What will happen to the economy?

[Peacock]

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.

[Gumba Masta]

Don't worry, as long as you have two strong livers, working for your retirement funds, everything will be just fine and dandy.

[Lord T Hawkeye]

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!"

[Gumba Masta]

As a Parasite I strongly object to your views.

[Travis Retriever]

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.

[Virgil0211]

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.)

[Gumba Masta]

Oh, I know your game Virgil.

[Virgil0211]

Oh, I know your game Virgil.

Huh. I see your barking cat, and I'll raise you a half-naked woman.

[Gumba Masta]

I see.

[Peacock]

Back on topic, please

[Gumba Masta]

U R doing it WRONG!
If you want us two to shut up about it you take this picture
and post it.


You are welcome.

[Virgil0211]

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.

[Gumba Masta]

My god, you really are brilliant.

[MrBogosity]

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.

[Virgil0211]

My god, you really are brilliant.

Thanks. My girlfriend thought the same thing when I met her. =P

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.