Woolley Arguments.

[Days]

It's true, if the system wasn't abused the way it was... and if Congress would stay on a reasonable budget, there's no reason for the nation to be floating ten trillion in debt. But we are where we are, and it is unsustainable. The euro nations are trying to work out reducing the principle owed on their worst debtor nations but they have a problem; those nations gave up their sovereignty over their currency, now they need the European central bank to work it out for them... so instead of the nation simply printing money to pay down the principle the Central Bank is trying to forgive principle, which means they have to ask all the investors in those bonds to agree to take losses... that's a thousand times harder.

I'm of the opinion that banks work best when they are part of the market and not the whole market. When businesses had gold in their vaults, and transactions took place in hard currency, and the industrial sector had a ton of capital on hand to build with, then banks augmented growth nicely. But when we changed the currency to bank credit, all the wealth eventually transferred to the central banking system, the marketplace went into TILT, and the bumpers stop spitting points and the flippers couldn't keep the ball in play.

 

[Days]

Absolutely agree. Now take three steps back and look at the long term investment strategies and see what happened there. Once the system rid itself of hard currency and went to fiat currencies with floating values, all sorts of carry trades came into play... making money on interest. That's not what money is for. Money is supposed to facilitate trade, not get boxed into bonds on the sideline. Banks were borrowing at lower interest rates and then buying bonds at higher interest rates... all of it was borrowed money and none of the money was growing the economy. Instead of investments which put the money to work, it was put to interest. Then the other thing they did was play the currency exchanges against each other. When they got real good at altering those values, they crashed the yuan and then bought it up with dollars, making it super cheap to invest into land and build factories throughout the western Pacific Rim.

So see the picture, the dollar stopped investing into American industry, then the dollar was invested into building the competition. We cut our own throats. The classic strategy of government is to try and regulate a solution. But there is no way to regulate prosperity, it has to be built up over time. To do that, you need a foundation to build upon; a type of currency that grows with business, not populates ahead of business, and doesn't redistribute the wealth away from the people into the hands of the wealthy.

Same goes for fighting down debt on a debt currency. Which I liken to building these levies higher and higher on our rivers; it only results in the rivers depositing their silt in their restricted beds and that results in the rivers raising themselves over the levies... its guaranteed failure over time. But if we change the currency to something that isn't building up debt and is still being invested into the nation's growth, then the nation starts to heal itself over time instead of burying itself in debt.

 

[degsme]

Hmm and what defines how much money a sovereign government has? Lets here this.

The wealth of its citizens leveraged to infinity

Well since infinity is by definition an unreachable number, what you have just said is that the a sovreign government has no limit on the amount of money it has. OK. that's actually not far from the truth.

Hmm and Considering that right now the COST of US debt is still DECREASING with increased borrowing.

That is artificially manipulated by the Federal Reserve monetizing 10/30yr USTs

right... the Fed sets its own rates by manipulating the auctios... uhuh... Orbital mind control vortex generators just keep the rest of us from realizing this.

Hmm and what is different about printing MORE money vs the current amount of money or the amount of money we had in 2001? FACTS please

Much the same as as a stock split.

And what is the stated face value of most stock certificates? What is their market value?

 

[Woolleybugger]

You are starting to sound like a gold bug. Gold is not the answer. The answer is common sense banking.

 

[Angel of Dearth]

A fellow satellite guy and I had a very interesting conversation about Steve Keen during a recent launch campaign(the satellite guy and I are currently locked in a competition for the most conservative guy west of the Rockies). He is a rather strong proponent of Keen's theories and since I am a systems engineer (Keen's method) he had me look at debtwatch. Suffice it to say that I can't fully grasp in two weeks what took this guy several years to build but it would make a good hobby to continually hammer away at (I love MIMO systems and can really get into controls).

Both the fellow satellite guy and myself agree vehemently that economists are little more than sophomoric charlatans selling what they don't know (i.e. they have no model, they KNOW the economy is too complex to model. . .but they profess to be able to predict the future according to their school of thought. This is the essence of a snake oil salesman.) Both of us have known that the economy presents itself as "modelable"--that is you lower interest rates, something predictable happens. You raise them, something predictable happens. You raise taxes, something even repeatable happens. Same goes for a multitude of inputs. This has computer modeling written all over it in ways much more compelling than global warming.

Apparently, according to my launch friend, Keen has been saying, "You guys (economists/politicians) have been pushing the economy to the poles." This kind of language makes complete sense to me. The "poles" of a system are the mathematical points at which the system "blows up." Poles in the right half plane indicate an inherently unstable system. If they're in the left hand plane the system is stable. Changing parameters (interest, taxes, trade deficit, inflation, etc.) can move the poles around. In fact, a "root locus" plot is a graph of exactly how those poles move when one parameter is varied over a range. I've done many many root locus plots. This is my kind of stuff.

But Keen is a mix. He is no Keynesian and certainly no neo-classical guy. But he can most closely be associated with an offshoot of Austrian economics (not to be confused with Friedman or other monetarists). So we'll see. The Emperors Clothes is on my short list.

 

[Woolleybugger]

Pay attention to him, he makes a lot of sense to me. And he is a keynesian btw, he just doesn't think it ends with him...

 

[Days]

Gold is not the answer for America, that's for sure. Some silver would help keep workers wages from devaluation, but that hardly matters at a time when workers have no work. Globalists are not about to do an about-face and invest in America... at least not to build factories that would compete with existing factories in the western pacific Rim. The only solution that has a chance of success in this market place is Treasury created issue invested directly in new start-ups. That's bound to invite all kinds of fraud, but even that would help kick start the economy, at least the crooks spend the money.

 

[degsme]

No, degs, that's not what happens. Businesses are bought out completely with loans,

You are talking specifically about LBOs. LBOs don't happen that often and many are succesful - otherwise banks would not invest in them. Sorry doesn't work the way you claim except in a small handful of cases. Which is hardly the basis for policy.

As for a cohesive arguement - I'm not making one here. Is not meaningful to try and do so in the face of what is basically random disconnected myths.

 

[degsme]

LOL! As soon as we passed the first regulation it was the same as having an all encompassing industrial policy and five year central planning?

since that's the arguement you are making... and not I, the fact that you yourself find your own claims silly is about as good an indictment as exists.

 

[degsme]

A FREE MARKET IS REGULATED by the marketplace.

That explains the success of financial, industrial and banking centers like those in Somalia

LOL!!

 

[degsme]

Keen is nowhere near Austrian econ

as for

Both the fellow satellite guy and myself agree vehemently that economists are little more than sophomoric charlatans selling what they don't know (i.e. they have no model, they KNOW the economy is too complex to model

Um sorry the economy is LESS complex than even the Quantum Mechanics of the CPU you used to post this. After all in the US Economy there are LESS THAN 4x10[sup]8[/sup] actors and worldwide there are less than 5x10[sup]10[/sup] individuated actors.

The latest CPUs have 2x10[sup]9[/sup] TRANSISTORS, each made up of at least 3 Quantum Mechanical interfaces and that does not count the other circuit structures like resistors and capacitors etc.

And we clearly have sufficient capability to design, model, analyze and regulate things of that order of complexity almost COMPLETELY PREDICTABLY.

So either you sattellite guys are decades behind in the tools of dealing with compleixty, or you really are just tossing about name calling as a way of dismissing things you yourselves pretend to "understand" but really do not.

You are correct about issues of stability, but where you go off is that the issue is not one of "driving systems to the poles" but rather that complex functions can (they don't necessarily, but usually they do) have "meta-stability" locii within regions of instability. The simplest example would be something like

(0.5x-3)^2+sin(3x)=y

Such a curve has metastability points at roughly 1.8, 3.8 etc with a periodicity of sin(3x). You don't need to drive a system to its poles to cause it to crest a localized peak and tumble towards the next metastability pointl.

As a Sattelite guy, you would probably be familiar with this in terms of sub and supersonic aerodynamic "drag buckets" IE what is low drag at supersonic speeds is often higher drag at subsonic speeds and vice versa.

The economy works similarly. And that's the core insight of Keynes. That there are metastability points in the growth curve of economies, and that it takes specific targetted "boost phase" effort to go from one "orbital state" to another.

 

[worldlymrb]

That explains the success of financial, industrial and banking centers like those in Somalia

LOL!!

In free market, when corrupt/mismanaged banks go broke, (which they always do in a free market), they are liquidated and put out of business and their CEOs join the unemployment line. Today, they are given huge bonuses with taxpayer bailout money, and as a added bonus, get to write the new "reform" legislation.

 

[trapdoor]

That explains the success of financial, industrial and banking centers like those in Somalia

LOL!!

This is your standard answer to too many debates, Degs. Somalia lacks a stable society, so naturally it lacks a fully developed, and free, market. The lack of an all encompassing, repressive regulatory environment is not the cause of Somalia's problems. Yes, there is good reason to LOL -- it's a laughable comparison.

 

[imreallyperplexed]

In free market, when corrupt/mismanaged banks go broke, (which they always do in a free market), they are liquidated and put out of business and their CEOs join the unemployment line. Today, they are given huge bonuses with taxpayer bailout money, and as a added bonus, get to write the new "reform" legislation.

MrB,

In a response to degsme up above in the thread, you wrote: "A funny thing about theory's. They always look good on paper, but immediately fall apart when confronted with the real world."

However, in my opinion, your opinion of what happens to banks in a "free market" is as theoretical as anything that degsme, Wooley, or Keynes asserted. Furthermore, your "free market theory" falls apart when confronted with the real world. For example, do you support the FDIC which protects depositers money so that if a bank fails, the savings of the customers of the banks are protected? Or is that too Keynesian for you? And if the bank fails, what replaces it and how is it replaced?

I am not claiming to have answers to these questions. But as a total free marketer, you should have an answer to these questions and not just fly off into one of your "control-freak" rages (in my opinion.)

 

[Woolleybugger]

I find it fascinating that folks with your point of view describe free markets as devoid of regulatory controls or drags yet in the same breath state that an economy like Somalia is not a true free market because it has no regulations or infrastructure to support a true free market. The only sensible conclusion I can draw from this position is that your definition of a free market is indeed one with rules, laws and regulations. I would love for you to tell us which rules, laws and regulations are indeed key to a free market and which ones are unnecessary. The key to understanding this debate is where to draw the line between oppression by an ungoverned free market and oppression by an overly regulated market. This issue seems to come up every time a liberal attempts to fix a regulatory flaw that allowed a previously unregulated or poorly regulated market to destroy wealth, jobs, the environment or some other external cost that creates a national or global calamity. Your side cannot describe this perfect state of freedom, you can only make vague statements without any specific recommendations and analysis.

For instance, let us assume that you are saying that pollution controls on car emissions constitutes an unwanted burden upon car manufacturers and customers. Your advice would be what exactly? To return to cars emitting pollutants legally? How about controls on emissions from coal plants. Having just read a book about Chicago in the late 1800s, it clearly stated that downtown Chicago was so thick with soot, smoke and ash that people could barely breathe. Is this the type of free markets you want?

 

[Days]

the thread was plenty cohesive until you jumped into it

but thanks for commenting... that's more important than whether we agree.

In this thread with Wooley, he is discussing the merits of sticking with the stimulus and I am agreeing but pointing at specific types of stimulus that will bring in jobs and not build up the debt.

 

[Woolleybugger]

Days...you really need to listen to Keen, his advising much the same thing.

http://www.youtube.com/watch?v=W6uSWnVTCDw&feature=related

and then here:

http://www.debtdeflation.com/blogs/2011/12/03/my-hardtalk-interview-transcribed/

 

[degsme]

In free market, when corrupt/mismanaged banks go broke,

In a free and unregulated market, banks do not lend money since they have no way of getting it back

 

[degsme]

This is your standard answer to too many debates, Degs. Somalia lacks a stable society,

PRECISELY. It lacks REGULATION and without regulation you... wait for it... LACK A STABLE SOCIETY. Instead 'might makes right'. So if you want a STABLE SOCIETY you have to have regulations and therefore regulated markets. its really not that hard.

The lack of an all encompassing, repressive regulatory environment is not the cause of Somalia's problems.

Really? The lack of a rule of law, and a consistent set of judicial and legal regulations is not at the root of Somalia's problems? Might Makes Right as opposed to Judical and Regulatory management or rights and property is NOT the problem in Somalia?

Could have fooled me.

What IS it then that causes Somalia's unstable society? TOO MANY Regulations?

 

[degsme]

I find it fascinating that folks with your point of view describe free markets as devoid of regulatory controls or drags yet in the same breath state that an economy like Somalia is not a true free market because it has no regulations or infrastructure to support a true free market. The only sensible conclusion I can draw from this position is that your definition of a free market is indeed one with rules, laws and regulations. I would love for you to tell us which rules, laws and regulations are indeed key to a free market and which ones are unnecessary.

Give that man a CEEGAR!!!!

And that's the disconnect all the folks, from Trapdoor to Sgt. Staples to Lukey do not seem to get.