I believe that the Austrians have it right and that the rule of the monetarists is quickly coming to an end.
Richard W.
Comments and opinions welcome.
Richard W.
... why would I want to invest in gold again?
- Productivity is double-counted and triple-counted by means of adjustments for faster computer processors and faster disk storage access. A recent conjob was perpetrated to reclassify software expenditures as capital equipment investments, thereby allowing a multiplier to be unleashed as in the accounting of equipment sales.
- Business investment over the 12 months ending 2003Q1 for computer systems grew by an hedonically elevated $56 billion, whereas in current unadjusted terms, it rose only $4.4B. Recently announced forward guidance by both Sun Microsystems and Siebel Systems serves to confirm the notion that information technology recovery is a myth.
- Even the jobless report is conducted with fraudulent intent, as nutty estimates are introduced for small business job creation, thus wiping out over 300,000 layoffs in Q1 of this year in revision.
- Savings are not a small and rising percentage of income, but rather are actually about minus $400 billion annually after one pushes off the ledger several fraudulent adjustments cited above.
To have and to hold
Aug 28th 2003
From The Economist print edition
Can people learn to be as rational as economic theory supposes?
FOR several years now, a battle has been raging among economists. On one side are the traditional, “neoclassical” theorists, who believe that people should be thought of as rational economic agents. On the other are the upstart “behaviouralists”, who do not accept that people always get their complicated sums right (maximising utility subject to a budget constraint, and all that), or even act as if they do.
A top behaviouralist, Daniel Kahneman, won last year's Nobel prize in economics for pointing out the differences between Homo sapiens and H. economicus. Real people tend to judge their well-being relative to others, not in absolute terms; their actions depend on the way choices are presented; they fear loss more than they crave gain. Such insights form the core of what is known as “prospect theory”. Some economists think that prospect theory can overthrow two centuries of neoclassical thought. Others say that it only gives credence to the idea that people repeatedly make daft mistakes. Is there a way of settling the dispute?
...../SNIP/......
This implies that prospect theory can capture the behaviour of inexperienced people, of which the world has many in all sorts of markets. But experienced buyers or sellers in well-established markets get over their psychological “flaws”. They can even transfer their trading skills from one market to another. The neoclassicals, it seems, have scored a point.
Mr List notes that sellers seem to learn how to trade faster than buyers do. What might this imply for, say, stockmarkets? The green investors who discovered shares only when markets boomed in the 1990s had been slower than others to part with their cash and join in. But once in, were they afflicted by the endowment effect? Owning Amazon shares bought for $400 each made it hard to sell until much higher prices came along (they didn't). Sophisticated traders, especially the sell sides of investment banks, had no such baggage, and sold. The bear market, however, should have proved as good a learning experience as novice investors are likely to get.
This obsevation is the heart of the matter. Those who ignore or scoff at it due to party loyalty due so at their own peril. In this atmosphere, parties are able to successfully isolate politically inconvenient groups of society that are either too small or to sparcely grouped to consitute a large enough voting block to be a threat come election time.
I'm no economist but, when I recently refinanced my home I eliminated 100K of debt (we were also able to pay off our credit cards). As a result I have alot better liquidity than I did at this time last year.
Please explain how this is a bad thing. Also if millions of Americans have done what we did wouldn't the overall debt load in the US economy have been substantially reduced thereby blowing this argument into pieces?
Buy handbaskets! Now!
I'm having trouble believing that the 2 party system is a secret conspiracy. Even if I admit that they are becoming increasingly similar and statist. Especially considering the remarks by Mr. Gillespie.
"Arbitrary law has trumped objective law as a policy tool for each of them." Hultberg is right on with this remark, IMO, so maybe it is moot whether it's a conspiracy or not, the result's the same.
"This doctrine states that America needs to abandon the conventional foreign policy model of national defense and actively pursue a reshaping of the world"
It's very possible that we have no choice other than pursuing such if we are to restrain the terror threat against us. Or we must end our dependence on Middle Eastern Oil.
"Greenspan's wild, hallucinatory expansion of the money supply that culminated in the blow off top of the stock"
Pardon my ignorance, does the above refer to his lowering of interest rates and encouraging of corporate debt?
Yeah, I agree with the thrust of this article, I am sure that one cannot successfully manipulate the market to achieve political ends, as statists imagine. No matter what, the market will rule, fooling with it too much is, I am sure, asking for trouble (or catastrophe, as the author anticipates).
I fully agree with him that we are headed for serious trouble or catastrophe, mostly for the reasons he gives, because we have given up our founders' ideals in favor of statism and arbitrary rule. Whether or not the catastrophe is now upon us is beyond my meager ability to really guess. But I don't doubt that when it occurs, the Left, and probably the Right will call for yet more statism to correct it.
This whole thing is really over my head. However, I'm going to get out my Ben Graham stuff and look at my portfolio, what's left of it, in terms of fundamental "value," I guess. Probably be a good idea to look at the amount of debt compainies are carrying.
Thanks