Capitalism Hits the Fan (Lecture)

[Drex]

someone in my family posted this in an argument on facebook yesterday.

I laughed so. fucking. hard.

http://blog.mises.org/13753/gains-fr...e-differences/

i've got an excess of carrots in my backyard. surely they will hand over some of their excess jewelry in exchange for my excess carrots. then they won't need to buy groceries and i won't need to buy my gf a present for her bday.

[Demosthenes11]

i've got an excess of carrots in my backyard. surely they will hand over some of their excess jewelry in exchange for my excess carrots. then they won't need to buy groceries and i won't need to buy my gf a present for her bday.

ITS CALLED LOGIC ASSHOLE

[Pirian]

Sure, I can buy 2 Silver Maples with $100 but just the shipping and other costs with 1 $20 bill. Sad though, last year I could buy 3 Silver Maples, and 3 years ago, I would of been able to buy 5! LOL. I love that, "Don't try to disprove me because I am not wrong" argument.

Yes, this is called "inflation". It's a normal occurrence that happens when demand exceeds supply. Sorry, I don't mean to be talking to you like you're an idiot, but I'm finding that I can't take these facts for granted.

Yes, US has the largest economy. It is still the #1 economic power, but it's power is on the decline to China, this is a fact.

It's on the decline in terms of manual labor, but that is to be expected for a society in our(I'm assuming you're American?) status. While our physical labor force is still more than a force to be reckoned with, our future is with technologies growth. This is where the higher paying jobs, that Americans demand, are. Of course, that isn't to say that there won't always be a place for physical labor in the US. If you compare the population / income ratio's of the US and China then there ceases to be any similarities between us at all. Our working poor are better off than an entire US population's worth of people in China, this is a fact.

China is fragile to its own citizens. They can flip on a moments notice. They do like to keep civility in the country, so since their inflation is on a 6% reported (probably higher) tear, and holding higher reserves does jack shit, I would believe that they will have to allow their money to rise in strength to combat the inflation.

Well arguing is not going to win anything here, its the Internet. Especially if you simply tell me that I am wrong; nothing will win against that. Sure there are a lot of "what-ifs", but with way everything has happened, they are becoming more like "now that..".

I'm not simply telling you that you're wrong - I am backing that up with information, but you are either not reading it or choosing to skip over it to try and make points, which I then have to go back and address that I've already addressed that point.

You know its funny, I used to jest with my father on the Glenn Beck thing 2 years ago. He is a fraud for Goldline and his thoughts are simply stolen from the likes of Alex Jones, but he did speak some truths when I listened to him. He had sensationalism to his point.

If you listen to a madman long enough then they're most certainly going to say something factual eventually. That doesn't mean that you should listen to them for the nuggets of truth. It's not like he doesn't know what he's doing.

There were a lot of naysayers in 2006-2007 about the housing bubble. It didn't hit me when I was asked by family members to just buy a home with a variable rate interest loan with my measly $34k job. I didn't listened to them and instead tried to find out what people are listening too. It was then I heard the likes of Marc Faber, Peter Schiff, and Ron Paul on TV and what they said made a lot of sense. Then the housing market fell through the floor.

That just means you weren't a stupid consumer and knew what you could really afford, and kudos to you for that. A lot of this shit was common fucking sense, but it always looks that way in retrospect.

Just because a few people "called it" doesn't mean that they know what they are talking about. They just happened to be in a position of power, and said some things that eventually came true. Somebody had to be right, eventually. If it wasn't the housing bubble (which a lot more people saw coming than just those 3), then it would have been something else, and you would be spouting off some other people's names as examples.

If you think the economy is great, then go towards Pirian route. Listen to what CNBC and CNN are feeding you. The economy is doing great. Avoid Gold (was $900 @2008 now $1550), and Silver (was $20 @2008 now $45) as they are in a bubble.

No really, you have no idea how a bubble works, do you? Right when everybody, and their mother, is talking about it - THAT IS THE TOP. Don't worry, I'll be shorting gold as it comes down, you can count on that. I do find it funny that you could "see" the housing bubble, but then don't recognize it in gold/silver. All the markets are driven by people with emotions, and people have been people since there were people. Things really aren't that different.

No, I don't think the US economy is "great" right now. I do think it's acting normal. Normal, and healthy, economies go through recessions. Without fail, there are always people predicting the downfall. Same in the late 1920's-30's, same in the 70's, same in the 2000's. I'm more surprised nowadays about how people are still surprised, more than anything.

If you think the economy is in bad shape, then I would recommend listening to Ron Paul, Peter Schiff, Mike Maloney, David Morgan, Kyle Bass, Damon Vickers, Max Keiser, etc. You don't have to be a conservative or a liberal to understand fundamental economics.

You don't understand economics at all from what you've displayed. The main reason we're still in a recession is because Democrats want to do half of what it takes to get out, and Republicans want to do the other half of what it takes, but neither is willing to do both things needed to fix a recessionary gap.

Our nation is more at risk of going down the drain due to overspending on wars than we are of failing due to not being on the gold/silver standard (and I actually laughed while writing this, because it is laughable to think there is any comparison to which is the real cause.)

[Pirian]

I disagree with the notion that there have to be recessions in a healthy economy, that's just how it works in the system we've set up.

I'm genuinely curious for an example of a economic system in place now that doesn't go through periodic recessions. Not interested in theoretical systems though, because those are a dime a dozen

[Demosthenes11]

it's not about recessions, it's about healthy expansions. In the last decade, our only period of economic "progress" was artificial and an ultimate cause of the collapse we have.

[Plow]

The point that isn't being acknowledged enough is that while improvements in technology and efficiency tend to cost jobs, they also should lower the cost of living. Amazon puts lots of local stores in a shitty position and costs a lot of people jobs, extending from mom&pop stuff up to wal-mart. But, at the same time, it offers tons of goods at the best prices nationwide no matter where you live, with free shipping eliminating transportation expenses from the comparison.

The same is true with robotics and whatnot as well, they cost jobs, but they also reduce production costs immensely.

So, all the production jobs lost have to go somewhere else, and even though the price is going down, the lower level production jobs are more and more filled by automation. Service is the only option left.


In short, we're not becoming a service economy because we're insane consumers unwilling to produce, it's simply the reality that the vast majority of the future of work as we advance as a society is service.

[Cantih]

^

My main worry is, we're getting so efficient, that so little needs to be done,
that the whole "every person should work to get income to get necessities" dynamic we've got ingrained is going to have a wrench thrown into the gears because we simply don't need that big of a workforce.

[Plow]

I would say massage therapy and prostitution are the future of human work, but the robots are prob gonna be better at that, too.

[Pirian]

Ours. Think of a capitalistic economy as a human being. If a person is healthy, they should keep being healthy, not go through sudden periods of extended illness and slowly recover. There's no real reason for boom and bust cycles except that we say there have to be - think of economic bubbles as allergens. The more we expose the economy to them, the worse the reaction is going to be until it finally goes into anaphylaxis. That's when put it on life support and start jabbing it with epi-pens. What we should have done instead was, if these bubbles were a part of the economy's diet, transition it off onto something it wasn't having a reaction to.

What makes us so recession prone is the human desire to eke out as much from a bubble as possible before it bursts and the economy has an allergy attack. The type of economic system we have isn't the problem, it's the way people choose to approach it. Instead of running our economy like a health-conscious suburbanite going to the doctor regularly and buying food from the Farmer's Market, we run it's a music mogul in 1982 - it only eats McDonalds in-between drug and alcohol binges and rampant unprotected sex.

Although now that I make the metaphor, it seems less surprising to me. The last thing we should expect an American thing to have is health coverage.

Forgive me for sounding impudent, but given what you just said before this, I cannot accept this answer. You said this is the system that we've set up, and I asked for an example of another system that doesn't go through recessions, and you gave me our own system (the one you just said didn't work).

If you really wish to use that metaphor, then you must also recognize that no matter how healthy the individual, they always get sick from time to time. Recession is just part of the boom/bust cycle.

http://www.subhub.com/custom/recession%20graph.jpg

In actual practice it looks more like this:
http://yglesias.thinkprogress.org/wp...ED-Graph-1.png

The faster the growth period, the deeper the correction, but it has ALWAYS come back, and there's no reason to think it won't come back this time. If you're thinking that this time is different, then you must consider that during every recession there are always people saying that we'll never come back, and they are always wrong.

[Ferion]

Recessions are just ways for markets to shed inefficient businesses or employees that are hindering growth. Once they are removed from the market it frees up capital and workers for projects that can be used more efficiently else where. I know it's kind of counterintuitive because economies contract during recessions, but don't think of a recession as a healthy person becoming sick, think of it as an over weight person realizing that they need to get in shape again. I'm not saying this is the case in every recession, but it's generally why a lot of economists feel that recessions are healthy in the long-run.

Yes, this is called "inflation". It's a normal occurrence that happens when demand exceeds supply. Sorry, I don't mean to be talking to you like you're an idiot, but I'm finding that I can't take these facts for granted.

I'm probably just being a pain by pointing this out, but this isn't entirely true. In the short-run, inflation is caused by a wide variety of reasons, including when demand exceeds supply. In the long-run though, the only thing that can cause inflation is growth in the money supply.

[Demosthenes11]

Recessions are just ways for markets to shed inefficient businesses or employees that are hindering growth.

is there ANY evidence for this? I've heard a few people say it before and it sounds completely nonsensical and like a made up conservative platitude

[Ferion]

There definitely is evidence for it, but like practically everything in economics there are also groups of macro-economists who have what they feel is evidence against the claim. I'm not completely positive, but I think it's more accepted than rejected.

[SwampdonkeyPLD]

is there ANY evidence for this? I've heard a few people say it before and it sounds completely nonsensical and like a made up conservative platitude

GM comes to mind, had it been allowed to fail.

[archibaldcrane]

This recession is somewhat different than others, fueled by artificially, paradoxically anti-capitalistic super cheap credit. This was a really strange case, financial institutions trying to, basically, fuck each other over (by taking on bad loans and then repackaging and selling them to each other) and trying to be the one sitting on the chair when the music eventually stopped.

In tiny transactions the activity made sense but from a greater market standpoint it was suicidal insanity.

I just feel like this one is going to take longer to recover from. It's not "the normal boom/bust cycle".

Or maybe that's just because I'm looking to buy a house right now and seeing how so many people got themselves fucked financially for a long time.

Sent from my Samsung Galaxy S 4G using Tapatalk

[Pirian]

I'm probably just being a pain by pointing this out, but this isn't entirely true. In the short-run, inflation is caused by a wide variety of reasons, including when demand exceeds supply. In the long-run though, the only thing that can cause inflation is growth in the money supply.

Oh I know, I was trying to be a smartass. If you look at the comment I was responding to then you'll see that we're clearly talking about short-run inflation.


To Archi - every recession is slightly (or entirely) different than the last. I think we stopped having recessions/crashes due to the same thing over, and over, once we created a national bank and backed all deposits.

[aurik]

unfortunately, your econ book doesn't list that we can not pay our debts with Gold and Silver, despite what is written in the Constitution: "No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

See the bolded word there?

[Pirian]

I love you sometimes. (most times)

[popsiclestix]

Umm ok, then:

No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;..."

does that work for you?

Here is my favorite from Jefferson:

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

[Pirian]

You can't take things out of context like that. You've been watching too much Glenn Beck. Also, the "states" still aren't doing that, even if you want to chop up what it says. The printed money may technically come from a state, but it's the federal government that is actually doing it, not the states.

Also, private banks don't control the issuing of currency - that's the job of the Federal Reserve (that's the Nation's Bank). Thomas Jefferson has said many great things, but that particular one isn't relevant here.

[aurik]

I still don't understand

What part of "no state" applies to the federal government?

By your own logic, if that clause applies to the federal government, so does "enter into any Treaty, Alliance, or Confederation". Guess all foreign treaties are illegal.