What will happen to the economy if people keep doing what they are doing (which, according to you, is exactly the opposite to what they should be doing)?
my problem is i would hate to live through a second great depression.
and how does that end? world war 3?
or the collapse of the US?
I may be talking out of my a** about this, because i don't know much about the economy other than your videos, but it feels to me that it's THAT BAD.
Don't worry, as long as you have two strong livers, working for your retirement funds, everything will be just fine and dandy.
Stefan Molyneux seems to think the whole idea of statism is dying.
It's going to be ugly at first as everyone is suddenly without the state they so strongly relied on but I think once the initial shock wears off, we'll be surprised at how little we actually miss them. Perhaps, once the parasitical class is out of the way, we can start building a new society on some much more sensible ideas than "more guns! more guns! More guns!"
As a Parasite I strongly object to your views.
Read Mary J Ruwart's book Healing Our World (online verison available for free).
She tears the idea that the poor and the parasites are worse off without the state a new one.
Quote from: surhotchaperchlorome on May 02, 2010, 07:58:45 PM
Read Mary J Ruwart's book Healing Our World (online verison available for free).
She tears the idea that the poor and the parasites are worse off without the state a new one.
Allow me to reply for GumbaMasta before he gets a chance to, and we'll see how accurate my prediction is.
(Placeholder for a demotivational poster I saw featuring a photoshopped picture of the twin towers flying into a pair of large upturned 747s and the Adam Savage quote "I reject your reality and substitute my own". Will be replaced when I can find the damned thing.)
Oh, I know your game Virgil.
(http://i120.photobucket.com/albums/o196/Gumba_Masta/CatSpy.jpg)
Quote from: Gumba Masta on May 03, 2010, 01:49:32 AM
Oh, I know your game Virgil.
(http://i120.photobucket.com/albums/o196/Gumba_Masta/CatSpy.jpg)
Huh. I see your barking cat, and I'll raise you a half-naked woman.
(http://www.lessthanmotivational.com/images//2009/05/female-armor-gaming-demotivational-poster.jpg)
I see.
(http://i120.photobucket.com/albums/o196/Gumba_Masta/CityRoller.jpg)
Back on topic, please
U R doing it WRONG!
If you want us two to shut up about it you take this picture
and post it.
(https://share.ols.inode.at/FU67XAWZ26MK3P9HUDV8ZSUQMOOGKOQ1JV7G73G8)
You are welcome.
Quote from: Peacock on May 02, 2010, 06:03:16 AM
What will happen to the economy if people keep doing what they are doing (which, according to you, is exactly the opposite to what they should be doing)?
my problem is i would hate to live through a second great depression.
and how does that end? world war 3?
or the collapse of the US?
I may be talking out of my a** about this, because i don't know much about the economy other than your videos, but it feels to me that it's THAT BAD.
A great depression like scenario is possible, but not necessarily likely. If the government inflates the money supply a bit more, and then deflates it rapidly (which they may decide to do if the banks start carrying fewer reserves, or if people just get so worried about inflation that they vote in someone promising to do something about it who decides to shrink the money supply too rapidly (at least, that's how I understand it right now. I could be wrong.)). According to some people I've talked to, the banks could decide to start loaning out their money, and the fact that they're holding greater reserves than they're required to is all that's keeping us from seeing much greater levels of inflation.
However, I'm not quite as worried about the inflation itself as I am about the potential malinvestment leading to another contraction (which would probably prompt even more expansionary policy and inflation), the misdirected resources from taxation and government spending, and the national debt. As you're probably aware, government size is more easily increased rather than decreased. Once instituted, the new government programs and so forth are rarely scaled back or done away with. These programs direct production/consumption away from where it would naturally occur in the marketplace. This inflicts a deadweight loss on the economy, preventing growth in other industries. In addition, the government has less of an incentive to be efficient (not necessarily no incentive, as the voting booth does have an effect, but the strength of its influence pales in comparison to the profit motive), which has its own negative effects. They may pay their employees more than they would be paid for a similar job on the open market, or hire too many employees for a single job.
The government, when it spends money on a project such as defense, military, research into military technology, or an industry normally performed by a private entity, is essentially trying to hit a moving target whilst blindfolded. There is a minute possibility that it may hit its target, but this possibility is so small as to be almost impossible. Even if the target is hit at one point, said target is moving, and the government's inability to accurately determine where it is or where it will be means that it's almost a certainty that it will be missed. Thus, the government isn't able to effectively create as many needed jobs as the private sector, and must take jobs away from it in order to do anything. Then there's the government debt. Eventually, we must pay it back. How we pay it back, whether through taxes or printing the money, will hurt the economy somehow. We'll either suffer a great deal of deadweight loss with higher taxes, increased inflation due to an expanded money supply, or (more likely) a combination of both.
What am I trying to say in the end? We probably won't see the end of the world. So long as there is trade, there is the chance of recovery. It's going to be painful as the short run meets the long run, but it's not impossible to weather the storm.
My god, you really are brilliant. :o
There's an important aspect I think you're missing, Virgil: one of the things the Economic Stabilization Act of 2008 was to, for the first time, allow the Fed to pay interest on reserves. Effectively, that means that banks are being paid not to loan out money. And they wonder why there's a credit crunch! The result is the demise of many small businesses and any others that need credit. So the government doesn't need to deflate the money supply; with over a trillion dollars in the banks not being loaned out, that's effectively a trillion dollars sucked out of our economy.
All the more reason to have a gold standard.
Quote from: Gumba Masta on May 03, 2010, 09:08:39 PM
My god, you really are brilliant. :o
Thanks. My girlfriend thought the same thing when I met her. =P
Quote from: MrBogosity on May 04, 2010, 06:01:20 AM
There's an important aspect I think you're missing, Virgil: one of the things the Economic Stabilization Act of 2008 was to, for the first time, allow the Fed to pay interest on reserves. Effectively, that means that banks are being paid not to loan out money. And they wonder why there's a credit crunch! The result is the demise of many small businesses and any others that need credit. So the government doesn't need to deflate the money supply; with over a trillion dollars in the banks not being loaned out, that's effectively a trillion dollars sucked out of our economy.
All the more reason to have a gold standard.
Ah. I see. So, the Economic Stabilization Act of 2008 is paying banks interest on the banks' reserves, giving them an incentive to hold more money in reserve?
Couldn't this also help to counter-act some of the problems of a fractional reserve banking system, encouraging banks to be more careful with their reserves to avoid banking runs and having to get loans from other banks/the fed?
Agreed. Nixon was definitely a moron.
It's the opposite problem. It's not that credit is bad so less credit is good; there needs to be an equilibrium. They only gave the market a shove in the other direction, too low instead of too much.
Quote from: MrBogosity on May 04, 2010, 11:40:39 AM
It's the opposite problem. It's not that credit is bad so less credit is good; there needs to be an equilibrium. They only gave the market a shove in the other direction, too low instead of too much.
I understand that. I was primarily asking about it from the standpoint of the fractional reserve banking system versus full reserve. I remember from our discussions that the American free banking era had many bank failures because quite a few banks attempted to use a fractional reserve system and were thus unstable. Then, after we re-instituted a national banking system, the fractional reserve system set us up for that banking crisis in the early 1900s.
Could have something to do with the fact that I'm tired, but I was just contemplating the possibility that such a policy might help encourage banks to be more careful with their reserves so as to avoid banking runs. I agree that it's causing more problems than it might solve right now. My contemplation, I guess you could call it, would be with the idea of such a policy rather than its current version.
And just to be clear, I would most definitely prefer a free banking system over the one we have right now. Such a thing would be akin to sealing a leak in a pipe temporarily until a more permanent solution was implemented. (i.e., freeing up the banking system)
The problem is, as long as they're still creating money out of thin air, it's still a problem. It's the wrong solution to the wrong problem.
Quote from: MrBogosity on May 04, 2010, 12:42:21 PM
The problem is, as long as they're still creating money out of thin air, it's still a problem. It's the wrong solution to the wrong problem.
Good point, but what if we went onto the gold standard while maintaining our current fractional reserve banking system?
By the way, do you know if there are any models/methods for measuring black market activity in economics?
None that I'm aware of.
Quote from: Virgil0211 on May 03, 2010, 09:03:46 PM
However, I'm not quite as worried about the inflation itself as I am about the potential malinvestment leading to another contraction (which would probably prompt even more expansionary policy and inflation), the misdirected resources from taxation and government spending, and the national debt. As you're probably aware, government size is more easily increased rather than decreased. Once instituted, the new government programs and so forth are rarely scaled back or done away with. These programs direct production/consumption away from where it would naturally occur in the marketplace. This inflicts a deadweight loss on the economy, preventing growth in other industries. In addition, the government has less of an incentive to be efficient (not necessarily no incentive, as the voting booth does have an effect, but the strength of its influence pales in comparison to the profit motive), which has its own negative effects. They may pay their employees more than they would be paid for a similar job on the open market, or hire too many employees for a single job.
The government, when it spends money on a project such as defense, military, research into military technology, or an industry normally performed by a private entity, is essentially trying to hit a moving target whilst blindfolded. There is a minute possibility that it may hit its target, but this possibility is so small as to be almost impossible. Even if the target is hit at one point, said target is moving, and the government's inability to accurately determine where it is or where it will be means that it's almost a certainty that it will be missed. Thus, the government isn't able to effectively create as many needed jobs as the private sector, and must take jobs away from it in order to do anything.
Basically, what you're referring to is the economic calculation problem.
Reminds me of Mises exposing the planned economy being unable to structure production in any way resembling sanity.
Quote from: Virgil0211 on May 03, 2010, 09:03:46 PMThen there's the government debt. Eventually, we must pay it back. How we pay it back, whether through taxes or printing the money, will hurt the economy somehow. We'll either suffer a great deal of deadweight loss with higher taxes, increased inflation due to an expanded money supply, or (more likely) a combination of both.
Actually, there are 4 ways this can go down:
1. Voluntary means
2. direct taxation
3. inflation
4. repudiation (just refusing to pay the debts and canceling all of it to everyone owed).
I personally think it will come to either inflation or repudiation.
Because of this article: http://mises.org/daily/4040 ("The War on the Young" by Brain Foglia)
"Unsurprisingly, the ever-declining value of the dollar also poses a large problem for the economic prospects of American youth. Even short of the hyperinflationary monetary collapse envisioned by the likes of Peter Schiff, John Williams, and Jim Rogers, inflation will soon be a very serious problem in the United States. Consider the enormous national debt (which now amounts to over 80% of GDP), the hopelessly massive federal budget deficit, and the overwhelming level of excess reserves lurking in the banking system. (http://mises.org/daily/3933) These liabilities will ultimately be financed by either printing money or repudiating the debt. Either of these scenarios will cause political upheaval on a very large scale."
Quote from: MrBogosity on May 04, 2010, 12:51:58 PM
None that I'm aware of.
Yet ironically, my economics textbook estimates it to be about $1 trillion in 2005 (no joke).
Quote from: surhotchaperchlorome on May 04, 2010, 03:02:50 PM
Yet ironically, my economics textbook estimates it to be about $1 trillion in 2005 (no joke).
How did it arrive at that estimate?
I guess this might be a bit due to my background, but it seems to me that the black market would be an important element of any economy. The activities of the black market can influence an economy, one example being (according to a class I took a year or so back) when Florida's cocaine trade helped it weather a recession in the eighties (if I remember correctly. I'll have to double check to make sure.). As such, it seems to me that at least some aspect of economic research would be geared towards measuring this element.
Quote from: Virgil0211 on May 04, 2010, 11:54:20 PM
How did it arrive at that estimate?
I guess this might be a bit due to my background, but it seems to me that the black market would be an important element of any economy. The activities of the black market can influence an economy, one example being (according to a class I took a year or so back) when Florida's cocaine trade helped it weather a recession in the eighties (if I remember correctly. I'll have to double check to make sure.). As such, it seems to me that at least some aspect of economic research would be geared towards measuring this element.
All it says is,
"Source: Friedrich Schneider and Dominik H. Enste, "Shadow Economics: Size, Causes, and Consequences," Journal of Economic Literature, March 2000, p. 104."
How the guy estimated that, I'll never know.