Max Keiser in The Journal.ie

meglome

Now I'm not the biggest fan of Max, or Russia Today for that matter. The mutual backslapping of the comments shows that many people do take Max Keiser seriously.

The Journal wrote:

FORMER STOCK TRADER Max Keiser has arrived in Ireland, bringing his outspoken brand of economic forecasting to bear on our financial situation.

Keiser shot to fame several years ago with a series of accurate predictions about the economic crash. He foresaw the role sub-prime mortgages would have in the meltdown, as well as the the collapse of US lenders Fannie Mae and Freddie Mac, two of the biggest casualties of the crisis.

The broadcaster is speaking at the Kilkenomics festival in Kilkenny this weekend. Ahead of his appearance he gave TheJournal.ie his take on Ireland’s plight, including:

Why Nama is a terrorist organisation
How rogue bankers should be brought to justice
Why Ireland needs regime change
Why the euro will eventually collapse
How RTÉ is a tool of the bankers

http://www.thejournal.ie/readme/interview-max-keiser-on-ireland-bankers-and-why-the-euro-will-collapse/

I'm no expert in economics but most of what he says just seems like conspiracy theory rubbish to me. What do you think?

RichardAnd

meglome wrote: »

I'm no expert in economics but most of what he says just seems like conspiracy theory rubbish to me. What do you think?

Be wary of dismissing things as conspiracy theories. Governments have been deceiving people for centuries by feeding them false information or by keeping things under wraps. Alot of those dismissed as conspiracy theorists are only guilty of questioning the status quo.

When choosing what you wish to believe, don't ever dismiss someone just because what they say is so far against the grain. They might be wrong but there is always a chance they are right. In either case, progress is only ever made when people start asking questions.

andrew

Some of the stuff he says in that article is mind-bogglingly stupid. OP, you can safely ignore Max Keiser, whoever the hell he is.

wingsof daun

Max Keiser features on RT almost daily and he has been on Vincent Brown. I don't understand the negative comments regarding him. He seems to be a hero of the masses, but I always have my doubts about such people that they may be "planted" and paid by the bankers to essentially deceive everyone. I doubt that now. Someone could "get rid" of him someway or other if he emerges as a real threat to the banking cartel of the world.

Voltex

I find him more entertaining than informative. I follow him on FB and tbh its getting rather boring listening(reading) to his doom mongering.

zootroid

Some of those headlines: "regime change", "terrorist organisation"

Christ

andrew

zootroid wrote: »

Some of those headlines: "regime change", "terrorist organisation"

Christ

"Gold Standard"

shudder :P

Slydice

Yeah... cos everythings

fine here in Ireland... yep,

real fine

MungBean

Perhaps someone could argue against some points he has made or something rather than scoff and call stuff stupid.

Things like "regime change" and "terrorist organisation" are not incorrct terms to use given his viewpoint.

andrew

MungBean wrote: »

Perhaps someone could argue against some points he has made or something rather than scoff and call stuff stupid.

Things like "regime change" and "terrorist organisation" are not incorrct terms to use given his viewpoint.

How does calling nama a terrorist organization make any sense? Unless his viewpoint is that of an attention grabbing media whore (which I think he is)

MungBean

andrew wrote: »

How does calling nama a terrorist organization make any sense? Unless his viewpoint is that of an attention grabbing media whore (which I think he is)

Buy a dictionary and look up the words then try to think rationally instead of spouting insults. Considering your standard of posting in this "serious discussion" forum I wont be responding to you any further.

andrew

MungBean wrote: »

andrew wrote: »

How does calling nama a terrorist organization make any sense? Unless his viewpoint is that of an attention grabbing media whore (which I think he is)

Buy a dictionary and look up the words then try to think rationally instead of spouting insults. Considering your standard of posting in this "serious discussion" forum I wont be responding to you any further.

ah, I remember the first time I tried to troll someone.

saywhatyousee

andrew wrote: »

"Gold Standard"

shudder :P

A worse idea than imaginary pieces of paper ie fiat currency?
What makes me shudder is your the mod of a economics forum.

saywhatyousee

I like Max Keiser sure he is a bit of a eccentric he knows his stuff though.

SupaNova

There is an irrational fear of gold in some quarters, and i hear the dumbest stuff regurgitated as an argument against gold, stuff like "you can't eat gold" or the comment Buffet repeated asking would you prefer 67foot cube of shiny metal or all the land in the US. Most gold haters don't understand the gold standard or the history of it. It was ended to fund World War I, not because it was a bad system.

The classical gold standard is actually much better than what we have now. The gold standard had a natural mechanism of balancing international trade and putting checks on inflation. The international monetary system we have now doesn't do well on either front and gives one country the privilege of being reserve currency, a truly horrible and unfair system which will end.

While we might not get a classical gold standard again, a re-emerging role for gold is not really an out there view. World Bank president, Robert Zoellick has said we are moving in this direction. If you look at the make up of the ECB's reserves, at launch, reserves were 30% gold, 70% foreign currencies, now reserves are about 65% gold and 35% foreign currencies which is interesting in itself. Also go to the World Gold Council's website and you can find a graph showing how Central Banks have gone from being overall net sellers of gold to net buyers. Adding the pieces of the puzzle it doesn't take much clairvoyance to imagine gold playing an important role again.

meglome

RichardAnd wrote: »

Be wary of dismissing things as conspiracy theories. Governments have been deceiving people for centuries by feeding them false information or by keeping things under wraps. Alot of those dismissed as conspiracy theorists are only guilty of questioning the status quo.

When choosing what you wish to believe, don't ever dismiss someone just because what they say is so far against the grain. They might be wrong but there is always a chance they are right. In either case, progress is only ever made when people start asking questions.

Oh I've spent many a day posting and reading over in the CT forum so I think I can spot conspiracy rubbish when I see it. And by golly does he love the sound of his own voice. Quite honestly any good points he makes are lost in the nonsense and rhetoric he spouts.

SupaNova wrote: »

There is an irrational fear of gold in some quarters, and i hear the dumbest stuff regurgitated as an argument against gold, stuff like "you can't eat gold" or the comment Buffet repeated asking would you prefer 67foot cube of shiny metal or all the land in the US. Most gold haters don't understand the gold standard or the history of it. It was ended to fund World War I, not because it was a bad system.

My understanding was there is not enough gold in the world to back the monetary system. And well... you can't eat gold.

The Journal wrote:

On why Ireland needs ‘regime change’:

The IMF is extracting wealth from the Irish people, through weapons of mass financial destruction, as Warren Buffett calls them. If the government are not going to represent the interests of the people who elected them, then the people have to assume that they need to be replaced. A regime change is necessary.

So I would say to the Irish people, see what people did in Cairo, see what people did in Tunisia. They were intolerant of financial terrorism, they sought a regime change, and they got it. That’s what this Occupy movement round the world is all about – because people understand that only regime change is going to get them independence from banking terrorists.

We as a nation borrowed big and lost. We supported a system that whomever gave away the most was elected. These comment above from his interview are just crap.

MungBean

meglome wrote: »

Oh I've spent many a day posting and reading over in the CT forum so I think I can spot conspiracy rubbish when I see it. And by golly does he love the sound of his own voice. Quite honestly any good points he makes are lost in the nonsense and rhetoric he spouts.

Perhaps you've spent too much time in the CT forum. Sounds like you've come across Max before and your very eager to throw a few digs based on the fact that he's probably popular among conspiracy folk.

We as a nation borrowed big and lost. We supported a system that whomever gave away the most was elected. These comment above from his interview are just crap.

We as a nation voted in FG and Labour with a mandate to stop bondholders being paid at the expense of the people. We as an nation didnt bring about this collapse, the banks did by over exposing themselves to the property market. We as a nation are not the banks.

What he's saying is if the government are not doing what the people want them to do then a change is in order. How is that talking crap ?

meglome

MungBean wrote: »

Perhaps you've spent too much time in the CT forum. Sounds like you've come across Max before and your very eager to throw a few digs based on the fact that he's probably popular among conspiracy folk.

Oh I've come across posts about Max many times over in the CT forum. And I've seen nothing in this most recent interview that paints him in a better light.

MungBean wrote: »

We as a nation voted in FG and Labour with a mandate to stop bondholders being paid at the expense of the people. We as an nation didnt bring about this collapse, the banks did by over exposing themselves to the property market. We as a nation are not the banks.

What he's saying is if the government are not doing what the people want them to do then a change is in order. How is that talking crap ?

Personally I saw it as electing a government to try to fix the mess. And I had no doubt whatsoever that there would be a lot of pain. Maybe it's me but morally if you borrow money you should pay it back. I'd like to think by playing ball with the EU we'll get more out of it in the long run.

But let's be very clear it's our overspending that is the biggest threat to this country. Must easier though to keep shouting about the banks and avoiding the elephant in the room.

SupaNova

meglome wrote: »

My understanding was there is not enough gold in the world to back the monetary system. And well... you can't eat gold.

There are different ways of using gold in an international monetary system. If you wanted to go back to a classical gold standard, the problem isn't that there isn't enough gold, it's just a question of price. The problems with going back to a classical gold standard are costs of transition and politcal will. It aint goin to happen voluntary, the political will could emerge as a way to rescue things in an unlikely worst case scenario.

The main reason i think gold is re-emerging as an international reserve asset is counterparty risk. When the Chinese receive paper dollars and buy american debt, they are dependent on the ability of future generations of American's to pay back that debt. They may get paid back nominally but when they go to cash in their dollars they will find that they have got a raw deal. If gold was used to pay for trade deficits, China and other countries that before received dollars are no longer dependent on the promise of single nation to produce in the future, but can use their gold to purchase the production of any nation worldwide. A return of gold in this role would stop out of control trade balances as countries who import more than they export will have to reverse course when they run out of gold.



Your not supposed to eat gold or paper debts.


Oh and Max Keiser is a loon.

The Outside Agency

I'd say the SDR will be new reserve currency eventually.

The IMF are suggesting it will provide stability in global markets.

The economic mods on this site are quite the experts...once dismissing any notion of IMF intervention in Ireland.

The same experts also dismissed privatisation of water and other structural readjustments.

Don't worry, Ireland's in good hands...we have highly educated economists.

MungBean

meglome wrote: »

Oh I've come across posts about Max many times over in the CT forum. And I've seen nothing in this most recent interview that paints him in a better light.

Ah yes, so its not other peoples opinions your after at all its just an opportunity to throw a few digs at him under the guise of a discussion.

Personally I saw it as electing a government to try to fix the mess. And I had no doubt whatsoever that there would be a lot of pain. Maybe it's me but morally if you borrow money you should pay it back. I'd like to think by playing ball with the EU we'll get more out of it in the long run.

FF were demolished because of their policies in dealing with the issue, FG and Labour were elected based on their policies to fix it. Both parties stated they would re-negotiate on behalf of the people the terms agreed with the EU and that they would negotiate with the banks and would not continue the complete repayment. They have a mandate to do what they said pre election, not to do whatever they want.

Your "morally if you borrow money you should pay it back" you do understand that the people didnt borrow the money, developers and banks borrowed the money right ? The majority of people dont owe any more than a mortgage.

But let's be very clear it's our overspending that is the biggest threat to this country. Must easier though to keep shouting about the banks and avoiding the elephant in the room.

If you want to be clear you might want to try looking at the actual situation rather than ignoring it while coming up with a solution.

The deficit would have been reduced with the proceeds of what could have been saved in the repayment of Anglo bondholders. But "Much easier to take it from the people than to take it from the bondholders".

Debtocracy

The status of Max Keiser is likely to rise in the future as his post-Lehmans predictions (currency devaluation, peak resources, peak credit, uprisings in Western societies) start to match the success of his pre-crash predictions. He also has the ability to move back and forth across the political and economic spectrum depending on the issue at hand. This gives him a wider potential audience than say Alex Jones who has a consistent underlying right wing agenda. The stuff about terrorism (e.g. waterboarding Bernanke) and the guillotine is not supposed to be taken seriously. It’s a ploy to keep an audience’s attention on what is normally boring material.

In fairness though he does not seem to have researched much about the Irish situation. Maybe he can’t grasp the fact that a government would bail out the financial sector without there being some form of corruption involved.

Some of his guests can be pretty decent like Steve Keen and this guy.

andrew

SupaNova wrote: »

There are different ways of using gold in an international monetary system. If you wanted to go back to a classical gold standard, the problem isn't that there isn't enough gold, it's just a question of price. The problems with going back to a classical gold standard are costs of transition and politcal will. It aint goin to happen voluntary, the political will could emerge as a way to rescue things in an unlikely worst case scenario.

The problem is that as the economy grows, the same amount of gold has to support a growing amount of production. Unless the 'price,' or rate of convertibility is, adjusted (analogous to an increase in money supply), then you get deflation. If the rate of convertibility is adjusted too much though, the standard loses credibility, and fails. This is a problem inherent in having a fixed money supply, and it's (partly) why very few actual economists (the Phd. having, lecture giving, research producing type) are in favour of a return to a fixed standard. I've only ever seen investor types (like Keiser and Schiff) advocate such a return, and I've always got the impression that they're bigging up gold because they've invested in gold, and have an interest in maintaining it's value.

SupaNova

andrew wrote: »

The problem is that as the economy grows, the same amount of gold has to support a growing amount of production. Unless the 'price,' or rate of convertibility is, adjusted (analogous to an increase in money supply), then you get deflation. If the rate of convertibility is adjusted too much though, the standard loses credibility, and fails. This is a problem inherent in having a fixed money supply, and it's (partly) why very few actual economists (the Phd. having, lecture giving, research producing type) are in favour of a return to a fixed standard. I've only ever seen investor types (like Keiser and Schiff) advocate such a return, and I've always got the impression that they're bigging up gold because they've invested in gold, and have an interest in maintaining it's value.

You seem to hold the belief that you need a money supply to grow in line with the economy, this would only be a problem if gold coins were used instead of cash or debit card at the point of sale, which nobody who has taken any time studying the gold standard advocates. Your reason for wanting a growing money supply seems to be fear of deflation, which there is also an irrational fear of.

I read a document from ECB just for the hell of it yesterday, and while they state the dangers of a rising CPI due to an increase in the money supply, they gloss over how deflation measured by the CPI that does not result from a collapse in the money supply but from productivity gains is a good thing. Hayek and Mises showed in clear daylight the problems with a policy of price stability.

To be fair though the ECB are open and honest in their documents about the problems, and try and make distinctions pointed out by Austrian economists. The reason i hear given for this fear is the Keynesian fear of hoarding, Which may hold true for sharp deflationary credit crash, but certainly wouldn't be true for -1% CPI measurement. For example price levels of phones and computers have dropped year on year for decades, and we haven't had a problem with hoarding yet. The ECB document quickly glosses over this argument.

There are plenty of phd types who advocate a gold standard, google Guido Hulsmann or De Soto, i could go to trouble of giving you more. De Soto has a treatise on Money and Credit. Modern economists who support a gold standard do so for reasons primarily the same as Mises, Hayek and Rothbard, and i haven't found anything that invalidates their work. The reason they advocate a gold standard are, it doesn't allow international trade to become imbalanced, and it limits the ability of governments and banks to inflate thus limiting the destructive misallocation of resources caused by the business cycle. The reason we don't have a gold standard is banks and governments don't want their ability to inflate restricted, simple as.

The reason many phd economists don't advocate a gold standard is they probably know little about it and never investigated it. The appeal to an authority is how most people dismiss the gold standard, even using senseless Buffet quotes. The approach doesn't have much weight, when a nobel prize winning economist can't tell you his thoughts on the economy.

http://www.youtube.com/watch?v=mFdnA5UNmVw

Cavehill Red

Kaiser's documentary on Ireland is well worth a watch. No conspiracies here:

https://www.youtube.com/watch?v=A5zXU1bQ3tQ

beeftotheheels

SupaNova wrote: »

You seem to hold the belief that you need a money supply to grow in line with the economy, this would only be a problem if gold coins were used instead of cash or debit card at the point of sale, which nobody who has taken any time studying the gold standard advocates. Your reason for wanting a growing money supply seems to be fear of deflation, which there is also an irrational fear of.

I read a document from ECB just for the hell of it yesterday, and while they state the dangers of a rising CPI due to an increase in the money supply, they gloss over how deflation measured by the CPI that does not result from a collapse in the money supply but from productivity gains is a good thing. Hayek and Mises showed in clear daylight the problems with a policy of price stability.

To be fair though the ECB are open and honest in their documents about the problems, and try and make distinctions pointed out by Austrian economists. The reason i hear given for this fear is the Keynesian fear of hoarding, Which may hold true for sharp deflationary credit crash, but certainly wouldn't be true for -1% CPI measurement. For example price levels of phones and computers have dropped year on year for decades, and we haven't had a problem with hoarding yet. The ECB document quickly glosses over this argument.

There are plenty of phd types who advocate a gold standard, google Guido Hulsmann or De Soto, i could go to trouble of giving you more. De Soto has a treatise on Money and Credit. Modern economists who support a gold standard do so for reasons primarily the same as Mises, Hayek and Rothbard, and i haven't found anything that invalidates their work. The reason they advocate a gold standard are, it doesn't allow international trade to become imbalanced, and it limits the ability of governments and banks to inflate thus limiting the destructive misallocation of resources caused by the business cycle. The reason we don't have a gold standard is banks and governments don't want their ability to inflate restricted, simple as.

The reason many phd economists don't advocate a gold standard is they probably know little about it and never investigated it. The appeal to an authority is how most people dismiss the gold standard, even using senseless Buffet quotes. The approach doesn't have much weight, when a nobel prize winning economist can't tell you his thoughts on the economy.

http://www.youtube.com/watch?v=mFdnA5UNmVw

Huh??? you're advocating some kind of religious adherence to an old school of economics on the basis that "[you] believe in it therefore it must be right, regardless of empirical evidence to the contrary"?

Burn the bondholders and set the markets free, whaaaaat????

andrew

SupaNova wrote: »

You seem to hold the belief that you need a money supply to grow in line with the economy, this would only be a problem if gold coins were used instead of cash or debit card at the point of sale, which nobody who has taken any time studying the gold standard advocates. Your reason for wanting a growing money supply seems to be fear of deflation, which there is also an irrational fear of.

Are you sure you understand what a gold standard is? Cash and debit money may not literally have to be gold, but they have to be backed by a certain quantity of gold under a gold standard.

I read a document from ECB just for the hell of it yesterday, and while they state the dangers of a rising CPI due to an increase in the money supply, they gloss over how deflation measured by the CPI that does not result from a collapse in the money supply but from productivity gains is a good thing. Hayek and Mises showed in clear daylight the problems with a policy of price stability.

To be fair though the ECB are open and honest in their documents about the problems, and try and make distinctions pointed out by Austrian economists. The reason i hear given for this fear is the Keynesian fear of hoarding, Which may hold true for sharp deflationary credit crash, but certainly wouldn't be true for -1% CPI measurement. For example price levels of phones and computers have dropped year on year for decades, and we haven't had a problem with hoarding yet. The ECB document quickly glosses over this argument.

Phones don't have a price level. Computers don't have a price level. They are both components of the price level. Please give me evidence that sustained deflation isn't harmful. An empirical study, or a paper outlining the theoretical reasons why. Why is debt deflation not bad?

There are plenty of phd types who advocate a gold standard, google Guido Hulsmann or De Soto, i could go to trouble of giving you more. De Soto has a treatise on Money and Credit. Modern economists who support a gold standard do so for reasons primarily the same as Mises, Hayek and Rothbard, and i haven't found anything that invalidates their work. The reason they advocate a gold standard are, it doesn't allow international trade to become imbalanced, and it limits the ability of governments and banks to inflate thus limiting the destructive misallocation of resources caused by the business cycle. The reason we don't have a gold standard is banks and governments don't want their ability to inflate restricted, simple as.

Please do give me more. I know of De Soto, but assuming we're talking about the same De Soto, his work is more about property rights than it is about money. Also, regarding the bolded bit; why is the ability to affect the nominal exchange rate bad? Why is trying to affect the economy in the short run bad?

The reason many phd economists don't advocate a gold standard is they probably know little about it and never investigated it. The appeal to an authority is how most people dismiss the gold standard, even using senseless Buffet quotes. The approach doesn't have much weight, when a nobel prize winning economist can't tell you his thoughts on the economy.

Seriously? That's it? You think they don't advocate a gold standard, because they don't understand it? Don't you think maybe, just maybe, they don't advocate it because it's a bad idea, theoretically? Learning about different monetary systems is a staple of pretty much every undergrad economics course. I doubt it'd be possible to get a economics degree and not understand the gold standard; it's not very difficult. And if very few mainstream economists go with the gold standard, and nowhere in the world is currently on such a standard, and pretty much every economist thinks deflation is a bad thing, does maybe that not mean it's not a great idea? And this isn't an appeal to authority; the gold standard isn't a bad idea just because economists say it is, it's a bad idea because of the theoretical arguments they have which say it's a bad idea. [An appeal to authority is where you say someone's right because of their position, not because of their theoretical knowledge of the subject]

SupaNova

andrew wrote: »

Are you sure you understand what a gold standard is? Cash and debit money may not literally have to be gold, but they have to be backed by a certain quantity of gold under a gold standard.

Yes an your point is?

Phones don't have a price level. Computers don't have a price level. They are both components of the price level. Please give me evidence that sustained deflation isn't harmful. An empirical study, or a paper outlining the theoretical reasons why. Why is debt deflation not bad?

Sustained price deflation measured by the CPI that is a result of increased productivity isn't harmful, i haven't said debt deflation is good.

Please do give me more. I know of De Soto, but assuming we're talking about the same De Soto, his work is more about property rights than it is about money. Also, regarding the bolded bit; why is the ability to affect the nominal exchange rate bad? Why is trying to affect the economy in the short run bad?

Got to Mises.org and you can find more. As for why inflation is bad you can read to ECB's own opinion as to why monetary inflation is bad, they aren't miles away from Mises, Hayek and Rothbard, they gloss over deflation in their own documents. Go read some Hayek to find out why monetary inflation is destructive.

Seriously? That's it? You think they don't advocate a gold standard, because they don't understand it? Don't you think maybe, just maybe, they don't advocate it because it's a bad idea, theoretically?

Well the mindless comments regarding gold would suggest that some economists need to brush up on this, as well as other basic stuff like value theory and supply and demand.

And if very few mainstream economists go with the gold standard, and nowhere in the world is currently on such a standard, and pretty much every economist thinks deflation is a bad thing, does maybe that not mean it's not a great idea?

Governments and Banks don't want a gold standard because it restricts their ability to inflate, not because it is a terrible system. If that's a criticism or flaw of the gold standard fair enough, its a flaw i would like to have.

You have to differentiate monetary deflation from price deflation. No one will disagree that monetary deflation is a bad thing. Price deflation brought about by productivity gains is not a bad thing.

Just because most economists think price deflation is bad, that doesn't mean it is.

SupaNova

beeftotheheels wrote: »

Huh??? you're advocating some kind of religious adherence to an old school of economics on the basis that "[you] believe in it therefore it must be right, regardless of empirical evidence to the contrary"?

Burn the bondholders and set the markets free, whaaaaat????

Reading and understanding Hayek makes me religious believer? If you bother to read and understand Hayek and his description of monetary inflation and the associated problems, you will find he doesn't really differ much at all from the ECB on the subject, but goes into far greater detail and gives far more explanation. I don't think there is much point discussing anything with someone who cries people are religious believers than actually make a point.

andrew

Got to Mises.org and you can find more. As for why inflation is bad you can read to ECB's own opinion as to why monetary inflation is bad, they aren't miles away from Mises, Hayek and Rothbard, they gloss over deflation in their own documents. Go read some Hayek to find out why monetary inflation is destructive.

I know a guy who got a post on Mises.org, while in second year, who isn't even doing an economics degree. It's not a very reputable site; are there any other sources?

Well the mindless comments regarding gold would suggest that some economists need to brush up on this, as well as other basic stuff like value theory and supply and demand.

What mindless comments? What economists? What makes you think they need to brush up on supply and demand? And what about the question: if so many economists don't advocate a gold standard, why do you think this is?

Governments and Banks don't want a gold standard because it restricts their ability to inflate, not because it is a terrible system. If that's a criticism or flaw of the gold standard fair enough, its a flaw i would like to have.

I know inflation is a bad thing; but it's better than deflation, no? And not all monetary interventions lead to inflation; what about contraction monetary policy, do you think it's good that that policy option be removed too?

Sustained price deflation measured by the CPI that is a result of increased productivity isn't harmful, i haven't said debt deflation is good.

You have to differentiate monetary deflation from price deflation. No one will disagree that monetary deflation is a bad thing. Price deflation brought about by productivity gains is not a bad thing.

Just because most economists think price deflation is bad, that doesn't mean it is.

A fall in a single price, say of computers (btw, the price of an entry level computer hasn't really fallen), is not deflation. The deflation to which I'm referring is monetary deflation, a fall in the general price level. It's not deflation brought on by productivity because I'm pretty sure productivity gains don't bring about a general fall in the price level. So I'm saying gold standard = monetary deflation. You agree it's a bad thing; so we're in agreement, no?

SupaNova

andrew wrote: »

I know a guy who got a post on Mises.org, while in second year, who isn't even doing an economics degree. It's not a very reputable site; are there any other sources?

Lol i hope you are you really being deliberately stupid rather than actully being stupid. Economists with Phd's and MA's regularly contribute to Mises.org, and its easy to track them down by going to the site and you go and talk about a forum poster. Mother of God :rolleyes:. Roger Garrison is another very good Austrian economist off the top of my head.

What mindless comments? What economists? What makes you think they need to brush up on supply and demand? And what about the question: if so many economists don't advocate a gold standard, why do you think this is?

Krugman for a start. And i'm not going on a runabout for someone being deliberately stupid.

I know inflation is a bad thing; but it's better than deflation, no? And not all monetary interventions lead to inflation; what about contraction monetary policy, do you think it's good that that policy option be removed too?

A fall in a single price, say of computers (btw, the price of an entry level computer hasn't really fallen), is not deflation. The deflation to which I'm referring is monetary deflation, a fall in the general price level. It's not deflation brought on by productivity because I'm pretty sure productivity gains don't bring about a general fall in the price level. So I'm saying gold standard = monetary deflation. You agree it's a bad thing; so we're in agreement, no?

You seem to be having a hard time separating monetary inflation/deflation from price inflation/deflation. Prices across the board can fall in relation to a fixed supply of money due to an increasing supply of goods and services. This type of deflation is not bad. Prices across the board fell from the start of the 19th Century to the end, because the money supply increased at a slower rate than the amount of goods and services.

beeftotheheels

SupaNova wrote: »

Lol i hope you are you really being deliberately stupid rather than actully being stupid. Economists with Phd's and MA's regularly contribute to Mises.org, and its easy to track them down by going to the site and you go and talk about a forum poster. Mother of God :rolleyes:. Roger Garrison is another very good Austrian economist off the top of my head.



Krugman for a start. And i'm not going on a runabout for someone being deliberately stupid.



You seem to be having a hard time separating monetary inflation/deflation from price inflation/deflation. Prices across the board can fall in relation to a fixed supply of money due to an increasing supply of goods and services. This type of deflation is not bad. Prices across the board fell from the start of the 19th Century to the end, because the money supply increased at a slower rate than the amount of goods and services.

So you're now engaging in time travel in order to justify an unjustifiable position. Time travel, which by the way, ignores pesky details like the death toll of the 19th century, there weren't any wars in that era, no small Frenchmen losing the run of themselves, no civil wars, revolutions, any of that sort of thing.

So, given that we, in the developed world, have moved on from a society where people die all the time from treatable diseases or hunger or large scale war, given we have produced a social safety net, we have also deprived ourselves of the incentive to produce goods below cost (no doubt you see this lack of pain and suffering as a bad thing).

http://news.bbcimg.co.uk/media/images/56291000/gif/_56291306_seven_billion_count_464.gif

Do you think that a gold mining chart echos this curve?

Lets look at the 20th century which more closely echos the world we live in. Deflation is a bad thing. It was a bad thing in the 30s, it was still a bad thing when Japan caught it almost 70 years later. It is still a bad thing today, not least because no one has yet figured out how to break it.

But none of that is why I accused you of being a religious zealot. Right now, the closest we have to a gold standard i.e. currencies being pegged to a value regardless of the needs or desires of their domestic economies, is the Euro. Which is, in a manner of speaking, the beginning, middle, and end of the current crisis. But you're advocating this on a global scale. Prevent any central bank back stopping her currency, have hard and fast exchange rates set once for all. This didn't work with the gold standard, it didn't work for the ERM and is currently not working for the euro.

Now I think eurozone politicians will learn and adapt and the euro will survive, but the ECB needs to print for the euro to survive, the very thing that a return to a gold standard would prevent from happening.

So, faced with the history of it not working, a belief that it will work this time is either religious zealotry, or is insanity.

SupaNova

beeftotheheels wrote: »

So you're now engaging in time travel in order to justify an unjustifiable position. Time travel, which by the way, ignores pesky details like the death toll of the 19th century, there weren't any wars in that era, no small Frenchmen losing the run of themselves, no civil wars, revolutions, any of that sort of thing.

So, given that we, in the developed world, have moved on from a society where people die all the time from treatable diseases or hunger or large scale war, given we have produced a social safety net, we have also deprived ourselves of the incentive to produce goods below cost (no doubt you see this lack of pain and suffering as a bad thing).

All these wars and revolutions were because of the gold standard, that's a pretty out there explanation, care to explain futher? And i don't think the rest of your rant above is worthy of any response.

http://news.bbcimg.co.uk/media/images/56291000/gif/_56291306_seven_billion_count_464.gif

Do you think that a gold mining chart echos this curve?

I am sure that a lot of things echo that curve, what the hell is your point?

Lets look at the 20th century which more closely echos the world we live in. Deflation is a bad thing. It was a bad thing in the 30s, it was still a bad thing when Japan caught it almost 70 years later. It is still a bad thing today, not least because no one has yet figured out how to break it.

Deflation in the 30's was an unavoidable result of crazy credit expansionary boom. Likewise with Japan. It shows the short sited Keynesian view that they cant even be bothered to study the preceding role of unsustainable credit expansion that occurred all through the 20's, and never do they consider it in the case of Japan.

http://www.financialsensearchive.com/fsu/editorials/amerman/2009/0318.html

But none of that is why I accused you of being a religious zealot. Right now, the closest we have to a gold standard i.e. currencies being pegged to a value regardless of the needs or desires of their domestic economies, is the Euro.

And that's what I like about the euro.

Which is, in a manner of speaking, the beginning, middle, and end of the current crisis. But you're advocating this on a global scale. Prevent any central bank back stopping her currency, have hard and fast exchange rates set once for all. This didn't work with the gold standard, it didn't work for the ERM and is currently not working for the euro.

The ECB is about as good as a central bank gets. Please tell me how exchange rates don't work under a gold standard? Enlighten me, please!

So, faced with the history of it not working, a belief that it will work this time is either religious zealotry, or is insanity.

It did work the last time until it was gradually dismantled. If you actually read my posts, i never said we were going to go back to the gold standard of old and nor do i really care to, all i said is that was a better system than we currently have. I also did say that gold will play a more important role as a reserve asset and in international trade. My guess is based on the changes in reserves of central banks and what some central banks say themselves regarding their purchases of gold. I would have thought anyone with an interest in economics would find those developments to be of some interest, as well as commentary of Robert Zoellick on the subject.

beeftotheheels

SupaNova wrote: »

All these wars and revolutions were because of the gold standard, that's a pretty out there explanation, care to explain? And i don't think the rest of your rant above is worthy of any response.

My point is that in the 19th century faced with a stagnating economy there were options to get things moving along the lines of invading another country, starting a war, and if subjects in a pesky western area of the empire were getting troublesome then you could allow them to starve to death.

However, such actions have consequences, often social consequences leading to further wars and or revolts.

You're suggesting that we look at the economics of the 19th century in a vacuum while ignoring the social unrest and revolution which accompanied said economics, and as a result of which the rules changed.

So to pretend that we can look that far back in history, at the economic outputs (ignoring the social consequences) without discounting that lesson for shifting social paradigms is just daft.

SupaNova wrote: »

I am sure that a lot of things echo that curve, what the hell is your point?

That populations are rising faster than ever. You insist lessons can be learned from times when the human population was a small fraction of what it is today, and an even smaller fraction of what it will be tomorrow, a situation much more suitable to a finite resource of money than one with an exploding population.

SupaNova wrote: »

Deflation in the 30's was an unavoidable result of crazy credit expansionary boom. Likewise with Japan. It shows the short sited Keynesian view that they cant even be bothered to study the preceding role of unsustainable credit expansion that occurred all through the 20's, and never do they consider it in the case of Japan.

I think everyone gets that but there are many preferable solutions to credit control than returning to the gold standard.

SupaNova wrote: »

The euro is about as good as a central bank gets. Please tell me how exchange rates don't work under a gold standard? Enlighten me, please!

Global currencies fixed to a finite resource as evidence of floating exchange rates? Really? It worked so well in the past, especially in war time I'm told, which is great because it is not like such an inflexible system could ever lead to war, or revolution, or anything like that.

Economics, like any social science, does not exist in a bubble. It interacts with politics, law etc and that is so obvious looking at the eurozone right now.

Fiat money may not be the best answer, and our paradigms will continue to shift, but the gold standard is not where they can or will shift to precisely because it was tried, and it failed, and its stepchild the euro is failing (until it stops trying to pretend that it is on the gold standard).

andrew

SupaNova wrote: »

Lol i hope you are you really being deliberately stupid rather than actully being stupid. Economists with Phd's and MA's regularly contribute to Mises.org, and its easy to track them down by going to the site and you go and talk about a forum poster. Mother of God :rolleyes:. Roger Garrison is another very good Austrian economist off the top of my head.

I'm not talking about a forum poster. This guy had a post on the main mises site. So you'll forgive me if I don't trust a site which I could post in tomorrow, if I wanted. How am I supposed to know who's actually an economist and who's just waffling? Surely there's 1 other site you could give?

Krugman for a start. And i'm not going on a runabout for someone being deliberately stupid.

Could you even show me the Krugman article? And is it actually stupid, or is it just that you disagree with him, and therefore, he's stupid?

You seem to be having a hard time separating monetary inflation/deflation from price inflation/deflation. Prices across the board can fall in relation to a fixed supply of money due to an increasing supply of goods and services. This type of deflation is not bad. Prices across the board fell from the start of the 19th Century to the end, because the money supply increased at a slower rate than the amount of goods and services.

As I've asked before, I'd love, really love, to see a citation for that. And the 19th century was pretty terrible economically, what with the depression which happened in the latter half, so I'm not surprised prices were falling. Also, could you clarify the difference between monetary deflation and price deflation?

nesf

andrew wrote: »

Also, could you clarify the difference between monetary deflation and price deflation?

One imagines he's talking a reduction in the money supply/velocity of money on one hand and a reduction in the price level on the other.

How or why it's relevant is beyond me though.

FreudianSlippers

... a terrorist organisation?

MungBean

FreudianSlippers wrote: »

... a terrorist organisation?

SupaNova

andrew wrote: »

I'm not talking about a forum poster. This guy had a post on the main mises site. So you'll forgive me if I don't trust a site which I could post in tomorrow, if I wanted. How am I supposed to know who's actually an economist and who's just waffling? Surely there's 1 other site you could give?

You previously asked for economists with Phd's, i gave you a few off the top of my head. A child who knows how to search the internet could find who is an Austrian economist and who is not, even without being directed to Mises.org, but this is beyond your abilities i see.

On Mises.org all the material i have read is from Hayek, Mises, Rothbard, Hazzlit and others i have mentioned. Is their work invalid because the site hosts an article from someone i never heard of and probably will never read. I'd be curious if you could point to this article or give me the name of the author so i can see this article that ruins the credibility of the whole site? Please do!

Could you even show me the Krugman article? And is it actually stupid, or is it just that you disagree with him, and therefore, he's stupid?

I really don't have the motivation to go running around for you. I'm sure with a little effort you could find which comments of Krugman's an Austrian economist finds absurd. Being an Austrian economist is not even required to find some of what Krugman says absurd.

As I've asked before, I'd love, really love, to see a citation for that. And the 19th century was pretty terrible economically, what with the depression which happened in the latter half, so I'm not surprised prices were falling. Also, could you clarify the difference between monetary deflation and price deflation?

My sources are Rothbard and Thomas E Woods. You can easily find their credentials, all though maybe you can't. Tell me about this 19th Century depression and the authors and Historian's you are basing this on? Love to hear it.

SupaNova

beeftotheheels wrote: »

My point is that in the 19th century faced with a stagnating economy there were options to get things moving along the lines of invading another country, starting a war, and if subjects in a pesky western area of the empire were getting troublesome then you could allow them to starve to death.

However, such actions have consequences, often social consequences leading to further wars and or revolts.

Lol Keynesian logic, the wars and empires are the economic stimuli to overcome the animal spirits that take hold of the market? What metrics and which economic historian's are you using when you claim that the 19th Century was a stagnating economy?

You're suggesting that we look at the economics of the 19th century in a vacuum while ignoring the social unrest and revolution which accompanied said economics, and as a result of which the rules changed.

So to pretend that we can look that far back in history, at the economic outputs (ignoring the social consequences) without discounting that lesson for shifting social paradigms is just daft.

So again, you say the wars and revolutions are a result of economics and the gold standard? Please point me to your revisionist history?

That populations are rising faster than ever. You insist lessons can be learned from times when the human population was a small fraction of what it is today, and an even smaller fraction of what it will be tomorrow, a situation much more suitable to a finite resource of money than one with an exploding population.

I think everyone gets that but there are many preferable solutions to credit control than returning to the gold standard.

You don't need to expand the money supply in line with population. We have become somewhat accustomed to inflation though, and I don't recommend a return to the gold standard of old, i mentioned here and in another thread i am quite happy with the Eurosystem, and i see that model as preferable to any other.

Global currencies fixed to a finite resource as evidence of floating exchange rates? Really? It worked so well in the past, especially in war time I'm told, which is great because it is not like such an inflexible system could ever lead to war, or revolution, or anything like that.

Yes it had to be abandoned in war time. I love this Gold Standard leads to wars line, love to hear more about it, equally as stupid as the fiat money leads to wars line that goldbugs regurgitate.

Economics, like any social science, does not exist in a bubble. It interacts with politics, law etc and that is so obvious looking at the eurozone right now.

I don't disagree.

Fiat money may not be the best answer, and our paradigms will continue to shift, but the gold standard is not where they can or will shift to precisely because it was tried, and it failed, and its stepchild the euro is failing (until it stops trying to pretend that it is on the gold standard).

I think fiat money can be ok, Hayek would agree, which may surprise people who instantly dismiss the Austrian School as religious goldbugs. I admit some of the silly sound bites repeated by goldbugs may give this impression. I don't see a gold standard of old returning, and it would fail again, governments and banks want the ability to inflate to serve themselves. I have even said it already, that if you want to call the restrictions on inflation, permitted by the gold standard a flaw, so be it. You are reading parts my posts and descending into a mindless rant.

I do see gold playing a role again, that does not mean i see a classical gold standard returning or do i really care to, and i have given reasons why? I would have thought someone interested in economics might find developments in the make up of central bank reserves of some interest, guess not.

andrew

SupaNova wrote: »

You previously asked for economists with Phd's, i gave you a few off the top of my head. A child who knows how to search the internet could find who is an Austrian economist and who is not, even without being directed to Mises.org, but this is beyond your abilities i see.

I really don't think it's that much to ask that you provide some links, but nevermind. I had a look at the mises 'faculty.' Telling that only just over half even have Phd's in economics, but I'll accept your point that a handful of american economists teaching at small universities are indeed austrians. I would've been more impressed if they taught at one of these universities though.

On Mises.org all the material i have read is from Hayek, Mises, Rothbard, Hazzlit and others i have mentioned. Is their work invalid because the site hosts an article from someone i never heard of and probably will never read. I'd be curious if you could point to this article or give me the name of the author so i can see this article that ruins the credibility of the whole site? Please do!

Well, it harms the credibility of the site to host material by some randomer, yeah.

I really don't have the motivation to go running around for you. I'm sure with a little effort you could find which comments of Krugman's an Austrian economist finds absurd. Being an Austrian economist is not even required to find some of what Krugman says absurd.

You're the austrian. You're the one saying it's absurd, so really the onus is on you to show it to me.

My sources are Rothbard and Thomas E Woods. You can easily find their credentials, all though maybe you can't. Tell me about this 19th Century depression and the authors and Historian's you are basing this on? Love to hear it.

And I'm willing to bet they're your only sources. I've asked time and again for proof of the assertion that deflation isn't bad, and you can't provide me with a single empirical study or paper; nothing. You read those two guys, they seemed to make sense, and so you decided you were an austrian without fully understanding the whole world of economic theory that's out there.

Also, can you clarify the difference between monetary and price deflation? Is nesf correct?

And yes, yes I can. Here's a link. And before you read the last section and think that it proves me wrong, note that the entire period was a period of low growth and stagnation. Surely if deflation is a good thing, or not bad, then the opposite would've been the case no? On either side of the flat bit which that depression represents, we have significant growth of output and prices, and in the centre, relatively flat growth and falling prices.

SupaNova

andrew wrote: »

You're the austrian. You're the one saying it's absurd, so really the onus is on you to show it to me.

Google the words, Krugman, criticism, absurd, contradiction. Try searching Mises.org also. Although the common sense and the ability to use the search function seems to be beyond you.

And I'm willing to bet they're your only sources. I've asked time and again for proof of the assertion that deflation isn't bad, and you can't provide me with a single empirical study or paper; nothing. You read those two guys, they seemed to make sense, and so you decided you were an austrian without fully understanding the whole world of economic theory that's out there.

I don't have to prove or show empirical studies that falling prices due to increased productivity is bad. Why would anyone go to the trouble of studying something that is obviously a good thing. Prices falling due to changes in money supply are bad, they are different things. Its pretty simple.

Also, can you clarify the difference between monetary and price deflation? Is nesf correct?

Its really simple, you have a supply of real world goods and services on one hand and on the other hand we have a money supply. Changes in money supply distort prices, increases and decreases both are harmful. Increases cause prices to rise further than they otherwise would and the opposite for deflation. If there is no change in the supply of money, and prices fall because there is an increase in the available number of goods and services that is not a bad thing. There is no empirical study to show falling prices for that reason are bad, what logical basis would you have that would warrant such a study?

And yes, yes I can. Here's a link. And before you read the last section and think that it proves me wrong, note that the entire period was a period of low growth and stagnation. Surely if deflation is a good thing, or not bad, then the opposite would've been the case no? On either side of the flat bit which that depression represents, we have significant growth of output and prices, and in the centre, relatively flat growth and falling prices.

I'll have a read later.

Crazy Horse 6

Say what you want about him but he's been bang on the money about what is going on in Europe regarding transfer of wealth from the soverign to the banks.

Amberman

Don't laugh at him, pity him. Poor Andrew clearly doesn't understand that he's fallen under the influence of some witchdoctors.

How the Fed Bought The Economics Profession.

And the High Priests, Bernanke and Geithner haven't been right about anything apart from bailing out Wall Street......for now...they can't see bubbles, the cures haven't worked as they thought they might, the debt has grown in the US just like it did in Japan, the US has lost its AAA rating (after Geithner said there was no way that could happen).

How can these guys be so wrong so often and still have a job?

HeliBen has an Economics PhD, doesn't he Andrew? How do you explain that fact that he has been wrong about almost everything if he's so smart and understands economic reality so well??

Heres one view...

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

SupaNova

Myth of the Long Depression

Some economic historians have complained about the "great depression" that is supposed to have struck the United States in the panic of 1873 and lasted for an unprecedented six years, until 1879. Much of this stagnation is supposed to have been caused by a monetary contraction leading to the resumption of specie payments in 1879. However, this "depression" saw an extraordinarily large expansion of industry, of railroads, of physical output, of net national product, and real per capita income. As Friedman and Schwartz admit, the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged "monetary contraction" never took place, the money supply increasing by 2.7 percent per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion—a rise of 13.1 percent or 2.6 percent per year. In short, a modest but definite rise, and scarcely a contraction.[43]


The myth was brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879. Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. In the natural course of events, when government and the banking system do not increase the money supply very rapidly, free-market capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers. The analogous "great depression" in England in this period was also a myth for the same reasons.[44]


Although per-capita nominal income declined very gradually from 1873 to 1879, that decline was more than offset by a gradual increase over the course of the next 17 years. Finally and most significantly, real per-capita income either stayed approximately constant (1873-1880; 1883-1885) or rose (1881-1882; 1886-1896), so that the average consumer appears to have been considerably better off at the end of the 'depression' than before. Studies of other countries where prices also tumbled, including the US, Germany, France, and Italy, reported more markedly positive trends in both nominal and real per-capita income figures. Profits generally were also not adversely affected by deflation, although they declined (particularly in Britain) in industries that were struggling against superior, foreign competition.


Accompanying the overall growth in real prosperity was a marked shift in consumption from necessities to luxuries: by 1885, 'more houses were being built, twice as much tea was being consumed, and even the working classes were eating imported meat, oranges, and dairy produce in quantities unprecedented'. The change in working class incomes and tastes was symbolized by 'the spectacular development of the department store and the chain store'. In short, the Great Depression of 1873-96, considered as a depression of anything except the price level, appears to be a myth:

Prices certainly fell, but almost every other index of economic activity - output of coal and pig iron, tonnage of ships built, consumption of raw wool and cotton, import and export figures, shipping entries and clearances, railway freight clearances, joint-stock company formations, trading profits, consumption per head of wheat, meat, tea, beer, and tobacco - all of these showed an upward trend.

Lol some depression alright. And i was aware of this myth thanks to Milton Friedman and Thomas Woods.

Some relevant Thomas E Woods lectures:
http://www.youtube.com/watch?v=6XbG6aIUlog
http://www.youtube.com/watch?v=czcUmnsprQI
http://www.youtube.com/watch?v=TxcjT8T3EGU

And in the talk given about Keynesian predictions he quotes Samuelson, someone who would meet all your requirements: A Keynesian economist, a nobel prize winner, lectured at MIT, here's some of his wonderful insight:

"Every economy has its contradictions. … What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition

"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition

Bravo!

Amberman

SupaNova wrote: »

Lol some depression alright. And i was aware of this myth thanks to Milton Friedman and Thomas Woods.

Some relevant Thomas E Woods lectures:
http://www.youtube.com/watch?v=6XbG6aIUlog
http://www.youtube.com/watch?v=czcUmnsprQI
http://www.youtube.com/watch?v=TxcjT8T3EGU

And in the talk given about Keynesian predictions he quotes Samuelson, someone who would meet all your requirements: A Keynesian economist, a nobel prize winner, lectured at MIT, here's some of his wonderful insight:

"Every economy has its contradictions. … What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition

"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition

Bravo!

Game, set and match. Well played Sir, well played!

nesf

SupaNova wrote: »

Its really simple, you have a supply of real world goods and services on one hand and on the other hand we have a money supply. Changes in money supply distort prices, increases and decreases both are harmful. Increases cause prices to rise further than they otherwise would and the opposite for deflation. If there is no change in the supply of money, and prices fall because there is an increase in the available number of goods and services that is not a bad thing. There is no empirical study to show falling prices for that reason are bad, what logical basis would you have that would warrant such a study?

It comes down to whether one believes that a deflationary spiral can happen (i.e. lower goods prices driving down output which drives down wages which drives down prices and so on). Austrians and others believe this cannot happen, mainstream economists believe it can.

One thing I'd caution you on is that any decrease in the money supply has a very long lag in making an impact on prices. You can't equate the two as one in the same exactly.

nesf

SupaNova wrote: »

Lol some depression alright. And i was aware of this myth thanks to Milton Friedman and Thomas Woods.

Some relevant Thomas E Woods lectures:
http://www.youtube.com/watch?v=6XbG6aIUlog
http://www.youtube.com/watch?v=czcUmnsprQI
http://www.youtube.com/watch?v=TxcjT8T3EGU

And in the talk given about Keynesian predictions he quotes Samuelson, someone who would meet all your requirements: A Keynesian economist, a nobel prize winner, lectured at MIT, here's some of his wonderful insight:

"Every economy has its contradictions. … What counts is results, and there can be no doubt that the Soviet planning system has been a powerful engine for economic growth." — Paul Samuelson, Economics, 1985 edition

"Contrary to what many skeptics had earlier believed, the Soviet economy is proof that … a socialist command economy can function and even thrive." — Paul Samuelson, Economics, 1989 edition

Bravo!

It's a matter of optics. If you take smaller periods in the 1870's then you see the decrease in output and the higher unemployment to go along with the price deflation.

SupaNova

nesf wrote: »

It comes down to whether one believes that a deflationary spiral can happen (i.e. lower goods prices driving down output which drives down wages which drives down prices and so on). Austrians and others believe this cannot happen, mainstream economists believe it can.

One thing I'd caution you on is that any decrease in the money supply has a very long lag in making an impact on prices. You can't equate the two as one in the same exactly.

Yes an Austrian would acknowledge that wages nominally can fall in a scenario. All that matters are real wages. It's possible that real wage rates can rise with increases in money supply, or without. What the Austrian economists explained is the changes in money supply and the way in which money enters and filters through the economy distort prices and the structure of the economy. After reading the ECB document, its something an up front and honest central bank are aware of to a certain degree. But the way they state the problem mirrors exactly Friedman's explanation of what he referred to as static caused by inflation. Hayek's explanation of the same problem is far better, and accounts for changes of the structure of production, describes the temporary stimulative effect, a better description of how inflation filters through the economy, and how the market tries to adjust and why stimulus will be short lived. In the absence or limited effects of changes in money supply, you have far less of the negative effects, and more sustainable growth that will result in real wage rates rising faster, than a market constantly trying to adjust production to the source and volume of monetary expansion.

SupaNova

nesf wrote: »

It's a matter of optics. If you take smaller periods in the 1870's then you see the decrease in output and the higher unemployment to go along with the price deflation.

Yes you can zoom in and find price deflation correlating with unemployment for certain periods. Correlation is not causation. That's where Keynesian theories and other theories of the boom bust go wrong. They look at the effects of the bust and diagnose them as the cause. One of the videos i linked was on economic cycles before the fed. There are plenty of periods you can zoom in on and find prices falling and high unemployment, but also you can find periods where prices fell and the economy was booming. You would think this would be a clue to perhaps look for some other reason why the economy booms and bust other than blaming falling prices for causing a bust. What Austrian's have is a logical sound theory, of why artificial credit expansions cause booms, and why busts are unavoidable. And for every boom and bust in the 19th Century, they have found data showing loose monetary expansion the source of booms and busts. Busts will be typified by higher unemployment and falling prices.

nesf

SupaNova wrote: »

Yes you can zoom in and find price deflation correlating with unemployment for certain periods. Correlation is not causation. That's where Keynesian theories and other theories of the boom bust go wrong. They look at the effects of the bust and diagnose them as the cause. One of the videos i linked was on economic cycles before the fed. There are plenty of periods you can zoom in on and find prices falling and high unemployment, but also you can find periods where prices fell and the economy was booming. You would think this would be a clue to perhaps look for some other reason why the economy booms and bust other than blaming falling prices for causing a bust. What Austrian's have is a logical sound theory, of why artificial credit expansions cause booms, and why busts are unavoidable. And for every boom and bust in the 19th Century, they have found data showing loose monetary expansion the source of booms and busts. Busts will be typified by higher unemployment and falling prices.

Really, you sound like you think the Austrian theory in this matter is flawless. It's far from it and rejected by most mainstream economists for various reasons.

I've no interest in arguing the minutiae of this, it's not an area of economics that I'm hugely familiar with or interested in but you're overstating the Austrian position here and should couch the theory in more qualified terms rather than being "logically sound" etc which implies that other theories do not work (which is bizarre given the successors to this theory and demand side theories of boom/bust cycles).

This is an area of economics with one of the grand supply vs demand side debates. It very much is up for debate and a lot of work is being done in the area but this should stop you from proclaiming the Austrian theory as the perfect solution, things are far, far more complex and uncertain when you actually look into the area.