How could anyone with more than two neurons connected in their brain write this or think it makes any sense whatsoever? Whatever the CB is providing, it couldn’t possibly be capital – for one, because the CB can produce as much of it as it wants by pushing "0"s on a keyboard. One shouldn’t be able to do that with capital.
Who cares what “the economy” requires? I require Ferrari 458 Italia, Porsche GT3 RS 4.0, and a 100 ft sailing boat with an all blonde crew. Can I create a CB to provide what I require?
The problem occurs during the boom before the recession. That’s when the real capital gets destroyed. The recession is merely the messenger. Gagging him will not reverse the damage.
The “hoarded” cash is being put to whose use, exactly? The owner who just expressed his preference to “hoard” it? Are you saying Bernank has a “better” use for someone’s property than its very owner himself?
Capital = postponed consumption. You know, you catch three tuna fish a month and you decide to postpone consumption of (save) one per month so – after two months – you can survive without having to fish for a month and spend the month building a bigger + faster fishing boat so you can catch five tuna a month. Got it?
No. What happens during recessions is that the information about the previous capital destruction (during the credit-induced boom) hits Bernank’s measuring device. Basically, whatever he thought got “created” during the boom, in fact, did not get created. Quite the contrary, capital got destroyed. No further credit-expansion could possibly reverse or alleviate that fact. It could only make things worse down the road. After decades of such can kicking, I’m afraid that we’ve reached the end of the road.
You mean, killing the messenger? Who should (subjectively) value that and why? Do I have a choice about giving my “hoarded” cash to Bernank if I thought his valuation was idiotic?
What’s the net worth (assets - liabilities) of X, for X = from CB infested nations all the way down to their average citizen?
You see no problem with the following: (1) Money supply MUST grow. (2) Money can only be created into existence as DEBT. => (3) Debt must grow?
A savings glut isn’t a messenger for anything other than the fact that a lot of people have chosen to hoard cash at the same time due to adverse economic expectations.
Nevertheless, I had fun. If debating annoys people, though, I’ll stop bringing these things up.
Believe it or not, the people on this forum are ten thousand times more mature and less neurotic than on the left liberal forums. I appreciate Jargon and Z taking my points seriously and having a constructive discussion.
Well, I hope Peter Schiff vs Paul Krugman is in the near future. Would be fun to watch.
Debating doesn’t annoy most people, as long as it’s a genuine exchange (mutual intellectual honesty). You keep pretending that this isn’t the issue by mis-characterizing why people get cross with you on these forums (i.e.: that debating annoys people rather than their annoyance being a function of how you interact with them in a debate).
Might be useful to read Henry Hazzlitt’s wonderful The Failure of the New Economics alongside the General Theory In fact, I would recommend this to anyone interested in economics. It’s a chapter by chapter criticism.
Hey Mustang! Betcha missed me, I’m finally done with exams.
Wait but?..
You chose to tie yourself off there, not me. I’ll take it as a concession. We’re only going round and round because I’m dumb enough to chase you around expecting that you’ll give an straight answer. I guess that’s my own fault.
I will note to the jury that this is an implicit recognition of the internal inconsistency of Keyne’s theory as admitted by Mustang.
Thank you. Of all the economists to listen to though, why Krugman? He’s the man who openly called for Greenspan to inflate a housing bubble and then says on the news that it is some right-wing myth that the Fed created the housing bubble. Clearly he was lying in one of the two cases or he has no understanding of his own thoughts.
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So did you read that big ol’ chunk of text in there? Was my or Hayek’s explanation of Austrian Business Cycle Theory helpful?
This is an oversimplification. There is no set cycle to M&A. There are however business cycles, wherein a handful of profitable companies can find themselves unharmed after the bloodbath swimming in 5 penny dollars. I will grant you that it is likely that M&A will occur when such opportunities are present. But again, so what?
So in sum: If we can ‘get through’ the recession without prices falling, we won’t have to restructure. Oh, and our evidence kind of supports our argument.
I think that you’re missing the principle or consciously avoiding it.This is not the Austrian gripe with modelling or empirically inducted theory. Yes climate science and evolutionary biology are complicated, but that does not bar them from the methodology of natural sciences. Why? Because they are not defined by actors or actions in the human sense. Climates themselves may constantly be in flux, but the contributing factors to that flux may be understood as characteristically fixed. Carbon is carbon, helium helium, gravity gravity, etc.
The difference in economics is that none of the variables are constant in a market. Humans value things subjectively and this leads to an array as large as the human population of unique spending and savings patterns. No experiment can be made because there are no constants. One may assume that Carbon will have six protons in a week, but one may not assume that the price of chinese pork will be what it is today in a week. If I make a prediction saying that X Government Program will have N result, even if such result qualitatively becomes true there is no way to establish the causality because there were simultaneously a plethora of other factors. All conditions in constant flux. Equilibrium, or final prices, is never reached but only approached. It is approached as best the market actors can possibly do so until conditions change again (which is constantly), in which case they re-orient towards final prices. I recommend you read either Hoppe or Mises on the subject, as both have written a defense of the praxeological method and will likely explain this with greater clarity than I can.
And this isn’t even to speak of macroeconomic aggregates and yardsticks which themselves are flawed, as has been discussed.
Am I wrong or aren’t I? I could say the same thing about Keynesians. The difference is that liquidationism produced the shortest recoveries and Keynesianism/Monetarism produced the longest recoveries.
Lol, really? You’re giving me a stock chart which is supposed to show capital accumulation under FDR’s **INFLATIONARY POLICIES.**Yep I’m sure those nice red bars had nothin to do with him revaluing gold from 20$/oz to 35$/oz.
Net Investment for the Depression period was -3.1 Billion.
That won’t cut it Mustang. You can’t make that claim and leave out the year 1920, in which 12 of the 18 months of the Depression resided.
Man you really troll me good. What did I do to earn a debate partner such as yourself? This comment informs me that you STILL don’t understand opportunity cost, ABCT, or both. That “Capital Formation” is consumption, because it is ultimately doomed to be unprofitable and liquidated, and people go completely broke and unemployed. Had it not been invested, net capital accumulation would be higher at the time of the crash (in a parrallel universe). I regret having typed this post having read that comment.
