I have been debating my friend and this is his latest reply:
Ask an supply-side Austrian about how the Great Depression was solved
and watch them get pissed. Depression was solved by Keynsianers.
Also, You need to learn about general macroeconomics prior to
advocating one side or another. To denounce Fannie and Freddie is to
denounce liquidity. There was a problem with how they were run, not
with their existence.
Pure free market capitalism does not work, you need regulation. Let’s
just allow hedge funds to go unregulated and leverage themselves 30
times over… whoops the market takes a downturn and they’re all
fucked. Govt regulation stopped average citizens from doing the same,
but not during the Great Depression. Back then people were allowed to
have 10% margin accounts (ie they can pay $1,000 and borrow $10,000)
now its 50% (invest $1,000 and get loaned another $1,000). This is
one reason why this crisis isnt at Depression levels… b/c the
government staved off dumb people’s greed before they lost their
shirts.
Do you know what investment banks do (or did, rather say)? Look it
up, then find out why they NO LONGER DO IT (as of about a week)!
I am not going to wade much further into an elementary debate on
supply-side vs. demenad side economics. Demand side has been proven to
work, but it should not be implemented to the extreme except where
necessary. By contrast, supply side tends to harm the economy,
leading to corporate consolidation and a lack of competition (Adam
Smith: competition more important than free market principles).
Nevertheless, the one truism is that NO PHILOSOPHY IS 100% CORRECT.
We wouldn’t have a nation right now if we were Austrian free
marketers, but if we become too Keynsian (demand side) we also would
have much less investment in this nation. The key is to be flexible,
applying the proper amount of subsidy and regulation where necessary.
How would you respond to this? It does not have to be an essay. I just want to shut him down.
It’s a morass of unintelligible nonsense from him, but let him know that Keynes’ pump-priming was tried and failed miserably. Other than that, your friend knows only enough to sound impressive to the uninformed.
Pure free market capitalism has never truly existed, but the closer we are too it, the better off we have been. What we have had for the past 30 years is corporatism, where laws favor corporations as opposed to the market, not free market capitalism.
It was government regulation that made the delineation between investment and commercial banks. Perhaps some bureaucrat genius thought separating the two would make things run more smoothly?
OT, but try it with the Tactics mod. Not so easy, as it vastly improves spellcasters. He’s in my party at the moment (due to the Longer Road mod.) [:P] Time Stop + Improved Alacrity + Chain Contingency = nothing in my path remains alive, and Spell Shield + Protection from Magical Weapons = nothing can touch me.
I run across ignorant people like this all of the time.
Run away. They are too stupid to be helped, and too arrogant to learn.
Find an open mind, a rational mind, to speak to. People like this will waste all of your time, and then proudly give you a goofy grin and repeat their mindless nonsense.
Let’s see, first they “solved” our problems of overuse of credit in 1929 by calling back in the 24-hour calls loans. Then they “solved” the problem of the stock market crash by raising the interest rates significantly. These two “solutions” decreased the money supply by 1/30 of what it was prior to 1929. Prices were still at 1929 prices and had to come down . Prices always decline much slower then they go up. But then people were starting to use gold again instead and the president “solved” this problem by fining anyone carrying gold for $10,000. Then he continued to “solve” the problem of no one having any money by making a laundry list of government agencies and jobs where people could dig holes and someone come behind and fill them. How did he do this? Mortgaging the nation to the Federal Reserve that created the problem. And then money was back in the system again. And this is how we’ve been living ever since: addicted to credit.
What you overlook is that govt licensed the very criminal practice of fractional reserve banking that allowed this to occur to begin with. That’s not free market capitalism when a “financial institution” is protected from lawsuits when it prints more bank notes then it has in actual money. Instead the govt regulated how this criminal behavior was to occur.
If I put someone else’s apples in my store and a sign above them, “Take one,” you better believe people are going to take them. Likewise, when the government gives, at their discretion, the ability to take part in the gravy train of money creation through debt, then you can’t only blame the institutions that hop on. The govt at the front of the train is at fault as well.
I prefer the EQ bard approach. Throw a slow and about 7 dots at them while laying out the melee dps and when my hp gets low, mezz and restore hp song. Then throw a couple heal potions on me and back at it again. Or maybe do some kiting. That’s the long way around tho.
Is “catallactics” English? Maybe not to most, but it doesn’t stop me from using the term around others in the know. A plain translation would be: an arcane onslaught that nothing can withstand. Let me know if you need a translator for therealjjj77’s post as well. [:P]
It seems to me as though he really has no idea at all what Austrians believe. He’s apparently conflating pre-Keynesian central banking with free-market capitalism, and assuming that all free-market proponents must follow supply side economics.
