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Niall Ferguson Explains Why Keynesian Policies Are Dooming The World Economy To Round After Round Of Asset Bubbles

Tyler Durden's picture





 

If there is one thing that everyone should watch to understand just why every policy attempt to fix the ongoing depression is doomed, it is the following short clip from Niall Ferguson in which he deconstructs the primary fatal flaw of Keynesianism. Ferguson explains why those who push for Keynesian policies in a globalized world are doing nothing to stimulate the economy, but merely inflate ever more bubbles. Quote Ferguson: "I wonder if it's worth revisiting the now familiar debate about whether or not Keynes can save us. Because I have some doubts about this. Deep doubts." Zero Hedge has no doubts about this - we are confident that the confines of a theoretical Keynesian system have been the recipe for the disaster unfolding now before our eyes (which is not to say that Austrian economics is necessarily better, although intuitively they certainly make a far more compelling case, and would certainly not have led to the current pre-apocalyptic economic situation, which only the most addicted to Kool Aid pig lipstickers refuse to acknowledge). However, that is not news - we have always made our position on the false voodoo religion of economics well known. We are, however, happy that more and more of the "mainstream fold" are finally starting to question the key flawed premise of this fundamentalist doctrine.

Ferguson continues "Remember what Keynes wrote in the 1930s about stimulus and the way in which government could get an economic going again really applied to a post-globalization world in which trade and capital flows had largely broken down, and most economies were quite isolated units. That's something that Keynes made clear in the German edition of the General Theory when he said the theory applies better in a closed totalitarian economy." The conclusion - in a globalized world, such as that preached by the BRIC pundits whereby developing nations will bail everyone else out, or so the legend goes, additional stimulus will always and inevitably merely lead to bubbles - either commodity or emerging markets. And all we have is a bunch of idiot Ivy League Ph.D.s' wrong interpretation of Keynesianism to thank for destroying the economic system as we know it.

Niall on the direct effect of existing failed Keynsian policies in a globalized world:

Globalization has not broken down. In fact the US economy is more open than it has ever been. That means that stimulus, both monetary and fiscal if very prone to what is called leakage. We've had an enormous of stimulus in the US, it's the biggest fiscal stimulus in the world, and huge unprecedented monetary stimulus. What's been stimulated? Not jobs in Michigan. What's been stimulated has been commodity markets and emerging markets. Because the liquidity just leaks out, and that's why another round of stimulus would not stimulate in the promised way. It would stimulate the wrong things. And those things, commodity markets and emerging markets, are already overstimulated to the point of being nearly bubbles.

So simple, yet so incomprehensible by the cadre of false Keynesian prophets who will never admit to this most elegant of realizations. It also means that America can expect more such farces as double stimulus roadsigns, and oil back at $140 (or much higher) before even another job is created out of all the excess money sloshing around.

Must watch clip.

 

And for those who would rather work in the confines of these two mutually exclusive worlds (Keynesianism and Globalization), there is one thing we would like to share with you, and that is the following extract from an interview by Peter Cook of the last person standing in Obama's economic team Tim Geithner:

They're also letting their exchange rate move up.  And they're doing that because it's in their interest.  Makes no sense for China to have monetary policies set by the Federal Reserve.  They're an independent country, large economy.  They need the flexibility to run their policies in a way that makes sense for China.  And that requires that their exchange rate move up over time, as they're now doing.

That our economic leaders are stupid enough to utter the bolded is sufficient validation that we are all doomed: not only is the world being guided by a flawed economic religion, but its priests are the most intellectually challenged individuals ever to enter "public" service.

And as an aside, those who wish to hedge bubbling emerging market exposure, SocGen's Dylan Grice had a great analysis of various cheap inflationary (compared to rich deflationary) EM hedges (link).

h/t Credit Trader

 


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Sun, 10/24/2010 - 11:53 | Link to Comment gkm
gkm's picture

A little anecdotal evidence of why the run in gold has yet to begin.  My parents went to an estate auction this weekend where, as usual, jewelery and such were sold first.  A gold coin from the late 1800's which had been appraised in the 1980's (i.e. probably at the height of the pricing then) at around $2300.  It had all of 3 bidders and sold for $225.  So pure gold being almost twice the price of what it was in the 1980's peak hasn't inspired people to want to buy gold.  A very good sign for gold's future.

What was selling?  A used car sold for a stupid amount and antique toys were in demand.  The sheeple were out in droves.

Sun, 10/24/2010 - 13:41 | Link to Comment doolittlegeorge
doolittlegeorge's picture

let's see.."nobody makes anything anymore."  REALLY?  That's interesting.

Sun, 10/24/2010 - 14:17 | Link to Comment traderjoe
traderjoe's picture

How much gold was in the coin, i.e. what was the melt value? Just wondering if those sorts of sales are worth attending...

Sun, 10/24/2010 - 17:00 | Link to Comment Arius
Arius's picture

i suppose you have the answer at the valuation in 1980s...i wondered what state was? perhaps, somewhere mid west?

Sun, 10/24/2010 - 18:32 | Link to Comment gkm
gkm's picture

Ontario, Canada

Sun, 10/24/2010 - 18:32 | Link to Comment gkm
gkm's picture

Couldn't say.  I heard the weight was 0.4 ounces but I'm not sure what content a coin of that vintage would have for gold.

Sun, 10/24/2010 - 22:21 | Link to Comment PeaBird
PeaBird's picture

the standard for coins of that vintage are normally in the 91.67% range for fineness.

Sun, 10/24/2010 - 19:22 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

My moms sisters fathers aunt goes to the flea markets in Biloxi Mississippi. She does dig up some gold. She goes at 10 am with her son Kooter. Her name is Dottie. Her daughter is a blackjack dealer at the Beau Rivage in Biloxi and she has a ferret named Marlana.

Dottie and Kooter once came home with a big 14k gold bracelet and she sold it on eBay for $16 before commissions. So I figure most jewelry will bring about $1 a caret. That's good money for one days work at the flea market.

Mon, 10/25/2010 - 00:35 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

Your mother's sister's (your aunt's) father is your grandfather. His sister is your great aunt. Kooter and his sister are your first cousins once removed. Marlana is no relation.

Gold karats are a measure of purity not weight and can not be priced as such. One  might own a one gram chain of 14k gold or a ten gram chain of 14k gold and the price of each would obviously differ by a factor of ten.

Mon, 10/25/2010 - 07:01 | Link to Comment MeTarzanUjane
MeTarzanUjane's picture

I'm not really sure what you're saying but it sounds good. Ever been to to the flea markets in Biloxi?

Mon, 10/25/2010 - 09:34 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

Haven't had the pleasure.

Sun, 10/24/2010 - 14:23 | Link to Comment Bartanist
Bartanist's picture

Unemployment for the college educated is <4.5%. For those with advanced degrees unemployment is around 3%

I don't know who goes to estate sales, but my guess is that they are employed and have disposable income or are in the resale business. So, it is debatable whether they feel they need gold as a way to protect themselves.

However, my guess is that the gold coin was a small weight piece and it was not valued based on being a collectable ... or littl extra value was given to it as a collectable.

Sun, 10/24/2010 - 15:28 | Link to Comment NOTW777
NOTW777's picture

"Unemployment for the college educated is <4.5%. For those with advanced degrees unemployment is around 3%"

incredibly deceptive stat.  many people with college degrees are working for $15/hr;  saw an ad for attorney position in SD recently, requiring experience for $25/hr.  how many college grads are moving back home to live with parents cause they cannot support themselves.  ask engineers, or tech grads what they are doing.

Sun, 10/24/2010 - 17:34 | Link to Comment tmosley
tmosley's picture

We hire recent graduates with 4 year degrees in the hard sciences for $10-13/hour, mostly at the lower end of that scale, and we can't give a raise for a year.  Every time I post a job, I get at least 30 applicants, and they aren't repeats most of the time.

We're paying pennies for the cream of the crop, and turnover is at a record low despite abysmal pay.  I like to think that it is because I'm a good manager, and that MIGHT be a part of it, but more than likely, it is because they just can't find another job, and this is the only way to pay the bills.  The only reason anyone even thinks about leaving is so they can move back in with their parents, but they have had problems finding jobs where thier parents live.

And this is in TEXAS, which has one of the lowest unemployment rates in the country.

Sun, 10/24/2010 - 17:59 | Link to Comment NOTW777
NOTW777's picture

California is similar and has even higher cost of living

Sun, 10/24/2010 - 20:02 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

It is no surprise that you're from Texas.

Sun, 10/24/2010 - 23:06 | Link to Comment nobita
nobita's picture

i am not from texas but your comment is junk.
please post less.

Sun, 10/24/2010 - 23:12 | Link to Comment chopper read
chopper read's picture

+1000

Sun, 10/24/2010 - 21:21 | Link to Comment Spitzer
Spitzer's picture

Oil rig newbies here in Canada still get $27.50 an hour, no experince, no education. Truck drivers and wire liners get 30 to 40 an hour.

Sun, 10/24/2010 - 21:52 | Link to Comment Dburn
Dburn's picture

saw an ad for attorney position in SD recently, requiring experience for $25/hr.

No doubt that his services will be billed out at something reasonable like $50.00 per hour? HAHA. It will be billed out at prevailing rate so the partners can take advantage of the current job market. Even govt jobs pay far more than that for Attorneys. I was checking tuition rates for the three year program offered by a university I would put in the C+ status of law schools. $20,000 a semester for in-state students and $49,000 for out of State. That comes to $40 grand a year plus books and living expense because it is pretty damn hard to work at least in the first year. So the cheapest they walk out with is $120G in debt of they are able to pay living expenses. If not and they are incredibly frugal, it will run $170-$200G for a 2nd to third rate law school. The one thing I like about "community" type law schools like this is they are taught by practicing attorneys who give a lot of practical training that theoretical ( expensive) law schools don't give on the assumption you will learn the nitty gritty of a practicing attorney in your first few years as an an associate.

I'm actually considering giving it a run. I think Bankruptcy Lawyers will be busy for years. Plus I am on a slow burn from hell about the trampling of the rule of law. I'd love to be able to get close enough to throw some fucking sand in the faces of even local bankers. At least I can say I tried.

Mon, 10/25/2010 - 08:02 | Link to Comment i-dog
i-dog's picture

"No doubt that his services will be billed out at something reasonable like $50.00 per hour? HAHA."

I would hope that they would be billing him out at $75 per hour, or more, else they will be out of business in no time!

If enough people junk me, I'll explain why (though it should be taught in high school instead of teaching Socialism 101, Socialism 201, etc). :)

Sun, 10/24/2010 - 16:49 | Link to Comment RockyRacoon
RockyRacoon's picture

That gold outlook can change with a few more articles like this one:

http://www.usatoday.com/money/markets/2010-10-22-personalfinance22_ST_N.htm

USA Today of all things!

Sun, 10/24/2010 - 17:23 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

"A 5% to 10% position in gold is enough for nearly everyone."

They destroyed their credibility with that statment.  

The statement has no basis in fact, and no facts are given to support it.   It's pure opinion of the writer, and therefore worthless.

The article is more gold-bashing.  It won't stir anyone's interest in gold ownership.

Sun, 10/24/2010 - 18:10 | Link to Comment chopper read
chopper read's picture

that statement is designed by financial planners to serve financial planners.  Its there way of acknowledging gold whilst minimizing its importance relative to fiat investments from which they get paid in perpetuity.  

Sun, 10/24/2010 - 19:29 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

that statement is designed by financial planners to serve financial planners.

Exactly!

As a Certified Financial Planner I actually take great risk when I recommend to my clients that they hold Gold and Gold miner positions of 20%, 30% and even more for the younger clients. Why? Because it's so far from "conventional wisdom" that if a client were to complain to the SEC, FINRA or even the CFP board, I could be in genuine trouble for violating my "fiduciary duty".

Of course, holding 50 or 60% in stocks is perfectly acceptable unless the client is in their 70's or 80's and I can't justify it, which isn't that hard if they have a decent income without touching their investments. The deck has always been stacked towards paper assets.

Sun, 10/24/2010 - 19:41 | Link to Comment chopper read
chopper read's picture

i hear you.  imagine if some 'rogue' fiduciaries overseeing a public pension plan invested in physical gold 10 years ago.  of course, it never would have happened because they are scared shitless of getting sued on the basis of 'studies' presented by the Wall Street Industrial Complex. 

ironically, if there is a collapse of fiat, Joe Sixpack may finally get his revenge on the system.  it is much easier to opt out of an IRA or 401(k), take the penalty, and buy gold and silver online within days.  He has no 'fiduciary responsibility' other than to save his own ass. How nimble are public pension plans by comparison?  Pension fund trustees are damned if they do buy gold, and damned if they do not!  By the time they get the investment policy statement changed because gold is at $3,000, old Joe is sitting in a fat winner. 

Sun, 10/24/2010 - 22:16 | Link to Comment prophet
prophet's picture

Not to mention that lead along with a few other assets classes did even better than gold. 

I think 4% is a good base allocation to an "asset class", 8 is pushing it and 12 is a hard top.  25 good ideas at 4P, 12.5 ideas at 8P, or if you are dead certain then perhaps 8.5 ideas at 12.5P.   

 

Sun, 10/24/2010 - 18:21 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

Agree. The figure of 5 or 10% is completely arbitrary and ridiculous.The same journalists would recommend you to place 95% into stocks when the economy is 'growing'.

According to the mainstream medias, betting on economic growth therefore deserves more money than betting on economic or monetary downfall.

And of course, 5% of your 1000 dollars savings will only buy you 1 gram of gold (15 days of food), when 5% of your 1,000,000 dollar savings will buy you 1,171 grams of gold (48 years of food). In very troubled economic times, it can mean that the first will die, and the second will live. If the first had increased his stake from 5% (15 days of food) to 50% (150 days of food), his chances of survival would increase by the same amount. Thus, advocating 5% in gold means that the probabilities of an economic downfall are only 5%. And even if this were true, the law of assymetrical risks recommends you to have more than 5% of your $1,000 savings in gold.

Summarized: one should not recommend gold buying on the basis of a percentage, but rather in absolute grams. 145 grams is, to my mind, sufficient for surviving during 6 years without ever lacking food. After that, the grams you add to your portfolio are comfort grams, which will be able to be used for another mean than survival.

Sun, 10/24/2010 - 18:36 | Link to Comment chopper read
chopper read's picture

thoughtful viewpoint!

Sun, 10/24/2010 - 22:19 | Link to Comment prophet
prophet's picture

Yes, the 145 grams would be what is known as an emergency fund in financial planning parlance.  It is distinctly separate from the investment portfolio. 

Mon, 10/25/2010 - 11:51 | Link to Comment RockyRacoon
RockyRacoon's picture

That summary is at today's food prices, of course.  A correction would be made to correlate with food costs.

BTW: I was posting that USA Today article as a note that the discussion of gold has gone to some main stream discussion.  It's crap, but relevant in that sense.

Mon, 10/25/2010 - 12:24 | Link to Comment MsCreant
MsCreant's picture

Agreed. I have a colleague asking me about gold. I gave him a big heaping scoop of reality (HFT, front running, bid stuffing, potential confiscation of IRAs and 401ks). He is a statistician, he followed everything with one explanation. He told me he wasn't going to be able to sleep tonight. 

Folks are starting to wake up. The thing is, they are waking up and reacting without enough information. Here is more of the problem, for anyone here afterhours reading.

My colleague, after hearing all this, says to me "Can I pay you to manage my money for me?" Do you get how bad this is? I am a nobody who trolls these and a few other sites, and reads a lot of alternative (sometimes garbage) news. I look up charts on my own here and there. It is the knee jerk reaction of my adult male colleague to look to someone to figure it out for him. He is a smart guy. What of the rest of America who do not have Ph.D.s in Demography? This is what we are dealing with.

Mon, 10/25/2010 - 12:31 | Link to Comment i-dog
i-dog's picture

You are not a nobody!

Mon, 10/25/2010 - 13:18 | Link to Comment chopper read
chopper read's picture

scary point.  of course, the simple answer is that he does not need your help to sell everything and buy physical gold.  But how was this not his first reaction?  great observation.

Sun, 10/24/2010 - 18:04 | Link to Comment RabidLemming
RabidLemming's picture

Numismatic value and melt value are very rarely related. 

Sun, 10/24/2010 - 11:53 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

Instead of seeing Keynesian policies and debt/monetary bubbles as policies which could have been right, but are not, people should start to realize that these policies were profoundly ridiculous and nonsensical since the beginning.

And I do think that the FED is very aware of that. A 5-year-old child can understand that you can't create real wealth with debt, printing presses and idiocy. It's like saying that a bum who owes $200,000 to a coke dealer is rich.

 

Sun, 10/24/2010 - 12:05 | Link to Comment Sqworl
Sqworl's picture

+1000

It's like saying that a bum who owes $200,000 to a coke dealer is rich.

Sun, 10/24/2010 - 12:19 | Link to Comment sushi
sushi's picture

+ 2000

The debt to the coke dealer represents an asset so he is richer by $200,000 as is the houseowner, er, cokehead, who is also up by $200,000. A rising tide of blow lifts all boats.

Sun, 10/24/2010 - 13:00 | Link to Comment masterinchancery
masterinchancery's picture

A perfect example of stimulus.

Sun, 10/24/2010 - 18:10 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

no i have a perfect example of stimulus.

not telling you, though.

Sun, 10/24/2010 - 14:44 | Link to Comment Spitzer
Spitzer's picture

Keynes expalined in under 30 seconds

http://www.youtube.com/watch?v=Ij_jWDmvBDw

Sun, 10/24/2010 - 12:26 | Link to Comment chopper read
chopper read's picture

 

Keynesian economics = over the long-term, everyone can have a free lunch.

Austrian economics = over the long-term, there are no free lunches.  

 

Sun, 10/24/2010 - 12:33 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

"Keynesian economics = over the long-term, everyone can have a free lunch."

Is it a joke?

Sun, 10/24/2010 - 12:40 | Link to Comment chopper read
chopper read's picture

keynesianism is to economics what astrology is to astronomy. 

no joke - it's true!

Sun, 10/24/2010 - 12:51 | Link to Comment snowball777
snowball777's picture

Then the Austrian school plays Tarot to economics' Poker.

Sun, 10/24/2010 - 13:30 | Link to Comment chopper read
chopper read's picture

probably true, too.  one thing is certain, there are no free lunches.  sorry, Keynesians.

 

keynesianism = centralization of power

austrianism = decentralization of power

 

is there really still a debate about which one is better? 

 

keynesians = smarmy elitest twats

austrians = lovers of liberty

Sun, 10/24/2010 - 13:49 | Link to Comment snowball777
Sun, 10/24/2010 - 14:27 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

Most of the comments about Keynesian economics on ZH...

=

people who have no fucking clue what Keynesian economics is.

You brain-washed morons are twisting, bashing, thrashing, manipulating and distorting an economic theory without having the slightest clue what it truly is.

Palin/Disinformation 2012

Sun, 10/24/2010 - 15:31 | Link to Comment NOTW777
NOTW777's picture

red neck, your name calling is so erudite, so convincing, - not.

tell george soros - name calling doesnt work anymore. rome is burning. your koolaid days are over.

your time of accounting is due

Sun, 10/24/2010 - 16:40 | Link to Comment chopper read
chopper read's picture

keynesians = oppressive British Empire circa 1775

austrians = industrious revolutionary colonists circa 1776

 

...its so simple!

Mon, 10/25/2010 - 03:45 | Link to Comment AnAnonymous
AnAnonymous's picture

So they both support slavery?

 

Cool... This should end any kind of discussion.

Mon, 10/25/2010 - 10:39 | Link to Comment chopper read
chopper read's picture

don't be silly.  this is not the comparison that i was drawing. 

I meant: both have a penchant for English Breakfast Tea.

you know how cushy economists live.  sheesh. 

Sun, 10/24/2010 - 19:05 | Link to Comment GoinFawr
GoinFawr's picture

Actually, Redneck might have a point here, and it might not be what you think.

Niall 'the plutocratic paperbug schill' Ferguson's words should not be taken lightly, but consider the source.

Have any of you read "The Ascent of Money"?

Excerpt,

"Angry that the world is so unfair? Infuriated by fat-cat capitalists and billion-bonus bankers? Baffled by the yawning chasm between the Haves, the Have-nots – and the Have-Yachts? You are not alone. Throughout the history of Western civilization, there has been a recurrent hostility to finance and financiers, rooted in the idea that those who make their living from lending money are somehow parasitical on the ‘real’ economic activities of agriculture and manufacturing. This hostility has three causes. It is partly because debtors have tended to outnumber creditors and the former have seldom felt very well disposed towards the latter. It is partly because financial crises and scandals occur frequently enough to make finance appear to be a cause of poverty rather than prosperity, volatility rather than stability. And it is partly because, for centuries, financial services in countries all over the world were disproportionately provided by members of ethnic or religious minorities, who had been excluded from land ownership but enjoyed success in finance because of their own tight-knit networks of kinship and trust."

400 or some odd pages and throughout the thousands of years covered, gold is little more than a minor footnote in Mr.Ferguson's mind. Yah, right.

Admittedly I am biased (towards the PM's, not Keynes), but http://www.goldensextant.com/commentary36.html#anchor5833

provides an excellent summary of NF and his alliances.

 NF may be deliberately attempting to confuse 'bubbles' with 'inflationary pressures'.

I smell the odour of prestidigitation on the horizon moving closer with every word this elitist breathes, and it stinks.

Most likely something along the lines of 'austerity' for the elderly eating grade C dog food on Social Security, 'balanced' by a doubling or tripling of the 'defense' budget. Not saying both programs, and more, don't need the haircutz, but it is entirely possible that NF is a talking head whose directive is to help pave the way for Priorities Obfuscation on a level felt most acutely by what's left of the world's middle class; not his.

Beware of enemies who suddenly begin to act as if they are on your side.

JMHO,natch

Regards

Sun, 10/24/2010 - 19:50 | Link to Comment chopper read
chopper read's picture

'facilitators of finance' can do so without fractional reserve counterfeiting, which serves nobody but bankers.  money planning should be decentralized, fractional reserve lending should be outlawed, and our economies should be opened to competing currencies including gold and silver. 


credit should be a simple agreement between a lender and a borrower.  one unit of wealth in, one unit of wealth out.  if that unit of wealth is lost, then this is the risk of lending.  We can lend our wealth ourselves (buy bonds), or pay an investment manager to lend on our behalf.  the alternative should be to store this unit of wealth in a safe for later use.  it is truly this simple. 

NF's apologetics in favor of bankers is full of fluff because he ignores these fraudulent dynamics in their practices.  he is clearly a shill.  

Sun, 10/24/2010 - 20:13 | Link to Comment Sean7k
Sean7k's picture

I was waiting for someone to make this connection. Ferguson is the new poster boy for the Bilderbergers. I was suspicious as soon as I read the title, much less the body of the material.

Sun, 10/24/2010 - 20:34 | Link to Comment surfsup
surfsup's picture

...and no one talks about interest itself as being an issue.   Well trained sheeple -- move along...  Control freaks will just march out the opposite meme of what you "think" the problem is and wrap interest into it and asset strip all the same.   Ya'll gotta dig a lot further into it!   Labels, names and all that will just be spun in the same bipolar fashion and hook people into wrong ideas as they think "a new form" is being promoted.   Until a systemic balance is achieved "within the system itself" you will end up with the same outmoded, outdated, and frankly incessantly destructive tractor plowing the field with perhaps a new little paint job on it and trailing the frill of the day like any mere political P/R based marketing gimmick.   

 

If NASA engineers where allowed to so unbalance their re entries of space vehicles with such unbalanced concepts similar to all the so labeled concepts inducing the exponential decay of commerce by debt, the entirety of low earth orbit would be a debris field of massive proportions.   Ya can't re enter without precision.  Same with any general economy -- it needs perpetual and detailed BALANCE -- on going and perpetual -- or one will end up with just what we see before us -- a massive debris field.   DIVER DEEPER!  

 

www.perfecteconomy.com

 

 

Sun, 10/24/2010 - 21:50 | Link to Comment chopper read
chopper read's picture

balance is achieved by opening up a national economy to competing currencies, including gold and silver, which serves to regionalize and temper boom/bust cycles and creates a strong foundation of savings and investment amongst the masses over time.  

all other promises are empty ones made by lying politicians and their private cronies in the pursuit of public resources (money and power).  The case-in-point is our Federal Reserve Bank, fractional reserve counterfeiting, and our single fiat currency.  this is all about control at the expense of both liberty and financial strength amongst the masses in America.   

Where would our country be if the monies we currently have sunk in public debt were redirected into private enterprise?   Dow 100,000?  Instead, we are shackled with interest payments.

Mon, 10/25/2010 - 23:10 | Link to Comment UncleFester
UncleFester's picture

"Beware of enemies who suddenly begin to act as if they are on your side."

Beware indeed!  The plutocrats/oligarchs often put forward their "elites" in times of crises to achieve their ends.  It is subtle, but notice the inference when he speaks of globalism and leakage.  The German preface to Keynes discussed that the "General" Theory only applied to closed system (not so general) and does not apply to open ones due to "leakage".  Here, NF is correct, in an open system (individual liberties), Keynesianism fails.  NF is informing us that "they" desire a global closed, totalitarian system.

Here endeth the lesson.  I fester.

 

Sun, 10/24/2010 - 14:39 | Link to Comment Spitzer
Spitzer's picture

You don't have a clue, you would probably change your view if you understood Austrian economics.

 

Keynesians=flat earthers

Austrians=round earthers

Sun, 10/24/2010 - 16:47 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

Spitzer

A society under the rule of Austrian economic theory will produce a plutocracy that is similar to what we have today - it just won't be called government.  Semantics may change, the end-game won't.

The rich and powerful parasites will continue to suck the marrow from the bones of society, while periodically throwing bread crumbs to keep the host alive. 

Whether you have big government, small government or no government, the rich and powerful will always have paid representatives who further their goals.

The idealism represented by Austrian economics can be extremely alluring and convincing, especially since the circle-jerk between Washington and Wall Street has become blaringly obvious over the past several years.  However, don't allow yourself to be drugged by idealistic prospects that, in the end, would produce similar results.

Do you actually think bankers would have less power in a Austrian society?  Social darwinism would empower the rich, snuff out the weak and make slaves out of everyone else. Perhaps in a pre-lapsarian world, Austrian economics would have better results.   

Lastly, when you equate gravity to economics, you are missing an immeasurably important variable: the human element - that is, humans after the fall...

 

Sun, 10/24/2010 - 16:54 | Link to Comment hugolp
hugolp's picture

Austrian economics is just a economic theory, not a political theory.

Saying a society under austrian economic theory would produce this or that makes no sense. You should learn before talking about something. Society already lives under austrian economic theory, the same way society lives under the law of gravity. Austrian economics explains how the economy works. How you use that knowledge is another matter.

You are probably referring to libertarianism, which is the political and moral theory. But that is not the debate. You should learn before talking about something.

Sun, 10/24/2010 - 18:55 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

Austrian economics is just a economic theory, not a political theory.

Economic theory and political theory are not mutually exclusive, unless you're just engaging in mental masturbation.  

Sun, 10/24/2010 - 19:18 | Link to Comment chopper read
chopper read's picture


Keynesian economics empower central government planners.  central government planners murder their own people.  

http://en.wikipedia.org/wiki/Ukrainian_Famine

ITS SO SIMPLE, FUCKWIT!!!!

Mon, 10/25/2010 - 01:15 | Link to Comment hugolp
hugolp's picture

Whatever you want to think. But if you learned austrian economics (because you have not) you will realize its just an economic theory. The things described by austrian economics happen no matter what political decisions you make. Denying austrian economics is like denying gravity. You can do it, but what this laws describe does not stop happening just because you deny them.

What you are referring to is libertarianism, the political and moral theory.

Mon, 10/25/2010 - 03:51 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

You're oversimplifying it.  

Austrian economics is far more than just a description of economic facts.  It is a philosophy with a strong predisposition towards retribution.  

Unlike gravity, there is no math nor science in Austrian economics.  Austrian economics is rooted in assumptions and philosophical deductions of various economic events.  In this sense, it is much like religion and its fallible attempts to explain the world around us.

 


Mon, 10/25/2010 - 04:04 | Link to Comment hugolp
hugolp's picture

Sorry to tell you this, but you keep showing your ignorance. You should learn what you are talking about before you do.

Austrian economics is far more than just a description of economic facts.  It is a philosophy with a strong predisposition towards retribution.  

No. Austrian economics is just a description of economic facts (as you put it). The "philosophy" you are talking about is libertarianism, NOT austrian economics. I have told you this repeteadly.

Unlike gravity, there is no math nor science in Austrian economics.

So? There was no math in Darwin's theory of evolution, yet I dont think you are going to say its not science. I am a scientist (hard science scientist) and I know that maths are just a tool to describe the world. But there are more tools. Yet again you are not saying anything, just repeating talking points you have read in some anti-libertarian article. You should learn what you talk about before doing it.

Austrian economics is rooted in assumptions and philosophical deductions of various economic events.  In this sense, it is much like religion and its fallible attempts to explain the world around us.

Man, you are boring. Let me try it too:

Physics is rooted in assumptions and philosophical deductions of various natural events. In this sense, it is much like religion and its fallible attemps to explain the world around us.

 

Seriously, are you going to say something that makes sense? It seems to me like you read some anti-libertarian article and you keep repeating the talking points you learnt, without realizing that they make no sense. Please use your critical part of the brain and try to think deeply for a moment. If you are up for an honest discussion and not more trolling of yours keep on, if not this is my last answer to you here.

Tue, 10/26/2010 - 01:59 | Link to Comment Burnsy
Burnsy's picture

Please refrain from comparing economics to hard science (e.g. physics). It's just not. Economic laws are not immutable. This is just a fact, and has nothing to do with being a keynesian or an austrian. Economics is a social science, on about the same level as psychology (nothing wrong with psychology, but I wouldn't build bridges or skyscrapers or other large structures based on it), only our experiments are not conducted in a lab setting, but on a global scale. 

I don't think all applications of Keynesianism are useless, nor do I think Mises is all I need. But: I don't think Keynesian dogmatics like you will save the day for us. The pseudo-science of modern macroeconomics is flawed and limited (and that is fine, it doesn't mean it's completely useless) and should not be trusted completely. It is not physics, and we should not treat economic models like natural laws. Nor should we count on government to do everything for us and fix all that ails us. Because they can't. The power of policy is limited. Keynes is fucking dead, and he didn't have all the answers.

Sun, 10/24/2010 - 16:55 | Link to Comment chopper read
chopper read's picture


A less terrorizing keynesian (they're impossible to find) would retain government surpluses during good times for the private sector, then spend these surpluses on "public works" during bad times for the private sector in order to offset unemployment.  This is very different than deficit spending with borrowed money where some of the interest payments go to foreign investors outside of the domestic economy.  Nevermind that "public works" are a 'broken window fallacy'.  Even in our most prudent keynesian example, in order to gain a surplus, governments must first take from the private sector during the good times.  this takes capital away from the private sector which is where consumers of both goods and services are happy to finance job growth organically.  

Further, keynesian economists never allow for price drops (deflation).  The entire 'school of thought' (and I use that term loosely) creates a centrally planned money policy that never rewards savers and investors and always rewards excessive risk-taking.  Moral hazards abound!  

A policy of "moderate inflation" creates artificial demand, which creates hyper-consumption and reckless behavior in the efforts to feed the gluttony (see: Gulf oil spill). 

"Government puts" on the economy prolong the booms to unsustainable levels.   As a result, the prolonged booms cause both reckless speculation and undue euphoria amongst unsophisticated common folk who go out and borrow and spend and plan their lives around permanently good times (because they always have been), only to lose everything when the inevitable bubble bursts.  Then come the wars, murders, suicides and divorces as the populace turns on one another, all because a few smarmy twats like you wish to defy the laws of financial physics by tinkering with reality, you "Keynesian", you. 

Its all very simple:

guns don't kill people, rappers and Keynesians do.

 

its so simple, even a monkey like you should be able to figure this out.  you're goddamned lucky that i took the time to explain all of these things to you.  now, go buy some gold and guns and wait this out.  your grandkids will thank you for listening to that stupid bastard back in 2010 in the subversive chatrooms of ZeroHedge.

carry on. 

Sun, 10/24/2010 - 17:29 | Link to Comment hugolp
hugolp's picture

And responding to some of your claims about libertarianism:

Do you actually think bankers would have less power in a Austrian society?

Less. Way less. Not having the monopoly on credit would certainly make a difference, dont you think? :rolleyes: Seriously now, I recomend you read some history about the canadian banking system, or in the USA from Andrew Jackson until the Civil War. You will get surprised and realize that a lot of things you assume as evident, are just false.

Social darwinism would empower the rich, snuff out the weak and make slaves out of everyone else.

Political darwinism is what empowers the rich (or more precisely the politically connected). Social darwinism as you call it, is not something inherent to libertarian societies, is something inherent to the human condition. There will always be competition between people. Its in our genetics, starting at reproduction.

Anyone denouncing social darwinism and claiming that his/her system wont have it is a fool and an arrogant. You really think you can change the human nature? Are you out of your mind? You need to get realistic. The best way to deal with this human characteristic is by allowing everybody to compete in equal conditions, not by empowering a few with special regulatory powers. Political darwinism is the way to disaster.

Lastly, when you equate gravity to economics, you are missing an immeasurably important variable: the human element - that is, humans after the fall...

Oh, the irony... http://www.amazon.com/Human-Action-Ludwig-von-Mises/dp/0930073185

 

Seriously now, you seems like a guy that really cares. You should really learn what libertarians say, because you have been caught by the propaganda and are believing a bunch of lies about libertarians. Before jumping to conclussions you should learn what we say. I guarantee you will be surprised (as I was when I was a social-democrat discovering libertarianism).

 

Sun, 10/24/2010 - 17:50 | Link to Comment Goldilocks
Goldilocks's picture

Social, Political &/or economic darwinism is what empowers the rich ...

No not exactly, but it does lead them to a false belief that they're doing god's work.

So, they've got that going for them, which is nice.

Sun, 10/24/2010 - 17:55 | Link to Comment hugolp
hugolp's picture

Its actually true. Regulations help the politically connected, usually the big corporations who can pay for this connections.

Sun, 10/24/2010 - 18:31 | Link to Comment Goldilocks
Goldilocks's picture

We may differ in the righteousness of "darwinism" ...
...as it is used as an excuse to gut the little guy.

Mon, 10/25/2010 - 01:24 | Link to Comment hugolp
hugolp's picture

I think darwinism is not really good or bad. Darwinism just is. Its part of nature. For me thinking that darwinism is good or bad is like thinking gravity is good or bad, it makes no sense. Gravity just is. And darwinism just is.

Any political theory that wants to work has to acknowledge reality, and that means acknowledging that darwinism is part of nature, including human nature.

Someone promising to create a society without darwinism is like someone promising to create a society wihtou gravity. Someone promising something like that is a charlatan trying to pull a scam. Usually people promising to end darwinism want a more authoritarian society. Well, usually all charlatans want a authoritarian society (where they rule obviously).

That said, I am a caring person. I think its important to take care of the people who is going through a rough time and to colaborate and share with others. Otherwise I would not be spending my time here talking to extrangers on how to make a better world. But this does not imply that I am not going to acknowledge reality and/or fall for the first charlatan that comes promising incredible things. 

Sun, 10/24/2010 - 17:52 | Link to Comment Spitzer
Spitzer's picture

The human element eh ? That is what Austrian economics is all about my friend.

Your comments about the rich and powerful are too Micheal Moorish for me to comment.

Sun, 10/24/2010 - 18:36 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

The human element eh ? That is what Austrian economics is all about my friend.

No shit, Sherlock.

And that's the fucking problem.

If you want a society with vampire squids hovering over every metropolis sucking the wealth and labor from its citizens, then social darwinism/Austrian economics is for you.

Those that subscribe to Austrian economics seem to treat society like it's a big vagina - somehow, left uncheck, it will self-cleanse and self-regulate.  I'm here to tell you that sometimes - even the most prized vaginas - need a douche from some outside water source. 

Otherwise, bacteria wins. And so do the vampire squids of the world.  

Sun, 10/24/2010 - 18:42 | Link to Comment chopper read
chopper read's picture

keynesianism = wealth destroyer = tool of big government oppressors and corporate welfare seekers. 

austrianism = wealth creator = friend of the working man.

 

every Rothschild knows this.  why don't you?  its so simple!

Sun, 10/24/2010 - 18:58 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

Your post is as dumb and as useless as a football bat.

Sun, 10/24/2010 - 19:16 | Link to Comment chopper read
chopper read's picture

you're so "enlightened".  ha, ha. 

Keynesian economics empower central government planners.  central government planners murder their own people.  


http://en.wikipedia.org/wiki/Ukrainian_Famine

ITS SO SIMPLE, DIPSHIT!!!!

Sun, 10/24/2010 - 21:17 | Link to Comment BigJim
BigJim's picture

At the risk of feeding a troll...

We already HAVE a society with

          vampire squids hovering over every metropolis sucking the wealth and labor from its citizens

so are you saying we are currently living in some kind of Austrian/libertarians' paradise?

If so, you clearly know nothing about Austrian economics or libertarianism. Or much about our current situation, either.

Why don't you head on over to mises.org and get a clue?

Sun, 10/24/2010 - 21:35 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

It would behoove you to actually read my posts before responding to them. Read my post to Spitzer.

We already HAVE a society with...

That's exactly my point.  Unfettered capitalism will lead you to the same dead end: plutocracy.

Sun, 10/24/2010 - 21:54 | Link to Comment chopper read
chopper read's picture

see, BigJim?  you fed a troll.  no good deed goes unpunished, and welfare breeds contempt.  he's getting a free education, and we're getting a headache.  

 

Sun, 10/24/2010 - 22:13 | Link to Comment BigJim
BigJim's picture

I know, I know...

Still, I hope that if enough of us reason with him he might start making some headway. Surely even trolls can evolve?

Sun, 10/24/2010 - 22:46 | Link to Comment chopper read
chopper read's picture

...pearls to swine, BigJim.  ...pearls to swine.  

Mon, 10/25/2010 - 00:49 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

And don't forget the silk purse he makes from the sow's (his mom's?) ear. Swine, indeed.

Mon, 10/25/2010 - 05:01 | Link to Comment E.Z. Mark
E.Z. Mark's picture

Now that wealth disparity is back to pre war (WWI) levels it's the perfect time to unleash the free market! 

 

 

Sun, 10/24/2010 - 22:39 | Link to Comment StychoKiller
StychoKiller's picture

If you want a society with vampire squids hovering over every metropolis sucking the wealth and labor from its citizens, then social darwinism/Austrian economics is for you.

This describes the "Socialist Darwinism" that's going on right now!  When TPTB listen to their corporate/bankster "contributors", we end up where we're at right now -- better to have little or no regulation than regulation(s) bought and paid for by the monied interest(s)!

Mon, 10/25/2010 - 04:48 | Link to Comment E.Z. Mark
E.Z. Mark's picture

Hey, we gotta be under the rule of some self-contained economic "theory of everything".

 

Semantics is the game, it keeps the plebs occupied with labels, word association and false dichotomies so that anyone with an idea that does not refernece their team's theory gets a bad label and is booed by the faithful like a wrestling villain. 

 

 

Mon, 10/25/2010 - 10:08 | Link to Comment chopper read
chopper read's picture

exactly. 

however, "austrian" is just code for "stop meddling in my affairs" and "end central planning".  "keynesian" is code for "we can do it better than you" and "some pigs are more equal than others". 

since folks LOVE to label themselve to gain identity and a tribal sense of belonging, it forces us to bludgeon them with their own label until they wake up and smell the dogshit.

i call it "getting my hands dirty".  you should consider it. 

Sun, 10/24/2010 - 14:41 | Link to Comment Spitzer
Spitzer's picture

One day Austrian economics will be known as the laws of economics, no different then the laws of gravity.

keynes is witchcraft

Sun, 10/24/2010 - 16:49 | Link to Comment hugolp
hugolp's picture

It actually happened the same with mercantilism vs clasic liberalism.

The mercantilists recieved all the merits because it was promoted by the government, the kings. At the time, their writings were revered as the truth. But with time they proved themselves 100% lie and showed that they were written just to benefit the government. And the clasical liberals became the de facto economics, while everybody was laughing the mercantilist texts.

Its funny how something that a majority believes at some point in time, later on clearly seems so stupid. The same will happen with keynesianism.

Sun, 10/24/2010 - 13:28 | Link to Comment ebworthen
ebworthen's picture

Don't underestimate the ability of the intelligent to get lost in their own syapses.

My Daughter's speech teacher had this riddle on her wall.  She said that the Kindergarden kids got it right away, the first graders next, and so on.  The adults had the hardest time with it, and the more education the longer it took them. 

It's more powerful than God.
It's more evil than the Devil.
The poor have it.
The rich need it.
If you eat it you will die.

I've got a "Piled Higher and Deeper" (PhD) and my Daughter had to tell me.

Sometimes, education and theories make you dumber.

Sun, 10/24/2010 - 13:50 | Link to Comment kridkrid
kridkrid's picture

umm... so what is it?

Sun, 10/24/2010 - 14:05 | Link to Comment MsCreant
MsCreant's picture

Try them one at a time and you will get it.

Sun, 10/24/2010 - 14:23 | Link to Comment kridkrid
kridkrid's picture

Potato chips?

Sun, 10/24/2010 - 14:52 | Link to Comment cxl9
cxl9's picture

"Nothing"

 

(thanks: Google)

 

Sun, 10/24/2010 - 21:20 | Link to Comment BigJim
BigJim's picture

Hey! I got it - straight away!

Looks like sleeping through all that tertiary education is finally paying off.

Sun, 10/24/2010 - 22:45 | Link to Comment Unlawful Justice
Unlawful Justice's picture

Simple understanding of the basic's

Evil is just to live backwards

Devil is to have lived backwards.

Heart and earth are the same word just spelled differently.

Justice is just us.

Realize is real-eyes

Sun, 10/24/2010 - 13:56 | Link to Comment bobzibub
bobzibub's picture

It is incorrect to blame Keynsian policies when the Fed never took the pedal off the gas even in the good times.
Methadone can work but to work it does require dicipline.

Sun, 10/24/2010 - 18:19 | Link to Comment chopper read
chopper read's picture

 

A less terrorizing keynesian (they're impossible to find) would retain government surpluses during good times for the private sector, then spend these surpluses on "public works" during bad times for the private sector in order to offset unemployment.  This is very different than deficit spending with borrowed money where some of the interest payments go to foreign investors outside of the domestic economy.  Nevermind that "public works" are a 'broken window fallacy'.  Even in our most prudent keynesian example, in order to gain a surplus, governments must first take from the private sector during the good times.  this takes capital away from the private sector which is where consumers of both goods and services are happy to finance job growth organically.  

Further, keynesian economists never allow for price drops (deflation).  The entire 'school of thought' (and I use that term loosely) creates a centrally planned money policy that never rewards savers and investors and always rewards excessive risk-taking.  Moral hazards abound!  

A policy of "moderate inflation" creates artificial demand, which creates hyper-consumption and reckless behavior in the efforts to feed the gluttony (see: Gulf oil spill). 

"Government puts" on the economy prolong the booms to unsustainable levels.   As a result, the prolonged booms cause both reckless speculation and undue euphoria amongst unsophisticated common folk who go out and borrow and spend and plan their lives around permanently good times (because they always have been), only to lose everything when the inevitable bubble bursts.  Then come the wars, murders, suicides and divorces as the populace turns on one another, all because a few smarmy "Keynesians" wish to defy the laws of financial physics by tinkering with reality. 

Its all very simple:

guns don't kill people, rappers and Keynesians do.

 

its so simple.  now, go buy some gold and guns and wait this out.  your grandkids will thank you for listening to uncle chop-chop back in 2010 in the subversive chatrooms of ZeroHedge.

carry on. 

 

Mon, 10/25/2010 - 06:41 | Link to Comment thepigman
thepigman's picture

>A less terrorizing keynesian (they're impossible to find) would retain government surpluses during good times for the private sector, then spend these surpluses on "public works" during bad times for the private sector in order to offset unemployment. <

Chile....via UChicago school. Amazing, huh?

Mon, 10/25/2010 - 10:09 | Link to Comment chopper read
chopper read's picture

what do you mean by "amazing"?

Sun, 10/24/2010 - 14:30 | Link to Comment Spitzer
Spitzer's picture

Thanks for saying that early on.

Arguing the technical intricacies of keynes, like this article and TV clip does, gives keynes more air time then its worth.

This article and clip gives keynes too much credit. That is what I don't like about Niel Fergeson. In his own mind, he probably knows that everything about keynes is a complete 100% joke but he never says it that way.

Sun, 10/24/2010 - 15:08 | Link to Comment Oh regional Indian
Oh regional Indian's picture

"these policies were profoundly ridiculous and nonsensical "

I'd add willfully criminal to that list. It's been clear since their implementation who they benefited. I'd put Darwinism and Keynianism in the same boat. Both willfully created to support capitalism's growth. Now they will devouver their master.

ORI

http://aadivaahan.wordpress.com

Sun, 10/24/2010 - 16:09 | Link to Comment Thomas Paine
Thomas Paine's picture

From the beginning...the "money trust" shadow planners of the Federal Reserve System assuredly worried most of all how their amassed wealth might be harbored from the eventual fiery implosions of the money-debt ponzi cycles they created. The wealth-rescue fireman of choice was resolved into that of the Keynes doctrine, and meant to offload the massive fraud of toppled assets onto a purposely-made dumb public as bagholders. However perverted the Keynes doctrine of 'stimulation' is, it has been matriculted by banker money and prestige in the hallowed halls of macro-economics academia over many decades, and crafted into political mainstream machinery without alternative. It is a farse plain and simple except to those useful idiots as pundits and politicians continuing to bank their careers on it. Keynesianism, or a derivation of it, remains the primary escape capsule of the bankster elite, to get their hands on counterfeited money first, when it is only the most useful. There is no intention to "fix" anything in the economy by its further use except as savior to the collective asses of the criminal money masters.

 

Paine

Sun, 10/24/2010 - 17:10 | Link to Comment chopper read
chopper read's picture

+1

folks only arrive at the keynesian school by first having an agenda, and next, needing an economic theory to support the agenda.  the questions are loaded, and the conclusions unscientific.  

keynesians = violent government thieves 

austrians = peaceful wealth creators 

Sun, 10/24/2010 - 11:56 | Link to Comment gwar5
gwar5's picture

If they're going to do stimulus why not decrease or suspend taxes in the first place so the $$ gets in the hands of individuals and businesses that will put it to work here in better ways? 

Having the government collect it (print it) and then direct where it goes is insanity.

The banks getting the money here are investing in China and creating jobs in Brazil because the USA is a bad investment and overtaxed.

Sun, 10/24/2010 - 13:51 | Link to Comment fiftybagger
fiftybagger's picture

because that would give lie to the whole game, being rob from the middle class and give to the rich and poor:

http://touchdowns.com/images/chicago-tea-party-photos/chicago-protest%20...

Sun, 10/24/2010 - 14:46 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

That is absolutely correct. Suspend all taxes and print money for the government's needs. Paulson's first stimulus of $600/per person agreed by Pelosi worked because the money was put back into the economy immediately or reduced people's debts, which otherwise would be defaulted on.

Eventually however, a depression (soon to come) would not have been avoided. And yes to the comment above that the lie would have been exposed.

 

Sun, 10/24/2010 - 11:56 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Niall's explanation about leakage being the fatal flaw in U.S. monetary and fiscal stimulus is brilliant.

Sun, 10/24/2010 - 12:00 | Link to Comment Apostate
Apostate's picture

Anal leakage.

There are more problems with it than just that.

Sun, 10/24/2010 - 13:22 | Link to Comment sgt_doom
sgt_doom's picture

Exactly!

Niall Ferguson is the same douchebag who recently stated that Larry Summers is a genius and saved America from another Great Drepression.

Simon Johnson, Ferguson, Sachs, Krugman, Tyson, et al., are the same douchebags responsible for all the criminal fraud perpetrated on us by their masters.

It's the same old B.S.  Now R.T. Nayler, there's an economist I pay attention to (along with Prof. Michael Hudson, of course!).

Sun, 10/24/2010 - 12:01 | Link to Comment Shocker
Shocker's picture

Agree... All people have to do is really look at the numbers, and take a little time to understand what is going on. Now is not the time to just run and hide and say I don't care or too much information. We currently have alot of problems, and they have to be addressed and soon.

Thanks ZH for all that your do!

http://www.dailyjobcuts.com

 

 

Sun, 10/24/2010 - 12:48 | Link to Comment A Man without Q...
A Man without Qualities's picture

Funny thing is when Greece was stimulating its economy, there was a clear increase in trade deficits and capital outflows.  The IMF and the ECB was quick to jump on the conclusion that the stimulus spending was providing little domestic benefit, and in fact, was worsening the situation.  

America has not been capable of living on its productive output for decades.  It requires credit expansion just to maintain the same standard of living, and owing to a lack of productive assets, the loose money policy has resulted in bubble after bubble.  The leadership thinks more credit will get the economy back to normal, but they don't realize there has not been a normal, stable economy for decades - unless they can keep expanding credit at an accelerating pace, the economy will collapse.  

All they are doing now is building sandcastles to stop the ocean.

Sun, 10/24/2010 - 14:38 | Link to Comment DosZap
DosZap's picture

A Man,

There is no shortage of credit.Nor, a shortage of credit worthy people.

The reason the economy has not turned,is not excessive debt.

It's FEAR of the unknown.

Small/Mid sized business all over the USA are not spending / hiring,because of Obamanomics.

They are clueless as to HOW his policies will affect their bottom lines.

And, he is more than happy to not let them know.Put solid rules & regs in place, and the economy will kick off VERY quickly.( If they are able to make a profit).

Leave them in the dark, and they will do what they have done since HE was elected,NOTHING.

Which is exactly the plan, and what they want.

Bring down the house, and make Gov't everyones Momma, and you have Socialism, and  Ultimate population control.

Until we are broken, we cannot be ridden.

Just like a horse that's never been broken.

Sun, 10/24/2010 - 19:50 | Link to Comment Oracle of Kypseli
Oracle of Kypseli's picture

Agreed.

I see an exodus of money and talent from the US much larger than the Hong Kong Chinese moving to Vancouver & Australia with their money and entrepreneurship. 

Sun, 10/24/2010 - 21:01 | Link to Comment Kali
Kali's picture

Ditto

Sun, 10/24/2010 - 17:48 | Link to Comment bobboberson
bobboberson's picture

+1

Sun, 10/24/2010 - 14:37 | Link to Comment Spitzer
Spitzer's picture

Not really.

All forms of stimulus are a joke, the whole idea of stimulus is a joke, closed economy or not.

Even the theory of the government saving in the good times and spending in the bad is a joke. It would be cheaper and more economical for the government to send out food stamps in the bad times rather then start capital intensive projects.

Mon, 10/25/2010 - 23:20 | Link to Comment UncleFester
UncleFester's picture

Go further Spitz,

What is good for the goose is not good for the gander.  UF.

Sun, 10/24/2010 - 11:56 | Link to Comment Rusty Shorts
Sun, 10/24/2010 - 12:23 | Link to Comment plocequ1
plocequ1's picture

The new economy's philosophy is there is no economy. There is only the stock market. Second, Anyone who speaks of this " Bubble " doesn't have any knowledge as to when this "Bubble" will pop, Which leads me to believe there is no Bubble in the first place. The fact that they can keep it going means there is no end in sight. At least Greenspan knew when to hit the breaks. He always spoke of Irrational exuberance . If we see Yahoo in the 200s, Then we will talk bubbles.

Sun, 10/24/2010 - 13:15 | Link to Comment TBT or not TBT
TBT or not TBT's picture

There's no economy eh?   Well we still sue each other, sell each other insurance, overcommunicate with each other, install and use foreign made products.   I mean, as long as the music keeps going, what's not to like?

Sun, 10/24/2010 - 13:24 | Link to Comment sgt_doom
sgt_doom's picture

I believe the term for what you described is:

"commerce"

and it has been with us since the caveman days.

There is no economy.....dismantled over the previous 35 years, and that is how we have so many debt-financed billionaires today.

Sun, 10/24/2010 - 14:12 | Link to Comment MsCreant
MsCreant's picture

that is how we have the illusion of so many debt-financed billionaires today.

You know I love you Sarge, but I had to fix that. I know you understand.

Mark to market instead of marking to myth and POOF! All gone for many of them. This was your point but it needed to be clearer.

Mon, 10/25/2010 - 13:22 | Link to Comment chopper read
chopper read's picture

hence, the bailouts.  there are no fears like those of billionaires who may lose everything. 

Sun, 10/24/2010 - 12:52 | Link to Comment snowball777
snowball777's picture

Certainly, we can count the jobs saved by the stim-u-less on Wall St (except Thain, but he's bounced back and climbed back up on his $35k throne).

I wonder if Timmy knows that, given their druthers, the CNY would be dropping like a 400 toz bar in a vacuum.

Capitalism and credit-money lead to bubbles, period...with or without government stimulus spending or the federal reserve and there is plenty of 'leakage' in corporations too (WorldCom?).

Sun, 10/24/2010 - 12:05 | Link to Comment brodix
brodix's picture

The big problem is that the law of supply and demand applies to capital, but those who control the supply, the lenders, prefer not to recognize the importance of demand, the borrowers. The economy can only effectively store as much notational wealth as can be productively invested and anything beyond that leads to asset bubbles. But rather than nourish borrowers as though they were the fertile ground in which the owners of capital need to plant their seed, they are constantly raped and plundered at every available opportunity. eventually everyone loses and we have to start over again.

 Money, as a form of economic medium, is a contract by everyone, with everyone. It is a form of public utility, much like a road system. You own your house, car, business, etc. but not the roads contecting them and no one cries socialism over that. Much like a house has family rooms and personal rooms, an economy has private property and public property. The monetary system is a form of public property. As government is the central nervous system of the community, the monetary system is its circulatory system. When this system is private property, eventually the rest of the economy will be owned by those who own its medium of exchange.

Sun, 10/24/2010 - 16:46 | Link to Comment hardcleareye
hardcleareye's picture

Good analogies, I'll have to remember those!!

Sun, 10/24/2010 - 21:07 | Link to Comment Stevm30
Stevm30's picture

Poor analogies.  Time to dig a bit deeper brodix: http://www.amazon.com/What-Government-Money-Percent-Dollar/dp/0945466447...

Sun, 10/24/2010 - 22:13 | Link to Comment brodix
brodix's picture

Stevm,

 You might to want to dig deeper as well. It's not as though gold based systems haven't been tried before and similar kinds of fraud, corruption and collapse have manifested in them. The problem with gold is that whoever controls it, controls the economy denominated in it. The old rewrite of the Golden rule, "Those with the gold, rule." The reason the Rothschilds developed the central bank model is as monarchies gradually bankrupted themselves through war and other forms of over spending, they borrowed from the goldsmiths and other gold dealers, especially the Rothschilds. When it reached the point these dealers didn't have anymore gold to lend, they made a deal with the monarchs, that since they were owed so much money anyway, they would take over the treasury functions from the governments. Since the supply of money has to grow along with the economy and there were few ways to measure economic growth in those days, it made sense to based money on debt, since debt tends to grow at roughly the same rate as the overall economy. The problem is that  the economy must grow to pay off the debt and debt must grow to further finance economic growth. For a long time, colonialism and technological advances provided the necessary resources and markets to keep this feedback loop going, but we have lost sight of the drawbacks to this model and allowed the banks to keep the illusion of growth going through increasingly unregulated debt and enormous transactional bubbles. It maintains itself by exploiting every possible resource and redundancy, so when it completely hits the wall, it will have cannibalized its own shock absorbers, as virtually every form of notational  wealth, cash, stocks, bonds, securities, derivatives etc. all become part of the same bubble.

 Then we start at the bottom again, with local economies and if yours has a bunch of gold to trade around, good for you. I hope mine has food and engineering talent.

Mon, 10/25/2010 - 13:44 | Link to Comment chopper read
chopper read's picture

Since the supply of money has to grow along with the economy

for what reason is this assumed, brodix?  lets talk this through.  seriously. 

Mon, 10/25/2010 - 23:27 | Link to Comment UncleFester
UncleFester's picture

The supply of money has to grow along with the population to maintain stable prices.

There, I fixed it for him.

UF

Sun, 10/24/2010 - 21:42 | Link to Comment BigJim
BigJim's picture

Sorry mate, but you're confusing money with currency.

Money arises spontaneously within societies to get around the problem of the double coincidence of wants. All sorts of things have been used throughout history as money, but precious metals became the standard in societies that had access to them, because they meet the 5 requirements for money (first written about by Aristotle in the 4th c BC). They are:

Portable
Durable
Fungible
Divisible
Inherently valuable

(You can argue with the last one on the grounds that they are not 'inherently' of any worth, but if you consider that they are difficult to produce or to counterfeit, they are valuable in a sense that paper is not.)

Unlike the rest of us, governments do not raise their revenues through mutually beneficial transactions, but through coercion. And insisting their citizens make transactions and pay their taxes with particular tokens helps them in this. These tokens are currencies, and may or may not be backed by anything of intrinsic wealth. Originally, they were (typically gold or silver), and one of the ways governments increased their wealth was by seignorage, which is charging more for the tokens than the metal used to create them is actually worth.

Giving government control over the money supply with currencies is giving them the ability to inflate the money supply, which acts as an invisible (and consequently less politically unpopular) tax.

It's a temptation few governments have managed to overcome.

Sun, 10/24/2010 - 22:38 | Link to Comment brodix
brodix's picture

BigJim,

 Life's a bitch and so are governments. Too bad. Governments started as private enterprise. What we would call warlords today. Eventually they gentrified into monarchs and so long as they could keep their band of thugs happy and the peasantry alive and scareder of what's outside than inside, it worked. But eventually they just got too damn crazy, stupid and useless that politics had to be made some form of public trust. As Chrchill said, Democracy is the worst form of government, except for all the others.

 Now the banks have made themselves more trouble than they are worth and it's time to figure out what to do next. No, politicians cannot be left in control of the money supply, for the same reason it doesn't work or kings to be in control. In essence, banking and government still have to be separate systems, as per my comparision of the nervous and circulatory systems. 

As any ten year old on an allowance knows, to budget is to list your needs and desires in order of priority and then spend on what can be afforded. The Federal government doesn't actually do this. They put together these enormous bills encompassing everything they think must be absolutely necessary and then tack on enough extras to coerce enough legislators to vote for it and then the President can only pass or veto the entire package. The consequence is that it creates enormous amounts of government debt, which is the basis of our monetary system.                                                                                                                                                                                                                                                                                                          In the spirit of actual budgeting, a possible solution would be to break the spending bills down to their constituent items and have every legislator assign a percentage value to each item and then re-assemble the bills in order of preference. The president would draw the line at what would be funded. This would divide responsibility, allowing the legislature to prioritize, while giving the president final authority over total spending. Since making the cut would be graded on a curve, there would be much less incentive to trade favors and the percentage system would allow legislators to fine tune their granting of favors to other legislators and lobbyists. As the particular items at the cutoff line would have a far smaller constituency than those being asked to fund them, there would be limited political motivation to overspend.  A local public banking system would cover much of the lost federal funding of local projects. 

 

Mon, 10/25/2010 - 10:25 | Link to Comment BigJim
BigJim's picture

That would certainly be an improvemment over the current system.

I think I may have mis-interpreted your original comment:

      When this system is private property, eventually the rest of the economy will be owned by those who own its medium of exchange

I lumped you in with those people who argue against gold-as-money, saying that somehow all the gold winds up in the hands of the wealthy. My bad.

Sun, 10/24/2010 - 12:05 | Link to Comment Quinvarius
Quinvarius's picture

This kind of implies that absolutely no amount of money can save the US banking system unless we institute capital controls.  Only complete nationalization would stave off the end of the banking system for a little while.  But then the government would print to save itself and follow the same path down the drain.

Sun, 10/24/2010 - 12:07 | Link to Comment B9K9
B9K9's picture

We are happy that more "mainstream fold" are finally starting to question the key flawed premise of this fundamentalist doctrine.

Tyler, you're almost there. I mentioned this awhile back, but beware the moment when the MSM begins to address the core underlying issues that ZH and other finblogs have been covering for the last 3+ years. That is the tell the astute have been awaiting.

The power-elite learned well the lessons of Watergate - it was absolutely imperative to destroy an independent press. In fact, what they realized is that it is actually impossible to advance certain aims if one does not actually own & control the primary media channels.

And we're not talking about the print world at all - their puny efforts are a complete joke. Nope, this all about controlling good 'ole TV. What is ZH's greatest hit count? 50K? 100K? On average, the big 3 network "news" programs deliver the approved message to 20-fucking-million eyeballs!

So when the MSM is directed to begin to question some of these underlying elements, one must ask themselves, why now? I would suggest the trap has been set and is about to be sprung.

Sun, 10/24/2010 - 12:11 | Link to Comment Tyler Durden
Tyler Durden's picture

1.5 million uniques a month.

Sun, 10/24/2010 - 12:25 | Link to Comment sushi
sushi's picture

Yeah, but a percentage of that number is SEC types who are here looking for the pictures.

Sun, 10/24/2010 - 12:49 | Link to Comment Careless Whisper
Careless Whisper's picture

1.5 million uniques a month.

props dewd

 

 

Sun, 10/24/2010 - 13:26 | Link to Comment sgt_doom
sgt_doom's picture

Could be those people from the alien UFOs, getting closer to Earth to browse TD's Zero Hedge.

Could be those pod people as well.

Just hope it's not all those Zombies.....

Sun, 10/24/2010 - 13:19 | Link to Comment bugs_
bugs_'s picture

get busy robo (and leo)

Sun, 10/24/2010 - 20:11 | Link to Comment hidingfromhelis
hidingfromhelis's picture

Umm, SEC types go to an entirely different category of website when they want pictures.

Sun, 10/24/2010 - 18:34 | Link to Comment Hulk
Hulk's picture

In that case, (1.5 million uniques) I would like to advertise in this space:

"Pasture raised food, its whats for dinner"

Thank you and goodnight!

Sun, 10/24/2010 - 20:47 | Link to Comment The Alarmist
The Alarmist's picture

It doesn't hurt that ZH gets mentions on Rush Limbaugh and Glenn Beck from time to time.

Sun, 10/24/2010 - 12:14 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

The main problem is that the current round of PhD heavy, common sense light economists and economic advisers are mistakenly applying Keynsean theories and fixes to a Western world that is trying to deleverage from a massive asset bubble caused by excessive credit growth and speculation.Keynes would be rolling in his grave to see his policies and theories being used to justify the insane and corrupt protection of the very bankers who have caused the very mess we are now in.

What needs to happen is for economies to deleverage,reduce debt,asset prices to correct,house prices to fall to a level where people can actually afford them,savings to be restored.Of course this would mean the banks that are already insolvent would have to write down massive losses from CDS and mortgages that are currently either being ignored or supported by tax payer bailouts.In other words, they would have to go bust twice - err yeah.Anyone see that happening,or will the central banks(acting on behalf of the very beneficiaries of government policy - the banks) just keep telling politicians there is no other alternative but to print more money to try and kickstart the economy,because if they don't the sun won't rise in the morning, there will be riots on the streets..... whatever.

Unless the riots precede the destruction of everyones wealth I cannot see any lying scumbag politician having the backbone to grasp the nettle of deleverage.

There simply isn't enough time for a suitably credible political alternative to the two party system to achieve the removal of the banking system and its influence from Capitol Hill.

Nobody can stop Bernanke,he is going to go nuclear and keep printing until the debts disappear in a storm of worthless paper.What makes it worse is so many people know what is wrong and cannot stop it happening.

Sun, 10/24/2010 - 13:16 | Link to Comment centerline
centerline's picture

I've tried twice actually to write back to your post here - each time, the response just got too big with thoughts and content.  So.... I realize I have something bigger to work through and post here someday soon.

 

Short answer though.  Agreed in full.  The current situation reads like movie script.  Doing the right thing is political suicide.  There are simply too many people who are dependant on the machine.  And either way, there are going to be riots.  Like you said, it is just a matter of whether they come before or after the wealth destruction.  Or should we say "the recognition of wealth destruction."

 

Sun, 10/24/2010 - 13:57 | Link to Comment cdskiller
cdskiller's picture

The wealth has already been destroyed, my friend. It's gone. The theft was supremely successful. Trillions. Bernie Madoff times 40 in size. What is happening now is desperate and ruthless obfuscation. Politicians, fighting for their life to prevent awareness of their total failure. Bankers consolidating their power, celebrating their victory over the truth, celebrating their transformation from criminals into sacred leaders who must be protected at all costs. The process that might lead to recognition, if dragged out long enough, which is the plan, leads only to surrender and depression. People have lives to lead, mouths to feed. They can't pay attention long enough as the big lies keep being pounded down their throats.

The time for riots has passed. The time for war is approaching.

Sun, 10/24/2010 - 15:56 | Link to Comment StarvingLion
StarvingLion's picture

What "war" (that is not presently occuring) could you possibly mean?  I guess you mean the parasites in office are going to slap broad tarriffs on the mercantilists like China?  Hahahahahaha...thats like B9K9's "predictions" based on monetary mechanics.  You are smply guessing.

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