Sorry guys, I am not a good defender of the Austrian school. 
The only thing you got “roasted” on, from the brief skimming I made, is accusing another person of not having “read economics” when he actually has a degree in it. I certainly suggest not making blanket statements like that in the future, for this very reason.
However, the Panic of 1907 was clearly a result of systematic fractional-reserve banking. The phrase used in place of this in the mainstream is “a shortage of money and credit”. To paraphrase Gary North, whenever you hear or see “a shortage of money and credit”, think “fractional-reserve banking”. The main reason the Federal Reserve was established was to allow the systematic fractional-reserve banking to continue without nearly as much of a threat of bank runs, which can threaten to unravel the whole thing (as they did in the Panic of 1907).
Has a degree in economics means he was told nonsense for four years day after day and stil didn’t manage to figure out it was all BS and drop out. What a sorry excuse for a brain cell-equiped primate.
You may have been beaten in this particular debate but that has less to do with what you were saying than how you were saying it. By gambling on the effectiveness of the somewhat snide “read economics”, you lost the intellectual high ground right from the start. Maybe on the off chance he hadn’t actually read any economics he would meekly defer to you, but you crapped out when he played the “degree” card. At that point it had nothing really to do with the content of the debate. He could just overawe you with links to important sounding govt bureaus and shoot down anything you said w a simple “take a _______ course, and then you’ll see what I mean,” never mind the fact that what he was actually saying is mostly Keynesian cliché bullshit (the economy needs inflation to grow, the banking system was unregulated before 1913, GDP is a meaningful figure…)
A suggestion on style: even if the guy hadn’t had a degree in it, nobody has read literally no economics (or at least would admit to it in a thread like this) so it sounds douchey, almost as bad as “read a book,” and anyway calling people out like that tends to create an adversarial tone that doesn’t usually help to change minds.
Anyway, thanks for sharing. It’s always helpful to see how these debates go. I think even though AE is growing more prominent, we have to know our stuff forward and backward if we want to be able to trump conventional wisdom in debates. If we show uncertainty about how things work then it looks like we just think what we think because we don’t understand.
I agree with what Stephen Adkins said. I’m sure it’s meant as constructive criticism, not as any kind of put-down.
Definitely constructive criticism. I applaud your maturity in being able to criticize/critique yourself publicly, and I wanted to get across that I don’t think you got “roasted” in the sense that you were ignorant of the subject you were trying to debate, but rather that if you work on some of the peripheral stuff you will be more effective in your next debate.
Ya you did alright, but you allowed the fraction reserve banking to be the standard/requirement of banking. Every counter argument he made can only be made because fractional reserve banking is cnsidered legal. At least it wasn’t a high school kid you lost to.
I’m struggling to figure out what was ‘lost’ here, besides the pointless ‘read economics’ diversion that adds nothing to the debate anyway.
We mainly because he gave up. That is the first sign of defeat.
You’re right. It’s amazing to me that a simple ego-induced phrase can destroy your credibility in the eyes of your audience.
What I see is that you let him get away with claiming that making banks have deposits is a government regulation, while as I understand it FRB is fraud that would not occur in a free market. He appears to be making the Austrian case when he says that the panic would not have occurred had the banks been made to hold reserves.
Am I wrong here?
Missed that. Ya allowing him to get away with suggesting the only reason any bank keeps reserves is because they are forced to by regulations was an error.
I don’t think fractional reserve banking is inherently against a free market. My theory is yes it’s fraud, but I don’t think everyone would see that. Though I do believe fractional reserve banks would go under without a central bank in a free market. Meaning consumers, after losing their money in frbs, would quickly choose to bank with 100% reserve banks and render frb obsolete.
I don’t think you’re wrong, but the problem with facebook debates with “econ majors” is that line of argument would seem bizarre and ridiculous to him (I’m only speculating of course). I’m impressed he knew who Rothbard was, but he only seemed to know enough to say that quoting him is dangerous. This indicates to me that he prly wouldn’t be receptive to the idea that somehow the banking system would be more stable without FDIC, or that banks could function as profitable busnesses if they had full reserve backing.
I agree you did ok. When I talk to these kinds of people, I usually try to steer the conversation towards a point of logic by asking a question.
“Why did the bankers invest so much of their money in highly risky bets like subprime mortgages, especially if they KNEW they probably wouldn’t get their money back? Why would they drop all normal lending standards and common sense?”
they will probably reply “because they were greedy.”
You say “They were always greedy. What caused them to be stupid?”
Then say "For instance, If I offered you the chance to invest in 100 different little investments and put $1 in each of them, and each investment had a 20% chance of ever paying you anything and the maximum return you would see out of each was a surplus of 50 cents, would you take that bet?
Most would say no.
Then say, “Ok, what if I offered you the same bet, then some other guy said that if the bet doesn’t pay off, I will make you whole again.”
Of course, you would be dumb not to take that bet.
Now explain all of the NUMEROUS incentives that were given by the state to make these subprime loans seem like a good idea.
In anonymous debates I’ll generally say that I “study” economics. Came across someone with a degree in econ once and I just used it to make them look foolish. At that point it makes it an actual challenge and if you know your stuff it shouldn’t be hard to whip something out on someone who’s been bred in Keynesian theory.
The Panic of 1907 was the result of fractional-reserve banking like US Steel was a free market monopoly.
No need for an ignorant copout when the certain causes of certain individuals are certainly recorded: namely, L.M. Shaw’s, secretary of the treasury in that period, injections of treasury money into the loan market.
I liked the part where US steel tried to fix prices but they failed. Good times.
Take that Elbert Gary, you dead bastard!
you shouldve told him that regulations are written by greedy bankers anyways.
how can one trust greedy politicians to protect them from greedy capitalists?
This topic of economic cycles before the Fed was brought up recently…I’d send him these links: