[kenberg]

 blackshoe, on 2011-July-12, 18:25, said:

"Self-regulating markets and laissez faire business models" might or might not work, but since we've not had such in this country (certainly not in my lifetime, or my parents') it's hard to say.

I am no expert on economic history, here or elsewhere, but my general understanding is that this was settled in the early 1900s. In the 1800s we built railroads. Sure, John Henry was a steel driving man, throwing twelve pounds from his hips on down, and all that. But many railway workers, especially Chinese, worked in brutal conditions. Women and very young children worked in sweatshops for long hours and low pay, and sometimes they died there. Coal miners died. They still do, but not as often and at least they get paid. The old song goes "St. Peter don't you call me 'cause I can't go, I owe my soul to the company store". I don't think this is a fantasy.

Growing up in the middle of the last century I saw that a normal guy could have a good life by working hard and not acting like a fool. This had a lot to do with the power of unions and with government imposed reforms. Without a doubt the world is now a much more complicated place. I doubt that de-regulation, leaving corporations to act as they please, is the answer.

[blackshoe]

And yet, with all your vaunted government regulation of corporations, the tobacco industry still got away with fraud for an awfully long time. Maybe they would have done the same in a completely free market, maybe not. So no, I don't think anything was "settled".

I'm no expert either, but I'm learning. Currently studying Austrian School economics. Current text: The Case Against the Fed, by Murray Rothbard. I'm only a couple of chapters in, but so far, he seems to be making a pretty good case. On deck: Economics in One Lesson, by Henry Hazlett. One of the books in the pile is a history of economic theory. I'll get to that eventually.

[hrothgar]

 blackshoe, on 2011-July-13, 08:50, said:

I'm no expert either, but I'm learning. Currently studying Austrian School economics. Current text: The Case Against the Fed, by Murray Rothbard. I'm only a couple of chapters in, but so far, he seems to be making a pretty good case. On deck: Economics in One Lesson, by Henry Hazlett. One of the books in the pile is a history of economic theory. I'll get to that eventually.

If you're actually interested in learning anything about economics, you should probably start somewhere other than the Austrian School which is (broadly) considered to be a joke by mainstream economists.

Last I knew, the Austrian School practioners were pretty much limited to George Mason University and random think tanks where they sit around playing with themselves (in both senses of the word)

[blackshoe]

It may well be "mainstream economists" who've gotten us into the mess we're in right now. So frankly if they consider the Austrian School a joke, that's a plus for it.

[PassedOut]

 blackshoe, on 2011-July-13, 14:02, said:

It may well be "mainstream economists" who've gotten us into the mess we're in right now.

Not sure what you are getting at here. The US was in great fiscal shape when Clinton left office, and he certainly followed mainstream economic principles (against strong opposition from the other side). What have the mainstream economists done (or even had the power to do) this past decade that could have gotten us into the current mess?

[blackshoe]

I wasn't thinking of the past decade, more like the past century and more.

If Rothbard is right, then the establishment of Central Banks, which started with the Bank of England in the early 19th century, has got to be one of the biggest scams in history.

[hrothgar]

 blackshoe, on 2011-July-13, 14:21, said:

I wasn't thinking of the past decade, more like the past century and more.

If Rothbard is right, then the establishment of Central Banks, which FNORD started with the Bank of England in the early 19th century, has got to be one of the biggest scams in history.

Freemasons CONTROL the money supply!
Flouridation IS A plot BY the Illuminati!
Stop the NEW FNORD World Order Chemtrail CONSPIRACY!

Who controls the British crown?
Who keeps the metric system down?
We do! We do!
Who leaves Atlantis off the maps?
Who keeps the martians under FNORD wraps?
We do! We do!
Who holds back the electric car?
Who makes Steve Guttenberg a star?
We do! We do!
Who robs the cave fish of their sight?
Who rigs every Oscars night?
We do! We do!

[Winstonm]

A combination of deregulation, lack of enforcement of existing regulations, and trust in the free markets all worked together to cause the banking/debt crisis. The only part of the debt crisis that required bailout was the completely unregulated CDS and MDS markets. We should have used the Swedish model to allow TBTF to fail while salvaging the CDS and MDS pools. This would have allowed the banks to fail, the bondholders and shareholders to take the losses, as should be, while still having an orderly unwind and preventing worldwide panic over derivitives.



Although it is true we have not had complete laissez-faire, every time we have been close the economy has suffered dramatically.

If we try austerity now, we will relive the 1930s.

[blackshoe]

Ridiculing one's opposition is a common tactic — one usually employed by those who have no other recourse.

[kenberg]

This is just a little Americana that brothgar's post reminded me of. I bought my first car in 1954 and somehow got on a mailing list. After all these years I still remember the dramatic tone of one of the advertisements. I didn't buy it, even at age 15 I was a skeptic, but I just now looked to see if it is on the internet. It is, and it's from the NIST museum.

http://museum.nist.g...df/auto-all.pdf

I realize the total irrelevance but hell, I'm the OP.

[blackshoe]

Heh. Reminds me of Heinlein's short story "Let There Be Light", in which he postulates the troubles two scientists have getting their new invention, the Martin-Douglas Sunpower Screen, to market over the, um, objections of The Power Syndicate, a group of energy companies dedicated to maintaining their place in the energy market. In the story, Heinlein mentions "the museum of suppressed inventions", which contains such things as the razor blade that never dulls, the light bulb that never goes out, the (nylon - this was written in the 1940s) stockings that never run, the 50 mpg carburetor, and others.

[awm]

 blackshoe, on 2011-July-13, 14:21, said:

I wasn't thinking of the past decade, more like the past century and more.

If Rothbard is right, then the establishment of Central Banks, which started with the Bank of England in the early 19th century, has got to be one of the biggest scams in history.

What makes you think the past century or more has been a mess?

It seems to me that real wages and standard of living for all Americans (and Europeans, for that matter) have improved immensely since the 19th century. Medical care and lifespans have increased dramatically too. We have had very many years of amazing economic growth no matter how you measure it. At the same time, standards in products and in advertising and environmental laws have improved, making us all safer. We have more political freedoms now: lots more people can vote, women and racial minorities have equal rights, non-christian religions (and atheists) have more protections, people of different races (and even people of the same gender in some places) can marry, etc. There are plenty of cases where people from modest backgrounds have had a great idea and become wealthy beyond the imaginations of the 19th century (take Bill Gates or Sergey Brin for example). But at the same time, our working class can make a living wage (okay, could until this recent bout with high unemployment). Would you really want to trade in your modern lifestyle for the 19th century?

Yes, there are some countries that are total disasters (take Somalia for example) where things might arguably have been better in the 19th century, but it's hard to blame economists for what goes on over there.

[PassedOut]

 awm, on 2011-July-13, 21:07, said:

What makes you think the past century or more has been a mess?

It seems to me that real wages and standard of living for all Americans (and Europeans, for that matter) have improved immensely since the 19th century. Medical care and lifespans have increased dramatically too. We have had very many years of amazing economic growth no matter how you measure it. At the same time, standards in products and in advertising and environmental laws have improved, making us all safer. We have more political freedoms now: lots more people can vote, women and racial minorities have equal rights, non-christian religions (and atheists) have more protections, people of different races (and even people of the same gender in some places) can marry, etc. There are plenty of cases where people from modest backgrounds have had a great idea and become wealthy beyond the imaginations of the 19th century (take Bill Gates or Sergey Brin for example). But at the same time, our working class can make a living wage (okay, could until this recent bout with high unemployment). Would you really want to trade in your modern lifestyle for the 19th century?

Yes, there are some countries that are total disasters (take Somalia for example) where things might arguably have been better in the 19th century, but it's hard to blame economists for what goes on over there.

I'm interested in the answer to this too, as I'm genuinely puzzled about what Blackshoe is getting at. There have been terrible wars for sure, but I don't see a connection between wars and mainstream economists.

[Winstonm]

Before the fantasy that the bailout was profitable becomes ingrained as more urban legend, I wanted to post this response to the currently reported analysis: http://www.ritholtz....d-bad-analysis/

[hrothgar]

 PassedOut, on 2011-July-14, 07:52, said:

I'm interested in the answer to this too, as I'm genuinely puzzled about what Blackshoe is getting at.

You might want to look at the source materials Blackshoe is reading...

Rothbard was an anarcho-capitalist
(Not a warm fuzzy liberatarian minarchist... An outright anarchist)

These people are firmly detached from reality. I firmly recommend that folks read the following as a basic introduction to the species

http://examinedlife....shes_were_.html

[Aberlour10]

China seems to be not amused at all about what actually happens in Washington. They hold over the trillion dollars in US bonds, if they get too nervous and stop to buy all these new Treasuries, who want and will buy it else?

[blackshoe]

What caused the Great Depression? "Mainstream" economists would have us believe it was "a failure of capitalism". Others (not just the Austrians) think it was the Fed's manipulation of the money supply.

My understanding is that there are still international treaties whereby nations can demand repayment of another nation's debt in gold. If so, what happens when China says "you owe us $1Trillion, give us the gold."? I think we still have it, but who knows? And what if all our other creditors follow suit? I don't think the US going bankrupt can be good for anybody.

I dunno, maybe the mainstreamers are right, and there's nothing wrong with the way things are. Or maybe Rothbard is right, and the whole thing was a scam from the beginning. One thing I'm sure of: statements that "if we had kept a 100% gold standard, we would be in worse trouble now" or, for that matter "if we had kept a 100% gold standard, we would be in better shape now" are of no value, since there's no way to know which one is right.

[Foxx]

 blackshoe, on 2011-July-14, 18:36, said:

My understanding is that there are still international treaties whereby nations can demand repayment of another nation's debt in gold. If so, what happens when China says "you owe us $1Trillion, give us the gold."? I think we still have it, but who knows?

Rumor has it that there are hundreds of tons of gold buried away in an abandoned mine in North Dakota. No expedition, American or otherwise, has dared to venture there for decades, because of the hobgoblins, orcs, rattlesnakes, zombies, quaggas, ur-viles, and jabberwockies. Even the native Sioux Indian tribes didn't go in there.

Anyone ever heard of "Mean Mama"? If we could find him (yes, it's a "him"), he could haul out that coin in no time. He could single-handedly rescue our economy. Heck, I have enough experience to trek up there and lend a helping hand myself.

[hrothgar]

 blackshoe, on 2011-July-14, 18:36, said:

My understanding is that there are still international treaties whereby nations can demand repayment of another nation's debt in gold. If so, what happens when China says "you owe us $1Trillion, give us the gold."? I think we still have it, but who knows? And what if all our other creditors follow suit? I don't think the US going bankrupt can be good for anybody.

Nations live in the state of nature
They are welcome to demand whatever they want from one another...
And they are equally welcome to say "Bite me" to one another.
It would certainly hurt our credibility, our future ability to borrow, and probably cause world wide economic panic.
However, if we really wanted to, we could go tell the Chinese "We are going to pay you a dime. Bugger off".
I don't think the Chinese would be able to come over here and seize all our gold.

With this said and done, my understanding is that US debt is dollar denominated which means that we need to pay it back in dollars.
This is quite advantageous (For example, Greek debt is Euro denominated)

I'd certainly welcome seeing any treaty that is still in effect that suggests that US debt is denominated in gold.
(And, if so, what the exchange rate might be...)

[PassedOut]

 hrothgar, on 2011-July-14, 08:56, said:

You might want to look at the source materials Blackshoe is reading...

Rothbard was an anarcho-capitalist
(Not a warm fuzzy liberatarian minarchist... An outright anarchist)

These people are firmly detached from reality. I firmly recommend that folks read the following as a basic introduction to the species

http://examinedlife....shes_were_.html

Well it's certainly the case that the link gives examples of positions that are "detached from reality." So much so, in fact, that I doubt that Blackshoe personally holds those positions, regardless of what reading he happens to find interesting these days.