Austrian Economics

[reverendjeremiah]

Why, because you don't like what it prescribes? That's irrelevant, you should judge a model by it's predictive power and in that sense there is no doubt that the Austrian model of business cycles is superior.

What predictive power? I cant help but sense a mode of anger in your post. I listened to that mans ENTIRE video loop. I hope that I get some credit for putting such effort into this discussion from you

He's speaking for Laymans, go check out his radio show if you want more in depth analysis.

No thankyou. I try to stay away from people like that as a waste of time and as an extremist. I will have nothing to do with extremists. I dont agree with the Libertarians, nor will I vote for them.

Not to mention he is dead wrong when he spoke of Unions. The labor unions DID make MANY sacrifices, and that fact that he pushed that lie and also claimed the poor stock owners were the ones taking sacrifices is flat out wrong. Apparently he has no problem with people coming together as a group to make as much profit off of a companies stock as possible, but if a group comes together to protect the working class they must be run off.

At what point in the video does he say that?

25:50 - 27:36 "Its going to be the same company, it's going to be the same union workers, only now its official that they dont need to profit, because now GM is going to be run by the government. and its going to be run for the benefit of the labor unions and other political hacks are going to be feeding at that..you know..giant troff (applause from fellow Libertarians) What we needed in GM is a legitimate bankruptcy , because we need to make cars, we need an automobile industry, we just dont need the one that we had. We need a profitable automobile industry, and we would get one if the government would alow a real bankruptcy.I mean there are a lot of accets there. there is real plant and equipment. Let somebody buy that who knows how to manage it..and look...the labor unions are talking about all the big sacrifices they are making, they arent making any sacrifices. I mean, the sacrifices were made by the share holders who lost everything. And the bond holders are going to take a huge hit here..those are the real sacrifices..I mean the unions are getting stock in GM, the owners are getting nothing. But, what we need..is what we need is somebody to buy up those plants, and be able to hire workers who are not members of these unions..you know..thats what we need, we need market wages, and unfortunately, you know, wages have to come down. I mean its not a good thing, its not a happy thing. But its a consequence of the fact that we dont have a lot of capital in this country anymore. You know the only reason if you can pay high wages is if you can give your workers a lot of capital. You know if somebody is digging a ditch, if somebody has a bulldozer, they are a lot more productive than somebody with a shovel. And so you can pay the person in the bulldozer a lot more money, but only becuase he's got the bulldozer. Thats what makes him more productive, its not the labor, its the capitol. But where does capital come from? It comes from savings, we dont have that in this country. We need to rebuild that.

I find that extremist, dispicable, and quite frankly I would have several harsh words with this man after his presentation.

And you would have been schooled, no doubt.

Here we go again with you suggesting I am stupid when it comes to economics. Not once have I suggested you are stupid or needed to be schooled on economics no matter how much I disagreed with you.
He obviously doesnt know squat about the construction or Industrial trades, considering his description between the shovel vs. bulldozer analogy. I wonder how many union busters this man hired during his "consultant job" at Shearson Lehman Brothers brokerage when they were doing "aggresive management buyouts" (otherwise known as hostile corporate takeovers). I wonder how many families he ruined? I wonder how many good jobs he destroyed in the name of turning a quick profit? I wonder how many government programs this man "consulted" his clients into taking advantage of behind closed doors while in public he talks down about them?

The man even goes so far as to say that market regulation is what caused our economic stress, when in reality it was the deregulation of many different economic sectors, during the bush years, including the housing market, that caused the crash in the first place.

That's an objectively false statement, Bush massively regulated the housing markets!

Wrong. In fact I participated in rallies that opposed the Republican majority plans to deregulate the utilities industry. Bush did not regulate the housing market. Regulations are restrictive to protect from greed, abuse, and squandering.
http://dpc.senate.gov/dpcdoc.cfm?doc_name=fs-110-2-166

Subsidies for first home buyers,

Not a regulation. Regulations are restrictive. That is Interest group transfers - "regulation" that results from efforts by self-interest groups to redistribute wealth in their favor, which may disguise itself as a legitimate regulation. Who benefitted from that in the end?

cheap money at low rates,

Not a regulation. Regulations are restrictive. That is Interest group transfers - "regulation" that results from efforts by self-interest groups to redistribute wealth in their favor, which may disguise itself as a legitimate regulation. Who benefitted from that in the end?

guaranteed loans,

Not a regulation. Regulations are restrictive. That is Interest group transfers - "regulation" that results from efforts by self-interest groups to redistribute wealth in their favor, which may disguise itself as a legitimate regulation. Who benefitted from that?.

Fannie and Freddie,

Was NOT regulated, in fact it was deregulated for interest group profits.

cash to suppliers and manufacturers,

Like no-bid contracts? This is not a regulation. Regulations are restrictive.

tax breaks for contractors,

Dont get me started on the problems of tax breaks regardless of the political party giving them - and besides, I am not sure if that even belongs in your list. Thats a WHOLE other can of worms that I dont want to open right now.

engineered derivative structures,

??? Are you using the correct term for this? Forgive me, I am not trying to say you are stupid, I just want to make sure we are on the same page. Do you mean Financial engineering of interest rate derivatives? If so, then how is this a regulation and not a perk for special interests?

sub-prime trading aids,

Not a regulation. Regulations are restrictive. That is Interest group transfers - "regulation" that results from efforts by self-interest groups to redistribute wealth in their favor, which may disguise itself as a legitimate regulation. Who benefitted from that? Inside traders on wall street?

phony credit ratings etc etc etc...

DEFINITELY not a regulation. In fact that is the exact opposite of a regulation.

He allowed the traderss to play with other people's capital - As greedy as the financial sector is if they are forced to play with their own capital they would never have taken such massive risks because there is absolutely fuck all chance of them coming out on top and everything they do is designed to make money, it's only when they get given taxpayer funds, favorable market conditions, guaranteed loans, limited liabilities and then have the entire market shoved by the government in the direction of the housing market that you get such chaos.

..and yet you claim he regulated the system? We are talking about Bush right? We are still in context of Bush "massively regulated the housing markets!" right? How can you regulate something, but let it all fall apart at the same time. How is ANY of this regulations? Perhaps we have different ideas of the word regulations. Do me, the word regulations is restrictive. If I have to abide by military regulations at the gate, that means I get frisked, dogs sniff my car, my tools get searched, and my car gets searched for guns and bombs. In the context you are using the word "regulation", in my opinion, that same millitary gate would be a chain link fence, with no lock, and a sign that says "Guards on lunch break, back in one hour." Im not being shitty with you, nor am I calling you stupid, but we are OBVIOUSLY not using the same definition of "regulations".

And it all happened because the politicians didn't want to go through the recession caused by the NASDAQ boom, which is exactly what they should have done, recessions are medicine and you need them whenever you've gone through a boom because it's the only way that the market will restructure appropriately.

Sure. Some democrats were just as responsible. Let me clarify this so that you understand my position: I am not opposed to recessions. I understand why they happen. I am NOT a 100% supporter of Keynes economics. Small recessions should be left alone with very little or no help from the government at all. I am in favor for a mixed and MODERATE economic system. Large recessions that destroy a major industry, like GM, is when Keynes system should be used in my opinion. Something that Peter Schiff failed to mention is that if you allow a local plant such as GM (he focused only on the company as a whole, not the local economys around their singular plants) to fail, the trickle down effect can be bad enough to render a ghost town of its environment in a matter of months. Talk about wasted Capital. If a town decides to vote help and support of its local economy, and they garner the majority, then they can by all means do so. If a state decides to do so, then they also have such a right. This is a constitutional Republic, and because of that, we can use a democratic process for anything that does not oppose the constitution. Governments, according to America, are for the welfare of the people, for the people, and by the people. Not just the individual, and not to stamp all over the individual either.

Now some of the people who have shammed the system because of deregulation are just starting to get thrown into jail. Freddy and Fanny were deregulated, it wasnt that they didnt care..they were DEREGULATED. Therefore opening them up to being abused.

Fannie and Freddie WERE regulatory bodies! They were public assets designed to change the direction of the market created BY the administration specifically in the name of the stimulus - THEY were the ones buying the sub prime loans because THEY were the ones guaranteed by the government!

No, Fannie was created during the depression by Progressives as a joint government/free enterprise housing and loan system to help pull American citizens out of the Depression. During its first few decades it was lightly regulated by the federal government. It converted into a publicly traded company in the late 60's leaving it wide open for scandal, purchasing private mortgages, aggresive insider trading, and abuse. In 2000, because of a re-assessment of the housing market by HUD, anti-predatory lending rules were put into place that disallowed risky, high-cost loans from being credited toward affordable housing goals. In 2004, these rules were dropped (because of DEREGULATION) and high-risk loans were again counted toward affordable housing goals.
Freddy started in the 70's in the same fashion Fannie was created. Take a guess at what date and why Fredy failed as well (i.e.: see "Fannie" above)

Nobody in their right fucking mind would risk their own capital on subprime loans, but when the government regulates the market and gives protections and guarantees then you massively change the types and severity of risks.

The government barely regulated it, gave little protection (as they also changed the application qualifications for bankruptcies when they deregulated it), and guarenteeing things are NOT a regulation. So yes, in that situation why risk your own capital on sub prime loans? Someone profited from this mess. Care to point out who did?

So yeah. If you follow this mans idea on economics you will see me standing stern against you at every turn. I am against deregulation. Just like I am against extremist economic policies.

Sure, go ahead and crash the dollar, cause another global recession. This mans ideas on economics are the tough medicine you need to stabilize the economy.

LOL, what? I was speaking from a personal point of view. Are you saying that if I dont follow what this man says then I will personally crash the dollar and cause another global recession? I thought Peter Schiff said recessions are necessary regardless? So if we follow his system we will no longer have recessions? Ever? We will never have global recessions? Ever? I dont think very highly of this man, and neither does the electorate, drawing only 23% of the vote in his run as a Republican Senator. I dont consider his theories to be medicine I need. I consider them to be self serving indulgences that would ill fit our nation. If we switched over to a fully Libertarian model right now there would be tens of thousands of people dying everyday, going unemployed, and sickness would run rampant. Sorry, but I respectfully disagree wholeheartedly. And why do I need to stabilize the economy? I dont have a say so in this particular situation. If you like him and the American Libertarians, then by all means vote for them. My vote will go to the most Progressive or the least of the evils.

You seem to think that all regulations involve consumer protection, that is plainly false, most regulations are designed and implemented for political, social and economic agendas. Keep the consumer protection regulations if you like, at worst the Austrians think they are unnecessary, but get rid of the government Czars manipulating the economy - There isn't a single fucking group of men on earth who are competent or intelligent enough to effectively manipulate a national market of 300 million people, that's why you end up with the boom and bust cycles, wealth divides, debts and deficits etc.

Consumer protections ARE Regulations, and it is NOT plainly false. Regulations are restrictive by nature in my opinion. What you are calling reguations is in my opinion special interest perks to benefit a small group for great profit. That is NOT regulations to me. As far as your last sentence - that is why I support mixed economies and oppose special interests. Divides are going to happen, but I oppose GREAT divides because I do not want to see my country become a banana republic. It is obviousl you are using a different definition of "regulation".

Bush and Greenspan tried it and caused the housing bubble now Bernanke and Obama are trying it and they're going to cause a currency collapse! The Dollar index went under .73 today! It's just as bad as it was during the fucking peak of the recession! All the Quantitative Easing nonsense than Bernanke and Obama have been doing only temporarily helps the index while inevitable returning to the same lows and making your working class broke while they're at it.

They might cause a currency colapse. Right now it is fluctuating low. The number you just posted is up .10 from the last time I checked, which was a few days ago. Speculation is fine to get a glimpse of basics, but should not be something to freak out about. Yes, use it to plan ahead, but do not use it to chop the chickens head off. Remember, 300 million people, national market, group of people not intelligent enough to manipulate yadda yadda yadda..how many people were involved in that specualtion you posted? I think if we follow Peter Schiff, the working class will become serfs, begging for pennies from the great divide of wealth caused by such a travesty of a modern economic model.

With that said, I leave you on a brighter note that I have FINALLY, after many weeks of practice, got the entire "The awakening" bass solo down on my 5 stringer, and am now teaching my drummer to play along. Hopefully we will be playing it live within a month. It isnt easy to do.
http://www.youtube.com/watch?v=N9HA1CUltjQ