Try Ancient Greece.
As for booms and busts, yes, they’re possible due to fractional reserve banking (and as Stranger has pointed out due to recessions in countries that retain a central bank). Normal, however, I doubt.
how dare you suggest that market selection of fractional reserve banking is evil(sarcasm).
what do you mean by try ancient Greece?
I disagree because receiving a wage for anything is payment enough to allow individuals to receive an income that they can use in order to spend on consumer goods. For example The building of an aircraft carrier generates jobs in the same way digging a hole generates jobs. Both of these things will eventually be finished,and may not serve that much economic use after they are built,but while they are being worked on they generate jobs and allow workers to receive wages.
Okay, but where do you get the money to pay the workers? You’re either devaluing existing dollars and creating distortions that set the boom/bust cycle in motion to begin with, or you’re transferring resources from ends deemed productive and sustainable in terms of profit and loss, which is the only rational method to calculate how resources should be allocated.
The market didn’t select fractional reserve banking. In a free market, fractional reserve banks suffer bank runs and are liquidated. So, bankers lobby government for a central bank, which basically cartelizes the fraud. Of course, all that does is increase the moral hazard as the current crisis makes clear.
The market didn’t select fractional reserve banking, hence central banks.
Booms and busts have been occuring since Ancient Greece, not the 16th C.
Not at all… if there is a surplus of anything in the market, all that is required to clear that surplus is for prices to adjust. In a free market there is no such thing as involuntary unemployment - merely workers who are holding out for a better salary. In the depression, workers and factory owners were prevented, by law, from agreeing on a salary that was practical given the contraction of the money supply that had occured and thus the necessity for prices of everything (including labor) to move downwards in order to adapt to the new levels of money in the economy. So the unemployment in the great depression had nothing to do with the free market - it was caused by price controls that prevented the free market from functioning corectly (i.e. the absence of the free market).
Can you indeed? Most investment bankers being laid off today are finding that they are having to train for at least a year before they are able to find new jobs as teachers. Surely you can see that specialization in the workforce requires employees acquire a certain competence in their jobs before they can be as effective at them as other employees who are more experienced (or indeed as effective as they were in their old jobs). If tomorrow we all of a sudden needed 50,000 new civil engineers do you think that we could pick random employees from the finance and real estate sectors of the market or from the salesrooms of GM and give them these jobs?
Which would be fine in a fairy tale universe where production was not necessary and goods made themselves. This ignores the fact that all consumption must be met, 100% (without exception) by equivallent production. If 99% of the population is digging holes and filling them in again then it will be very difficult to supply 100% of the population with food, clothing and housing on the backs of the remaining 1% that are productive. Once again, the trick is not to get people employed, but to get them employed making things and doing things that other people demand - it is the meeting of supply with demand which proves to be an absolutely impossible task for the central controller. This is a job that is so complex that, to date, the only mechanism that we know of capable of performing this inspection of the minds of billions of individuals across the planet and the communication of that information to just the right people is the price system - i.e. the invisible hand of the free market.
How perfectly irrelevant.
Absolute rubbish. There is always demand at the right price - a price that both the employee and the employer are able to agree on freely, without coercion, in the absence of interfering labor laws.
You are WAY out of your depth here.
Thanks. Rothbard rocks.
I will give a view that is probably over-simplistic. “Booms” and “Busts” are inevitable in any system due to the reality that there is still over-leveraging (Boom) which eventually results in the need to de-leverage (Bust). The difference in a free-market is two-fold: the government does not mettle in the mess and compound the problems that led to the bust thus allowing the market to correct, and the peaks and valleys are shorter and less pronounced.
you can that money from tax’s or borrowing. For example prior the civil war are government collected most of its money from tarrifs and borrowing.
< In a free market there is no such thing as involuntary unemployment - merely workers who are holding out for a better salary.>
proof?
you need to do more then back up a claim with its own assertion.
and if this is a hypothetical then i can play that game too…cant I?
<Absolute rubbish. There is always demand at the right price →
proof? again you are only backing up a claim with your assertion.
furthermore the great depression shows what A LACK OF DEMAND CAN DO TO SUPPLY.I already explained this but if you are unwilling to accept simple economic facts that even pseudo economists agree upon then i do not see the point of debating you.
//Can you indeed? Most investment bankers being laid off today are finding that they are having to train for at least a year before they are able to find new jobs as teachers//
you need to cite a source when you make such a claim.
yes i can hold two jobs at once. For example i could be a janitor for a school,and work at McDonals at the same time,but only if the demand for my services exists will be able to get employed.
Furthermore these investment bankers that just got laid off may not be able to become a teacher after their training is done because the demand for these individuals might have dropped…makes perfect sense though since we are in a recession.
i am going to ask you a qeustion now.
do you know why the Great Depression was so bad,and why most of the population was unable to find work?
all manner of price controls.
do you know why the Great Depression was so bad,and why most of the population was unable to find work?
Come on every Austrian knows its because the governments and central banks prevented market from readjusting to the situation
yawn: http://mises.org/daily/2492
You’ve heard of the law of supply and demand right? If not, then I wouldn’t actually recommend starting with an elementrary text in economics. Instead, you should pick up a copy of Menger’s Principles along with a copy of Gene Callahan’s Economics for Real People.
Dude, this is really really really fundamental stuff. I shouldn’t have to “debate” this with you. Seriously, do some reading.
No, dude. Nobody needs to cite a source to back up the claim that “investment bankers need to train for at least a year before they are able to find new jobs as teachers.”
Almost every State (every state?) in the U.S. requires that in order to teach, one must first complete a superfluous “teachers’ education” program at a University. In many states (all states?) one must also work as an unpaid (you actually have to pay for the privilege) “student teacher” for one or two semesters.
These facts are so readily available, that to ask for a source belies the fact that you’re being intentionally contrarian.
Not only this but I’ve already explained it two you in two posts above… but you seem rather reluctant to try to understand any of the arguments I’ve proposed and propose any serious refutal of either the premises or the inferences.
To be honest, there’s little point in my discussing this with you. Get yourself some elementary economics texts (of which I’ve provided two excellent recommendations in my previous post). Once you understand some of the fudamentals (and even Keynes at least appeared to understand fundamentals such as supply and demand) you might be in a better position to both understand and question the assertions of others.
By the way, it’s not my assertions that you have to question (I certainly wasn’t the first person to dream up any of the above arguments) but those of people such as Mises, Hayek and Rothbard. These guys aren’t kindergarten teachers - they’re intellectual giants. I hate to use an argument to authority, since I don’t think they prove anything, but Hayek won a Nobel prize for his work in this field (arguably his work, since he almost certainly borrowed much from and cooperated with Mises on this) so if you’re going to try to seriously argue with the arguments above you’re going to have to school up a bit… indeed quite a lot. You would have to be one of the most brilliant minds the world has ever known - and your initial progress in the field shows you to be somewhat recalcitrant.
Hi HoffmanJohn,
If I may ask, may I ask what is your background? IE, did you formally study Economics? History? Poltiical Science? Other? Self taught?
VS
//No, dude. Nobody needs to cite a source to back up the claim that “investment bankers need to train for at least a year before they are able to find new jobs as teachers.”//
Actually you do need to cite a source because this is not common knowledge.
//These facts are so readily available, that to ask for a source belies the fact that you’re being intentionally contrarian.//
excuse but i am a criminal justice major and have an extensive understanding of how debate works in and out of the courtroom. Jimmy made the claim about laid off investment bankers needing to train for at least a year before they are able to find new jobs. This was the claim he made,and the only way to prove such a thing is to provide a burden of proof. Thus asking me to provide proof for his claim is completley ridicoulus. What if jimmy became a DA and made a claim that someone committed a crime,and then asked the Defense attorney to provide proof? Obviously the charges would be dropped within a few seconds.
Furthermore Jimmy never answered my qeustion as to why unemployment must happen in order for someone to change jobs,and instead he gave an example about investment bankers. IT is perfectly rational to assume that given certain varibles within the economy that an invest banker can train as a teacher while staying as an investment banker. Just in the same way that it is perfectly rational to assume that people can hold two jobs at once. Jimmy claims that uemployment is frictional,but he never explains why their must be unemployment in the first place.
what?
you never told me why the great depression was so bad.
//Come on every Austrian knows its because the governments and central banks prevented market from readjusting to the situation//
Apeal to authority,and furthermore corelation does not equal causation.