patrick.net

tatupu70 says

errc says

with all the technological advancements, and the information age revolution, we working humans would certainly find work arounds, and a new, better system would take this outdated systems place in a heartbeat

It astounds me that there are so many people that believe that "a new, better system" would magically appear. Will it rain gumdrops under this new system too?

Umm, your reading comprehension skills are either severely lacking, or you're putting your own words in my mouth. There's no magic about it

Solar panels
Bitcoin
The internet

errc says

This isn't 1929

with all the technological advancements, and the information age revolution,
we working humans would certainly find work arounds, and a new, better system
would take this outdated systems place in a heartbeat

Tell that to the fellow from Zimbabwe. Somalia also sounds like a lovely place.

yup1 says

These companies would have failed. Citi, [...], US Steel, and with that the rest of the economy would have gone down in flames.

Because you assume that the only alternative is to let the world go down in flame.

It isn't. This is a false dichotomy.

errc says

Solar panels

Bitcoin

The internet

How do solar panels, bitcoin or the internet help any? Please educate me on how exactly those technologies would avert another Great Depression.

indigenous says

The group think was the agreement that there should be slavery. BTW there have been more white slaves than black slaves. The group agreement was also that there should be a civil war engineered by Lincoln. BTW he did not care about ending slavery at all.

The individual brought us abolition not the group. BTW slavery was ended in the world without war.

You are delusional. History based on your fantasy of reality is well fantasy.

I thought the blue pill was a matrix reference. I did not think that you actually are actively taking blue pills. Get your dose adjusted........

Heraclitusstudent says

Because you assume that the only alternative is to let the world go down in flame.

It isn't. This is a false dichotomy.

It is if the only other choice being offered is doing nothing--which is was being discussed.

indigenous says

Anything worthy comes from an individual.

Whether we like it or not, we are not a set of individuals doing their own things. We are a society where each person depends on a bunch of others. This is no longer a wild frontier. There are dependencies involved. That requires top down organization. Like every person in a city depends on a government to organize a sanitation system, or they are doomed to die from cholera.

Group think is demonstrated here where the usual suspects don't have an original thought just a regurgitating of memes

indigenous says

Group think is demonstrated here where the usual suspects don't have an original thought just a regurgitating of memes

You are regurgitating Ayn Rand how the hell is that original?

Heraclitusstudent says

indigenous says

Anything worthy comes from an individual.

Whether we like it or not, we are not a set of individuals doing their own things. We are a society where each person depends on a bunch of others. This is no longer a wild frontier. There are dependencies involved. That requires top down organization. Like every person in a city depends on a government to organize a sanition system, or they are doomed to die from cholera.

Individuals working in cooperation are still individuals. Government is not a monolith it is a bunch of individuals as well but with very little accountability and to the degree it is perceived as a monolith it allows them to act through group think

yup1 says

indigenous says

The group think was the agreement that there should be slavery. BTW there have been more white slaves than black slaves. The group agreement was also that there should be a civil war engineered by Lincoln. BTW he did not care about ending slavery at all.

The individual brought us abolition not the group. BTW slavery was ended in the world without war.

You are delusional. History based on your fantasy of reality is well fantasy.

I thought the blue pill was a matrix reference. I did not think that you actually are actively taking blue pills. Get your dose adjusted........

That is NOT an argument.

tatupu70 says

It is if the only other choice being offered is doing nothing--which is was being discussed.

I'll give you an other choice:
1 - raise rates, stop any subsidies of debts (mortgages, student debt). Stop encouraging people to go in debt.
2 - raise taxes to finance the government
3 - Print money to compensate debt deflation. But do it without debt, from the liability side of the Feds balance sheet: send a check of $1000 (or whatever) to every person in the country every month to maintain a stable inflation level. The same check to every person, Warren Buffett or Joe six-pack.

Instead what we are doing now, at the country level, is the same that homeowners were doing in 2005: increasing their leverage and spending the extra equity. It's a suicidal way of keeping an ugly reality behind an increasingly tattered veil of fake wealth.

indigenous says

How does this work? If the rich guys share their wealth then consumption goes up?

Yes

indigenous says

If their is complete equality then what motivation does the rich guy have?

Logical fallacy of the extremes. Nobody is arguing for complete equality.

indigenous says

If the poor guy is given what he has what motivation does he have?

The same motivation we all have--to get more.

tatupu70 says

If their is complete equality then what motivation does the rich guy have?

Logical fallacy of the extremes. Nobody is arguing for complete equality.

As a theory?

tatupu70 says

indigenous says

If the poor guy is given what he has what motivation does he have?

The same motivation we all have--to get more.

Why the incentives are to work less and get as much as possible with out doing any work?

Heraclitusstudent says

There is a reason why 100+% of new revenues in the 'recovery' in fact went to
the top 1%.

It isn't 100%, but it is close. The reason for this is because the wealthy own all the productive capital.

From the PEW study:

http://www.pewsocialtrends.org/files/2013/04/wealth_recovery_final.pdf

In 2011, Households with net worth under $500k have total net worth of $10.6T. Of this, fully 53% are in non-prodcutive assets like your primary home, your car, and checking accounts.

This is 87% of households, under $500k net worth. Definitely all of the middle class and all of the lower classes.

The average family doesn't have anywhere near $500k - $500k in total net worth is really $235k in productive net worth. This means roughly 26 out of 30 households have $235k or less in productive assets.

$10.6T in total assets * 47% productive = $10.6T*.47 = $5T in total productive assets, for 87% of the country.

The top 13% have $29T in total assets * 79% productive = $22.9T in total prodcutive assets for 13% of the country.

Basically, the top 13% control 82% of the productive assets.

Lowering taxes on capital, devaluing labor, devaluing entitlements = all of these policies will only make this worse.

control point says

Basically, the top 13% control 82% of the productive assets.

Lowering taxes on capital, devaluing labor, devaluing entitlements = all of these policies will only make this worse.

What were the statistics say in the 90s or the 60s?

Heraclitusstudent says

If these people are allowed to keep the cash when the debt is not paid, then
yes they swoop-in and take back the assets on the cheap. The policy created
this.

Not all of the rich would have wiped out, they weren't all leveraged. A smaller subset of the current rich would have done the same things at even better prices. They are the only ones with cash.

It would have consolidated wealth more.

control point says

Basically, the top 13% control 82% of the productive assets.

I would contend that there has been more inequality with government intervention

indigenous says

I would contend that there has been more inequality with government
intervention

And if I prove otherwise, will that weaken your belief in the cult or will you just attack the data?

First would need to agree on when there was "less" government intervention, right? When do you think there was less? Let's start there first before I go digging.

control point says

First would need to agree on when there was "less" government intervention, right? When do you think there was less? Let's start there first before I go digging.

The past 6 years and the early 30s

control point says

Not all of the rich would have wiped out, they weren't all leveraged. A smaller subset of the current rich would have done the same things at even better prices. They are the only ones with cash.

When money is lent, and the loan goes bad, the owners of the bond or loan lose their money (or at least part of it). When companies go badly shareholders lose money. If you prevent this process, you preserve the wealth of rich people.

I don't think all rich would suffer or be wiped out. But a lot of the wealth being created today is not a function of productive assets. I don't think Tweeter for example created a value of $30 billions. Its valuation and that of many other assets is purely a function of speculation driven by the Feds money flood. When they realign with reality, they will make the owners a lot poorer.

And it's not the poor who are owning these stocks or these loans.

Heraclitusstudent says

When money is lent, and the loan goes bad, the owners of the bond or loan lose their money (or at least part of it). When companies go badly shareholders lose money. If you prevent this process, you preserve the wealth of rich people

Are you under the impression that the bailed out companies didn't lose money?

Heraclitusstudent says

The question is not whether they should have bailed out key companies. They had no choice.

Sure they did, and it would have been infinitely better if they had.

indigenous says

Heraclitusstudent says

The question is not whether they should have bailed out key companies. They had no choice.

Sure they did, and it would have been infinitely better if they had.

Destroying a lot of companies that had nothing to do with the problem was not the best solution.

Heraclitusstudent says

indigenous says

Heraclitusstudent says

The question is not whether they should have bailed out key companies. They had no choice.

Sure they did, and it would have been infinitely better if they had.

Destroying a lot of companies that had nothing to do with the problem was not the best solution.

You need to learn about the business cycle and why this is important.

I think Mell said something about that on this thread

Heraclitusstudent says

Of course they lost money. The Fed lost control and there was a deflationary crisis.

First they wouldn't have lost money if the Fed had not encouraged huge and unwarranted risk taking.

How exactly did the Fed encourage unwarranted risk taking? If I gave you a low interest loan, would that compel you to invest it in a risky manner?

indigenous says

You need to learn about the business cycle and why this is important.

I think Mell said something about that on this thread

This kind of disruption has nothing to do with the normal business cycle.

It's like saying that the destruction caused by a volcano is part of the natural order of things.

tatupu70 says

How exactly did the Fed encourage unwarranted risk taking? If I gave you a low interest loan, would that compel you to invest it in a risky manner?

Interest rates are supposed to reflect the risks of the loan. When the Feds manipulate rates, they manipulate this estimate. Lowering rates is equivalent to lowering the perceived risk. And since all asset classes are linked, investors are pushed to take more risks than they otherwise would.

Or if you want the money supply is increased and this money chases yield, taking risks in the process. While the market goes up and the economy grows, risks are muted because... precisely things are going well. But when the cycle turns and the market starts going down, the risks are multiplied.

That's why investors are made into speculators: they all know that in the long run, the assets they hold are not worth the current market value. They just hope to find a bigger idiot who can buy it from them before it collapses.

Heraclitusstudent says

Interest rates are supposed to reflect the risks of the loan. When the Feds manipulate rates, they manipulate this estimate

How? Whoever lends out money can set whatever rate he/she chooses. The Fed doesn't set interest rates on loans made in industry. It can influence the prime rate, but the risk premium is set entirely by whoever makes the loan.

Heraclitusstudent says

Or if you want the money supply is increased and this money chases yield, taking risks in the process.

Why does it chase yield. The money is cheaper so it should be satisfied with lower returns. The difference should be the same.

control point says

Tell that to the fellow from Zimbabwe. Somalia also sounds like a lovely place.

Wow! I am sorry but you are really ignorant and stupid. Zimbabwe has hyperinflation, thanks to heavy-handed policies of the brutal government. Please read up on this. Are you confusing a brutal dictatorship with free market?

Somalia was also mostly in a brutal dictatorship. It has now moved from dictatorshipt to anarchy. "Surprisingly", it is relatively better off under anarchy than under dictatorship. Look at the data:
http://www.peterleeson.com/better_off_stateless.pdf

Key development indicators before and after statelessness
1985–1990a 2000–2005 Welfare change
GDP per capita (PPP constant $) 836b 600c,e ?
Life expectancy (years) 46.0b 48.47c,g Improved
One year olds fully immunized against measles (%) 30 40h Improved
One year olds fully immunized against TB (%) 31 50h Improved
Physicians (per 100,000) 3.4 4h Improved
Infants with low birth weight (%) 16 0.3l Improved
Infant mortality rate (per 1000) 152 114.89c,g Improved
Maternal mortality rate (per 100,000) 1600 1100i Improved
Pop. with access to water (%) 29 29h Same
Pop. with access to sanitation (%) 18 26h Improved
Pop. with access to at least one health facility (%) 28 54.8k Improved
Extreme poverty (%

tatupu70 says

Whoever lends out money can set whatever rate he/she chooses. The Fed doesn't set interest rates on loans made in industry. It can influence the prime rate, but the risk premium is set entirely by whoever makes the loan.

Lenders don't choose because there is a market for loans where the rates are set. And market rates are influenced by what the feds are doing.
The Feds buy treasury bonds and mortgage rates are influenced, so are junk bonds.

The only choice for a lender would be not to make the loan in which case they make nothing and no one is paid for that.

tatupu70 says

Why does it chase yield. The money is cheaper so it should be satisfied with lower returns.

Some people rely on the cash flow. They *need* the yield.

Heraclitusstudent says

Lenders don't choose because there is a market for loans where the rates are set.

Of course they choose. They are lending the money, after all. Have you ever applied for a loan? They have different rates depending on your credit history and ability to repay.

Lenders ABSOLUTELY set the rates by which they loan money.

Only 400% APR!

(It can be over 500%+ in Texas)...
http://paydayloansonlineresource.org/average-interest-rates-for-payday-loans/

gsr says

Wow! I am sorry but you are really ignorant and stupid. Zimbabwe has hyperinflation, thanks to heavy-handed policies of the brutal government. Please read up on this. Are you confusing a brutal dictatorship with free market?

I don't accept your apology.

The context in which that comment was made was centered around how it "isn't 1929...with all the technological advancements, and the information age revolution, we working humans would certainly find work arounds, and a new, better system would take this outdated systems place in a heartbeat"

I simply pointed to Somalia and Zimbabwe as two places that have not found "work arounds, and a new better system....in a heartbeart."

Now since your superior intellect failed to miss that point - allow me to further discredit your post.

gsr says

Zimbabwe has hyperinflation, thanks to heavy-handed policies of the brutal government. Please read up on this.

1. Zimbabwe HAD hyperinflation. It is over now and has been since dollarisation in February 2009, 4 years ago. Please read a book published after 2009.
2.Heavy-handed policies of the brutal government had nothing to do with this. The white minority (less than 1%) owned 70% of the land in the country, and Mugabe instituted a "willing buyer, willing seller" program, with loans to purchase the land buy Black Zimbabweans financed by the US and UK, primarily. This worked fine until both decided they were no longer willing to finance the purcahses in the late 90s. Zimbabwean revolutionaries (not government) reacted by seizing farms and torture. Zimbabwe's government was unable to control the revolutionaries - and this lead to economic sanctions - effectively closing the local economy - leading to shortages. This lead to economic recession, causing tax revenues to fall and finally, Zimbabwe was not able to meet its obligations to the IMF. Weimar Germany happened next, with associated hyperinflation.

gsr says

"Surprisingly", it is relatively better off under anarchy than under dictatorship. Look at the data:

Well at least publish all of Table 1 from Mr. Leeson's paper. What you see is general health outcomes have improved while the population is poorer. Again context might be helpful but you struggle with that. Context, such as Table 2 - comparing Somalia with other countries of the region. Let's look at Ethiopia v. Somalia...you know...that place that prohibits private land ownership.

GDP per capita +15.5%, -29%
Adult literacy nd, -20%
Infant mortality Rate +28.5%, +24.4%
Life Expectancy +9, +5.4
Pop. with access to improved water -4.3%, 0%
Pop. with access to improved sanitation +333%, +44%.

And I would say they are about on par with Kenya too.

Point is - yes they have improved (but honestly, TVs, comparing the 1980s to the 2000s? No surprise an increase there)

But so have other nations in the region, and those countries do have functioning governments. This means that there is little correlation between amount of government and general improvement in that region.

So of your points, 100% false or misleading. Good job.

You read something that supports your preconceived idea of reality and take it hook line and sinker. So typical of Austrian wannabes.

I love dipshits from George Mason, btw. No political motivation behind the research that comes from there....

http://en.wikipedia.org/wiki/Mercatus_Center

Heraclitusstudent says

indigenous says

You need to learn about the business cycle and why this is important.

I think Mell said something about that on this thread

This kind of disruption has nothing to do with the normal business cycle.

It's like saying that the destruction caused by a volcano is part of the natural order of things.

Your right it does not have anything to do with the normal business cycle.

And that is the point. And that is what you need to learn about. Seriously do yourself a favor and read this:

http://direct.mises.org/daily/6533/Only-Austrian-Theory-Can-Explain-and-Expose-Booms-and-Bubbles

indigenous says

And that is the point. And that is what you need to learn about. Seriously do yourself a favor and read this:

I had a look to this page and saw nothing new. We all understand why a housing bust affects banks balance-sheets and how this is caused by malinvestments.

The point I'm making is that you can see the goal of bust as to purge the malinvestments. However a credit bust is a self-reinforced phenomenon. It ripples through the economy and is unlikely to stop at unhealthy parts. Left to itself it will destroy perfectly healthy companies which in an other context would have flourished. This uselessly destructive and the impact of a bust can be lessened provided you prevent that.

Heraclitusstudent says

The point I'm making is that you can see the goal of bust as to purge the malinvestments. However a credit bust is a self-reinforced phenomenon. It ripples through the economy and is unlikely to stop at unhealthy parts. Left to itself it will destroy perfectly healthy companies which in an other context would have flourished. This uselessly destructive and the impact of a bust can be lessened provided you prevent that.

Not true. It is a myth that has been spread by Wall St.

The center of the problem was the derivatives. GS, Morgan Stanley, Citi Bank, et al would have gone the way of Lehman Brothers but that would have been the extent of it.

GM was irrelevant to the melt down.

AIG had 800 billion in assets with only 10% involved in derivatives. Being that AIG is an insurance company it is required to separate the arm that was involved in derivatives. Point being no way in hell were they going out of business.

GE same deal they were not going out of business, they had to roll over 5 billion, small problem for a company with 200 billion in sales.

Point is that no main st companies were in ANY danger as it would not have spread. That was a fairy tale authored by Paulson, Bernanke, and Immelt, and Buffet

bgamall4 says

So the banks are at risk with too little collateral for deals and are at risk if taking away QE leads to a housing crash.

The banks that were involved in derivatives were about a dozen with 20 trillion in assets with 80 billion in exposure.

indigenous says

Point is that no main st companies were in ANY danger as it would not have spread.

You're dreaming. Credit was frozen. Banks just wouldn't deal with each other. Their balance-sheets were devastated. The entire financial system would have collapsed. Derivatives are just one transmission mechanism, and not the worse. The main one is that the money supply would have collapsed absent feds intervention. The transmission through economic slowdown itself would have ravaged main street. Not to mention companies relying on short term loans and the like.

It's worth remembering that before the crisis, financial profits represented close to 40% of all companies profits in the US. This kind of profits were made by companies like GM. The US had essentially become a large hedge fund.

So, no, this wasn't a myth.