikely to turn a direct profit, but are useful for humanitarian purposes, or a general positive impact on the economy (e.g. infrastructure).

I understand where you're coming from, but I still think govt should mostly stay out of that too. Most people are led to consider profit a bad thing, when concern with profit is what's actually more humanitarian than pursuing anything with alleged "humanitarian" goals and taxpayer money. Profit is not something strictly selfish (well, actually it is, but profit is usually obtained by providing services to others, which is where the "selfless" magic behind profit lies), a growing economy eventually allows itself to have longer and longer-term goals while still being bound by a profit-seeking mentality, even if we're talking highways or space exploration.

What Bernanke believes is that the Fed should have known better and reacted by massively expanding the money supply to stave off deflation, and rescuing the failing banks.

I know. Even though he acknowledged that the Fed helped cause it, he gathered the wrong conclusion: That the Fed didn't do enough. Well, he's been putting those beliefs in action so we'll all get to see how that works out real soon.

Austrians say it will cause hyperinflation, keynesians will either say "yay, it worked!" or "hyperinflation only happened because the Fed didn't expand the money supply enough and didn't save enough failing banks".

We won't solve the Austrian-keynesian blame game over the Great Depression here, specially if you're saying Austrians caused it, so I'd like to move on.

What if we bring inflation into this discussion, because it best illustrates a basic disagreement we probably have. Keynesians embrace inflation as a tool, which is why I consider keynesianism an ideological tool of the state. The govt loves inflation and it will never openly admit to that love, or admit to using it A LOT, because people obviously don't like inflation.

Inflation can only be effectively used when the govt has a monopoly over the currency, which, to me, explains why you're so in favor of central banks and opposed to parallel currencies: So people can't flee from inflation.

Inflation produces easy money for the govt at the expense of everyone's wealth denominated in that currency. It's the ultimate stealth taxing tool: The govt/Fed just prints money and we all get poorer, and they get to give that money to those who are politically connected.

It's like an upside-down redistribution of wealth, everyone gets slowly robbed (the poor getting hit the hardest for having less resources) and usually the ones at the top get the most benefit first, specially if they're in bed with govt.

Govt, as always, gets a free pass and points its finger at capitalism, business owners, the market, banks, foreign lenders, ANYTHING and people will buy it if they're keynesian, statist or stupid enough.

The wage conversation is a bit of a tangent, but from my point of view the right answer is to expand unemployment benefits and welfare, rather than reduce the minimum wage. I might be convinced that yes, people in certain situations should be able to work for less, but I'd rather the market just adjust to knowing that projects that rely on cheaper labor can't be done here.

As for your assertion that the entire housing asset bubble was caused by Fannie and Freddie and the 1977 Community Reinvestment Act...I'm disappointed. I'd thought you were more well-read than to believe that story.

Here's the most basic, simplistic response -- if it was all Fannie and Freddie's fault (two formerly privately-owned and operated companies, BTW), why are other banks in trouble? Why is AIG in trouble?

I agree that the problem here was moral hazard, but I disagree that it was government that created that situation. It seems that the market's own mechanisms for accurately gauging risk failed utterly.

>> ^gtjwkq:
Money spent by govt is, in principle, rarely spent as wisely as money spent by people, because people work to earn and therefore value their money, they usually have to be productive to earn it (which isn't easy), while govt is just politicians and bureaucrats deciding over money they easily appropriate from productive people. I don't know how I can put this in simpler terms.

I hear this a lot from Austro-libertarians. If this were true, banks should never work right, either. The people making the investment choices, and choices about loans are not the people who own the banks. The most risk they have to bear is getting fired, and often they get lavish severance packages even when they are fired, and are almost immediately rehired by another bank.

I agree that having some skin in the game helps motivate people to be more wise with their money, but I don't think there are any people in government who're casually disinterested in how taxpayer money is spent -- on the contrary, I think they're highly interested in either spending it on altruistic things (like unemployment, healthcare, green technology incentives) or spending it on selfish things (tax cuts/subsidies for industries that donated to you, aid in skewing regulation to benefit donors). I like to vote for the former, and call for the latter to be jailed (though it seems they're all guilty of both in varying ratios).

I also think government spending is best directed at things that are unlikely to turn a direct profit, but are useful for humanitarian purposes, or a general positive impact on the economy (e.g. infrastructure).

I would like to see less military spending, but I think that will be politically difficult when there are two wars going on, and a recession. I like the way Obama/Gates have shuffled the military budget in terms of reallocating money between different military projects, but I'm annoyed that the budget did still get an increase for next year.

As for the bank bailouts, I feel like they were a necessary evil. I would rather they'd asked more in the way of concessions from the bank in return, but I do think letting them fail would have just made things worse.

When I give you money, the money is now yours, what you do with it is your own business. But when I'm the govt, and I give you money, I'm giving you money that IS NOT MINE and that I SHOULDN'T BE GIVING TO YOU (at least that's what I'm arguing, a keynesian might think differently). So there lies the root of the problem: govt is to blame for handing out free money, not what people did with it, because it's expected that people will be careless about money that is freely handed to them, as opposed to money that is earned.
People with guns don't inevitably commit murder. About the bus driver, it's expected that he'll drive poorly and crash when drunk (maybe not though if he's lucky), even though I said he was force-fed the alcohol, which is not accurate since I'm not sure investment banks were legally obligated to accept govt money, but it's easy to imagine how a bank might be strongly influenced to accept money if it has no strings attached and it's also offered to its competitors.

This, I think is a crucial part of our disagreement. Say you're a well-known investor who's made ridiculous profits through shrewdly investing in successful business. I walk up to you, give you a million dollars, no strings attached. Are you going to necessarily be reckless and wasteful with that money, simply because it was a gift? What if the money had come from some investment that simply performed better than your expectations? Does that make you unwise?

Would it make any difference how I got the money I gave you? Even if I conned it out of a bunch of nice old ladies, wouldn't you still invest it correctly? That's why I think the Austrian theory doesn't make sense, especially on this topic.

It would make sense if the government, before the economy went haywire, said "do whatever ya like, we'll absorb all your losses" -- but it didn't do that, implicitly or explicitly.

All that said, I disagree with your characterization of there being a qualitative difference between money given to companies being theirs, but that money given to government to pay taxes still somehow remains yours. It's this whole idea that government is operating as a giant racketeering organization (which seems utterly incorrect). It's like the managing corporation of a condominium. By living here, you agree to a contract with the government, and you have to abide by the obligations in the contract, like obeying the laws, and paying taxes.

Regardless of how you think government got the money to give away, I don't see why money government gives to banks somehow will automatically be frittered away, especially if they say "this is yours, no strings attached".

Even though I think Ben Bernanke is an idiot, he's smart enough to be the current chairman of the Fed and even he thinks the Fed helped cause the Great Depression. The conclusions one can take about what happened in the 20's and 30's are not as clear cut as you'd think. What is important to understand are the motivations behind those that acted and those who interpret what happened.

I think you should perhaps read that speech of his more carefully -- I find what Bernanke says about the Great Depression persuasive. He's mostly talking about how much he loves Milton Friedman, but the key paragraph is:

Friedman's emphasis on avoiding monetary disruptions arose, like many of his other ideas, from his study of U.S. monetary history. He had observed that, in many episodes, the actions of the monetary authorities, despite possibly good intentions, actively destabilized the economy. The leading case, of course, was the Great Depression, or as Friedman and Schwartz called it, the Great Contraction, in which the Fed's tightening in the late 1920s and (most importantly) its failure to prevent the bank failures of the early 1930s were a major cause of the massive decline in money, prices, and output. It is likely that Friedman's study of the Depression led him to look for means, such as his proposal for constant money growth, to ensure that the monetary machine did not get out of order. I hope, though of course I cannot be certain, that two decades of relative monetary stability have not led contemporary central bankers to forget the basic Hippocratic principle.

He doesn't go into why the Fed thought what it was doing was the right idea here, but it should sound refreshingly Austrian -- they were worried about deviating from the gold standard too much, and weren't concerned about bank failures because they figured, as you do now, that banks failing is a blessing in disguise: ownership just moves from incompetent managers to competent ones, no muss, no fuss (liquidationism, it's called these days).

What Bernanke believes is that the Fed should have known better and reacted by massively expanding the money supply to stave off deflation, and rescuing the failing banks. What it actually did was contract the monetary supply and let them fail, and that was pouring gasoline on the fire (or as one economist said of Austrian advice at the time, it was "to cry, 'Fire! Fire!' in Noah's flood.")

I don't contest that the Fed has a lot of power, and that if wielded incorrectly it can cause a lot of damage. But I think the period of time between the Great Depression and now is a testament to the stability a central bank can create. There were recessions, but no Depressions, or Panics. There's already a debate about whether Greenspan could have prevented this one, but so far that debate is leaning towards the relaxation of banking regulation being at fault, rather than a FRB monetary policy error.

I don't really think debate on the history of the Great Depression is over; Keynesians and Monetarists are still fighting about aspects of it. But Austrian economics fell out of the mainstream in the aftermath of the Great Depression, largely because their policy prescriptions were carried out, to disastrous results. Present-day Austrians don't even deny that a contractionary monetary policy in the late 20's was a bad idea, they just deny it was their idea, even though it's what people like Hayek and Schumpeter were calling for at the time, and what they're calling for now.

That's why I can be perhaps a bit over the top when trying to quash Austrians as quacks; in my opinion their policies caused both Depressions.

@ ^NetRunner

The principal sponsor of the "audit the fed" bill is Ron Paul, he wants people to see how much the Fed stinks, so he can push his agenda to abolish it. Far fetched, but his heart is in the right place.

So, again, instead of reaching the conclusion that economic intervention is bad, or that the Fed's intervention must've not been so obviously predictable or that the Fed's false guarantees (and those of other federal institutions like Fannie Mae/Freddie Mac) created moral hazards that subverted the market, you'd rather think that markets are dumb. Way to go.

Central banks are huge interventions in an economy, hell, we should be glad that markets even work despite them. Not you, no, you think markets are slow and stupid, because they can't adapt to being strangled (or, according to you, "gently caressed") by central banks.

If you say the Fed arose from the necessity to stabilize interest rates, you just bought into their alleged purpose, you're drinking the kool-aid. You're starting from the premise that because currency used to be issued by private banks, they'd always have an evil agenda and take advantage of people who used it.

Think about it: If I could print my own currency, sure, I'd be tempted to inflate it, but wouldn't that ruin my reputation? This leads people to adopt the best currency over time, the one with the best history of retaining value and high liquidity.

The Fed is no less dishonest than those banks could be, what in the nature of the Fed makes you think otherwise? With the added grievance that it has a monopoly over the entire national currency market! So, if you don't like the dollar, the govt says "f*** you, move to Canada!", using anything else is forbidden by law. Tell me, how is taking away your freedom of choice supposed to make things any better?

Think about the amount of wealth the Fed has been stealing through inflation from all of us this whole time since the gold standard was criminally dropped in the 70's, its colossal compared to whatever private banks would be able to get away with in a free currency market.

Linking to an article and just saying "False" makes your view of economics seem simplistic to me. Entire schools of thought were built around mistaken or dishonest premises. There are a lot of political motivations behind false economics (which is also one of the reasons I'm opposed to public education: Govt using taxpayer money to further its statist agenda, but I digress).

When you mock me saying I assume something created by govt is bad, it makes me wonder if you truly understand the corruptible nature of govt. It's not just ideology speaking, its very real: Govts usually have NO incentive to be productive, they tend to grow and become corrupt, as evidenced by history, which is why we should strive to have govt institutions be as small and transparent as possible.

In any case, I was pointing out that people usually assume we live in a capitalist society, even though we have these massive anti-capitalistic monsters sticking out of it. Critics of capitalism and the market selectively blame it for everything wrong in society yet fail to acknowledge how uncapitalistic our economy actually is.

What BS! Blaming the shorts is an old game... they are the only ones with the brains to take the air out of an overinflated system. Blame the bonus culture and moral hazard of CDO's, not the shorts.

>> ^NetRunner:
^ I actually agree with you on most of the actions you're recommending, if not your total rejection of "socialism" (which you seem to define as "anything that restricts businesses from doing as they please")

No, I define socialism for what it is: any government which controls over 50% of its capital. We are extremely close to that and it's a major problem. Do you understand that in a libertarian society, it is illegal to infringe on a person's rights, whether you're a company or an individual? How do you interpret my post as wanting to let companies do ANYTHING they please? Gimme a break, companies in a truly free market are forced to follow the law and compete in a fair environment or be taken to court. The enablements of inflation, subsidies, and specialized tax breaks erode that fairness. Without that, companies would have only one legitimate way to make money: to convince you to buy their product over their competitor's. And to pay its workers by outbidding its competition and getting you to agree on a price. Oh, the horror! And not even the highest paid lawyers in the world can win cases on outright false advertising and malpractice.


>> ^NetRunner:
^There is always an implied (and in your case directly stated) belief that anyone who believes in regulating markets doesn't understand economics, and I heartily disagree. If that were the case, all PhD economists would all be endorsing the Libertarian party...and yet, they've got a political spectrum that leans left of the average populace.

"Economics" is too vague. There are many different branches, the dominant philosophy changes with time. Currently, it is neo-Keynesian, but that will change after its collapse. It matters not that 90% of current economics doctorates are in this manner of thinking. The Austrians were already proven right from the FIRST great depression, do we really need another one to figure out that the Federal Reserve is the equivalent of the benevolent dictator argument?

>> ^NetRunner:
^My favorite "market regulation" is a ban on slavery. If you follow the Libertarian/market fundamentalist argument -- slavery should be legal. People should be able to sell themselves into permanent servitude, and then be resold by their owners.

I don't think that's going to fly, because no one would know if you were voluntarily doing it or somehow coerced or tricked into doing it. But fundamentally, you're right, people own their own bodies, and that means they are free to inflict themselves with drugs, kill themselves, whatever. If our technology comes to a point where the government is capable of manipulating your body into not doing something with some kind of field under the pretense of protecting you, will you allow them this ability? Or are you smart enough to realize that the power will be abused and incur ultimate costs far greater than the benefits?

>> ^NetRunner
Fraud should also be legalized -- if I'm smart enough to dupe a person or corporation out of their money, I should get to keep it.

Wrong, misrepresentation or not honoring a verbal or contractual agreement is the equivalent of theft. The transaction is not complete until both parties receive what they contractually agreed upon. If some person in Negeria tells you you won a prize and you pay them the collection fee, and they give you no prize, that is an unlawful appropriation of property and an infringement of rights. Not a freely acceptable activity under a libertarian free market, because the federal government has legitimate duties to protect people from infringements of rights and offer a means of recourse through the courts. See, this is the problem. You don't even understand the few government powers that ARE justified, you're so wrapped up in its "regulatory" extensions!

>> ^NetRunner:
^Violent intimidation should also be legalized. If my competitors think they can open a store in my neighborhood, they better be able to protect it from my guys burning it down.

Ummm, arson is destruction property you don't own. Rights derive from property, if you don't own it, you can't take or break it with impunity in a system that protects from such infringements.

>> ^NetRunnerAfter all, only a socialist would think we should interfere with the free market.

The market is millions of people making mutually agreeable transactions. The government is not the market, they're just suppose to protect people's property and settle disputes on a national and domestic level. And it isn't black and white anyway. For example, I disagree with fellow libertarians in that I want to keep the FDA for information, labelling, and enforcement of what constitutes terms like "organic" and "free range," but remove their ability to ban products. That power is currently used for collusive anti-competitive reasons. Go on wikipedia and look up Stevia for one example, the artificial sweetener lobby bribed officials to block its use in products because it was a natural, no-patent substitute to crap like "Aspartame" which would have cost them billions.

>> ^NetRunnerThose sound silly, but they're along your line of thinking. When us "socialists" talk about regulating the mortgage market, most of us are thinking that the law should require lending companies be upfront about the risks and costs involved in loans to the customer. It shouldn't be "caveat emptor" at all times, and buying a home shouldn't mean you need to hire a lawyer, just to hear the truth about what your obligations will be.


I'm not entirely sure what such a law would say, there are risks everywhere to everything. You can't slam your finger in the car door and sue the automaker for not explaining the risks of doors to you. Likewise, if you are speculating on home appreciation and taking a non-standard loan, I have ZERO sympathy for you if you didn't read the paperwork and ask questions beforehand. Many of these people lied about their incomes to get mortgages on homes they knew they couldn't afford, but thought would pay for themselves.

Ultimately, though, their only loss will be their credit and the home they couldn't afford because they can walk away and leave their bank or lender with the unpaid loan and depreciating house. That's what the government is trying to bail out with honest taxpayer money. Instead of letting the chips fall where they may, we're trying to delay a necessary recession AGAIN with inflation. Prices want to come down from these artificial levels, and have those jobs reallocate to manufacturing exports because exports are the only thing a the weak dollar is good for. Yes, that's a painful process, just like a junkie from a high, but you have to come down from it, not shoot up with more heroin until you kill the dollar.See, that's the market's automatic way of healing itself. BUT IT ISN'T BEING ALLOWED TO HAPPEN. We're getting more intervention, full of moral hazard from socialized losses and a systemic destruction of natural deterrents (why would I keep saving prudently if I lose and a speculator wins? Why would banks stop being taking risks if the government will always spare them true consequence?).

But tell me, how many politicians are going to win an election saying that pain is necessary? Zero. They're going to play to people's ignorance and gravy train optimism and propose an easy government solution. And it will be a replay of the FDR administration with Obama, but pretty effing bad under McCain as well.

And I just want to say thank god that you didn't know any myths about gold, because I'm tired of writing today, but I see jwray made up for that. *sigh*