I wonder how NetRunner will vote.

Canadian. So don't care.

Not so good so far. He's doing great as a celebrity but I'm not hearing about "real change".

I'd vote terrible, he's doing everything wrong regarding the economy, nothing else he does will matter if the economy gets screwed.

failing on all fronts.

>> ^randomize:
Canadian. So don't care.


That's awesome that you live in your own country and that no other countries or leaders affect you. It's like you're on the planet by yourselves. Very cool. Good for you.

>> ^burdturgler:
>> ^randomize:
Canadian. So don't care.

That's awesome that you live in your own country and that no other countries or leaders affect you. It's like you're on the planet by yourselves. Very cool. Good for you.


I'm Canadian, and I started the poll. It affects us. Google "Buy American", "NAFTA", and "Dirty Oil".

>> ^Throbbin:
>> ^burdturgler:
>> ^randomize:
Canadian. So don't care.

That's awesome that you live in your own country and that no other countries or leaders affect you. It's like you're on the planet by yourselves. Very cool. Good for you.

I'm Canadian, and I started the poll. It affects us. Google "Buy American", "NAFTA", and "Dirty Oil".


I probably misunderstood that so I apologize in advance .. but you're not defending "Canadian. So don't care." .. right?

Most 'Americans' don't care who is elected as Canadian prime minister, so why should they care who we vote in as President?

>> ^blankfist:
Most 'Americans' don't care who is elected as Canadian prime minister, so why should they care who we vote in as President?


That's a good analogy. I never thought of it that way.
Most of the world considers whoever the PM of Canada is and what his sweeping foreign policy decisions will be on the same level as the President of The United States.

I've been hammered with the wall to wall coverage of whether or not Canada will stop meddling in Iran or if they will help the protesters or why they're to blame for everything even if they'll do nothing to solve it all. I'll tell ya .. its a real relief having Canada on my northern border knowing the US doesn't have to worry about protecting this hemisphere of the Earth. Certainly there's no reason for any nation or person in the world to think that what Obama does might have more of an impact on their own shit other than the people of Canada.

I guess I could keep swinging my dick around about America or I can tell you .. we have to get out of this petty bullshit mind set and we all better care who gets elected on all sides .. and about everything they do because this isn't a fucking game. The world is on pretty shitty footing right now and it's time for people to stand up and reject apathy and "I don't care .. not my problem .. not my country" attitudes.

Until the president's name is Jesse Ventura, I don't care about any of them.

>> ^burdturgler:
we have to get out of this petty bullshit mind set

I was going to tell you the same thing. You think because we're the bullies of the world every country should stand at attention when our elections come around? The balls.

>> ^burdturgler:
>> ^Throbbin:
>> ^burdturgler:
>> ^randomize:
Canadian. So don't care.

That's awesome that you live in your own country and that no other countries or leaders affect you. It's like you're on the planet by yourselves. Very cool. Good for you.

I'm Canadian, and I started the poll. It affects us. Google "Buy American", "NAFTA", and "Dirty Oil".

I probably misunderstood that so I apologize in advance .. but you're not defending "Canadian. So don't care." .. right?


Right, I am NOT defending "Canadian. SO don't care."

>> ^blankfist:
>> ^burdturgler:
we have to get out of this petty bullshit mind set

I was going to tell you the same thing. You think because we're the bullies of the world every country should stand at attention when our elections come around? The balls.



So .. you're insulting me or agreeing with me? I think maybe something is wrong with your sangria this evening my friend.

>> ^burdturgler:
So .. you're insulting me or agreeing with me? I think maybe something is wrong with your sangria this evening my friend.


I think I'm using the third option you left out: disagreeing with you. Not everything I say is an insult, you smelly, toothless bastard. And stop thumping your chest at people in Canada who aren't interested in our elections.

Obama should make some sort of peace treaty between the nations of Blankfistopia og Burdturglistan.

Given the magnitude and challenge of the problems he has been given, I think he is doing OK. I've been elated by some initiatives and disheartened by others. I have not seen any valid political alternatives, however. I am curious about what the opposition will run as in the mid-terms.

>> ^rasch187:
Obama should make some sort of peace treaty between the nations of Blankfistopia og Burdturglistan.


The people of Burdturglistan and those of our great nation are old allies. We would never do anything to tarnish the great name of... BOOM! I just nuked that motherfucker! Hiroshima, bitch! All your base does belong to us!

He has restored American significance on the world stage.
He's killed a lot of Al Quida in Pakistan with unmanned aircraft. U.S. troops have a reasonable and timely exit strategy.
I am waiting for the education reform he campaigned with.
People are still debating about the New Deal (although, I had never heard anti-Roosevelt propaganda until the Obama/McCain election) and it's almost certain to be continued after our demise. I think he's doing fairly well in this area, although, his hands seem to be tied by the bankers. It's a hell a shit storm to have to sail through and I trust in his ability to keep us afloat.

>> ^blankfist:
I wonder how NetRunner will vote.

Pretty Good.

>> ^Deano:
Not so good so far. He's doing great as a celebrity but I'm not hearing about "real change".

What were you expecting to have happened already?

>> ^gtjwkq:
I'd vote terrible, he's doing everything wrong regarding the economy, nothing else he does will matter if the economy gets screwed.

You repeat whack-job talking points well! I'd be grading him as "Awesome" if he'd already done so much to "screw" the economy from your point of view. Tell me, are you a Friedman-style monetarist, an Austrian Business Cycle Theorist, a Neoclassicist, or just an asshole?

Mostly though, MrFisk has it just about right. I'm still waiting to see what he's able to do on several fronts. I'm shocked at the savage and vicious attitude of his opposition. I think he's doing fairly well, though I see some areas of concern (unwillingness to investigate Bush administration, willingness to continue indefinite detention, willingness to deal with crazies Republicans). Mostly though, it's a hell of a shit storm to sail through and I trust in his ability to keep us afloat.

I noticed NetRunner got that tattoo he always wanted of the arrow pointing to his mouth that reads "Obama, insert penis here." Man, that never gets old.

>> ^NetRunner:
You repeat whack-job talking points well! I'd be grading him as "Awesome" if he'd already done so much to "screw" the economy from your point of view. Tell me, are you a Friedman-style monetarist, an Austrian Business Cycle Theorist, a Neoclassicist, or just an asshole?

Austrian. Obama approved a $1 trillion stimulus package and, not only will it not work, it's bad economics, he's digging us into a deeper hole. He's been poorly counselled. The US economy will soon face a hyperinflationary recession.

I'm not saying this is Obama's fault. The coming shit storm has been building for a while. The problem is that he's doing EXACTLY what he shouldn't do in a recession: Increasing taxes and govt spending.

>> ^gtjwkq:
I'd vote terrible, he's doing everything wrong regarding the economy, nothing else he does will matter if the economy gets screwed.


"If the economy GETS Screwed"???? It's already screwed, I THINK he's trying to keep it going...

Oh, and I'm Canadian so, first off, I don't keep up on Obama like I probably should - but then I don't keep up on our PM either. I've never liked Stephen Harper, and since there may never be a PM that cares about us in the West, on this side of the plains, It doesn't much matter what we have to say. We are irrelevant as far as our government cares.

Which is why we stop caring and fade into complacency. The East has all the power and makes all the decisions and never really takes the west into account. We have a lowest amount of seats and we are to far away to make a complaint. That's the way of things.

9 awesomes? Really? 9?! That's pushing it. Both him and Bush have mortgaged our grandchildren with the stimulus bills. So, 9 awesomes?! Really?!

Even I didn't vote "terrible", because I don't think he's a terrible president or doing terribly. He's just doing not so good, IMHO. I think Obama's heart is in the right place.

Sorry, but I can't read these comments or comment myself other than saying that the Bush administration handed Obama a flaming bag of shit which he is now supposed to polish into a diamond the second he's in office.

I'm not saying he's done a good job, but frankly anyone who thinks they "know how to solve the economic crisis" is just full of shit. The economy has become so over-blown and indecipherable, there's just no one easy answer.

The internet... full of fucking "experts."

>> ^ponceleon:
...but frankly anyone who thinks they "know how to solve the economic crisis" is just full of shit. The economy has become so over-blown and indecipherable, there's just no one easy answer.

I disagree. We know the fiat currency system has lead us to this problem. The answer isn't to continue creating money out of thin air and creating hyperinflation. That only prolongs the depression.

You have to cut the government off from an endless supply of money by transitioning to a currency system that has something backing the money and thus limiting the supply. I really do think it's that simple. We'd still have unemployment and hardship as history proves depressions come and go no matter what kind of economy you have, but we'd pull out of it quickly.

>> ^Sagemind:
"If the economy GETS Screwed"???? It's already screwed, I THINK he's trying to keep it going...

Not completely, things can still get a lot worse, and most likely they will.

>> ^ponceleon:
Sorry, but I can't read these comments or comment myself other than saying that the Bush administration handed Obama a flaming bag of shit which he is now supposed to polish into a diamond the second he's in office.

Yes, Bush handed Obama a flaming bag of shit, I was feeling sorry for the guy, but Obama wants to explode that bag with a stick of dynamite.

(...)anyone who thinks they "know how to solve the economic crisis" is just full of shit. The economy has become so over-blown and indecipherable, there's just no one easy answer.

More presumptuous than someone saying they know how to fix the economy is saying that no one does. I agree that there is no easy answer.

An economy is a very complex thing, in principle it's not meant to be fixed, but more like "left alone", so it can fix itself. A real expert in economics understands that you can never be expert enough to plan an economy. What is Obama doing? That's right, planning it even more, adding more regulations, more taxes, a bigger "stimulus", printing more money, etc., he'll end up fixing the economy alright, straight into the ground.

Hayek said it best, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

How's Obama Doing So Far?
He's not McCain, so I'm happy.

>> ^blankfist:
Most 'Americans' don't care who is elected as Canadian prime minister, so why should they care who we vote in as President?

I think who I elect as mayor of my Lincoln Log village is more important that the Prime Minister of Canada.

...I sure hope he can keep the G.I. Joes from destroying the village and raping my Barbies...

Good stuff from all sides here.

I voted "Pretty good." He's not McCain, and I don't see how he would have handled the economic crisis we're in any better. Granted, that's not saying a lot. But I have a feeling that Obama is treating this better than McCain treated the 8 planes he crashed over his military career. Things are hard, and we've been saying "the end has to be in sight, the bottom has to hit, and then it's only back up from there" for a while now. But I'm still optimistic that things can get fixed soon.

In other important, direction-changing news, Al Franken was finally confirmed his senate seat today. The Democrats finally control both houses with a 2/3rds majority. Unless a democrat decides to turn coat, the threat of filibuster that has prevented the president from taking quicker action is no longer a viable tactic. One can hope that the coalition will finally (and quickly) right the damage inflicted by 30 years of Fiscal Conservative Policy, but I have my reservations. The GOP is all but resigning themselves to the loony bin, and it sure is fun watching that elephant writhe in introspective agony. Even Cantor was saying that he misses Obama reaching out to him like he did earlier in the presidency (even though they gave him nothing for his efforts... priceless)

I don't see the GOP gaining many (if any) seats in either house in 2012. Ensign should resign now if he wants to help his party at all, but he won't because he's a hypocrite and a coward, just like Sanford, and that pride will cost the party his seat (and maybe more collateral damage) when the time comes for him to have to prove to Nevada that he isn't a total fuck-up. Here in California, the only serious contender I'm hearing to challenge Boxer is Carly Fiorina (the fuck-up former CEO of California-based Hewlett-Packard. I went to a school with a lot of HP employees, not one had any kind words for her.)

So we'll have a few years at the very least to see what Obama can do for the country without the GOP being as much of an obstacle, for better or for worse. I'm pretty positive that he can do a lot of good, and that things will happen a little more quickly now that the playing field has change so drastically recently. There's still a lot for him to do for me to want to vote "awesome" in a future poll, but I'm very happy with how he's handling the crisis in Iran (hands-off is the only way to handle the hot-potato. The Iranian people have to make change on their own, but the damage done to the legitimacy of their theocracy is already permanent).

Obamarx has been voted Salesman of the Year...by the makers of ammunition and canned goods.

Whoever said he seems to have his hands tied by the bankers is entirely correct... and until he develops a conscience, or just listens to it, and shows some genuine care for the American people, they will continue to have him by the balls, and America too. But he won't. He can't. I'd like to think in his heart of hearts he'd have it some other way if he could. But he was born into this, groomed for it, and there's no turning back now. Same way it went for every other president before him. I'm observing many each day waking up to the fact that he's no different than his predecessors, so I have... hope.
But don't take my word for it - I'm a conspiracy nut, right?

Economics is voodoo. Don't pretend that anyone in the entire world has ever understood it or 'done the right thing.' Some people just get lucky.

That said, well, whatever. I hope Obama gets lucky economically. On the other hand, what he has near absolute power to control is the government's transparency and how it treats its citizens. So far I've seen a lot of reneging on the whole 'open government' and 'no domestic spying' and 'closing Guantanamo' and 'due process' things.

Peter Schiff has your economics voodoo right here!

Voting for this poll ended with the majority of users voting Pretty Good.

Peter Schiff was wrong.

Austrians are political hacks. They are to economics what intelligent design is to biology; a science built around the central preconceived notion.

Milton Friedman himself said "The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false."

As opposed to Peter Schiff, Paul Krugman really did call it on our current crisis. And he's got a Nobel prize. Before either of those things happened, he raised his own questions about the Austrian explanation for unemployment.

I think the most damning argument against ABCT is this one. My own paraphrase is this: if central banks are creating/worsening booms and busts by surprising the market, why isn't the market getting smarter about predicting its behavior? It's not like the Fed rates are done at random and in secret. They even tell us what their essential policy algorithm is.

I tend to think Brad DeLong makes a lot more sense than other economists. He doesn't seem wed to any particular school's mindset, and spends a lot of time comparing theory to data and questioning the theory when it doesn't match the observations (something I never see Austrians do).

The more I've read of the different economic theories and the unfolding conversations between the mainstream economists, the more I think they're all starting to realize their models are broken in some subtle but profound way. (Except the Austrians, who don't make falsifiable predictions, and thusly see vindication in every squiggle of the market.)

Behavioral economics seems to be the next Big Idea in economics, but I've not seen anyone try to incorporate that into their models in any meaningful way. For now I'm with direpickle and ponceleon; all economic predictions are the result of an imprecise voodoo dance, and anyone who claims certainty should be viewed with deep suspicion.

I want to support the guy, but then I remember that he thinks I'm just a stupid pot head so I figure why bother.

Yes, it's better that he's in office rather than Grampa and Jiggles.

Yes, he's trying to fix the clusterfuck economy that QM's heroes managed to thrust upon us just as they were leaving office.

Yes, most of that fixing involves money being spent making sure that rich people stay rich and that the assholes who got us into this mess are not going to suffer very much for their troubles. In fact, most of the assholes who got us into this mess are right where they were when they made the mess to begin with.

Yes, nobody will be happier to see him fail than those good old All American conservative Republicans who think we all need another terrorist attack or another great depression with food lines and homeless people living in their cars.

Do I like the guy? Yes, sort of.

Do I think he's doing a good job? Yes, mostly.

Do I think that he turned his back on me and millions of others like me for political expedience?

Yes, I do. And I'm not going to fucking forget it.

Austrians are the most honest school out of the mess that is economics, Keynesianism is the pseudo-scientific nonsense that unfortunately is predominant, it's like as if astronomy were 90% astrology. Paul Krugman is a keynesian witch doctor, I couldn't care less what is the product of his intelectual dishonesty.

The Fed is a secretive entity with govt given powers but no govt oversight, there is a bill in Congress to audit the Federal Reserve for exactly that reason: Even the govt doesn't know what the Fed does!

So your argument is that if markets are so smart, why don't they adapt to this huge entity that has a monopoly on the currency and prosper anyway? Why aren't you asking the opposite of that: If the Fed is so predictably and correctly setting interest rates, why isn't most of the market making the right long-term decisions?

Booms and busts happen naturally in a market, but they have a much smaller scale and cause minimal destruction when central banks are not involved. When a considerable portion of the market makes wrong decisions and we get huge booms and busts, you can bet your mortgage that the govt/Fed is involved, a lot of people making very wrong decisions all at once can't be just an unfortunate coincidence.

Maybe if the market could create their own currencies, we'd have parallel competing currencies, and no one would be confined to the arbitrary rules of the unwarranted and unnecessary monopoly that is the Fed. The best money would naturally be chosen by the market itself. Ever thought of that?

Central banks are not creations of the market, they are only possible because of govt. They shouldn't coexist with capitalism.

>> ^gtjwkq:
The Fed is a secretive entity with govt given powers but no govt oversight, there is a bill in Congress to audit the Federal Reserve for exactly that reason: Even the govt doesn't know what the Fed does!

Here's an area where we have some common ground. I want the Fed audited and a bit more accountable to Congressional oversight. However, the reason why the fed is so independent is to attempt to isolate it from the winds of political machinations. Making it more controlled by government is a step closer to socialism, not further away (not that I think that matters, but I'm surprised you'd be for anything slightly like that).

Setting that aside, I do think public accountability for the Fed (and the rest of government) is important, so I hope the "Audit the Fed" campaign succeeds.

So your argument is that if markets are so smart, why don't they adapt to this huge entity that has a monopoly on the currency and prosper anyway? Why aren't you asking the opposite of that: If the Fed is so predictably and correctly setting interest rates, why isn't most of the market making the right long-term decisions?

I don't assume a perfect Fed, but I definitely ask why the market isn't making the right long-term decisions. My personal answer is a corporate culture driven by short-term gains. However, I think perhaps it's less politically volatile for me to say that behavioral research indicates that human beings have trouble understanding long-term schemes, especially when there's a delay of gratification required.

As the article I linked put it, there's no particular reason to think that artificially stimulated investments have a greater tendency to be malinvestments. If the market can deal with all market-related pressures as complex as they are, certainly they can discern the reaction of a single bureaucratic institution.

Booms and busts happen naturally in a market,

True.

but they have a much smaller scale and cause minimal destruction when central banks are not involved.

False.

Maybe if the market could create their own currencies, we'd have parallel competing currencies, and no one would be confined to the arbitrary rules of the unwarranted and unnecessary monopoly that is the Fed. The best money would naturally be chosen by the market itself. Ever thought of that?

Yes! The result of actually doing that in the US, and the resultant opacity of dozens of money-issuing banks, all with their own evil agendas financial motivations for manipulating their currency is what led to the implementation of a unified national currency and (later) a central bank. The argument at the time was that interest rates fluctuated too quickly and too wildly, and it had a chilling effect on the economy. Central banking has been a stabilizing influence since.

Central banks are not creations of the market, they are only possible because of govt.

True. But this is a non-sequitor, unless you're starting from the premise that because it's created by government it is therefore an inherently bad thing.

That's political ideology talking, not economics.

[shrugs] It's politics. At least he's better than GWB. Not sure if Obama can fix our economy.

@ ^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.

>> ^gtjwkq:
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.

I'm far from alone in drinking that particular kool-aid. I wasn't around in the late 19th century, but the history of what people believed and were trying to do at the time is all I've got to go on. Austrians disagree with the majority of history books on, well, all of history. I think that's more easily explained by the theory that Austrians are prejudiced and in a deep well of their own confirmation bias than than that they're right while the rest of the world is wrong.

Personally, I'd rather not have multiple currencies no matter what. I don't even like Xbox Live points.

Linking to an article and just saying "False" makes your view of economics seem simplistic to me.

That was in response to a single clause of a single sentence where you made an entirely false assertion that there weren't crashes in America before 1913. There were. Lots of them.

I don't quite get what's so hard to understand about the idea that markets can be wrong. That's not simplicity, it's just the fact of the world. I think some economists might call it "irrational exuberance". There's also the word hubris, which was probably around before the concept of currency.

Entire schools of thought were built around mistaken or dishonest premises. There are a lot of political motivations behind false economics

Yes, I agree. Austrians put forth a politically motivated school of thought. After the Great Depression, it was proven false. Economists with intellectual integrity moved on to other theories. You'd like the Chicago school. It's just as self-deceptive, and just as politically stilted, and all you really have to change about your politics is say central banks are a necessary evil. It's still a respected school, though the Japanese Lost Decade, and our current crisis are giving it some trouble, just like the bout with inflation in the 70's gave Keynesians trouble.

It remains to be seen whether they adapt the theory to fit the evidence, as the New Keynesians have, or whether they go the way of the Austrians, and descend into strident self-deception.

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.

Yes, I do. But I mock you for thinking corrupt behavior begins and ends with government. Seems to me that if bribery affected someone's reputation enough to make them go out of business, it'd easily be good enough to ensure they lose elections.

That doesn't seem to be the case in either sector. If you think politicians are corrupt, boycott the companies who use lobbyists. Seems like a good compromise between your philosophy and mine.

Ok, austrians are crazy and Keynesians got it right, we'll agree to disagree.

I'm curious about your thinking though, what is your opinion on inflation? Where would you say it comes from, do you believe the US economy is headed towards hyperinflation?

Just swing that magic wand and say "fix the economy"

I'm not saying Keynesians are "right", I just think they're the least wrong of the current schools.

The nutshell Keynesian theory of inflation is that it's primarily about mismatches between aggregate supply and demand. Assuming they're normally in equilibrium, if you increase aggregate demand (e.g. an increase in government spending), or cut aggregate supply (e.g. the price of oil/shipping spikes, or an embargo is put in place), the general price level will increase.

As far as money supply, its main role in inflation has to do with its effect on aggregate demand (lowering interest rates makes it increase, raising it makes it decrease).

According to the econometrics, aggregate demand has fallen off a cliff, while aggregate supply has remained relatively unchanged, hence deflation. In normal times, the Fed buying up debt from private banks would cause those banks to lend out those reserves, resulting in more money in circulation. But since the banks are still refusing to lend, it isn't getting out into the general economy.

There's a concern for inflation if the Fed doesn't contract that down as we recover (and they intend to), or if we end up monetizing our debt (which the market doesn't seem to think is terribly likely right now).

That story sounds plausible to me, especially since it explains all the weirdness we're seeing in the economy right now (and through various crises in the 20th century). Unemployment is going up, prices are going down, and this is happening despite an exceptionally radical attempt to expand the money supply.

@ ^NetRunner

Interesting.

Do you think hyperinflation in the US is likely, that the dollar will lose a substantial amount of its value in the following years, like some austrians are predicting?

Oh well, I think after the US economy collapses, Obama's popularity will become irrelevant, and ppl will see him for who he is: A politician who started off with extreme popularity and did all the wrong things because he and his administration have no understanding of economics, they don't know how to correctly interpret what is happening in the real world, mostly because Keynes is full of s**t and they're full of Keynes.

Other ppl (including Obama himself) will blame everything else, of course: Bush (yes, he deserves a lot of it, but he's not in charge now), China (predatory lending? lol), Wall Street (even though govt is to blame for bailing them out), capitalism, or some absurd scapegoat only keynesians can provide a convoluted explanation for.

I don't think hyperinflation is likely. If anything, I think we're looking at a Japanese-style "Lost Decade", though there might even be an argument for us having been in one since the dot-com crash...

I guess it's a good thing I went quiet long enough to hear politically motivated talk from you again. Austrians use the same scapegoat every freaking time -- government is the root of all evil, every time.

In this case, I think Obama probably isn't being radical enough to try to fix things. I do think things like the stimulus are mitigating a bit of the pain (though the stimulus was never designed to be immediate, or to fully reverse the problems with the economy), but I don't expect the recovery to do more than begin in the next 9-12 months, hopefully sooner.

Most of the Keynesians out there right now are saying "too little" about the stimulus, and getting progressively less kind about debunking the talk of "green shoots" in the economy. Krugman himself is saying he's very concerned about us going into our own Japanese-style Lost Decade, where we are too timid about stimulus, and not focused enough with the type of stimulus.

The Keynesian take on inflation is that it's a concern, but one that we both can a) clearly see coming, and b) cut off by raising the interest rate at the Fed.

^ One major reason I think it won't be Japanese style is because Japan could actually afford their "stimulus" and other nonsense from their govt: They were, and still are, the biggest creditor nation in the world, they have huge savings and own the largest amount of assets abroad. Japanese are taught about saving and working hard while they're still in the womb.

The US, on the other hand, is screwed. They are currently the biggest debtor nation of the world, it can't afford all these trillion dollar stimulus on top of its ever increasing all time record breaking national debt.

I'd argue that stimulus are very much immediate and short-term, they are actually alleviating a deep recession that we should be experiencing right now (something a lot worse than this) at the cost of terrible long-term consequences (that are not so long-term in our case, maybe 1 or 2 years away). We're supposed to welcome the recession, so it can fix the imbalances in the economy, not postpone and aggravate it with stimulus.

They should be called depressants.

If you're talking about trade balances, yeah, the US is in big trouble there, but it's hard for me to see a way to blame government for the way private business is shifting capital overseas. I suppose you could declare that we need to bring our working conditions and pay down to the level of a 3rd world nation in order to "compete", but that seems like a big step backwards to me.

Looking at the government debt to GDP ratio of the US and Japan since 1987, I think it's tough to say they're somehow in dramatically better shape than us in terms of public debt today.

I haven't seen a full economic analysis that compares the predicted debt w/stimulus vs. predicted debt without stimulus, but it seems to me somewhat intuitive that in an economic decline, your tax revenues will fall, and your obligations will increase. That's what's really causing all the state budget issues throughout the country.

If one believes (as I do), that the stimulus will provide for both short term (people get jobs and businesses get orders as part of the gov't programs), and long term (via the infrastructure that's built) benefit, it seems strange to me that people would say it is somehow a bad idea, purely because it increases the debt by less than 10%. It's also going to raise the GDP, which offsets a bit of the debt problem. If it also sparks a recovery, it's absolutely worth the money.

Personally, I disagree with your notion that we should welcome all downturns, big and small, debt-deflation or otherwise as a joyous of creative destruction.

If you look at who made the mistakes (investment banks, mostly), and who's suffering due to the resultant credit crunch (everyone, everywhere who needs credit to buy a car, or grow their business), it doesn't seem to me that it's some sort of positive natural selection, any more than the Black Death was something people should look back upon as having fortunately cut back our "surplus" population, and made our species stronger as a result.

Austrians/libertarians/conservatives tend to think of the market as some sort of omnipotent, omniscient, unstoppable force of nature that is some sort of mortal folly to tinker with. If the market goes into a tailspin, it's because we've committed sins, and need to pay for them, and only once our souls have been through the cleansing fire will we be able to go back to our lives.

Personally, I think it's emergent behavior amongst a pack of animals who think themselves rational. It can do a lot of good, but sometimes it suffers bouts of auto-immune insanity, and there are things government can do that makes an appreciable, positive impact. It's a bit like practicing medicine; generally the body has to heal itself, but with research you can learn how to make medicines (or perform surgeries) that can limit damage, and speed recovery.

Setting working conditions and minimum wages is the art of benefiting the hired at the expense of the employers and the unemployed. Pretty soon a black market for illegal hiring will grow as businesses and people try to survive in tough times despite such ill-considered regulations. So you actually end up with 3rd world salaries that way.

Just FYI, almost 70% of America's GDP accounts for consumer spending, its not reliable as an indicator of a nation's productivity. Over the years, a lot of that spending is just people borrowing with their home equity extractions and mostly credit card debt. Now that we're in a credit crunch, GDP will probably fall (unless statisticians come up with a more hedonistic interpretation for it).

In a recession like we're having, in the private sector you need more productivity and you need to flush out the malinvestments and money wasting businesses. In the public sector, you need less govt so it can be less of a burden on the private sector.

How can that possibly happen if govt borrows/taxes/prints a stimulus into existence (adding to the burden of debt), then proceeds to use all that taxpayer money to expand govt programs and spending (more burden), bails out the inefficient businesses that should've failed otherwise (more burden) and poorly hands that money out to businesses via govt contracts instead of letting consumers make better choices with their money themselves (burden burden burden)?

Seriously, if you're counting on govt to do anything productively, you probably got the wrong person for the job. People are far better at making choices with their own money than the govt is with money that they effortlessly take from others.

Blaming mostly investment banks for this recession is like force-feeding alcohol to a bus driver and blaming him for killing all the passengers in the resulting crash. Don't you have any idea of the Fed and other federal institutions' role in causing the market distortions that led to this recession? How can you give them a free pass as the major culprits?

AFAIK, creative destruction in economics is an often misunderstood sophism that doesn't apply to what I'm advocating. If an economy is moving towards a recession, the recession is not the problem, the artificial *boom* was the problem that the market is trying to correct with a recession. It is a kind of selection, just not as brutal as you described, because its not the end of the world: people get fired, businesses go bankrupt, the assets of incompetent people are transfered to the competent people, people are hired again somewhere else and eventually the economy resumes growth.

The market is not an omnipotent unstoppable force, its complexity just eludes the narrow-mindedness of the fools that try to plan it, specially when they're the same fools that screwed it up in the first place. A market is already planned by those in it, and they have the best incentives in place to make the best plans, because they are usually the first ones to pay for their mistakes. Politicians and bureaucrats, on the other hand, are exempt from responsability and are seldom punished when they waste huge amounts of money. They are the ones who commited the worst sins.

The terrible mistake in your criticism of the market is that you constantly blame its "emergent" irrationality as an excuse for thinking on its behalf. What you correlate to auto-immunity on an otherwise healthy body I would compare to a heavily medicated pacient that undergoes daily surgeries after years of treatment for what started out as a sore throat.

>> ^gtjwkq:
Setting working conditions and minimum wages is the art of benefiting the hired at the expense of the employers and the unemployed. Pretty soon a black market for illegal hiring will grow as businesses and people try to survive in tough times despite such ill-considered regulations. So you actually end up with 3rd world salaries that way.

Minimum wage is a whole other topic, but my read of what you're saying here is that 3rd world salaries in the US are unavoidable, and we should just accept it. Suffice to say, I disagree.

Just FYI, almost 70% of America's GDP accounts for consumer spending, its not reliable as an indicator of a nation's productivity. Over the years, a lot of that spending is just people borrowing with their home equity extractions and mostly credit card debt. Now that we're in a credit crunch, GDP will probably fall (unless statisticians come up with a more hedonistic interpretation for it).
In a recession like we're having, in the private sector you need more productivity and you need to flush out the malinvestments and money wasting businesses.

I agree with this, though I'd replace the Austrian-defined "malinvestment" with just plain "bad investments." Why did the market go for an asset bubble, rather than go after investments with a real long-term prospect?

In the public sector, you need less govt so it can be less of a burden on the private sector.
How can that possibly happen if govt borrows/taxes/prints a stimulus into existence (adding to the burden of debt), then proceeds to use all that taxpayer money to expand govt programs and spending (more burden),

How does laying off schoolteachers, firefighters, police officers, closing VA hospitals, etc. Help recovery? It seems like a highly ideological statement to say that no one the government gives money to should be employed.

Being worried about the debt seems natural, but why you would say the spending itself adds burden? That seems to presuppose that money spent by government is automatically, intrinsically going to purchase nothing of value to anyone.

[It] bails out the inefficient businesses that should've failed otherwise (more burden)

For what it's worth, the left (myself included) isn't pleased about the bailouts. We're mollified slightly when the CEOs of several of these institutions is asked to resign. I'm not so worried about the auto bailouts (since they're all loans, and I suspect they'll be repaid), but the bank bailouts should involve more pain from people who aren't taxpayers.

and poorly hands that money out to businesses via govt contracts instead of letting consumers make better choices with their money themselves (burden burden burden)?

As a general proposition, I would agree with this, though we're "fortunate" in that successive rounds of conservative politicians have let our infrastructure crumble, so we have a very convenient, worthwhile target for stimulus. That's in contrast to Japan, whose stimulus mostly went towards things of little long-term economic benefit, like increasing their level of hurricane and earthquake resistance.

Blaming mostly investment banks for this recession is like force-feeding alcohol to a bus driver and blaming him for killing all the passengers in the resulting crash. Don't you have any idea of the Fed and other federal institutions' role in causing the market distortions that led to this recession? How can you give them a free pass as the major culprits?

I've seen Peter Schiff use this metaphor (and others like it) several times. It makes no sense.

You say government force-fed them alcohol, when really what it did is give them money. Why is government solely or primarily at fault for the investment bank using that money to make bad investments?

To me, this seems like trying to jail the CEO of Smith & Wesson for a murder committed with one of their guns, while holding the person pulling the trigger blameless.

It is a kind of selection, just not as brutal as you described, because its not the end of the world: people get fired, businesses go bankrupt, the assets of incompetent people are transfered to the competent people, people are hired again somewhere else and eventually the economy resumes growth.

Yes, people get fired, lose their health insurance, lose their savings (what's left of them), go even more deeply into debt, potentially lose their home...yep, nothing at all brutal in that!

The market is not an omnipotent unstoppable force, its complexity just eludes the narrow-mindedness of the fools that try to plan it, specially when they're the same fools that screwed it up in the first place. A market is already planned by those in it, and they have the best incentives in place to make the best plans, because they are usually the first ones to pay for their mistakes. Politicians and bureaucrats, on the other hand, are exempt from responsability and are seldom punished when they waste huge amounts of money. They are the ones who commited the worst sins.

Why are politicians exempt from accountability? Don't we have elections?

Which CEO of these companies is now on welfare or in jail? Seems to me, other people wind up paying for their mistakes, government bailout or no.

The terrible mistake in your criticism of the market is that you constantly blame its "emergent" irrationality as an excuse for thinking on its behalf. What you correlate to auto-immunity on an otherwise healthy body I would compare to a heavily medicated pacient that undergoes daily surgeries after years of treatment for what started out as a sore throat.

I think anyone familiar with the history of the Great Depression, and the 1920's generally would view things my way. This is why I decry Austrians with such venom -- they engage in revisionist history rather than adapt to the revelation that government isn't Satan, and that the market can indeed do the wrong thing all by itself.

I wouldn't say low salaries are completely unavoidable, there are jobs that can only offer such salaries but the long-term tendency in a free market is for better salaries to be available to those more competent and specialized, with a general increase in quality of life and purchasing power attenuating most concerns on the lower end.

Minimum wages today are calculated with goals like "sustaining a family of four" or something, but teenagers or people who live with their parents sometimes are just working for extra bucks, or they might be looking for entry level employment for the experience, to acquire a skill, etc. So the govt steps in and says NO, and that represses an entire market for lesser jobs in every sector of the economy, taking away freedom of choice both from the unemployed and the employers. In the end, it won't matter when unemployment reaches high percentages and desperation sets in.

Why did Fannie Mae and Freddy Mac (FM2) offer free credit and backed up loans made in the real estate market? Because politicians decided it should be easier for people to have houses, yay! A noble goal any politician would promise for votes.

Now here's a thing about the nature of people: They're greedy, but they're also fearful. It's a very important balance because they want stuff, but they also fear losing what they have. But FM2 stepped in and took away the fear: ZERO risk, we are federal institutions and we totally back up all your loans! So people were free to be greedy without the fear. That's the housing bubble in an austrian nutshell for you.

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.

The govt isn't just police officers and VA hospitals. How about our multi-trillion dollar warfare machine, how can any liberal think that's indispensable? What about institutions like Homeland Security, Departments of Education, Agriculture, DEA, FDA, and countless other needless resource wasting bureaucracies at the Federal level? I'm all for cutting them out first.

You say you're not pleased with the bailouts, yet you don't consider govt at fault for handing money to investment banks. Could you elaborate on this apparent contradiction?

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.

The rest of us go bankrupt or get jail time if we lose or steal money, a politician, with luck, doesn't get reelected. That's what I meant with "exempt from accountability".

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.

The privileges granted from the govt to the Fed make it a very very powerful institution, and the govt LIKES the Fed. Just keep that in mind.

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.

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.

>> ^gtjwkq:
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?".

It's not really about the usual libertarian focus on voluntary vs. authority, it's about accountability. No one in government gets their job without either being elected, or being employed by someone who was elected. If tax money is misspent, you can elect someone else.

But I also think there are plenty of people who excel at their profession because they like to be good at what they do, not because they think their ass is on the line if they screw up.

I also question whether people who're primarily motivated by bonuses given for high short-term investment returns have the right kind of incentives.

But I have no control over that at a bank.

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?

I'd say a little of both. I doubt the big asset bubble was a plan that the banks and government colluded on. I think the banks screwed up, and I think the strength of their lobbying arm made sure government gave them money with no strings attached, rather than following a more progressive path (temporarily nationalizing them FDIC-style, or folding the same volume of money into the social safety net and letting them fail, or just giving the money to single-home homeowners to bail them out, and by proxy bail out their banks).

I'm in a wait-and-see mode with the bank bailout. Government spent it all to get stock in these banks, which it will later sell. It may wind up being that the way they did it will actually bring more money in than it spent initially, like what happened with the S&L crisis.

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.

I understand the free market theory, and I actually see that kind of virtuous business cycle as being a goal I share. I just don't think it's possible to have a market that is both unregulated and beneficent to ordinary people.

I also don't think we can count on charities to take on the problems of the poor adequately, especially not in economic downturns that's tightening everyone's budget. People are too selfish to really worry about it.

You said, regarding the Fed's expansion of the money supply:

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".

Actually, unless something drastic changes, Keynesians will say "holy shit, how did we get inflation?"

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.

Supply shocks aren't really predictable, but there are ways to measure the international community's confidence in the dollar, and there aren't any warning signs at this point.

If employment comes roaring back, and GDP reverts to trend, then we'll be calling for the Fed to contract the money supply to stave off 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.

I agree with this assessment of the issues that can and do crop up. I disagree that the Fed intentionally causes periods of high inflation in order to explicitly to benefit their well-connected friends.

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.

Slurs against people like myself aside, I think you misunderstand our position. It's not that government gets a free pass, it's that a corrupt government happens because of businesses influence.

Peter Schiff has used the analogy that the crisis was like a teacher leaving kids alone with a bunch of candy, and then later comes back and finds the kids have made themselves sick. I agree with the analogy -- business is like a bunch of misbehaved kids, and the government, like the teacher, is supposed to be the responsible adult who keeps them in check. The cure isn't to fire the teacher and let the kids have the keys to the candy supply, the cure is to fire the teacher and hire a responsible one.

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

I want to end fraud, corruption, and abuse, but I don't think big business is somehow immune to it, and I don't see how telling government to generally take a hike would cure it.

I think it's a symptom of human nature itself that people are always going to be seeking advantage, fair or not, by any means necessary. I want to empower altruistic people who represent the people's interests, and aren't afraid to push back against corporate interests to make sure people are treated fairly.

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".

NERDS!

(...)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?

>> ^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.

Well, one might think it's very honorable to treat all these needs as entitlements and call them human rights, but I'm not in favor of govt being responsible for providing services to fulfill those needs. Govt will inevitably tend to do it poorly, with no incentive for efficiency and with means and inclination towards corruption, using resources they aproppriate from others and in detriment of private businesses and charities that also provide these kinds of services.

So the ends may seem noble, but if govt is the middle man, they'll miss those ends by a mile, screwing a lot of people in the process, specially those they're ultimately meant to help.

I think the best way to entitle people to things like medical care, food, education, etc. is to let them become as accessible as possible. Markets are a lot better at lowering prices and providing distribution than the public sector.

Imagine if govt was in the business of handing out cell phones to everyone, because some politician believes humans are entitled to mobile communication, imagine the mess it would be. Cell phones would cost thousands of dollars each (for the taxpayer) and service would be terrible. Taxpayers would see many billions vanish on some No Cell Phone Left Behind program and we'd have millions of people waiting to receive them in line or some kind of national lottery.

Like I said, this is really the fundamental philosophical difference between us. Personally, I think you are trying to force me to accept a false dichotomy; either help the poor and create a stagnant economy, or create a thriving economy, and hope one day the poor find a place in it.

I don't see why providing taxpayer-funded food stamps to the poor would prevent market forces from making food as cheap and available as it can.

I also think you're just fundamentally being dishonest with yourself about the capabilities of government. In many places, local government does provide subsidies for phone lines to the poor -- some of the smarter local governments negotiate a large-scale cellphone plan with one of the major carriers, and are able to provide a more useful service (cellphone vs. landline) to the beneficiaries of the program for a lower cost. I think we can both agree that the government's free cellphone plan hasn't made cellphone prices go up.

Now, if the person who winds up making the decision on the contract happens to own a big share in the company picked, or if they gave the elected official over him fat campaign donations, then I do have a problem with it. But so do the laws and oversight committees that preside over such things. I'm always open to new ways to improve transparency and accountability for how public funds get spent to minimize waste, fraud, and abuse.

But I find your claims of inescapable, entirely calamitous economic outcomes every time government collects and spends tax money to be indefensible, and more than a little silly. You need some balance in your diet of information if you think government-subsidized cellphones for a small minority of the population would drive their price from free to thousands of dollars, and their supply to contract so far as to require lotteries.

Nationalizing the entire cellphone industry and outlawing the import of foreign cellphones would probably make that happen. Problem is, that's not even remotely what we're talking about.

(...)In many places, local government does provide subsidies for phone lines to the poor(...)I think we can both agree that the government's free cellphone plan hasn't made cellphone prices go up.

That's awful. I'm sure you can figure out why I think that's a waste of money, even though it's a considerably smaller amount when a program is local as opposed to state-wide or federal.

We might not agree that prices haven't gone up as a result of them, we can agree, at least, that nationalizing the whole industry would be a terrible idea.

Cell phones did once cost thousands of dollars and their supply used to be very limited not too long ago. It's interesting how, with technology, things became more accessible, same with computers or the Internet. Through the years, it was the combination of technology and market forces that basically made it possible for cell phones to be as cheap and accessible as they are today. That would've most likely never happened if production or distribution of cell phones were the mandate of some federal agency to begin with.

Even with the aid of technology, things tend to become less accessible and quality of service worsens when govt steps into a sector of the economy. Just look at healthcare, despite all the incredible medical advances and research, so many things in healthcare cost a lot more than they used to 20-50 years ago. Market forces that would've stimulated price and quality competition this whole time were and still are repressed by excessive regulation and a system mostly clogged down by bureaucrats with noble goals and their laws.

I don't see why providing taxpayer-funded food stamps to the poor would prevent market forces from making food as cheap and available as it can.

Funny how creative critics can be when conjuring all sorts of irreparable problems arising from the free market, yet are terribly incapable of foreseeing any of those that result from govt interference.

When you grant money to poor people for food, you're not subsidizing nourishment, you're subsidizing poverty.

People who are poor and not productive enough to buy food, they get free food paid by those people who are productive enough to buy their own food and pay taxes. The money that is being given to poor people for food, is being used less productively because a) it's money that was not earned and is therefore spent less responsibly (crap food, food you don't need), b) it's money spent to satisfy a need that would otherwise encourage the poor to be more productive, c) the money acts as incentive for the poor to stay unproductive for as long as it qualifies them for free food, and d) those who are productive have less of their earned money to spend.

Productivity is our answer to the everlasting problem of survival. In life, you have to be productive (or live off of someone who is) or die. So instead of helping people be productive or allowing an environment where productivity is rewarded, the govt wants productivity to be taxed to reward those who are unproductive.

That's bad for society.

My main message I'm trying to convey is about what liberals are, and what they're really about. It's not about fighting the existence and proper functioning of a free market, it's about making free markets serve humanity instead of humanity serving markets.

I realize that your view is that there is no difference. To you, people starving in a rich society isn't a moral failing of the society, it's a failure of the individual, and richly deserved. Moreover, starvation is a net positive, as it fills you with energy to work harder, and that's really all anyone needs to succeed.

Thinking like that is bad for society.

I'd love for the argument against food stamps to be something like "instead of giving the man a fish, we should teach him to fish...", but that's not what conservatives push for. It always boils down to dehumanizing the losers in our economy.

And you really don't want to open the can of worms on health care with me. Who pays the largest share of their GDP for medical care? We do, 16% of our GDP. The second most expensive? Germany, at 11%. What are we rated on the WHO's list? 37th.

You want to blame that on government, but the truth is that all the countries with big government healthcare both pay less and get better health outcomes than we do. Our market fundamentalism has allowed the entire healthcare system to get built on perverse incentives, where neither doctors nor insurers are focused on maximizing their service to the patients.

I'd agree that those perverse incentives are indoctrinated in our laws, but that came about because of a coalition of corporatist politicians, and knee-jerk reactionary conservatives trying to fight the implementation of a welfare state.

If people were the priority instead of profits, we would've gotten "socialized" healthcare done in the Truman era, and we'd be far better off now.

I realize that your view is that there is no difference. To you, people starving in a rich society isn't a moral failing of the society, it's a failure of the individual, and richly deserved.

Who are these people starving in a rich society? You mean the society where the economy is doing so well, productivity is unhindered and savings are abundant, it's a lot easier to open up a business, many more businesses are competing for your money and offering all kinds of services and jobs, you have many more choices for education at lower prices, where money is sound and isn't constantly being devalued, and people are naturally encouraged to have savings so most of them have enough and don't mind being charitable towards the very few that, for some reason, can't provide for themselves? That society?

I'm talking about productivity and you talk about starvation. While you're busy worrying that starvation leads to loss of productivity, I'm worried about the root problem: What leads to starvation? Oh yes, lack of productivity, people not producing enough to buy food for themselves or their families.

Starvation is a terrible thing, that's why productivity is so important. Allowing and encouraging a society to produce makes a lot more sense than just granting free food for the poor. Doing that on a large scale and instituting free food as a right is detrimental to society because resources are being poorly allocated (unproductive!) and the practice discourages productivity on the long run.

If someone escapes the reach of charity and does die by starvation, I wouldn't say it's something that person deserves, we are responsible for how we live and choices we make, that is accountability and responsibility playing a role. If we always expect govt to safeguard people from the consequences of their actions, we're instituting irresponsability.

Moreover, starvation is a net positive, as it fills you with energy to work harder, and that's really all anyone needs to succeed.

Not energy, motivation.

Imagine if I could render you immortal in a way that would make you completely independent of any material needs. My guess is you'd eventually become absolutely unproductive. You wouldn't need to produce anything to sustain yourself, or produce anything for others because you wouldn't need anything from them. You wouldn't rush to live your life or basically do anything, because you'd have all the time in the world and not even the explosion of the sun billions of years from now would threaten your existence. Kind of like a Doctor Manhattan without the powers. That guy ended up getting bored with humanity and leaving the galaxy.

(...)what conservatives push for. It always boils down to dehumanizing the losers in our economy.

Your characterizations of the worlds a "conservative" and a "liberal" want are so biased, that you completely miss the end result. It's like talking to backwards logic man. An ideal "liberal" society is just short of the dehumanizing utopia that socialists want, talk about trying to help people out of their human nature.

What is the point of villifying those who seek productivity and profit, when these are the very things that provide food, shelter, healthcare, education, etc. everything a good liberal wants everybody to have?

The difference is that liberals want everybody to have stuff for free, conveniently disregarding the impractical aspect of "free" meaning "not producing anything in exchange" and "at the expense of productive people". I also want people to have their stuff while being guided by their selfish interest in profit, because that's what really leads to the most wealth being allowed to the most people.

And you really don't want to open the can of worms on health care with me. (...) If people were the priority instead of profits, we would've gotten "socialized" healthcare done in the Truman era, and we'd be far better off now.

Ah, the socialized medicine kool-aid.

Sure. I won't bother trying to convince you that we'd be worse off, but it bothers me that you think that what once made US's healthcare so great and is currently keeping it barely afloat is the *problem* and what is bogging it down and slowly choking it to death is the solution.

Well, I think you did a good job of laying out a case against a strawman socialist. Shame you didn't really have much to say to me.

I suppose there is this:

The difference is that liberals want everybody to have stuff for free, conveniently disregarding the impractical aspect of "free" meaning "not producing anything in exchange" and "at the expense of productive people". I also want people to have their stuff while being guided by their selfish interest in profit, because that's what really leads to the most wealth being allowed to the most people.

Why does doing a little of what's in the first sentence prevent what you describe in the second sentence from happening?

If we raise the tax rate for people making more than $500,000/yr by 1%, are they all going to quit trying to make more money?

With regard to food, I don't want anyone living off the state on a permanent basis either. Seems that we can solve that by putting a time limit on the benefit for people of working age (18-65), who aren't disabled. I don't really have a problem feeding orphaned kids, seniors, and the disabled indefinitely, though.

Your bias seems to be that you can't see that I'm way right of center on the spectrum between socialist and anarcho-capitalist. You seem to think calling me a socialist frees you from having to make arguments about having against what I'm actually proposing, and instead give me canned arguments against socialism, as if they apply.

I don't see why we can't have your capitalist utopia, and also have a social safety net that provides some basic security to its citizens' lives.

We've got that mix now, I just want to patch some of the holes in the net. I'd be happy to privatize Amtrak and eliminate farm subsidies in return.