Examining the available data, there is a strong negative correlation between the population of Louisiana and its land area. Does this demand causation, i.e., are the greater number of people in the state pushing it down into the ocean? Or does the population growth happen to coincide with geographic and natural processes? Most would find the second explanation much more reasonable.
“I find that statement quite amusing. I have never seen anyone who understands money and banking half as well as I, and after months of wrangling with Nathan, he was forced to concede that my understanding on that point did seem rather sound. I hope you’ll read through that argument rather than force me to argue on it for a few more months with you.”
Looking at nathan’s argument, you seem to not agree with him still. He did see that money is debt if you think about it from the bank’s point of view. To the bank, it’s a liability. To the person, it’s an asset. If you think of it strictly in an accounting sense, and using GAAP, one’s person debt is another person’s asset. So for me…cash is an asset, not a liability. To a bank, cash is a liability, not an asset.
If you understand banking so well, I suggest running for chairman of the fed.
"
Yeah, and see? You don’t seem to have a clue as to the makings of money either. Maybe you should look at this video series. It seems to have helped Nathan come around. Don’t take the conclusions too seriously, but the primary foundations of the case was impetus for me to think some 25 years ago.
http://www.youtube.com/watch?v=cy-fD78zyvI"
So you can’t answer my qusetion on the accounting books? So you dodge the question and simply point out to the video…which you have disagreed with in the first place.
"Allowing that minimum wage is not harmful is far from saying that you want it increased. According to the survey almost half of economists said that they wanted it increased, but they will only say so in anonymity. For every 10 articles on minimum wage, you should find at least 3 calling for an increase. Why is this not so??? Because the old guard has an emotional attachment to their education that they cannot overcome, and vilify anyone who moves against it. "
No, not every 10 articles…you should find 3. It’s like saying that for every 6 dice rolls, I should get a 6. That is certainly not true. Also, your only argument that I truly see from denying these studies is simply that it is “established.” That doesn’t prove anything that the studies are wrong. Also, I could say the same about your arguments. You have an emotional attachment to your idea that minimum wage is helpful. And you “villify” anyone who tries to deny you of such a statement. Also, I made the claim that Stiglitz ADVOCATED minimum wage increasing. What, you want me to find you two more economists?
Here, I got a better one. An entire organization supporting the increase of the minimum wage. The economic policies institute. You may have heard of the EPI? They support minimum wage..and work with washington. I mean, those politicans that want to increase minimum wage are listening to some economist. Or maybe their support of minimum wage is based upon “emotional” standpoints…that their concern is of helping the poor.
“So 37% of economists are activist economists??? Gee, I didn’t think that the field was such a radical group!”
Radical? I never even implied activists are “radical.” That is a silly assertion. Also, I didn’t say that either. I believed what you meant are those who actively promote an increase to minimum wage. 37% of economists do. I think you are out-right denying this statement. That you don’t find it true..and saying that in a long drawn-out way.
It’s not jus semantics. By using the word “floor” you are suggesting a support level for low-income individuals. In reality, minimum wage law creates a cut-off line . . . more of a hurdle that a would-be laborer would have to clear in order to start earning wages legally. As you agree, most people eventually move beyond their first, lowest paying jobs. Having a first job helps securing future more advanced and higher paying jobs. Minimum wage laws, by outlawing all jobs below a certain paying threshold, in effect makes less entry-level jobs available. It’s not a support level, but a cut-off line. That’s why the word “floor,” especially in the way you were using it, was imapproriate.
As opposed to the current statistic of: 6% recently jobless and still eligible for government unemployment benefits; 12% jobless for so long that they no longer qualify; 35% having fake jobs that essentially entail paper pushing for the federal government, and another 8-12% doing the paper pushing for the state and local government. Of the reaming 40% or so of employment age adult population who do not want to be stay-home moms, those who have private sector jobs, nearly half engage in selling each other houses and loan papers. Wonder why the US economy has been in such a malaise.
You’d be blind to deny the existence of sector price rotation. Stock, house and commodity prices go through multi-decade cycles, out of phase with each other. Do a search of “dow-to-gold ratio” and see for yourself. When government statistics does not take into consideration certain sectors where money can go, such as assets, the price inflation statistic simply does not show the whole picture. Sometimes, the statistics may even be intentionally skewed: for example, as housing prices went gang busters in the late 90’s and early 00’s, none of the price appreciation of houses is reflected in the BLs inflation numbers; instead, an “equivalent rent” is used.
Do you even know what “economic trend lines” mean? You brought up the treand lines, got rebutted, then now you try to counter by ignoring the whole discussion on treandlines and talking about short term economic indicators . . . and you call me “Baloney”?
Of course borrowing is how money is created in our current system. However, the FED controls the short-term cost of money (to banks), both the price that banks can charge each other for overnight rates and the cost of money through the discount window. That is the crucial point. The banking industry can’t make profit as a whole by only charging each other interest: both the payer and the payee in he ledger would be banks! The spread between deposit and loan in interaction with the world outside the banks is how the banking industry as a whole makes money. By holding down short-term interest cost to banks, the FED increases that spread.
Goes to show just how economicly illiterate the company you have been keeping. I wouldn’t count myself as the most economicly insightful person that I have ever know, 'cuz I know a lot of economicly astute people. Some of them are actually well know economists.
Not really. Now, explain how a minimum wage differs from any other price control. You’ve repeatedly avoided providing any evidence for your position. I am beginning to think this is an utter waste of time.
The economy is built on scarcity. Markets clear.<
And this we know because you said so? If resources were truly scarce, marketing would be moot. There would be no junk mailers, no telemarketers. You wouldn’t have to push products at consumers. If resources were scarce, so too would competition be scarce. If there really are less widgets available than what can be sold at profit, what would it matter if a competitor lowered his price, and so sold out more quickly. Excess capacity is a part of every business, and should their sales approach their capacity, the business likely will expand to bring in more capacity, even while the existing capacity is not being fully used. Every day products and produce are sent to landfills, so as to make room for trendier styles or fresher food.
By what logic do you demand that scarcity rules?
Wonder why the US economy has been in such a malaise. <
Compared to what?? Compared to what it was10 years ago?? Or compared to what it was 70 years ago? Or compared to what other country?
You brought up the treand lines<
No, I do not have a clue what a treand line is.
and you call me “Baloney”?<
Yes.
Of course borrowing is how money is created in our current system. However, the FED controls the short-term cost of money (to banks), both the price that banks can charge each other for overnight rates and the cost of money through the discount window. That is the crucial point.<
If money is created by the local bank and not the fed, then how is the fed’s rate controlling the bank’s cost?
Most would find the second explanation much more reasonable.<
That one causality is more palatable than another does not negate the fact that correlation demands causality. You post this ancedote in response to my question "have you no ‘why’ in you. That you look at explanations means that you are interested in the why. Every correlation is a mystery demanding a theory.
Causality is inherent to everything, really, so correlation shouldn’t be any special case. A correlation between two things can be explained by the virtue that there are two things, and both have causes. However by your statements you seem to be implying that, if there is a correlation between X and Y, there must be a connection to the two, i.e., X causes Y, Y causes X, or Z causes both X and Y, when it’s possible that both X and Y could just be independent events with their own causes.
If resources were truly not scarce, there would be no prices. Is there a price on air (excepting special circumstances where the air must be transformed into usable form, e.g., compressed air or oxygen tanks)? In the economic definition, saying “there is no scarcity” is equivalent to “for all practical purposes, the quantities of immediately usable goods are infinite”, an absurd statement indeed. If you’re not using scarcity in this way, please define it exactly as you are using it.
If you had any knowledge of economics, you wouldn’t be blathering such ignorant statements (competition would be scarce?). Resources are scarce, which is precisely why prices arise. Markets move the economy from a scarcity problem to a coordination one, to an extent, and constantly expand supply of goods - that is why we do not live in a Malthusian world. If demand is overestimated, it is natural that the business will rid of its excess production and plan more carefully in the future. At its base, however, there is scarcity; without the market’s coordinative function, the problem would persist to a far greater extent.
Compared to the real US economic growth rate before the imposition of the myriads of regulations as part of the growing welfare state; one of such impositions being the minimum wage laws.
Then what why the heck did you write on January 30th at 12:29pm that: “The enactment of these regulations gave zero change to the economic trend.” ???
Very simple: banks have to have money (in the form of its own capital or more frequently in the form of deposits) in order to make loans; even fractional reserve banking has to maintain reserve ratio; how does a bank get deposits? In a free market, it has to pay savers sufficient interest in order to attract deposits. FED control on the overnight rate in interbank lending is a price cap on overnight interest rate. If a bank can get loans from other banks for less, then they don’t need to pay outside despositors more. If a bank is so shaky that no other bank is willing to lend it money at the overnight rate, the FED comes to the aid through the discount rate window: a bank no matter how shaky, so long as it is still licensed to operate, can borrow at the discount rate directly from the FED. Obviously, that souce of funding depress the rate at which banks have to pay savers on their deposits. That’s why as soon as the rate cuts are announced, banks cut interest rates that they pay depositors immediately. Sure, lending interest goes down too, but not by as much when the yield curve is steepening. Banks thrive on borrowing short and lending long; FED cutting of short interest rates steepens the yield curve and make banks more profitable than otherwise would have been the case.
The core function of a business is convincing the public that its method of allocating limited resources is superior to the alternatives out there, therefore the public would give the business more resources than the resources that the business would consume making/rendering the goods and services, with the owner pocketing the difference. It is the owner’s desire to lay claim on scarce resources, and his ability to convince consumer’s to assign more resources to the business than it takes to make the goods/services, that keep business in existence.
If resources were limitless, there would never be “over capacity.” There is no overcapacity of the number of copies of any download song. If the songs are distributed on CD’s, however, there can be “over capacity” in the numbers of CD’s made . . . because it actually takes limited resources (polycarbonate plastic and cyano dye) to make make CD’s, and the seller has to make realistic estimate on sales numbers in order to pay for the material input and capital input for renting the CD press. If resources were truely unlimited, i.e. polycarbonate plastic and cyano dye, and the capital requirement of CD presses, and the labor for distributing the CD’s were all readily available for free like the air we breathe every day, there would never be a problem of “over capacity.” The business would never have to worry about not making enough sales as a per centage of its production because the cost of extra production and distribution would be zero.
Advertising is just part and parcel of a business’ way of convincing consumers that its method of allocating limited resources is superior to its competitors. If advertising brings more sales, that would enable the business to have a bigger claim on limited resources on the input end. If all capital and labor factors were limitless, there wouldn’t be advertising; there wouldn’t even be business. People would just take whatever they want for themselves for free, without having to work and earn their claim on limited resources at all.
Economics is about the allocation of limited/scarce resources.
Causality is inherent to everything, really, so correlation shouldn’t be any special case.<
Causality is theory. It is only inherent to the human propensity to ask ‘why’.
A correlation between two things can be explained by the virtue that there are two things, and both have causes.<
Certainly, in which case there is two mysteries. Repeated correlations are too much of coincidence though.
it’s possible that both X and Y could just be independent events with their own causes.<
Certainly, but that possibility does not detract from a reasonable examination of the correlations and postulating causality.
It is the owner’s desire to lay claim on scarce resources,<
So you are more concerned with the propaganda than with the reality?
If resources were limitless, there would never be “over capacity.”<
Resources is supply. I say that the economy is limited by demand. Over capacity is a symptom of lack of demand… lack of consumer dollar. If resources were scarce, there would never be over capacity.
Advertising is just part and parcel of a business’ way of convincing consumers that its method of allocating limited resources is superior to its competitors.<
Marketing consumes excess resources and excess potential so that close to all that is available is used. It is a symptom of abundance, not a desparation of scarcity.
Business is about finding profit from excess resources.
Does ‘treand’ have a special meaning as opposed to ‘trend’? Never heard of it before.
I believe he just simply made a typo. Looking back at his posts about it, he did ask you if you even know what economic trend lines mean. when he typed “treand,” he simply made a typo. And you typed out “treand” and he too assumed that you made a typo as well…and believed you meant to type “trend.”
Arman, all I have to ask of you is this:
““for all practical purposes, the quantities of immediately usable goods are infinite””
Is this statement true? Yes or no?
“Resources is supply. I say that the economy is limited by demand. Over capacity is a symptom of lack of demand… lack of consumer dollar. If resources were scarce, there would never be over capacity.”
Wouldn’t companies then…if they had too much supply, lower the amount they have so that their supply = demand? Secondly, rising prices is an indication that demand is higher than supply. Companies raise prices to “curb” the demand(lower it). It also sends a message to producers to increase supply, which lowers prices. Business is about finding profit from using limited resources.