Ok. Good. Then $1000 dollars received from Citibank (assume citibank created the $1000 out of thin air) is also capital. Right? It is mobile. Is it not?
Mansoor
Some will, some wont. Some will take the risk.
On the flip side, if it were inflationary. I could sell an investment with a 10% return, but if we have 10% inflation all I do is break even, and get the appearance that I have gained. But in reality now that prices have adjusted, I have gained nothing.
And plenty of research has been done. I have linked at least 6 things for you to sift through and you ignore them all. What kind of research do yo u want me to look at? The ones you cherry pick? You have yet to provide a single citation to support your illogical claim.
Even if you did find something, your theory does not follow from logic. IT’s nonsensical on it’s face. It’s like me trying to prove that 1+1=3, and then finding some silly study to support my claim. But logically it’s incoherent. Statistics do not prove or disprove anything. First you must scrutinize your own theory as Wilderness has said, and it’s apparrant you have not yet done that.
It is, but it is not Capital in the sense we are referring to. You do yourself a dis-service by not at least researching the bear minimum of the Austrian method.
Factories and Money are not the same, and it’s fallacious to equate them as both being the same. Money is mobile, Factories are not easily mobile. The most vendible good(Money) is always mobile, that is the fundamental purpose of money, to be mobile and easily movable.
Please, just go out and test my theory out there with real everyday people. And tell me how it goes.
Mansoor
I have. They don’t even define what real capital is: in real practical terms like loaves of bread, bread factories and pieces of gold.
Mansoor
Exactly right, at least under my definition.filc seems to be talking about “Capital Goods” which is a related but different concept.
I don’t get your point.
Mansoor
Umm.. I think you are confused. The Austrian school is one of the only methods of thought which make a strong distinction between Money and Capital goods. Again I have provided half a dozen links, references, citations, graphs, all which include the logical argument and empirical data to support it. You have ignored all of it. Why don’t you on the flip side start backing up your silly claims?
Don’t attack me and say I havn’t provided evidence when at least a dozen articles/books/dat ect.. have already been provided for you here.
FYI When we say capital we are referring to capital goods, IE Equipment, factories, supplies..
DO you agree, or disagree that money is a more vendible good, and as such is more mobile than a factory? It sounds like you are disagreeing.
Yes I am, sorry for the confusion. I am referring to Capital Goods. But I believe I have made it very clear that I am talking about the mobility of Factories vs money.
Look. All I want to know what is capital in terms of loaves of bread, bread factory and pieces of gold.
Please. My mind is extremely simple. I cannot understand things except in very simple things like making bread, bread factory, and pieces of gold.
I get confused very easily. So please just stick with simple everyday stuff.
Mansoor
Capital goods are the machines used to create the bread. Gold is the savings/investment.
The reason why a capital theory is important is that it points out that Capital goods are not easily movable. SO in a correction where assets must be liquidated it explains why there is a bust, or a recession. The recession is the wait period for that capital be moved into new employment under productive means.
Bread Maker = Capital Good
Bread = Product
Gold = Money
If the business fails it becomes very difficult to move the Bread Maker, as opposed to simply having money.
I don’t know why you keep saying this. Your theory has been tried. It failed. Look around you, the results of your theory have created unemployment and you ask for more of it. I have posted yet again. Go back to my last post. Find it. And please respond.
I agree, it’s your theory of Animal Spirits(irrational hoarding) which has justified massive credit expansion, caused the bubbles, and subsoquently the bust.
Our Data matches up precisely.
Ok. Lets stop at the point. If I cannot build consensus then I will wait for more data points. You have NOT changed my mind and you have not convinced me.
Mansoor
After all of this my friend, the last thing I expected was to change your mind. I think you made it very clear no such thing would happen.
To add to your stack of reading materials. I keep doing the same thing (refer reading materials to you) but expect a different result (that you might read some of them). Call me crazy.
Hayek on the Paradox of Saving
Murphy on the Paradox of Saving
Murphy-Consumers Don’t Cause Recessions-Paradox of Thrift
well it was obvious you never intellectually grasped what we were saying in the first place. The only way to learn something new is to know what somebody else is actually saying instead of focused on your own insights.
Look. I was an Austrian only just six months ago. Then I was challenged by a Keynsian. All the evidence fits. History is evidence. Current situation is evidence. All around us. I therefore accepted kenys’ insights.
Mansoor
Lol, my friend. If one thing is extremely self evident, it is that you were never an Austrian. At least you had very little grasp on it’s concepts. That much is evident from this forum alone. (NO offense, seriously)
That doesn’t mean you can’t grasp any of this. I think what everyone here would want most for you is for you to actually take your time and research what your arguing, before simply just arguing.
The massive amount of repetition in your statements is making my troll-senses tingle like mad. But I’ll entertain you anyway. I’m bored.
As I said. Capital is savings, anything that you already have that you can use to achieve your goals. If you have bread, you can just eat it instead of spending the day foraging in the woods. If you have a bread factory, you can produce bread and exchange it with other people for things you want. If you have gold, you can exchange that for what you want.
As for Capital Goods, it is generally meant that Capital Goods are things that are used in the production of other things, while Consumer Goods are things that are used directly. But this illustration is not entirely accurate, as there are many situations where this line is significantly blurred: What about houses? We use houses directly in keeping us warm and safe from the elements, but also indirectly in the pursuit of other goals. Thus it’s more accurate to talk about “Higher Order Goods” and “Lower Order Goods.”
Things are not valued in and of themselves, but because they satisfy particular desires. I eat bread because I’m hungry. If I just find the bread lying around on the ground, then we can say the “Capital Structure” of this consumption is this:
Bread → Yum!
However let’s say I don’t find it on the ground, but I bake the bread using wheat, yeast, and a fire (I also just happen to find these, for the sake of example). Then the Capital Structure looks like this:
(Wheat,Yeast,Fire) → Bread → Yum!
But let’s say I don’t just find the stuff, I produce those things too. I grow the wheat in a field and use a stone tool to start the fire. Now the structure looks like this:
(Field, Tool) → (Wheat, Yeast, Fire) → Bread → Yum!
The goods along the chain which are further away from the satisfaction are goods of a higher order, while goods closer to the satisfaction are goods of a lower order. If we kept going and defining the structure, eventually we’d run into things like factories. It is important to remember that the “order” of a good is not an intrinsic property of the good itself, but rather a consequence of how the good is utilized in the structure of production.
As the capital structure lengthens (or as it is said, it becomes more protruded) the productive capacity of the structure increases and the desire at the end is fulfilled more and more efficiently. But before we can lengthen the structure, we must first acquire the goods we need as capital (savings).