What I like most: there’s absolutely no sign that any of you are even remotely familiar with neoclassical economics. Question your dogma much?
what is your evidence? or have you deduced this apriori?
It’s probably Giles or some such trolling.
Haha!
What I like most: there’s absolutely no sign that Neoclassical is even remotely familiar with ABCT economics. Question your dogma much?
Wow that was easy!
Neo - I think this is what you are asking for:
Also, Block has a pretty good piece on rational expectations and ABCT here as well.
Vincent Bugliosi added a very important footnote to Lincoln’s observation, to wit “But you can fool MOST of the people MOST of the time.”
I just don’t get it at all. Look at this housing bubble. Did it end differently then most people thought it would? I think it fair to say that yes, they were absolutely wrong. What about the dot.com bubble? Again, most people were totally wrong. What about Bernie Madoff’s clients? How many of them thought his story would end the way it did?
Let us also remember, in any buying and selling of stocks, one guy thinks the price will go up, the other that it will go down. So 50% are always making a mistake right there.
How can you possibly assume that most people know what’s what about economics? Especially given the total brainwashing they are constantly fed [excuse the pun].
That’s one problem, the assumption that people are not stupid. Remember, by definition, half the the world has below average IQ.
The other problem is the unpredictability of the future. Who in 1491, besides a few Indians, knew there were THREE UNDISCOVERED CONTINENTS out there. Who knew the Greeks would defeat the Persians at Marathon? Who knew in 1988 that the Soviet Union was a year away from collapse? Who knew flying was possible? And on and on, constantly.
Speculators are supposed to serve as a check to depress artificially inflated prices. If we just had a completely free market except there was a federal reserve, you might be on to something. Astute investors like Peter Schiff, who are maybe armed with Austrian Economic Theory, would be able to make substantial gains in the market, transferring resources from inefficient uses to more long term productive ones.
The Greenspan puts stop those who learn from winning… in the market. The Austrians all knew that there had to be some long term investment projects that the market can’t see to completion. But we can’t short them if the government’s going to bail them out.
[edit: Thanks. You’re interesting. Please stick around and don’t be turned off by the hubris of some members. You are very welcome here]
**@Neoclassical…**Capital theory? Structure of production? Time preference? Pool of real savings? Distorted signals? You ignore the affect government intervention has on these things. Instead you ask why market participants don’t see through the distortions to prevent disaster, and make this the basis of refuting the theory.
Answers have already been provided.
You’re wrong about that. Many members of this forum are very familiar with neoclassical economics. Some of those members have participated in this thread (I do not include myself in that category as I am a mere layman).
Do you?
He’s welcome when he does some work rather than just trolling on and on.
[edit: Thanks. You’re interesting. Please stick around and don’t be turned off by the hubris of some members. You are very welcome here]
When someone comes in here with a cavalier stance, knows next to nothing about Austrian economics yet makes bold claims regarding it and acts in a manner that is suspiciously trollish, a degree of “hubris” is meritted. Perhaps he should instead hope we’re not turned off by his own attitude, that is if he’s not here to troll. This sort of strictly one-sided White Knight-ing is a nuissance; it merely feeds the ego of people engaged in puerile behaviour, and in this case it’s like you’ve jumped in this thread blindly, oblivious of the sheer amount of wilful ignorance he’s commiting himself towards. “Interesting” is an odd word for it.
Rational expectations theory leads to the conclusion that no deterministic business cycle can persist because it would consistently create arbitrage opportunities. Get that? There would be profitable opportunities that correct the market!
“I’ve always questioned whether there is such a thing, really, as a business cycle.” – Milton Friedman, echoing a quote I had from Eugene Fama earlier.
So much the worse for RE then. It seems to be a dogma of your own. It seems like you’re ignoring the fact that the signals that allow one to determine the level of productive savings are thwarted constantly. You’ve not answered what alternatives to it there are.
Behaving inconsistently with the approach and spirit of LvMI is never merited.
I agree. Sieben’s detractors are indeed feeding their egos by engaging in puerile behaviour.
IT IS the role of senior members of LvMI to be white knights. That change is what has brought about fantastic improvement in the community this year.
Well said.
No it is not their role. Their role is merely to enforce the rules of the community and that goes particularly for moderators like you. Neoclassical has been treated with considerable patience considering his habit of ignoring responses and then merely rehashing the same arguments over and over. If you’ve any further problems take them up in the moderation forum.
I just want to be loved.
Depends what your goals in interacting with them are…
Ignoring the flame/ego of a poster feeds it? Even if it increases, why do I care if I’m ignoring it anyway?
I wasn’t aware of that particular criticism of ABCT. Perhaps this is only news to me and boring to everyone else…
Once again, Smiling Dave, I am not claiming that market participants have perfect forecasting. I am simply saying that all information publicly available is eventually acted upon by self-interested persons seeking profitable opportunities, thereby correcting markets. There can be no systematic mistakes that are repeated over and over again, such as being ignorant of government interference as explained by the ABCT.
C’mon, people! The superneutrality of money! That’s all I’m saying!
Neoclassical, could you please address my post? Did you look at the Block article that was linked?
Hey,
what is your BCT?
Sieben, on the article, I strongly agree with Wagner (and not just because he is on of my favorite composers). A cycle theory that depends on the inability of people to distinguish, in the aggregate, between an increase in personal saving and an increase in central bank holdings of government debt must rightfully be dismissed on the grounds that it fails to incorporate any reasonable requirement of individual rationality in economic action. The aggregate data are widely and readily available. Austrian cycle theory is animated by a clustering of entrepreneurial error, and in the canonical statements that error would seem to reside in the inability of entrepreneurs to distinguish an increase in saving from an increase in central bank holdings of government debt.
Entrepreneurs, as all libertarians I expect to believe, are especially skilled at their specialty; hoever, Austrians believe they systematically–on a widespread level–make the same mistake, repeatedly, covering decades of time even since the ABCT was first articulated.
Let me say this differently: if there were an investment strategy that gave above-market returns, what would happen? More peoplpe would start using it. That information would then, obviously, correct the market. The same holds true for errors.
yessir! I’ve been waiting and waiting for someone to muster up enough curiosity to ask me!
Real business cycle theory is the one I entertain most.
But a statement by economist John Cochrane hits my thinking more clearly, I think most people mean by a “bubble” just, “Prices were high and I wish I sold yesterday.” The efficient markets (hypothesis) never told you that wasn’t going to happen. What efficient markets says is that prices today contain the available information about the future. Why? Because there’s competition. If you think it’s going to go up tomorrow, you can put your money where your mouth is, and your doing it sends (the price) up today. Efficient markets are not clairvoyant markets. People say, “nobody foresaw saw the market crash.” Well, that’s exactly what an efficient market is—it’s one in which nobody can tell you where it’s going to go. Efficient markets doesn’t say markets will never crash. It certainly doesn’t say markets are clairvoyant. It just says that, at that moment, there are just as many people saying its undervalued as overvalued. That certainly seems to be the case.
Ok, now you know what “efficient markets” means. What is there about recent events that would lead you to say that markets are inefficient? The market crashed, to which I would say, we had the events last September in which the President gets on television and says the financial markets are near collapse. On what planet do markets not crash after that?