118 replies to this topic

[Taran ap Dafydd]

We had more of a pure market economy in the U.S. in the 1800's..and we had boom and bust cycles every 15 years or so, seriously ones. We don't tend to have that anymore, recessions are very light compared to what they were 150 years ago. Why is that?

Primarily because we are no longer on a metal standard. If you compare the value of the metal (usually gold, but not always in the US), to the status of the economy, you will see that any significant change in the value of the metal resulted in a Bust in the economy. Either because of Deflation or because of Inflation.

With the disconnect from the value of the metal, we are better able to control that boom/bust cycle, which now depends primarily on whether there is significant over- or under-valuing of major goods or services. The last 2 busts in the US are perfect examples: 2000, it was the readjustment of the tech market after major over-valuing. In 2007-2008 it's real-estate. But smaller booms and busts happen within industries all the time for the same reason. In rice, for example. Last year there was a major boom And bust because of a perceived, and ultimately incorrect, major increase in the demand. Oil saw a similar boom/bust over the last couple years, though this had more of an effect on the total US economy than the rice did.

This is why anyone who wants to go Back to the Gold Standard (or Silver, or Copper or any other commodity) is either nuts or ignorant.

[MattW]

To bring this thread back to its original subject a bit, i am amazed at the sheer diversity of political opinion on CHF. Looking at Tang Scholar's graph shows we have members right across the compass...

[Mok]

Yeah, let's get back to topic and not take ourselves too seriously.

I'm quite amazed at the way my rather tongue-in-cheek thread took off, by the way.

[Tang Scholar]

To bring this thread back to its original subject a bit, i am amazed at the sheer diversity of political opinion on CHF. Looking at Tang Scholar's graph shows we have members right across the compass...

Sometimes things grow unexpectedly. In this case, I think the thread gives us the opportunity to plunge into a delicate and important subject which can become hot if not managed with care. We are political animals, said Aristotle... so we will be attracted to the subject. But we have to deal with it in a very civilized way. (Civilized in the best sense of the word). From around Post 98 to 105, we got lost into Economics. Even that was made very coolly.
Now it is time to return to the original theme of the thread. I think it is a very interesting thread. A political self-analysis of CHF, made with humour and armony.

[Taran ap Dafydd]

From around Post 98 to 105, we got lost into Economics. Even that was made very coolly.

Sorry, but thanks.

[mariusj]

This actually would not have economists discussing it endlessly, as both schools came to an understanding on this. Both theoretically and practically.
Theoretically: A truly "genuine free market" would not have either monopolies or predator companies of any sort.
Practically: A "genuine free market" only remains so as long as predator companies, which Do exist, are restricted from eliminating their competition. Once such predator companies are allowed to establish monopolies, you no longer have a free market at all, but an oligopolistic market, which may, or may not be marginally better than a state-run market.

In any case, neither a state-run market nor an oligopolistic market can effectively serve the consumer and is ultimately self-destructive. For examples, see the USSR, Venezuela, Cuba, and the economic crashes the immediately preceded America's Anti-trust laws.

You are talking about perfect competition. I am talking about free market.

Then, a cartel in general is self destructive, but I am uncertain whether we can say oligopolistic markets are ultimately self destructive since, well, OPEC is still alive . . .
Also, if someone do have a monopoly,it doesn't mean its not better run, or have worse marginal gain [though it often is] but instead a switch from Consumer surplus to Supplier surplus.

Anyways, I brought it up b/c the question use for testing is more ambiguous then their author intends.

[mariusj]

Sorry but I have to cut this to piece first.

We had more of a pure market economy in the U.S. in the 1800's..and we had boom and bust cycles every 15 years or so, seriously ones. We don't tend to have that anymore, recessions are very light compared to what they were 150 years ago. Why is that?

Are you talking about business cycles?
Anyways, I was under the impression that this is caused by the introduction of a disassociation of paper tender and actual metals.

Economics is a social science for a reason because you can't quantify human behavior which is the key input to a market. People often do not act rational meaning "to maximize the use of scares resources". If they did always acted so economics would be a "hard science" instead we just use that as a model and say "everything being equal things move to equilibrium" and other things that often do not happen or happen much more slowly or chaotically in the real world.

HUM. We don't say all people act in rationality - instead, enough people will act rationally ACCORDING to their information that we can assemble models
Then, I think we can statistically model human behavior in general, that is, we can statistically say how much of the people will react to a tornado, etc etc.

Politics enters economics (well not the only reason but this is the aspect I'm speaking about) to correct market inefficiencies. caused by human irrationalities. The other time it enters is because humans are social animals, like chimps but more so. Everyone is not capable of surviving in a market situation all the time in a way that we believe is "civilized" to live so we,l as a society, do things to assist those who "fall down", just like chimps will feed hurt/sick chimps in their group (something other lower animals don't tend to think or want to do). Altruism is a not a uniquely human trait, but it is definately a defining human trait whose examples go back to the beginning of recorded history.

I agree. I am not sure though if this have to do with politics, but rather our super ego demanding an act higher then ourselves.

please help me out for a minute, this being a history site and all. What law or regulation in the The Housing and Urban Development Act and The New Communities Act of 1968 directly made lenders in the first decade of the 21st century not manage their risk in appropriate manner? I'm having trouble finding it...

I think most people would not use the word directly, since that imply a hard and concrete evidence of scientific fact [or so I hoped]. Instead, people might argue, statistically, that people make more courageous [or....]bets or hedges.

Also...what mainstream recognized expert on the Housing Crisis who has been published in peer reviewed academic journals stated that this Act lead to the current housing crisis. I would like to review that person's opinion first hand.

Me too.

[mariusj]

Primarily because we are no longer on a metal standard. If you compare the value of the metal (usually gold, but not always in the US), to the status of the economy, you will see that any significant change in the value of the metal resulted in a Bust in the economy. Either because of Deflation or because of Inflation.

This I agree.

With the disconnect from the value of the metal, we are better able to control that boom/bust cycle, which now depends primarily on whether there is significant over- or under-valuing of major goods or services. The last 2 busts in the US are perfect examples: 2000, it was the readjustment of the tech market after major over-valuing. In 2007-2008 it's real-estate. But smaller booms and busts happen within industries all the time for the same reason. In rice, for example. Last year there was a major boom And bust because of a perceived, and ultimately incorrect, major increase in the demand. Oil saw a similar boom/bust over the last couple years, though this had more of an effect on the total US economy than the rice did.

We control the cycle through the Federal Reserve. Not from disconnect from value of metal [which began with the Gold Standard] but through banking regulations of interest, and cash reserve.

This is why anyone who wants to go Back to the Gold Standard (or Silver, or Copper or any other commodity) is either nuts or ignorant.

You do realize that by going back to the Gold Standard, or some other commodity, it is highly likely that we will skip the business cycles all together, and the price for that would be the lack of ability to rapidly expend [or obtain capitals].
But there are those who do want to go back to some standard [not necessary Gold, but, say, association to the adult male wage, which would control the COL, or other form of naturally true standard.] who, might be nuts, but are definitely not ignorant and far more intelligent then either of us.

http://www.econ.ucla...ompson/29-1.pdf

One of the more nuts and brilliant example.

[Mok]

Ok people, we're talking political leanings here, not economic policies. Do let's stick to the topic at hand; we can always start an economics thread for interested parties.

Mok

[Mok]

Taran and Marius, I'm more than willing to split apart the economics posts into a separate topic, so that you lads can get back to your discussion. Otherwise, I'm of a mind to delete irrelevant posts.

[mariusj]

Ok people, we're talking political leanings here, not economic policies. Do let's stick to the topic at hand; we can always start an economics thread for interested parties.

Mok

But its our difference in our economic understandings/policies that direct our political leanings [e.g Social Security, military defense, tax cut, etc etc]

but sure.

[Mok]

But its our difference in our economic understandings/policies that direct our political leanings [e.g Social Security, military defense, tax cut, etc etc]

but sure.

I certainly understand that, as long as it remains an explanation and not a discussion, otherwise the topic of discussion is off track again.

However, I shall leave the posts on here. Let's just not digress again. You are perfectly free to start your own Economics discussion threads though. I'm quite interested in the discussion between you and Taran.

[Taran ap Dafydd]

I'm cool with an economics discussion thread.
But I have a feeling that marius and I are now really just saying the same things in different ways, these last few posts...

[KLdome]

Can/should Communists be subdivided?