Posted on 08/04/2009 1:45:12 PM PDT by parsifal
I got interested when I kept running into von Mises types on FR and they were like oblivious to reality IMHO. I don’t know everything, so I started looking up more about the von Mises and ASE. For all I know, they’re right and I’m wrong. But, what they seem to be is just a bunch of theorists and while there is nothing wrong with that, philosophy shouldn’t really go around masking itself as the “science” of economics.
So I figured I would lay it all out, post what I found, and then, if I or others get into arguments about economics, the Mises and ASE’s can’t clothe themselves in the robes of science. They have their “opinion” and I can defend my opinions.
I thought it interesting that so many economists just dismiss the ASE, and their respect level is pretty low among their peers. Again, that in and of itself doesn’t mean they are wrong. Maybe mainstream is just jealous.
Then when I found out ASE doesn’t even do any numbers, that their view of economics is very, oh I can’t think of the term but it is religious like where belief is personal, but economics is like that to them. That may be ok in religion, but in science, you need some kind of framework.
If economic measurements are difficult, that doesn’t equate to doing away with them, it means you have to work harder. When a group just jettisons the hard stuff, that is like quack doctors doing away with all that technical stuff and just doing vitamin therapy or stuff like that.
I don’t fault the ASE for their approach, and I agree that there needs to be a qualitative slant on the formulas. In fact, that is where I usually get slammed when I come out in favor of higher minages or even minwages at all. I am deemed to not being economically scientific enough. But then come to find out, I am being slammed by a group who openly eschews science itself. Now that little secret is out in the open.
Another reason is the simplistic nature of the ASE. Their approach to economics seems to pretty much be if gov’t wasn’t involved everything would work out ok. Well that is BS, and if the nature of the capitalist beast isn’t apparent now, then I don’t know what it will take to wake folks up.
Gov’t plays it share in things, but so do greedy people. If a person will kill for a pair of Nikes, what do you think other people will do for millions. That is why you need sensible regulations.
Limited gov’t does not equate to NO gov’t. The ASE just have this ready made whipping boy for everything. Gov’t.
For egs, the ASE believes monopolistic situations can not occur in the absence of gov’t action. BS BS BS BS. Go back in history and look at the Gilded Age and the Trusts. A Republican, Teddy Roosevelt, had to put an end to that crap.
And the ASE ain’t rocket scientists on other issues. No wage and hour laws, no child labor laws, no minwages, no real regulation about anything. If that is not some kind of Freudian desire for a return to the Garden of Eden, I don’t know what is. The problem is, we live in the real world, and we would not have crafted these laws if there was not a need for them.
But what galls me, is not that the ASE guys believe differently, but that they want to priss around like their statements are carved in stone somewhere in the Ten Commandments of Economics. BS BS BS. They are opinions, and if you are confronted, you should come out and defend your position, not retreat to von Mises and cite it like they were citing the Bible. They’re citing von Mises’ opinion, and since he is dead, it is their obligation to defend the opinion.
Hopefully, I have managed to take some of the aura away from the ASE, and right or wrong, both sides got to get down in the dirt and start defending their opinions.
Why I think this is so vital is that I see these laisse faire types as a cancerous rot in the heart of the GOP. This is the 21st friggin century and it is stupid IMHO for these guys to disbelieve in minwages and wage and hour laws. And this darn hero worship of the wealthy and big business.
I think mainstream America will more and more reject the GOP, even though mainstream America is more conservative. This means liberals will be writing regulations and doing excessive social work thru gov’t while the GOP is hamstrung by these darn bunch of economic Luddites. God knows what they will do to national defense, gun rights, etc. in the process.
If though, you can get the Luddites to come out and start confronting their beliefs, the cancer can begin to be cut away. Step one is knocking them off their high horse. I hope I am putting a few of them in the dust. At the very least, I hope I am giving some ammunition to the more moderate GOPer’s to start resisting these troglodites.
parsy.
Thank you for reading it all. I don’t agree with everything I read either. But, do you at least have a better understanding of the ASE and how it is really just their opinion that is getting put out as economic science?
FWIW, I don’t disagree with everything von Mises wrote. I do think it noteworthy to see that what they are promoting is opinion, and has even less basis in observation and facts than other schools of economics.
parsy.
But, even if some ASE predicted the crash they were not the only ones. But here is maybe a more interesting point: What would the ASE have done, or will do, to prevent the next crash?
Answer: IMHO, NOTHING. Because everything is the fault of gov’t. ASE will not produce one single idea to pass better regulation, or change one law. They will sit on the sidelines and promote doing away with gov’t, period. That ain’t going to happen on this earth. So, the ASE is basically, useless.
parsy.
No, its because I understand the destabilizing influence and effect of runaway inflation. And prices increase way faster than wages during an inflation. Just look at the Fed’s disasterous handling of our money supply. If you really believe that printing one trillion dollars and giving it away to banksters, then you probably believe that Bernanke should be given a medal. And if printing money is the key to increasing wealth and our standard of living, then why not print 10 trillion.
The fact is that deflations are an unavoidable side effect of uncontrolled monetary growth. And the situation you have now is that the government has crowded out private investment and has debased the currency that foreigners will no longer buy US debt. This will inevitably result in still higher interest rates, until the real rate is positive, this will result in evaporating loan demand and thereby is major crash in the money supply and deflation.
The point is not choose your poison. The point is that by having a fixed money supply, not inflated by fiat currency, you can avoid the inflations and deflations that occur due to monetary manipulation. Given my druthers I will take deflation over hyper-inflation, any day.
One thing about the gold standard, while bubbles did occasionally occur, like railroad stocks, etc., multiple bubbles did not occur, like the present time.
The other aspect of sound monetary policy is that it forces sound economic policy upon our incompetent politicians. If they can’t print the money, and they can’t raise taxes, then they can’t finance endless entitlement and spending increase unless they figure out how to get gold out of seawater.
Interestingly, the only wars financed over the past several hundred years, were those conducted by Napoleon. Since France had undergone the revolution and hyper-inflation, the people would not accept inflation as a means to pay for war. That’s not to say that some wars aren’t worth fighting, they certainly. But they need to be financed by taxes, true borrowing from the populace and popular will.
Virtually every war in the US’s existence has been financed by paper fiat dollars.
So your choice is would you rather have $1000 that can purchase $1000’s worth of goods and services or would you rather have $1,000,000 that won’t be accepted by anyone, anywhere in the world, because that is exactly where we are heading.
Mild inflation is much less destructive than mild deflation.
Just look at the Fed’s disasterous handling of our money supply.
Over what time frame?
If you really believe that printing one trillion dollars and giving it away to banksters,
Giving it away? Where? Be specific.
The fact is that deflations are an unavoidable side effect of uncontrolled monetary growth.
When was the last deflation we had since the 30s? And when was monetary growth uncontrolled?
The point is that by having a fixed money supply, not inflated by fiat currency, you can avoid the inflations and deflations that occur due to monetary manipulation.
A fixed money supply would lead to long term deflation.
One thing about the gold standard, while bubbles did occasionally occur
And the depressions that occurred were much deeper and longer than recent recessions.
If they can’t print the money, and they can’t raise taxes, then they can’t finance endless entitlement and spending increase unless they figure out how to get gold out of seawater.
Do you imagine the Federal Reserve prints money to finance government spending?
Ah...you forget that during these times we had many STATE National Banks (upheld by their legislatures and Congress),
it’s wasn’t the free-market have you think, 2ndly you also forget that fiat currency during the pre/revolution was the reason why congress included that only gold and silver should be money in the USA!
I for one shall never stop striving against all you mentioned (some just want to give up/).
And they did so well, Congress felt the need to create the Fed.
it’s wasn’t the free-market have you think,
And it wasn't less volatile than it is now.
2ndly you also forget that fiat currency during the pre/revolution was the reason why congress included that only gold and silver should be money in the USA!
The Congress did not conclude that only gold and silver should be money.
Have prices doubled in the last few months? Why not?
Giving it away? Where? Be specific.
AIG, BOA, Goldman Sachs, Citibank, Tarp
TARP money was not a give away. And it wasn't the Fed.
23.7 trillion worth of guarantees..
The Fed did that? You have a link with details?
Monetary growth was out of control during and after the Vietnam War until Volker raised rates to 20 plus percent. Then we had a slight deflation due to the depths of the recession.
Doesn't sound unavoidable to me.
Disagree, the amount of gold mined equals about a 1.8% increase in the gold stock per annum
A growth of 1.8% means the money supply is not fixed.
And what is really wrong with the value of the currency going up by 2 percent a year,
If house prices were dropping 2% each year, forever, who would buy a house? If cars dropped in price 2% each year, would sales suffer?
as the productivity is increased.
Falling prices due to productivity are good. Falling prices due to deflation are bad. Do you understand the difference?
Some were, some weren't.
How many depressions did we have in the 95 years before the Fed? In the 95 years since?
By the government doing nothing, few depressions lasted as long as the 1930's, which ranked among the worst.
The Fed mistakenly allowed the money supply to crash during the depression. They're not making the same mistake now.
What the hell do you call quantitative easing?
I call it increasing the money supply.
Printing money, buying treasuries and other agency debt.
The Fed does not create money and give it to the Treasury to spend.
I don't think I am imagining anything, its an uncontrovertible fact that they have purchased about $1 trillion in government debt over the past year
You are mistaken.
and they have no intention of stopping
I heard last night that they'd soon stop buying bonds. Nothing official, yet.
since the rest of the world has lost faith in our ability to repay. Do you deny this?
I deny that a 10 year bond rate of 3.74% is proof that the world has lost faith in our ability to repay.
You must work for the Fed or for some bankster on Wall Street, fess up!
Normally such a poor grasp of the facts would mean you work for the Democrats, fess up.
Hardly a dem. You didn’t answer my question, do you work for Fed or a Bankster?
Do you deny they bought bought treasuries and other US gov’t debt, to the tune of $1 trillion?
Inflation hasn’t picked up yet, it is understated in the official government numbers and always has been. There is a lag time before monetary creation and inflation.
Do you deny that our dollars today are worth less than 5% of what they were in 1913? Do you deny that the fed is responsible for this?
Yes, price declines due to productivity are not due to deflation, yet we haven’t gotten to experience the benefits of our productivity because the Fed has inflated the currency and wiped out any gains we would have otherwise realized.
What is wrong with the value of the currency increasing.
You work for the Fed, admit it. I know you do. You work for the Fed in one capacity or another. Your profile shows you are a Fed apologist. You decry gold and silver. You love fractional reserve banking because it makes bankers rich and sucks the blood out of the people.
Do you work at the NY Fed or at the Headquarter
I don't work for the Fed. What's a bankster?
Do only Fed and bankster employees get to point out your errors?
Do you deny they bought bought treasuries and other US gov’t debt, to the tune of $1 trillion?
Yes.
There is a lag time before monetary creation and inflation.
How long before prices double?
Do you deny that our dollars today are worth less than 5% of what they were in 1913?
Why would I?
Do you deny that the fed is responsible for this?
Ditto.
Yes, price declines due to productivity are not due to deflation
Excellent.
yet we haven’t gotten to experience the benefits of our productivity because the Fed has inflated the currency and wiped out any gains we would have otherwise realized.
Productivity gains are not wiped out by inflation.
What is wrong with the value of the currency increasing.
I told you. If house prices drop 2% a year, every year, who'll buy a house? If cars dropped 2% each year, would car sales suffer?
You work for the Fed, admit it. I know you do. You work for the Fed in one capacity or another.
Wouldn't it be nice if everyone who was smarter than you worked for the Fed?
You decry gold and silver.
I make fun of idiot gold bugs, it's true.
You love fractional reserve banking because it makes bankers rich and sucks the blood out of the people.
Don't mean to burst your idiotic bubble, but we had fractional reserve banking under the gold standard. Sorry to ruin your rant with facts.
Do you work at the NY Fed or at the Headquarter
Bilderberger headquarters are deep under Fort Knox.
So you like your bank account being controlled by unelected National Bankers (who we don’t even know the full list of who they are)?
I prefer competition and freedom/that’s just me..
Yes Congress did stipulate that only gold and silver should be legal tender (that doesn’t preculde other forms of currency), just the official currency used by the USG.
Have you even studied the creation of the Fed, it was through WW and his (Communist) banker friends, Congress eventually approved, but only after failing once, and then through the marketing “Federal” trick.
Never said it was less volitale, infact I don’t like either era, I prefer the free-maket (even in monetary policy)-not central planning by either govt, or government backed national banker.
I guess you wouldn’t like Presidents’ Jefferson, Madison, or Jackson, either!
My bank account is controlled by me. Who controls your bank account? How do they do it?
Yes Congress did stipulate that only gold and silver should be legal tender
Permanently? Where did they do that?
I guess you wouldn’t like Presidents’ Jefferson, Madison, or Jackson, either!
Jefferson and Jackson didn't know much about economics.
So I guess you like inflation by both bankers and government then
“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;”
That means the USG, treasury not an unelected Fed, and Coin was understood to mean silver (which was common) or Gold.
Jefferson and Jackson had enough common sense to know that Bankers shouldn’t controll our money supply (where it would be easily manipulated). They didn’t need to harvard educated economists!
Jackson's big stand was to deposit Federal Tax receipts in state banks instead of the National Bank. How was he against bankers controlling the money supply?
Here are three more links to criticism of the ASE. Apparently, one guy had the same thought as me, just a few years earlier.
The last link is to a very hilarious 3 part exchange.
http://world.std.com/~mhuben/austrian.html
http://web.archive.org/web/20060307205450/www.libertysoft.com/liberty/features/61palmer.html
Some of this is a repeat of things found on my earlier links above, but more of the links within the links seem to work.
parsy.
Don't let that strawman fall on your head.
“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;”
The words gold and silver are missing from that passage.
That means the USG, treasury not an unelected Fed, and Coin was understood to mean silver (which was common) or Gold.
Now you're substituting your understanding for the actual words gold and silver?
Just do a google search on Fed Purchase of Treasury Debt. They have trillions planned. If you don’t know that the Fed has been monetizing US Debt this year in record amounts then there is really no point in continuing this dialogue.
Point of info, a bankster is someone who works on Wall Street who helped create the financial collapse and is now receiving fresh money from the Fed or the Treasury to help get us out of the mess that they helped create. Does that apply to you?
And what am I looking for?
They have trillions planned.
Ben told you that?
If you don’t know that the Fed has been monetizing US Debt this year in record amounts then there is really no point in continuing this dialogue.
Given up on your original claims already?
Does that apply to you?
No.
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