David Walker: "US Government Immorality Will Lead to Bankruptcy."

[WickedLou9]

I stopped reading when it said "Austrian School of economics"

[lew]

Originally Posted by WickedLou9

I stopped reading when it said "Austrian School of economics"

[WickedLou9]

Originally Posted by lew

You have to admit, they are a little bit out there. They don't use any real data or analysis to test thier theories. It seems to be more psychology than anything else.

[Fed Up]

Originally Posted by WickedLou9

You have to admit, they are a little bit out there. They don't use any real data or analysis to test thier theories. It seems to be more psychology than anything else.

Right...and Ron Paul's a "kook!"

Fed Up

[6SpeedTA95]

Originally Posted by WickedLou9

You have to admit, they are a little bit out there. They don't use any real data or analysis to test thier theories. It seems to be more psychology than anything else.

That's partly true...but you can NOT ignore the psychological aspect of economics. Keep in mind it was austrian school economists that were the first to really challenge and in many ways disprove the marxists.

[A_C_E]

Originally Posted by Fed Up

Right...and Ron Paul's a "kook!"

Fed Up

Ron Paul is a kook.

Anyone who thinks a hard currency wouldn't immediately pull down US GDP by a substantial margin is, by definition, a kook.

[Fed Up]

Originally Posted by A_C_E

Ron Paul is a kook.

Anyone who thinks a hard currency wouldn't immediately pull down US GDP by a substantial margin is, by definition, a kook.

And the beloved U.S. dollar in it's 37th year of the "experiment" has done how well?

Ron Paul wants to have both fiat money and gold trade side by side and let the People decide. The Constitution in Article 1 Sec. 8 defines money as a certain "weight" of silver or gold.

But hey...if one likes to invest their money in the bank, go ahead! Freedom of choice and all...

Check out the charts here:

Jesse's Café Américain: Financial Madness: Credit Default Swaps

Also:

OCCpg1.png (image)

and

This brings us to the chart. It is published by Cumberland Associates. It lets us see the decline in the FED's holdings of Treasury debt. The important section of the chart is labeled "Securities." The color is deep purple.

Fed Up

[A_C_E]

Did I say I wanted to get into another argument about the gold standard with you?

I said, "Anyone who thinks any movement to a hard currency wouldn't substantially yank down US GDP is a kook."

Please, if you would like to try and disprove me, go ahead. Here's a hint: you aren't going to be able to.

[Fed Up]

I never said I was trying to convince you. I actually had a post set up to go and included a statement that referenced that but lost it and had to do the damn thing over again...and left out the "pre-qualifier" as I know you ACE. You're mind is made up. No biggie.

But Ron Paul didn't say what you think he said. Read his books before you criticize him.

Fed Up

[kombayn]

If you've read anything on Ron Paul's platform, he wouldn't replace the Federal Reserve with a Hard Currency, he would allow U.S. citizens to opt into a gold standard to compete with the Fed which in the end, the ultimate goal would-be the Gold Standard defeats the Fed Notes which eliminates the Fed.

Same with education, social security, immigration or any other issue, he would slowly ween the United States away from it when it's stable. He's way smarter than that. Do some research on the man. Ron Paul follows a extremely Liberal (the true definition before the Democratic Party hi-jacked the term) Austrian set of Economics. Check out any of his books, fan-sites or non-profit organizations on his policies.

[A_C_E]

It's not that in some theoretical world a hard currency can't work. I'm of the belief that it can't, but am aware that there are no absolutes in economics.

At the same time, any degree of movement to hard currency (fully backed, partially backed, competing, etc) will necessarily result in a dramatic roll-back of US GDP. Which, needless to say, is not something we can afford right now.

Monetary Velocity Theory will give you the answers.

[A_C_E]

Originally Posted by kombayn

If you've read anything on Ron Paul's platform, he wouldn't replace the Federal Reserve with a Hard Currency, he would allow U.S. citizens to opt into a gold standard to compete with the Fed which in the end, the ultimate goal would-be the Gold Standard defeats the Fed Notes which eliminates the Fed.

Same with education, social security, immigration or any other issue, he would slowly ween the United States away from it when it's stable. He's way smarter than that. Do some research on the man. Ron Paul follows a extremely Liberal (the true definition before the Democratic Party hi-jacked the term) Austrian set of Economics. Check out any of his books, fan-sites or non-profit organizations on his policies.

I had Ron Paul rammed down my throat for months. I know all about his policies.

I had to actually educate myself in them if I hoped to fight off his legions of drones on college campuses (though not my own ) and the internet. Fact of the matter is, Austrian economics, like Lou said, is a ton of theory and virtually no practice. Way less practice than, say, Leninism. Most students of the Dismal Science agree that Austrian economics would work no better than Marxist economics would. There are plenty of faults on both sides, and the ideal solution is to meet in the middle--as we have done.

Yea, Ron Paul read a lot of books. He's also a Southern Christian ob-gyn. Forgive me if I trust other authorities when it comes to Finance.

[kombayn]

I'm not saying Ron Paul is the word of God when it comes to economics but he practices a theory that hasn't been tested, as you said...

Fact of the matter is, Austrian economics, like Lou said, is a ton of theory and virtually no practice.

He would allow practice putting it in competition. It'd be like the big DivX vs. DVD debate or HD-DVD vs. Blu-Ray, one would eventually lose and if it was the Gold standard, he would make the Fed the official standard.

I just don't like people calling Ron Paul a kook, when he has a different set of politics. His most important issues are No Foreign Wars and Full Private Rights for All. What's not to like when it comes down to basics as that? And he's a doctor... Are you? And what is a Southern Christian ob-gyn? I've never heard that term.

[Fed Up]

Originally Posted by A_C_E

It's not that in some theoretical world a hard currency can't work. I'm of the belief that it can't, but am aware that there are no absolutes in economics.

At the same time, any degree of movement to hard currency (fully backed, partially backed, competing, etc) will necessarily result in a dramatic roll-back of US GDP. Which, needless to say, is not something we can afford right now.

Monetary Velocity Theory will give you the answers.

I understand where you're coming from on the first part ACE, I just prefer one system over the other for the reasons (and many more) I posted.

However, as far as your understanding of velocity, it has been refuted by Mises, Hazlit and Rothbard. Of course you won't agree with them...I understand this too. I'll let you have the last word if you want as naturally we can agree to disagree.

Fed Up

Mises said;

"The main deficiency of the velocity of circulation concept is that it does not start from the actions of individuals but looks at the problem from the angle of the whole economic system. This concept in itself is a vicious mode of approaching the problem of prices and purchasing power. It is assumed that, other things being equal, prices must change in proportion to the changes occurring in the total supply of money available. This is not true."

Hazlit sums it up this way;

"Similarly, when we turn to money, increased exchanges (i.e., an increased V) may accompany a decline in the value or purchasing power of money. But there will be no necessary relation between the change in velocity of circulation and the extent of the decline in the monetary unit's purchasing power. In fact (though this happens less often), an increase in the velocity of circulation of money may be accompanied by an increase in the purchasing power of money, i.e., by a fall in prices. This can happen in a speculative collapse, as, say, in late 1929.

This bears repetition in slightly different words. Increased velocity of circulation is not, in itself, even a contributing cause of higher commodity prices. It is not even a link in the chain of causation. Increased velocity of circulation and higher commodity prices are joint results of a change in the value of money in relation to the value of goods. When people value money less in relation to goods, they offer more money for goods; when they value it more in relation to goods, they offer less money for goods. Any change in velocity of circulation is likely to be a result of these changed value decisions: it is not itself a cause of the change in value. The value of money does not decline because its velocity of circulation has increased, though the velocity of circulation may increase, when it does so, because the value of money in relation to goods has declined.

To sum up:

Velocity of circulation is a result, not a cause. It is commonly a passive resultant of changes in people's relative valuations of money and goods.

Velocity of circulation cannot fluctuate for long beyond a comparatively narrow range, because it is closely tied (except for speculation) to the rate of consumption and production.

V does vary with the volume of speculation, but an increased volume of speculation may accompany either rising or falling prices.

V is never an independent factor on the side of money, because the transfer of goods must speed up, other things being equal, to an equal amount. It is just as valid to think of the velocity of circulation of money being caused by what happens on the side of goods as by what happens on the side of money.

Actually it is psychological factors — desire to buy and sell, produce and consume — that determine V.

Monetary theory would gain immensely if the concept of an independent or causal velocity of circulation were completely abandoned. The valuation approach, and the cash holdings approach, are sufficient to explain the problems involved."

Rothbard refutes Irvings Quantitative Theory Of Money equation MV=VT in Man, Economy and State (the version with Power and Market), Chapter 11, pages 831-842 " He wrote; "Things, whether pieces of money or pieces of sugar or pieces of anything else, can never act; they cannot set prices or supply and demand schedules. All this can be done only by human action: only individual actors can decide whether or not to buy; only their value scales determine prices. It is this profound mistake that lies at the root of the fallacies of the Fisher equation of exchange: hum anction is abstracted out of the picture, and things are assumed to be in control of economic life."

[A_C_E]

You're right, in that we could argue this to the death and never come to a consensus. It's the reality of the field we are interested in.

For instance, I would say that Mises is trying to provide an answer (minus any data) by re-formulating the question. "It is assumed that, other things being equal, prices must change in proportion to the changes occurring in the total supply of money available." This isn't the point being contested, however. Aggregate prices are more stable than GDP, so if Velocity goes down (as it necessarily does moving from pure fiat currency to anything not pure fiat currency), even if we could make such a change while removing no money from circulation whatsoever, either Aggregate Prices or GDP still have to go down. Prices don't necessarily have to change, but if they do not, then GDP does. That's just simple math.

I would also say that your response certainly does nothing to disprove Lou's notion that Austrian economics is more about psychology than data-based science, though that is a discussion for another time.

But yes, to sum up: I absolutely agree with you. The only right answer is that there is no right answer. It would be like putting an Objectivist and a Communist in a room together and telling them to convince the other they were wrong. The debate could go on until the end of time and never end. This is the reality we have presented herein.

All other things being equal, I will choose to familiarize myself most directly with our current economic setup. Only a fool would believe it will change anytime soon, so if one wants to make a great deal of money working in the Investment arena, studying the markets as is seems agreeable. I will assume we can agree on that, and can thus end this quick jaunt on a positive notion--concurrence.

[Fed Up]

Fair enough...

Fed Up

[6SpeedTA95]

Originally Posted by Fed Up

Fair enough...

Fed Up

Hard currencies have problems with drastic fluctuations like floating currencies do and on top of that its much easier for a government to manipulate and inflate its currency valuation when its tied to something like Gold. One of the major problems in the great depression was the government pegging to gold and trying ot increase the value of the dollar...there's a bunch of other issues with it too but thats just a couple examples.

[WickedLou9]

Originally Posted by 6SpeedTA95

That's partly true...but you can NOT ignore the psychological aspect of economics. Keep in mind it was austrian school economists that were the first to really challenge and in many ways disprove the marxists.

psychology is definatly important but it can not be the only consideration. My main complaint abotu pure anarcho-capitalists is that it does not take into account psychological issues and it has no values. you definately need aspects of all 3 things, But the Austrian school seems to take too much of one at the expense of ignoring the others

[6SpeedTA95]

Originally Posted by WickedLou9

psychology is definatly important but it can not be the only consideration. My main complaint abotu pure anarcho-capitalists is that it does not take into account psychological issues and it has no values. you definately need aspects of all 3 things, But the Austrian school seems to take too much of one at the expense of ignoring the others

I think thats a good point and I agree with it. It seems that a mix of numerous economic thoughts/schools would in reality provide the best mix of growth and stability.