patrick.net

indigenous says

What do you feel were the causes?

In short, Harding and Coolidge policies on taxation and regulation caused inequality which fueled asset speculation, which caused mispricing of risk on privately issued debt.

control point says

In short, Harding and Coolidge policies on taxation and regulation caused inequality which fueled asset speculation, which caused mispricing of risk on privately issued debt.

As you know the Austrian version is that the money supply was too loose. Then, I suspect, as now the inequality was created by money from the Fed and the unevenness of inflation. This created malinvestment.

I read however that the depression would have been over in short order if not for the incessant meddling of HH and FDR.

control point says

Harding and Coolidge policies on taxation

http://www.cato.org/publications/commentary/1920s-income-tax-cuts-sparked-economic-growth-raised-federal-revenues

from 2003 of course.

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it.

Bellingham Bill says

"China's people have been living at a much lower standard of living than they had to if the Yuan had not been devalued. This is true because their buying power has been greatly reduced."

You somehow think that graph disproves my statement?

That idea is from Michael Pettis's book, he is a Chinese economist.

Bellingham Bill says

http://www.cato.org/publications/commentary/1920s-income-tax-cuts-sparked-economic-growth-raised-federal-revenues

"The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored."

"Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923."

After this the Fed came in and lent too much money at too low of a price.

If you want to read about it:

http://mises.org/rothbard/agd/chapter4.asp

Call it Crazy says

Ha Ha... That's laughable at best..

Isn't it time for you to make today's golf jokes?

(Apologies if they're off the talking points - I haven't seen Fox News since Tuesday.)

control point says

4. Internet misinformation starting mid-2000s.

I agree with your points, but I'd say a LOT earlier than that. Neoliberals and Libertarians were way disproportionally represented on the internet from the beginning.

Neoliberalism is in a terrible crisis, because it simply can't create decent jobs and has difficulty creating even burger-flippin', coffee-servin', data-entry, call-center plantation jobs.

If we step back for a minute, and remember the Monetarists and Neoliberals seizing the narrative from the Keynesians, they did it by criticizing Government Spending. Yet, after a generation or so of Neoliberalism, Government Debt is far, far, worse and the outcomes for 80-90% of the population, far weaker in comparison, even using the mid 70s as a benchmark.

Really, the only thing that kept Neoliberalism ticking along past the 80s was the explosion of private debt which "allowed" people to maintain their lifestyle - by borrowing.

thunderlips11 says

A LOT earlier than that. Neoliberals and Libertarians were way disproportionally represented on the internet from the beginning

Another believer in the "war got us out of the depression"

indigenous says

Then, I suspect, as now the inequality was created by money from the Fed and the unevenness of inflation.

You have that backwards. Uneven inflation is caused by inequality, not the other way around.

eg. As rich people become more rich, qualified demand for stuff they buy increases.

Laissez-faire regulatory policy, unchecked by taxation, encourages profit-taking (eating the seed corn as you guys like to say). This contributes to inequality increase because of the inherent nature of capitalism. Inequality causes uneven inflation (ie too much cash to lend for too few borrowers, lowering interest rates), therefore causing mispricing of risk.

There must be a feedback loop to prevent concentration of capital into the hands of a few or capitalism fails.

My view is different. Moderate inflation is a good thing, it means people have more money to spend, employment is full or near full, etc. The absence of inflation, or very low inflation, is troubling. Real Growth, esp. Real Growth of PPP for the majority of the population, is strongly correlated with moderate inflation. Stagnation of PPP Growth for the majority is correlated with low inflation.

Hyperinflation only happens due to political decisions. High inflation can occur due to demographic pressure, which is exactly what the 70s was - massive household formation by the largest demographic in US history outstripping supply for a decade.

Those who hated FDR and Keynes used the temporary demographic pressure and the stagflation created by a huge baby boom of too many young people trying to form households, to extrapolate that Keynesianism was no longer working - when it was just a temporary blip. IMHO.

Despite some neoliberal reforms, Germany, Sweden, etc. are doing very well with a strong Keynesian System. These country's populations are not naturally growing, so growth is going to be muted.

control point says

You have that backwards. Uneven inflation is caused by inequality, not the other way around.

I don't think so, even the liberal Pikkety believes that this is caused by the Fed lending money out at low interest rates. The people who have the most access to the cheap money get more of it than those who do not have good credit or investment capital to invest.

The feed back loop is baked into the economy, as the economy is always advancing. E.g. Walmart is now taking a serious hit from Amazon.

This natural dynamic is perverted by excess money supply.

Amazon actually isn't all that great, IMHO. It uses an Armada of Churned Temp Workers and despite massive cost pressure on Publishers as the #1 buyer of Books, still isn't profitable.

I'm a fan, I love the site, the service, etc. But they're got to get profitable somehow.

thunderlips11 says

The absence of inflation, or very low inflation, is troubling.

That was Milton Friedman's view. But his is the other side of the coin of the Keynesian view. I believe the primary fallacy is that the economy can be controlled or manipulated by the government. Any attempt to do so result in an imbalance. Friedman instituted a 3% target inflation rate in regards to the dollars exchange rate. This is a big part of the reason for the inflation we have as certainly today we do not have a closed economy.

The Austrians believe that the business cycle is a way of reconciling the weak from the strong in the economy and should not be stopped or hampered as this is a healthy thing for the economy. E.G. if the TBTF were allowed to the economy would be in good shape today.

thunderlips11 says

Despite some neoliberal reforms, Germany, Sweden, etc. are doing very well with a strong Keynesian System.

The metrics that you look at these countries through are too narrow. Sweden was very much a free market before it switched to socialistic policies that create the current meme. Germany has been the beneficiary of mercantilism to the rest of Europe.

thunderlips11 says

Moderate inflation

If we're talking 0.5% to max 1%, then we can agree ;) Likewise moderate deflation is not a bad thing either as a price-correcting symptom/event.

"In the future, there's potentially two types of jobs: where you tell a machine what to do, programming a computer, or a machine is going to tell you what to do. You're either the one that creates the automation or you're going to get automated." -- Tom Preston-Werner

http://www.businessweek.com/articles/2014-08-07/silicon-valley-tech-entrepreneurs-behind-the-stereotype#p6

The Jetsons future had us working 2 hrs a week. But there weren't any racial minorities in that future, just whiteys . . .

Bellingham Bill says

"In the future, there's potentially two types of jobs: where you tell a machine what to do, programming a computer, or a machine is going to tell you what to do. You're either the one that creates the automation or you're going to get automated." -- Tom Preston-Werner

Well, looks like it's either Socialism or a Fritz Lang Metropolis Dystopia.

thunderlips11 says

But they're got to get profitable somehow.

Why? Gross revenue has doubled 2010-2013 and they cleared over $2B in after-tax income in these 4 years.

hmmm, looking at their balance sheet, they're kinda like a shark I guess, swim or die, given they don't have a large cash cushion to fall back on -- $24B in cash, $20B in A/P and debt -- $2B in retained earnings is all dey got!

AAPL on the other hand is sitting on $100B of retained earnings; 6 years of operating costs. (MSFT has $17B, GOOG $68B)

Bellingham Bill says

cleared over $2B in after-tax income in these 4 years.

In 2013, they cleared about $0.25B net profit on sales of ~$75B.

Meager as last year’s profits were, they represented a small improvement from 2012, when Amazon actually lost money. Even with the slight uptick in 2013, Amazon earned substantially less profit than it did back in 2008, when it posted a net income of $645 million on relatively modest sales of $19.17 billion. Over the past five years, in other words, the retailer of the future managed to more than triple its sales while slicing profits by more than half. It’s a business success story like no other in the world.

If they do have all that cash, they should start Altywood / Altcomcast and start offering film content.

I can't believe in all this time somebody hasn't started a non-Cable Company "HBO" that streams digitally.

This is one reason the Fed had to throw in the towel on the unemployment metric ....I sure hope these millinenials will be able to find a way of reinventing themselves for the survival of the fittest because all the grassy patches on the farm are wearing thin