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Steve Keen On Keynes And The Failings Of The Neoclassical School

Tyler Durden's picture




 

When it comes to economics, our ridicule of the underpinnings of the dismal voodoo science are well known. Only Ivy league professors can profess to predict the future based on special case equations that isolate a system in vacuum, completely oblivious of the fact that nothing in the world is linear and if anything, a system based on Lorenz attractors and Mandelbrott theory would be far better suited to demonstrate that as far as predicting the future is concerned, it is nothing short of an exercise in futility. That said, we do appreciate the work of those economists who are first to admit not only their own limitations but the limits of the art, not science, that they engage in. Chief among them is Australian Steve Keen, whose work and analysis we always enjoy. For those unfamiliar with Keen, we have attached the following just released interview with Ross Ashcroft of The Renegade Economist in which he deconstructs the failings of contemporary interpretations of Keynesianism (in essence the usurpation of theory by those in power to perpetuate their own greedy practical pursuits), and exposes the core of neoclassical economics that guide every day macroeconomics for the sham it is: "fundamentally neoclassical economists are the priests of Capitalism, but the priests don't necessarily know there is god. They have this model of god and ditto with neoclassical economics: they have a model of capitalism which is almost but not quite, completely unlike actual capitalism. And they don't even realize that they have erected a smokescreen behind which if people want to rip the system off, then there is plenty of avenues created by these guys." Just a thought, but perhaps it is time for #OccupyWallStreet to pay a visit and #OccupyNYUEconomicsDepartment...

 

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Sat, 10/15/2011 - 15:56 | 1777421 broke433
broke433's picture

But gold goes in a straight linear line!!! Buy buy buy buy buy!!! ;(

Sat, 10/15/2011 - 16:11 | 1777464 The Peak Oil Poet
The Peak Oil Poet's picture

 

 

 

it's a daily trial to click and read
the blogs about investment
with a zillion other boomer babies
checking each assessment

the panic button's glowing red
we're ready to withdraw
but until then we're concentrating
hard on making more

Chorus

ba-by boomer, ba-by boomer
we'll be dead in the end or maybe sooner
all our money will be gone
our investments all gone wrong
we'll have given up the ghost on just rumour

 

http://thepeakoilpoet.blogspot.com/2011/09/baby-boomer-blues.html

Sun, 10/16/2011 - 04:36 | 1778462 AldousHuxley
AldousHuxley's picture

Keynes said to save during booms and spend those surpluses during recessions. sounds like common sense to me.

However, in practice under unaccountable politicians, during boom times government spent more than they earned and during recessions, they spent even more. Thus we have perpetuating debt cycle. And fiscal conservatives get sick of it and want to cut any and all government services which end up being longterm benefit ones like education and science R&D versus short term like welfare for food. Repeat for 30 years and you have a country that is broke an full of dumbasses except the top elite who just want to squeeze any remaining middle class. system is fucked. time to reform. but there are too many idiots who haven't got  a clue what the heck is happening (see captured tea party koch suckers and redneck republicans who care more about religion than even their own jobs)

Sun, 10/16/2011 - 05:24 | 1778484 AnAnonymous
AnAnonymous's picture

Keynes said to save during booms and spend those surpluses during recessions. sounds like common sense to me.

////////////////////////////////////////////////////////////////////////////

No, in a US driven world, it is not common sense. It is the path to death.

The US has imposed on the world a game of consumption. It is about consuming the most the fatest possible.

Conservation in this context is mark for death.

In the US world order, common sense dictates to find ways to consume more during boom times, even more during recessions and again even more during the next boom time.

People who conserve just self elect to be the next foodstore to loot by US citizens.

Libya is just another Iraq. Libyans under the mad dog Quaddafi had not fully exploited their oil potential. They kept part of their soil unexploited. They had not fully opened the tap. They had conserved.

Big mistake. They got punished. Now they are going to consume and consume much more.

Dont conserve when the game is all about consumption. It is common sense.

Sun, 10/16/2011 - 09:17 | 1778609 Snidley Whipsnae
Snidley Whipsnae's picture

AnAnonymous... Not saying you are totally correct in your vision of what is happening... But, no other human activity wastes more resources faster than war.

Or, as general Patton put it... "All other forms of human endeavour pale in comparison to war"

Whether or not the US can continue on it's current path of 'imposing on the world a game of consumption' is very much in doubt, imo.

Kudos to ZH for posting this video. I have been following Keen for a long time and was first made aware of his thoughts via Mish. Like Keen, I see this period going forward as a rich breeding ground for right wing lunatics. As we have seen in the past, all that is needed is an excellent orator that has the pulse of the poorly educated and out of touch have nots. Then we will see a neo version of the Brown Shirts and SS with the neo Hitler pointing to the 'new villians'... Who will the new villians be? The pulse of the have nots, as taken by the neo Hitler, will make that decision.

Hitler was sincere and the Germans that he addressed felt and responded to his sincereity. The world paid an enormous price for Hitler's sincereity.

There is nothing more dangerous to all mankind than a sincere, misguided person surrounded by well funded high profile enablers.

 

Sun, 10/16/2011 - 11:04 | 1778732 JW n FL
JW n FL's picture

 

 

Decay - The Collapse in Slow Motion

http://www.youtube.com/watch?NR=1&v=5wk7bAIw8NY

Uploaded by on Nov 29, 2010

The Madness of a Lost Society: As the world spins into self destruction, the consumer horde claim cheap imports as their victory. You know better. Prepare now. Stock up on storable food for the rough road ahead. I've got mine, how about you? http://www.storeyourfood.com Failure to prepare is preparing to fail

Sun, 10/16/2011 - 11:15 | 1778744 JW n FL
JW n FL's picture

 

 

http://www.youtube.com/watch?v=xSxYcj2o4i4

Severe police action as thousands of Occupy protesters fill Times Square

Uploaded by RussiaToday on Oct 16, 2011

Tens of thousands of people in hundreds of cities around the word have been venting their fury against the greed of the big banks - and the debt management inflicted by their governments. Inspired by the 'Occupy Wall Street' movement in Manhattan, protests took hold in Europe, Asia, and around the U.S. - with some turning violent. In New York, there were dozens of arrests as police moved to contain the rally. Here's RT's Lucy Kafanov.

 

Anti-Terrorism Units (meter maids dressed up like Marines) in body armor trying to SCARE "We the People" into not exercising our 1ST! Amendment Rights!

 

Why is NO ONE Covering the FACT that all those New York's Finest surrounding the NYSE are off duty and privately hired THUGS! that "We the People" will end up having to pay for when they hurt little girls?

 

Iran is on the Hit List to distract Americans.. but I don't think that will do the trick! it is time! for Americans to TAKE BACK the Country! This is a County of the People and Our Country should be Governed by THE PEOPLE! NOT! paid for, LOBBY WHORES!!!

 

 

Sun, 10/16/2011 - 11:16 | 1778750 Seer
Seer's picture

Decay isn't necessarily bad.  In this case think of it as a pair of decaying handcuffs!

Sun, 10/16/2011 - 11:13 | 1778745 Seer
Seer's picture

I really respect Keen, but I have to wonder whether ANY centralization can EVER keep from being corrupted.  Yes, I realize that good intent, and even some good "products" _can_ occur, but in the long run...  And this is why I eventually saw anarchism as the ONLY way to meet the dynamics of the future: diversification is the key to life; some make it, some don't; it's nature's model, we can no longer pretend that we're separate from nature (and nature's laws).

I also see the rise in Brown Shirts.  These are ALWAYS the troops that the elites deploy.  OWS is going to roust them out of their rat holes.  Gott mit uns!

Sun, 10/16/2011 - 05:47 | 1778490 damage
damage's picture

I find it kinda interesting your comment has absolutely no ups and no downs. At least so far.

I didn't feel like pressing either button... cause I do feel like Keynes was hijacked even if I disagree with him on many things.  I'm wondering if that is the general sentiment or not. I agree with the guy above me that in reality it is just the path to death because the government can't be trusted.

But it is barely over an hour old at 4:30am... so maybe that is why...

Sun, 10/16/2011 - 07:33 | 1778518 Raging Debate
Raging Debate's picture

It is hard to vote An Anonymous down because he/she is focused on an obvious flaw in the model.

You want to fix up a house, start with the foundation and stop blaming the workers building a deteriating house. Prior An Anon's commentary assigns blame to the citizenry specifically of the US.

The frustrating part of our human nature is the encapsulation effect. Human beings mostly evolve by pain (a shame the next generations forget and don't learn from history).

I am all form reform and restoration of the rule of law. However, we muat use caution when it comes to revenge. It will be very easy for the world to swing as a pendulum and 1/3 of all mankind dies off.

The Malthusian leadership doesn't care about any of the 99% and that includes their own enforcers. I didn't like where An Anon's intent was heading. Rape victims should not be strangled be them white, yellow, red or brown. It is about time Americans woke up en masse to the MIC and how it is really funded. It is about time we (I am an American) consider defense of the oppressed and realized we became empire. It happened very fast and so few of us know or knew that whichever nation becomes the reserve currency peg of the globe also inherits the job of protecting trade, the global policeman. The Central Bank model will evolve and of course the kicking and screaming to prevent that has started.

Sun, 10/16/2011 - 11:28 | 1778768 Seer
Seer's picture

"However, we muat use caution when it comes to revenge."

Thank you for stating that [assuming you meant to type "must" rather than "muat"].  At the end of that revenge button is a pile of nukes.

"The Malthusian leadership doesn't care about any of the 99% and that includes their own enforcers."

Enough with bashing Malthus!  Just because he warned us (seems that you can find similar warning way earlier, and in religious texts) that the world really is finite and that we couldn't have endless growth, it doesn't mean that he should be castigated for anyone else's leveraging (as you and others might suggest) for "evil purposes."  Lashing back at Malthus is an easy way out of discussing just what we are supposed to do when we're becoming short of resources.  Happens all across the board in nature (and we ARE part of nature).  Humans hide all of this (in an attempt to be compassionate- read Mutual Aid by Peter Kropotkin [it's available on-line, for free]) by engaging in wars (again, happening WAY before Malthus).  Blaming Malthus is like stepping off a cliff and blaming gravity for your demise: before you stepped off you weren't acknowledging the positives of gravity keeping everything anchored down!

Sun, 10/16/2011 - 10:58 | 1778718 BrocilyBeef
BrocilyBeef's picture

voted down after reading the ramble at the bottom. you are the greater fool.

Sun, 10/16/2011 - 17:31 | 1779411 DavidAKZ
DavidAKZ's picture
BBN Short-Bank-Series

http://www.debtdeflation.com/blogs/

 

Sat, 10/15/2011 - 16:11 | 1777465 Tyler Durden
Tyler Durden's picture

Gold is, more than anything, a bet on people's (and economists') stupidity. Since stupidity and its manifestations are endless, especially at systemic tipping points such as the one we are experiencing currently, you are absolutely right.

Sat, 10/15/2011 - 16:13 | 1777476 Gief Gold Plox
Gief Gold Plox's picture

That is by far the best definition of gold I've ever heard. I'm gonna use that. :)

Sat, 10/15/2011 - 17:15 | 1777610 spiral_eyes
spiral_eyes's picture

I'd actually throw that definition on its head. Gold is not a bet on the stupidity of economists, but a bet on the non-stupidity of reality. Debt-based money is a house of cards. A financial system based on inter-connected leverage is a house of cards. Statistical arbitrage is a house of cards. Quantitative (linear) analysis is a house of cards. Central planning is a house of cards. And so many more of humanity's "great ideas".

Reality kills all of those birds with one stone, such that gold — an inert and quantitatively limited lump of supernova-remnant — holds its relative purchasing power, while everything else does not.

http://azizonomics.com/2011/09/06/america-priced-in-gold/ 

Sat, 10/15/2011 - 18:30 | 1777749 sqz
sqz's picture

Is it me mishearing or did he say at the end (23:12):

-----

Q. What will be the societal effect in Australia, in your view?

A. I hope a return to the sort of mentality that existed just after the Great Depression and the Second World War when the emphasis was on the income status of the general population rather than promoting the wealth of the very few at the top. We've gone down the elite road - the Macquarie bank vision of the world, promoting the speculators and the spivs rather than the working people. I give my students a quote from the white paper on employment that came out in 1945 to show what the mindset was like after the last great crisis. That whitepaper had the following statement, "The object of economic policy is to maintain such a pressure on employment as as to guarantee a shortage of jobs, rather than a shortage of men."

-----

Did he misquote and mean a "... shortage of men, rather than a shortage jobs"? Otherwise, that pretty much IS the effect of neoclassical policy, as he defines it. :)

Anyway, pretty interesting discussion. This guy should link up with Nouriel Roubini, should make for interesting discussions.

Sat, 10/15/2011 - 19:49 | 1777898 Schmuck Raker
Schmuck Raker's picture

You heard right. And there is nothing inconsistent between what you quoted and - "that pretty much IS the effect of neoclassical policy, as he defines it. :)"

I'm afraid I don't understand why you would take exception. All due respect...

Sat, 10/15/2011 - 21:38 | 1778093 sqz
sqz's picture

Because that quote was a representation of the state of policy he hoped the world would return to, according to the first part of the response.

It is clearer in the video after the quote, I think.

So, unless I've missed something completely from start of that response to its finish, the white paper must have been misquoted.

Sun, 10/16/2011 - 03:37 | 1778424 BadKiTTy
BadKiTTy's picture

With you on this this one. There is a fundamental inconsistency unless he got the quote wrong.

K@

Sun, 10/16/2011 - 09:35 | 1778621 Schmuck Raker
Schmuck Raker's picture

I still disagree. Listen more carefully, his accent makes this difficult.

This is not really something we need to spend anymore energy on, though.

Even if you are correct, it still seems to me we (BadK,sqz,I) agree with what he is trying to argue as a solution.

Sun, 10/16/2011 - 14:54 | 1779076 Paul E. Math
Paul E. Math's picture

I did a double-take on that section of the interview too.  I agree with sqz and k@ - I think he accidentally flipped the quote.  He was explaining that the mind-set in 1945 was to use economic policy to improve the living standards of the masses rather than the elite and that would occur where there was a shortage of workers (men), where everyone who wanted a job could find one, rather than a shortage of work and high unemployment.

P

Sun, 10/16/2011 - 02:09 | 1778384 honestann
honestann's picture

Exactly correct.  Of course, in practice, gold is simultaneously a bet on reality AND a bet on the corruptness of the predators-that-be and predator class AND a bet on the stupidity of "economists", virtually all of whom are inherently authoritiarians.  I say this about economists even though it is possible for a purely observational science of economics to exist in a world of completely free markets (no government involvement, no fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-money).

What is important to remember [at certain stages as the economy plays out] is that gold is not the only form of "reality" that we can accumulate.  In fact, the most important form of reality to accumulate is "productive equipment and supplies", for THAT is what directly causes and endless stream of goods over long periods of time.

In gold we trust.
In silver we trust.
In platinum we trust.
In palladium we trust.
In productivity we trust.

Sun, 10/16/2011 - 07:39 | 1778522 Raging Debate
Raging Debate's picture

Ya, your right too Spaulding but it is far easier to explain to a layman Tylers explaination as to why they should hedge their bets. I tell people that are scared to buy three months food, water and methods to defend onself from violent crime first.

Sat, 10/15/2011 - 16:17 | 1777483 RSloane
RSloane's picture

Absolutely. Those of us in currencies always take into account stupid government moves designed to protect wealth that isn't there. If you think of governments as comprised mostly of mouth breathers, determining where the best play is going to be is quite simple.

Sat, 10/15/2011 - 17:07 | 1777595 Ghordius
Ghordius's picture

It's a GOOD bet

I'd just wish we could go back to INVESTING instead of BETTING

Some of the betting cohorts are starting to look and sound like surf champions realizing that the waves are DOUBLING every month

How big will your last wave be?

Sat, 10/15/2011 - 19:51 | 1777902 Schmuck Raker
Schmuck Raker's picture

A very nice analogy.

Sun, 10/16/2011 - 07:42 | 1778525 Raging Debate
Raging Debate's picture

Well put. I prefer placing my bets in reform first though or
we never get back to five year plans.

Sat, 10/15/2011 - 17:41 | 1777650 Going Loco
Going Loco's picture

I agree with this manifestation of Tyler that gold is a bet on stupidity but I don't agree with Broke433 that gold moves in a straight line. I smell liquidity crunch. I am watching the chart like a bloody hawk. I sold my gold at a profit because I smell liquidation here.

Straight line? Phooey. No asset moves in a straight line. Not one. Ever. Not even gold. (Especially not silver). @Broke 433: good handle that, well chosen IMHO. Any time you think you see a straight line trade I'll be your counterparty.

Sat, 10/15/2011 - 17:45 | 1777663 Unprepared
Unprepared's picture

For your information, there is a new ETF under symbol STPDX, which tracks the amount of stupidity in the economy. Due the large success of the fund, you have various choices: STPDX-P for political stupidity, STPDX-M for markets, STPDX-US, STPDX-EU, STPDX-EM ...

The purchase and redemption of fund shares are made in creation units. To purchase STPDX shares, investors have to deliver the equivalent of 1,000 shares with the same composition of the fund in the previous working day (which can be found on website www.stpdindex.com, read prospectus for further information) For example, for STPDX-P fund, investors should deliver a mix of either votes for Cain or reelection of Obama (whichever is stupider), signed agreement to all bail outs, attack Iran, a BLS report …

Shorting of STPDX is not yet open. STPDX shares are listed and traded in all major markets: NYMEX, NASDAQ, CONGREX, WHEX (White House Exchange) and your local Saturday market.

Sat, 10/15/2011 - 17:56 | 1777684 Thunder Dome
Thunder Dome's picture

The gold price is a measure of confidence in government.

Sun, 10/16/2011 - 00:28 | 1778301 disabledvet
disabledvet's picture

And i imagine "Love over Gold" is right around the corner, too.
http://www.youtube.com/watch?v=DyEEOxDTCRM&feature=player_detailpage
Have no fear...your catastrophe is here as always.

Sun, 10/16/2011 - 03:39 | 1778426 raki_d
raki_d's picture

Tyler-agreed!
So, whats the difference between dollar & gold?

Sun, 10/16/2011 - 04:46 | 1778468 AldousHuxley
AldousHuxley's picture

first one, you wipe your ass with.

Sun, 10/16/2011 - 04:44 | 1778467 AldousHuxley
AldousHuxley's picture

Gold is, more than anything, a bet on people's (and economists') stupidity

 

half of population have IQ lower than average of 100 by definition. so half of people are born stupid an you have shitty education system that barely developed the upper half, I'd say 90% of the world's population are ignorant. Less than 1% even know what money really is. Given that, gold is a good bet.

 

 

Sun, 10/16/2011 - 12:17 | 1778835 Republicae
Republicae's picture

Gold, indeed, is a good bet, not because of the increase in its fiat price, but because it is a recognized commodity of exchange. Additionaly, while there are those who say" "you can't eat gold", the truth of the matter is that even in the most difficult times, gold will still maintain a marketable exchange or barter power. Gold is money, the better money, despite Mr. Bernake's insistence that it is not. It can be certain that less than 1% of the population are aware of what money is, much less what money does in a market economy and how it should function as a medium of exchange...I dare say that the obtuse politicians in Washington don't have a clue about either the meaningful economic power of gold as money nor the incredible damages brought about by a fiat monetary substitution of gold.

Sun, 10/16/2011 - 15:27 | 1779168 Paul E. Math
Paul E. Math's picture

The only thing that scares me about gold is that it is a bet AGAINST the powers that be.  When you fight authority, authority always wins.

Politicians may indeed be stupid and so may be 99% of the population.  But those that benefit from government fiat currency are not stupid.  And they will not relinquish this benefit without a fight.

So far they haven't done much more than jaw-boning and hiking the margin requirements.  But I don't think there are many acts too heinous for the parasites that be.

Gold is an existential threat to very powerful and avaricious interests.  And they know it.

Sun, 10/16/2011 - 20:14 | 1779741 Republicae
Republicae's picture

The problem for those who have and are benefiting from fiat currency is that fiat monetary systems have an inherent self-destruct mechanism. As such, those who have benefited and depended upon it for their power and wealth will ultimately pay they price for their treachery. They will make every attempt to keep the system afloat, but to no avail, once critical mass is reach and the monetary/economic "super nova" takes place, they will find themselves at the mercy of an economic collapse where their power, their wealth and their security no longer exist and they will be exposed to a life they are not well prepared to live. Plus, they will probably be hunted with bounties on their heads.

Keep your powder dry!

Sun, 10/16/2011 - 13:55 | 1778973 duckhook
duckhook's picture

as the old joke goes %99 of people are brilliant the other %1 are economists

Sun, 10/16/2011 - 12:02 | 1778810 Seer
Seer's picture

I do and don't like this comment.  I like it because it informs us of the importance/power of gold (over the corrupting influence of fiat).  I dislike because it places more blame on people rather than the systems that have programmed them.

Not all of us were born understanding all this crap.  Some of us have de-programmed ourselves, others (MANY) have yet to do so, and some will NEVER be "fixed."  My point is that people are more likely "fixable" (via deprogramming) than are systems, and that it's more the fault of the systems than people themselves: people can change, but as we're seeing, systems not so much...

I strongly recommed reading Creeds versus Deeds (http://www.spunk.org/texts/intro/practice/sp001689.html).  He's an exceprt discussing my very point (NOTE: if "anarchism" bothers anyone then just read this and drop this word/term, the points are still valid to reasonable-thinking people):

[Start of excerpt]

One thing ideologues of all stripes share is a negative view of human nature -- they see us all as basically bad, and in need of improvement (achieved by a period of indoctrination, naturally, which they offer). Further, ideologues hold themselves exempt from this principal of negative human nature -- that is, they are okay, but the rest of the world is screwed.

However, this view is incompatible with anarchism, and entirely appropriate to authoritarian ideologies -- authoritarians all view people as basically bad, and in need of education, supervision, and above all, control, which they are all too willing to provide.

The anarchist, conversely, holds that human beings are basically good and not in need of guidance, coercion, and control -- indeed, we hold steadfastly to the idea that the only evils in society come about when some seek to control and coerce others, and that the mechanisms of power, privilege, and control turn even the saintliest stalwart into a connniving manipulator.

In other words, anarchists view people as good, and systems of control as bad, whereas ideologues hold the other view -- that people are bad, and systems of control are good (so long as THEY control those systems -- if someone else controls them, then they're bad -- that's how they seem anti-authoritarian when out of power -- but just wait until they do get a measure of power, and you'll see). It's an important difference, and determines the nature of the organization that arises from these foundations.

The organization based on a negative view of human nature will focus on power and control, centralizing these things in as few hands as possible -- the people who can be trusted with such power (meaning, the most obedient and doctrinally sound), whereas the organization based on a positive view of human nature will seek to disseminate power and eliminate control, decentralizing and dispersing these in as many hands as possible.

The most pernicious threat of the ideologue is that they exempt themselves from their own rules -- again, stemming from the notion that THEY have "seen the light" and the rest are either: 1) idiots; or 2) evil (for turning their backs on the Truth). Thus, they can never be reasoned with, because they are irrational themselves -- if you object to their program, regardless of the reason, then you are at fault, not them.

That's why a natural corollary of the ideologue is the use of force -- because they are dogmatic and irrational, all they can ultimately rely on for legitimacy is force, which necessitates centralization and control of force -- e.g., the State, in a newer, more pernicious form.

In a sense, the ideologue is a closeted authoritarian, which is why they are so treacherous. They seem anarchistic because they reject authority that exists when they have no part in it; however, they are really objecting to being disempowered themselves, rather than rejecting authority itself. When they attain a position of authority, they turn as despotic as anyone who preceded them.

Their Authority is in their ideology itself--their Big Idea--which you resist at your own peril. It was this that caused the Galleanists (Italian anarchist followers of Luigi Galleani) to engage in several bombing campaigns, even against innocent passerby--to the Galleanists, anyone who didn't get The Idea wasn't innocent.

[End of excerpt]

Sat, 10/15/2011 - 16:28 | 1777520 mr. mirbach
Sat, 10/15/2011 - 16:35 | 1777536 kaiserhoff
kaiserhoff's picture

You can't eat gold.... Well, you can, but you usually don't unless you're just trying to get through customs. 

 

Sat, 10/15/2011 - 17:33 | 1777640 Going Loco
Going Loco's picture

You can eat gold, and people do. I was walking through the back streets of Varanasi (Benares) some years ago and heard the chink of hammers. In the gold beaters quarter loincloth-clad urchins steadily hammered away at gold, turning it into gold leaf so thin it was almost transparent. Why? To decorate sweetmeats at wedding festivals.

(Why didn't they use roller mills? Urchins cheaper than machinery, that's why)

Sun, 10/16/2011 - 04:55 | 1778476 AldousHuxley
AldousHuxley's picture

you can drink it also....goldschalger

 

although I'm sure these days gold flake content is lower.

http://t1.gstatic.com/images?q=tbn:ANd9GcSKCD9A4LFZ5WvMLp-X6WiH6mC8HMPAs...

Sun, 10/16/2011 - 06:20 | 1778500 BorisTheBlade
BorisTheBlade's picture

So many assets wouldn't pass this simple test:

- can you eat USTs?

- can you eat AAPL?

- can you eat real estate?

- can you eat USD?

- can you eat EUR?

The answer is: probably you can, at least for the fiat currency. But, that's not the purpose of buying, is it...

However, yes, you can eat gold, but with my recipe only once: dissolve gold in aqua regia, serve it as a side dish with freshly shredded Zimbabwe dollars.

Sun, 10/16/2011 - 12:08 | 1778818 Seer
Seer's picture

"can you eat real estate?"

Given that real estate generally includes land (OK, I know of instances where the surface is really water [but there's land underneath water!], but this still applies), one can grow food on [in] it.  I suppose that one could also grow food ON fiat, ON gold etc, but that's a bit messy (less stationary).

Real estate is also the only asset out of the above list that is an "end-product" (all others mean nothing, have really no value, if held indefinitely).

Mon, 10/17/2011 - 07:22 | 1780679 BorisTheBlade
BorisTheBlade's picture

Not the land itself, but the land yield is edible. So, strictly speaking it still wouldn't pass the test. Looking forward to an edible currency: chocolate or meat dollars. Food-backed currency is already here: foodstamps!

Sun, 10/16/2011 - 12:21 | 1778847 Republicae
Republicae's picture

Gold will, even under the most ardent circumstances, still provide the value of exchange and while you might not be able to sustain yourself on a diet of gold, the fact is that it will still be recognized as a value during and after the collapse of the global fiat monetary regime. You might not be able to eat it, but you will be able to use it to buy something to eat. It will retain it's barter power. That being said, I would also stock up on other trade goods to use as mediums of exchange.

Sat, 10/15/2011 - 20:25 | 1777966 technovelist
technovelist's picture

They'll be discussing that clip for decades, maybe centuries.

Sat, 10/15/2011 - 20:45 | 1778011 Syntaxkat
Syntaxkat's picture

if the opportunity to raise and maintain wealth is gone. we are all slaves.  the lowest worker will become rich if he saves. fiat is a promise to pay on an inflating currency, gold and silver is money.  if the opportunity to overcome is taken away you have unrest, no one can control everything if you have to take it away from others.  freedom is the opportunity to walk away.  control is the acceptance of inequity.  control all is battle, wealth is peace.  make a choice! trolls be damned, opportunity depleted is battle.  tell a 5 yr old daughter she has to eat ramen cause its the only thing available.  everyone will be up in arms, choice and opportunity is a must for people to follow. fuck the oligarchy, debt slaves always lead to revolt, men are violent and violence is quelled through choice.

Sun, 10/16/2011 - 12:20 | 1778842 Seer
Seer's picture

"violence is quelled through choice"

Coke or Pepsi? :-)

But, seriously, your comment is based on there being an excess SOMEWHERE.  Nowhere is it written that there will ALWAYS be a source of excess.  This is, after all, a finite planet; at some point there cannot be excess; whether we reach it or not is the question (I'm thinking that plagues, wars etc. will "adjust" the demand side of the equation).

2/3 of the world's population lives on $3/day or less.  I suspect that they don't have a lot of choice.  And, most of these people don't start wars.  Wars today seem more likely to be started when a new exploitable resource is found than due to shortages of lower-level sustainable resources (yes, these do happen, but probably not at the scale of those over exploitable resources).

Sun, 10/16/2011 - 12:21 | 1778844 ElvisDog
ElvisDog's picture

In all seriousness, beef-flavored ramen is one of my favorite snacks. You need to pick a more digusting food, such as brussel sprouts or bulgar, to make your point.

Sat, 10/15/2011 - 20:45 | 1778012 Syntaxkat
Syntaxkat's picture

if the opportunity to raise and maintain wealth is gone. we are all slaves.  the lowest worker will become rich if he saves. fiat is a promise to pay on an inflating currency, gold and silver is money.  if the opportunity to overcome is taken away you have unrest, no one can control everything if you have to take it away from others.  freedom is the opportunity to walk away.  control is the acceptance of inequity.  control all is battle, wealth is peace.  make a choice! trolls be damned, opportunity depleted is battle.  tell a 5 yr old daughter she has to eat ramen cause its the only thing available.  everyone will be up in arms, choice and opportunity is a must for people to follow. fuck the oligarchy, debt slaves always lead to revolt, men are violent and violence is quelled through choice.

Sun, 10/16/2011 - 07:50 | 1778530 Raging Debate
Raging Debate's picture

Yes! People only do things for one of two reasons:

1) Opportunity to benenfit
2) Fear of loss

Same reason why deal why the Soviet fell, forty years of pushing fear over opportunity.

Sat, 10/15/2011 - 15:56 | 1777423 Inspector Bird
Inspector Bird's picture

All well and good, but Keynesian economics simply doesn't work in a high debt environment.  Even in a moderate to low debt environment, it's inefficient (though practical).  Currently, Austrian views would be the best to employ  - use time and debt deleveraging, painful as it is, to bring us to a better place.

Sat, 10/15/2011 - 16:00 | 1777431 Mike2756
Sat, 10/15/2011 - 16:44 | 1777553 maxw3st
maxw3st's picture

If you watch the video you'll see he's not an advocate of Keynesian economics the way you interpret it. You've missed the point.

Sat, 10/15/2011 - 16:55 | 1777576 css1971
css1971's picture

I hink he's talking about printing real money, not credit. i.e. real inflation.

Sat, 10/15/2011 - 17:04 | 1777588 Marco
Marco's picture

The problem with the Austrian "solution" (ie. a deflationary depression and shrinking government right in step with GDP as tax receipts fail) is that during deleveraging inequality will actually increase ... maybe not in a dollar sense, but certainly in a m2 of landownership sense as creditors take possession of all the collateral. How is increasing inequality going to lay the foundation for growth?

Sun, 10/16/2011 - 03:38 | 1778425 OldTrooper
OldTrooper's picture

Hmmm...do I really want to tilt at strawmen?  I think not.

Sun, 10/16/2011 - 10:22 | 1778671 Marco
Marco's picture

For this to be a strawman argument I'd have to be misattributing the choice for deflation and default (ie. creative destruction) to Austrian economics ... and I'm pretty sure I'm not.

My conclusion that due to wealth inequality most collateral and debtor assets would become property of a very few top creditors, which would get into (natural) monopoly positions as a result might not be accurate ... but that's not a strawman argument, I'm not attributing that conclusion to anyone but myself, it would simply be false.

Sun, 10/16/2011 - 18:43 | 1779551 pvzh
pvzh's picture

Inequality (measured as fraction of the welth held by top 1%) did not increased during Great Depression. It actually decreased substantially due to inevitable defaults and bankruptcies (people who had paper investments lost a lot of them, whereas people who did not have investments (most of the population) had little to lose). After massive wave of defaults in the 1930s inequality was on steady decline up until 1970s (mainly probably due to "progressive" taxation, and lack of "liquidity" due to limitations of semi-gold standard). In 1971, dollar was set free of its golden cage completely, and inequality started to rise. Inequality increases mainly due to bailouts (no defaults = no resets of inequality).

Let defalts to start, and bring back the gold standard. After that, equality and fairness in economy will improve dramatically.

Mon, 10/17/2011 - 11:06 | 1781386 Marco
Marco's picture

The Great Depression had FDR appropriating gold, repricing it and using the extra dollars that created for massive stimulus ... ie. he redistributed wealth, not exactly the Austrian approach.

Sun, 10/16/2011 - 21:12 | 1779820 Republicae
Republicae's picture

If you are speaking about Austrian Economic Thought, it doesn’t "include" as such, a deflationary depression as a solution, only that there must be the liquidation of all the mal-investments brought about by the artificial manipulation of the monetary system by the FED and government intervention in the market. Study the depression of 1920 through 1922, see what happened during that depression and how it was quickly reversed.

 

Were you aware, that during some of most economic prosperous times in the United States that there was actually deflation taking place, during portions of the 19th Century, there was a huge amount of economic growth, prosperity rose for more people in this country than at any other time and yet, there was price deflation.

Also, during The Great Depression, it is very interesting, and totally contrary to all the myths about deflation we find in the text books, that out of the 16 countries that suffered from deflation during The Great Depression, half of those countries did not go into an economic depression. So, the correlation between depression and deflation is not as solid as we have been lead to believe, there must therefore be some other fundament force that happened within those countries that suffered from both deflation and depression, or some element that was not present in those countries in which deflation occurred, but where there was no economic depression, but economic growth.

Now, it is also very interesting that if you look back in history, all the way back to the 1820s, you will find that there were around 73 deflationary periods in various countries, but out of those 65 of them, while having deflation, did not experience economic depressions. Thus, it can be said that nearly 90% of all deflationary periods were not, in any way, associated with economic depressions. Such data doesn’t follow the standardized myths that are generated by either the government paid or sponsored economists, or those who are, in one way or another, sponsored by the official myth-makers. Why? Could it be there must be a myth about deflation to keep inflation as an official policy. It is a policy of theft through inflation, redistributing the wealth and wealth-making capacity from the private sector to the government coffers, where the patronage system has created a putocracy.

Additionally, it is also odd that Keynesians and the others cannot explain a deflationary “boom”, such as has occurred in China at times. How on earth could there be a general increase in the purchasing power of the currency, i.e. price deflation, and there be an economic boom at the same time?

Ah, the lies that have been told to keep the people clammering for a constantly depreciating currency, one where both wealth and the ability to create wealth is siphoned off by governments.

No wonder governments have to institute Mimimum Wage Laws, if they didn't they couldn't maintain the ruse that their currencies are so depreciated that if the people really understood that the nominal or face value of the currency fools them into thinking they are making so many dollars per hour, when the purhcase value is so much less. A person might think he is making $15.00 per hour, but in the case of the U.S. Federal Reserve Notes, that $15.00 an hour only retains the purchasing power of .66 Cents per hour. One of the main things that keeps the fiat monetary ruse going is confidence in the currency as a medium of exchange, once it becomes apparent that the currency no longer can maintain its purchasing power or it is diminished through inflation, confidence in the currency begins to rapidly decline. As the decline in confidence increased the currency system will collapse, rapidly! 

It is amazing to me that people can look at two pieces of paper, printed with the same ink and costing the same to produce as holding differences in value. For instance, a $5 Dollar Bill is made of exactly the same as a $100 Dollar Bill, yet the value is preceived because of the utility of exchange, yet it is only a matter of confidence in the currency. There is no difference between the two pieces of paper, one image is different than the other, but there is no difference in them as far as actual value, only preceived value, only confidence. Unlike real money, i.e. gold and silver, paper money substitues have no value in and of themselves, only the confidence the government can mantain through preceived value. Gold and silver, on the other hand need no confidence, they are assets in and of themselves, they need no government legal tender laws enforce their use as money, they need no government stamp of approval, they are double assets whereas government fiat currency is always a double liability, a promise to pay, but to actually pay nothing. 

Think about that for a while and understand what this government and others have done through the power of fiat currency. 

 

 

Mon, 10/17/2011 - 12:33 | 1781416 Marco
Marco's picture

A quick google shows evidence that during the 1920s there was a significant shift from people being farmers to being farm labourers ... ie. exactly my point.

 

http://books.google.com/books?id=4LcnDHBOwsgC&pg=PA33&lpg=PA33&dq=1920+d...

 

Of course that was in a time of significantly more potential for growth and availability of natural resources ... so it's going to be much worse now.

 

PS. golds relative worthlessness (being shiny is basically it for the most part) and difficulty to forge is why it's a good currency ... it's historical use as money gives it value.

Sun, 10/16/2011 - 12:23 | 1778850 Seer
Seer's picture

Is Austrian economics based on perpetual growth?

Sun, 10/16/2011 - 21:04 | 1779882 Republicae
Republicae's picture

I think you might ask the question differently, but the answer to what Austrian Economics is based on is far too involved than to limit it to a few sentences here. My suggestion is the following: 

Carl Menger's Principles of Economics

Boehm-Bawerk's Positive Theory of Capital

Mises's The Theory of Money and Credit & Human Action

Or, if you perfer something a little lighter then you can read 

 Henry Hazlitt's "Understanding Austrian Economics"

Sat, 10/15/2011 - 16:01 | 1777434 buzzsaw99
buzzsaw99's picture

my econ. prof. was a strange little man. they are all strange little men.

Sat, 10/15/2011 - 22:16 | 1778149 Incubus
Incubus's picture

Mine was a big ol' man that resembled ben franklin.

Sat, 10/15/2011 - 16:02 | 1777438 Caviar Emptor
Caviar Emptor's picture

Capitalism 3.3 is dead. Long live capitalism 3.4. 

Sat, 10/15/2011 - 16:05 | 1777439 PD Quig
PD Quig's picture

But wait one minute: a CONSENSUS of economists believe that the neoclassical school is correct! I thought the way things worked was we voted and then the consensus view becomes the one that everybody must accept. It doesn't matter if the equations and datasets are ludicrously inadequate to model the globally vast, hugely complex system. We will allow a few 'scientists' (who choose their own peer reviewers) to use their conclusions to project not just a few years, but 75 YEARS!! into the future and drive policy that has massive social and economic implications.

Oh, wait a minute...that's the idiot global warming crowd--not the idiot economist crowd.

Sorry, got confused by their uncanny similarity.

Sat, 10/15/2011 - 16:07 | 1777451 RSloane
RSloane's picture

They really are quite similar.

Sat, 10/15/2011 - 16:13 | 1777480 NorthenSoul
NorthenSoul's picture

When the Wise Man point the direction of the Path, the imbecile can only stare at the pointing finger.

Sat, 10/15/2011 - 16:39 | 1777543 falak pema
falak pema's picture

maybe he has primal urges of fingery magnitude. Imbecile me...then is like kiss me. But I'm being very unwise, in fact totally off the beaten path.

Sat, 10/15/2011 - 17:45 | 1777665 Going Loco
Going Loco's picture

If you are not an imbecile you have the option of either biting the finger off or shoving the Wise Man off the path and down the ravine, whichever you prefer. Damn these Wise Men, I'm sick of them.

Sat, 10/15/2011 - 16:12 | 1777472 NorthenSoul
NorthenSoul's picture

If you want to equate physics with voodoo the only idiot in the room shall be...you!

Sat, 10/15/2011 - 16:17 | 1777496 falak pema
falak pema's picture

economics is basically a human science. So its not empirically like Physics etc.

Whereas ONE day, maybe, climatology could become an exact science, as its all about non man-made particulate/electro-magnetic wave interaction in space time. But we are not there.

Sat, 10/15/2011 - 16:49 | 1777568 maxw3st
maxw3st's picture

Economics is not, in any respect, a science. It has no predictive capacity. In that way it bears no resemblance whatever to physics. It is this realization that makes Keen quite brilliant in what he is saying in the video above.

Sat, 10/15/2011 - 16:58 | 1777581 css1971
css1971's picture

Isn't it quite obvious that Economics is psychology?

Sat, 10/15/2011 - 18:00 | 1777693 Going Loco
Going Loco's picture

Economics = {[Ps + D]^Po} / R

Where Ps = Psychology

D = Distraction

Po - Power

R = Reality

Unfortunately for those depending on Po, R tends to increase exponetially over time and D is the inverse

Given enough time the equation tends toward zero

I wait in eager anticipation. Sooner or later some twat on a TalkingHead show is going to look a politician or a central banker in the eye and say, "You haven't got a Freaking clue, have you?"

Sun, 10/16/2011 - 20:15 | 1779745 Republicae
Republicae's picture

HUMAN ACTION-LUDWIG VON MISES

Sun, 10/16/2011 - 11:30 | 1778773 centerline
centerline's picture

Mr. Keen sets himself apart by his willingness to explore the possibility that modern economics is in fact dogma rather than science.  He has talked in the past about issues such as peak oil and population growth as well.  While I do not fully agree with some of the underlying principles, Mr. Keen is very much a step in the right direction.  Academia should pay attention.

Sun, 10/16/2011 - 12:25 | 1778853 Seer
Seer's picture

Yeah, and the earth is flat and the solar system revolves around It.  Oh, and bonus! the earth is also filled with creamy caramel filling!

Sat, 10/15/2011 - 16:05 | 1777447 Lord Welligton
Lord Welligton's picture

Just a thought, but perhaps it is time for #OccupyWallStreet to pay a visit and #OccupyNYUEconomicsDepartment...

But they might actually have to come up with an idea.

That simply won't do.

Sat, 10/15/2011 - 16:12 | 1777475 falak pema
falak pema's picture

This guy's obscene in his over-reaction :


DONNY DEUTSCH: 'Occupy Wall St.' Needs A Kent State Moment

Read more: http://www.businessinsider.com/donny-deutsch-kent-state-occupy-wall-st-2011-10#ixzz1asp3Rilw

Sat, 10/15/2011 - 16:27 | 1777516 Lord Welligton
Lord Welligton's picture

Bit of an idiot there.

Never heard of him.

Seems like just another self-publicising moron.

What next?

We need Aliens to invade Earth for a war stimulus?

Sat, 10/15/2011 - 20:27 | 1777969 Dugald
Dugald's picture

Like your Avatar you'r just an old boot, with your own words you have shown us the real you.....a regular Twat....!

Sun, 10/16/2011 - 12:28 | 1778859 Seer
Seer's picture

You sure that it's not YOU who is unable to present an idea?

Seems that the "idea" is to use guillotines.  OK, I'm not endorsing this as any kind of rational way forward, but contrary to your suggesting it IS an "idea."

Sat, 10/15/2011 - 16:09 | 1777455 Dick Darlington
Dick Darlington's picture

Mr Keen is worth listening to. And for anyone, and there's a lot of those, who still for some reason thinks that house prices will always and everywhere go up just because they always go up no matter what, Mr. Keen's analysis of Australian housing markets and debt dynamics (and of course fraudulent government policies) driving the house prices can be a sobering experience.

Sat, 10/15/2011 - 16:27 | 1777517 falun bong
falun bong's picture

yep I sold my house in Sydney last month based on Steve Keen...last unpopped housing bubble

Sat, 10/15/2011 - 17:50 | 1777676 Going Loco
Going Loco's picture

Good job you sold it last month (probably good timing) and not last year prior to Mr. Keen making his trek to Mount Kosciuszko

http://www.theage.com.au/business/property/keens-long-march-to-lower-house-prices-20100414-sdn0.html

Just another example of why you might be right about the big picture (gold to the moon blah blah blah) and totally effin useless at timing, in which case when your savings are counted they will be found sadly wanting.

Sun, 10/16/2011 - 11:51 | 1778799 centerline
centerline's picture

Shitty comment Loco.

Top calling is near impossible.  If you try to play that game, you will lose.  It is the trend that matters.

Mr. Keen will be proven correct... in time.  Debt deflation is inescapable.  The real variable here is the desperate shifting of capital that is occurring as a result of debt deflation and the action/reaction of governments.

We also will see bubbles and more bubbles, like college debt in the US, as the banking system desperately seeks to create more debt (money).  Most of these bubbles, in such an evil manner, feed off of the fears of the public.  Fear of missing "the last chance" to get in on the track for a better future.

Here in the US, had I sold my home when my gut told me it was severely overvalued, it would have been the right thing to do regardless of missing the actual top of the market.  I could have hit within a 2 year+ timeframe and still done amazingly well.  Well enough that I could have paid my mortgage in full, gone rental for a few years, and now buy a house in cash with the proceeds.

 

 

Sun, 10/16/2011 - 13:11 | 1778921 Seer
Seer's picture

Thanks for adding a sense of rationality!

People are so focused on "the bottom line" that they miss out on the most important thing that we have- TIME!  Can't get more of That!

You can wait around forever until that right moment, based on an early prognostication, but are you the same person later on, are you still in the position to apply your "rewards?" and can you?

I sold at the national top, but not the top in my local market.  I too was going by gut: I had not yet filled backed this up in my brain (educating myself about economics in the greater world).  I sat on cash for a LONG time while watching real estate prices continue upwards (in areas that I was interested in).  Fortunately, for me, it cost me only 5 years of my life- I'm now on property and moving ahead with my initial plans.  Unfortunately, those 5 years tacked on top of my birthday cake has consequences: I'm healthier and in better physical shape than most who are far younger.

I would have liked to have been able to cash out.  But... interest rates were low, and this gives me a possible plus should the bottom fall out: I'll make payments until there's no one left to collect them- had I liquidated I wouldn't be able to take advantage of such a scenario; also get to keep other "appreciating" assets (as well as purchase others needed to increase productivity).

Sun, 10/16/2011 - 11:34 | 1778778 centerline
centerline's picture

Likely a very smart move.  Some of the interviews Mr. Keen has been involved in over the last couple of years have been very... entertaining.  Particularly when real estate and other "involved" parties argue that all is well without a shred of understanding about the debt dynamics at play.

Sun, 10/16/2011 - 08:41 | 1778574 anarchitect
anarchitect's picture

His analysis is worth listening to. He does a good job identifying the debt bubble, the housing bubble, and the failures of neoclassical economics.

His solutions, to the extent that he proposes any, are unfortunate. He supports the welfare state and agreed with the stimulus that was the Australian government's response to the crisis, at least until they tried to prop up the housing bubble.  He proposes a debt jubilee, after which the banks should be forced to lend to business and stop foreclosures.  Presumably this would involve central banks having to recapitalize the banks.  So what we have is continued government meddling, which was just as much to blame for the crisis as the banksters.  His thinking is typical of those who believe that central control can work, if only Leviathan is run by the right people, using the right principles.

Pass.

Sun, 10/16/2011 - 10:16 | 1778661 Snidley Whipsnae
Snidley Whipsnae's picture

anarchitect... Amazing... you actually watched the video! You are the first to post, so far, that Keen actually called for a debt jubilee during the video...

Unfortunately you are wrong about ... " Presumably this would involve central banks having to recapitalize the banks. "

imo... there is going to be a debt jubilee... The only question is: Will it be jubilee by war or will it be jubilee by gov intervention. Keen points out that those running the economic show SINCERELY BELIEVE that they are on the correct path to economic stability...which is of course ludicrous.

Since I can see no possibility of anyone gaining power to bring about a peaceful jubilee I can only see a solution by civil disorder/war. There will be a total reset and there will probably be no banks left standing to recapitalize... Start from scratch iows.

Sun, 10/16/2011 - 12:00 | 1778807 centerline
centerline's picture

Tend to agree Snidley.

Sadly.

 

 

 

Mon, 10/17/2011 - 15:33 | 1782522 anarchitect
anarchitect's picture

An interesting observation which brings to mind Martin Armstrong's recent interview at King World News:

Armstrong: One example from history was the city of Mainz.  This was where Gutenberg's press was, so it was the Renaissance, the beginning of real commerce there.  The politicians borrowed extensively, so they kept raising taxes, as they're doing now.  People then migrated.  They left the city.  The city was left with the people that couldn't pay the taxes.  They ended up defaulting.  Well, in the good old days, the way they defaulted was that the creditors came in, sacked the city, and burnt it.  And then the Pope excommunicated all of the politicians.

Sat, 10/15/2011 - 16:09 | 1777457 apberusdisvet
apberusdisvet's picture

"leading economists predict that (fill in the blank) policy, stimulus, hopium will create (fill in the #) million jobs"

 

That says it all folks.

Sat, 10/15/2011 - 16:08 | 1777458 sitenine
sitenine's picture

Official global theme song -

http://www.youtube.com/watch?v=u8dGTfT-RGM

Sat, 10/15/2011 - 16:11 | 1777468 RSloane
RSloane's picture

Keynesianism is incapable of articulating a sound basis of reality interpretation/prognostication that has at its underpinnings the word 'global'. Our economy is global, key elements of it are global, labor pools are global, etc. The only thing that isn't global is fiat currency in that most nations have their own, so of course they manage to fuck that up.

Sat, 10/15/2011 - 16:11 | 1777470 AustriAnnie
AustriAnnie's picture

"Had economic theorists rested content with using the microeconomics of the Neoclassical Synthesis strictly as a conceptual device employed in abstract reasoning, it might have done little damage. However...this type of theory cried out for application—which, in practice, was nearly always misapplication. The idealized conditions required for theoretical general-equilibrium efficiency could not possibly [be obtained] in the real world; yet the economists readily endorsed government measures aimed at coercively pounding the real world into conformity with these impossible theoretical conditions."

 

http://www.thefreemanonline.org/columns/our-economic-past/economic-analy...

Sun, 10/16/2011 - 14:33 | 1779041 Seer
Seer's picture

"this type of theory cried out for application—which, in practice, was nearly always misapplication"

Isn't this ALWAYS the case?  Hardcore libertarians take note.  Even IF something CAN work, is THE best, it still doesn't mean that it WILL work in application.  The reason being is that there will be forces looking to distort it in order to increase gains by a few.  And then there are forces that will be looking to crush it outright.

Present levers of power and they will be misapplied.  This is as sure as gravity.

I'd love to be able to say that a totally free-market system would work (I don't see any other way of trying to manage limited resources), but, unfortunately, the power thing...

Sat, 10/15/2011 - 16:13 | 1777482 Caviar Emptor
Caviar Emptor's picture

If we all worked in the nuclear power industry, there wouldn't be a problem. It would be a utopian lifestyle. No need for debt. Plenty of everything to go around. Tomatoes as big as an Audi. 

Sat, 10/15/2011 - 16:15 | 1777489 RSloane
RSloane's picture

We would do much better if we were all farmers, tailors, tanners, hunters, gatherers, gunsmiths, and fishermen.

Sat, 10/15/2011 - 16:21 | 1777506 Caviar Emptor
Caviar Emptor's picture

We might need a few exotic dancers and game show hosts

Sat, 10/15/2011 - 16:27 | 1777515 RSloane
RSloane's picture

Damn you're tough. Okay, exotic dancers as long as some of those are male, but no game show hosts.

Sat, 10/15/2011 - 16:34 | 1777522 Caviar Emptor
Caviar Emptor's picture

Dang I hope you don't become Our Great Leader: I agree to male exotic dancers (might be able to re-train and be one myself) but no game show hosts? That's the definition of austerity. 

http://www.youtube.com/watch?v=rCH3w_LnmHE&feature=related

Sat, 10/15/2011 - 16:47 | 1777564 RSloane
RSloane's picture

Great bod but no brains. He's perfect! Okay, just the one.

Sat, 10/15/2011 - 16:32 | 1777529 Lord Welligton
Lord Welligton's picture

Can we keep this guy?

Seems like a good laugh.

http://www.youtube.com/watch?v=IcB1JUOdWPY

Sat, 10/15/2011 - 16:48 | 1777555 RSloane
RSloane's picture

OMG clone him!! I had to laugh through the entire tape...

Sun, 10/16/2011 - 14:37 | 1779048 Seer
Seer's picture

Yes, isn't that what all those brown-skinned people have been trying to do as we've raped and pillaged their countries?  And then there was Thomas Jefferson (permanent failure from his worldview losing to Hamilton!).

What goes up comes down.  It'll go back to that.  The ONLY question will be whether we can maintain That level, or whether we'll continue to reverse back to clubbing ourselves with stones.  I can't think that far ahead, so I'm just going with the farmer thing for now (I doubt that I have enough time to see any "next" step).

Sat, 10/15/2011 - 16:14 | 1777484 PulauHantu29
PulauHantu29's picture

I feel sorry for the people who were sucke din by the RE sales pitch, "buy now...record low interest rates"...here is Dr. Housing Bubble discussing the serious continued plunge in Cali house prices:

<<Today the home is selling for $235,000 less than the 2005 price.  How low of an interest rate do you need to eat a $235,000 price cut and feel good about it?  Same thing happened here as it did with the Burbank condo.  It was initially listed in August for $460,000 thinking that some sucker would bite with low rates and the summer selling season.  The price is now lower by $125,000 in two months!  $125,000 is the price of a starter home in many states in the U.S.  People have forgotten the value of money in many areas and are much too comfortable with debt.  Imagine if you bought this place in August and knew it would only fetch $335,000 a few months later.  So many delusional people are being suckered in by low rates.>>

 

http://www.doctorhousingbubble.com/three-faces-california-housing-correc...

Sun, 10/16/2011 - 14:40 | 1779050 Seer
Seer's picture

It's just PART of the greater dillusion, that being that we could GROW everything forever.

Just wait and see what happens when economies of scale start running in reverse!  This housng thing will likely be the least of people's problems :-(

Sat, 10/15/2011 - 16:14 | 1777486 Mugatu
Mugatu's picture

Put another shrimp on the Barbie mate!

 

Sat, 10/15/2011 - 16:17 | 1777495 Stoploss
Stoploss's picture

"For at least another hundred years we must pretend to ourselves and to everyone, that fair is foul and foul is fair, for foul is useful, and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity and into the daylight."  Keynes.

 

"The best way to destroy capitalism is to debauch the currency. By a continuing and ongoing process of inflation, governments can confiscate, secretly, and unobserved, an important part of the wealth of it's citizens. There is no subtler or surer way of overturning the existing basis of society than to debauch the currency... The process engages all of the hidden forces of economic law on the side of destructiion, and does it in a manner, which not one man in a million years is capable of diagnosing.. "  Lenin.

These two are framed on my office wall.

The hundred years is up...

Sun, 10/16/2011 - 14:42 | 1779051 Seer
Seer's picture

" I am totally incapable of providing any meaningful reference for any quote that I toss out into the ether." -- Stoploss

Sat, 10/15/2011 - 16:21 | 1777501 GeneMarchbanks
GeneMarchbanks's picture

That said, we do appreciate the work of those economists who are first to admit not only their own limitations but the limits of the art, not science, that they engage in.

I know the majority of people visiting here live in a so called 'secular' society where 'science' reveals to us facts and truth. What is getting really annoying is mistaking scientism for actual scientific inquiry and I might add, economics, is at best, a craft not art. Art (ideally) conveys much bigger truths than even science sometimes. Kant was a giant at setting categories in order keep major confusion from poisoning peoples minds.


Sat, 10/15/2011 - 16:48 | 1777566 Dr. Acula
Dr. Acula's picture

>economics, is at best, a craft not art

No, it's a science.

http://mises.org/books/ultimate.pdf

 

Sat, 10/15/2011 - 16:51 | 1777571 GeneMarchbanks
GeneMarchbanks's picture

Social science. Not a natural science.

Sat, 10/15/2011 - 17:03 | 1777586 Dr. Acula
Dr. Acula's picture

Correct. From the link above:

"This essay proposes to stress the fact that there is in the universe something for the description and analysis of which the natural sciences cannot contribute anything. There are events beyond the range of those events that the procedures of the natural sciences are fit to observe and to describe. There is human action.

It is a fact that up to now nothing has been done to bridge over the gulf that yawns between the natural events in the consummation of which science is unable to find any finality and the conscious acts of men that invariably aim at definite ends. To neglect, in the treatment of human action, reference to the ends aimed at by the actors is no less absurd than were the endeavors to resort to finality in the interpretation of natural phenomena." - Ludwig von Mises, Ultimate Foundation of Economic Science

Sun, 10/16/2011 - 05:28 | 1778485 AnAnonymous
AnAnonymous's picture

Made me laugh.

How do the Christians put it? "The road to Hell is paved with good intentions."

Just shifting the focus on undetermined things.

Intent, intentions, end, finality.

Who can characterize them?

Conscious acts of men aiming at definite ends? Intent is not finality. There is not identity between the intent and the reached goal.

Impossible to build a science on this ground as observation is made unreliable.

Sun, 10/16/2011 - 14:46 | 1779058 Seer
Seer's picture

Hey!  Science is a method for identifying things via repeatable tests.  That's IT!

As it appears to me, economics MUST be conforming to science, as it sure as hell appears to be repeating itself quite well (albeit of catastrophic end)!

Sat, 10/15/2011 - 18:15 | 1777722 Unprepared
Unprepared's picture

I was going to trash you, but you beat me to it :)

Failing to make that distinction results in picking the wrong tools, principles and objectives of the discipline's inquiry. But that is not really the problem. Economics (the neoclassical breed), suffering from a physical sciences envy, sought to replace reality - an annoying testing benchmark - by models to test its usefulness. Almost everybody found their way in the new dismal science. Physicians-turned-traders, mathematicians-gone-econometricians and engineers-turned-developers were able to recycle their modeling skills in an archaic discipline. Simplistic and linear built-in parameters meant that exact measurements and predictions were possible. Politicians, banks, funds ... had at their dispositions tools to provide exacts objectives and reach them ... or so they thought. The paradox is that "Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction." A. Einstein.

Sat, 10/15/2011 - 16:25 | 1777509 Caviar Emptor
Caviar Emptor's picture

My _ism is better than your _ism. 

Sat, 10/15/2011 - 16:25 | 1777512 Escapeclaws
Escapeclaws's picture

Thank you for this! Go to his website for more.  The only major economic thinker who uses non-linear dynamics to build his model.

Sat, 10/15/2011 - 16:31 | 1777525 Mike2756
Mike2756's picture

I agree with him on having a balanced system, the bankrupt states are an example where there is no one to balance out the unions.

Sat, 10/15/2011 - 16:33 | 1777531 RobotTrader
RobotTrader's picture

 

 

Who needs gold when you can have a new iPhone?

4 million expected to be sold this weekend alone.

People lined up in droves world wide.

AAPL's $391 billion market cap now exceeds XOM by $15 billion.

http://www.bloomberg.com/news/2011-10-14/apple-may-sell-4-million-iphone...

Sat, 10/15/2011 - 16:42 | 1777550 falak pema
falak pema's picture

4 million in one week...one for every baby born in the world in that time frame. 

Sat, 10/15/2011 - 18:02 | 1777695 Poor Grogman
Poor Grogman's picture

Get a gold iPhone
Then you can have something neat that retains its value.
Problem is you might get to like it....

Sun, 10/16/2011 - 10:28 | 1778674 Snidley Whipsnae
Snidley Whipsnae's picture

"4 million expected to be sold this weekend alone."

So 4 million saps are lined up to purchase something that they hope will fill that cavernous void inside themselves?

Why am I not surprised? Gotta keep up with the Joneses!

Sun, 10/16/2011 - 14:49 | 1779067 Seer
Seer's picture

Blue pill stuff.  Appearances do not equate to reality.

The Easter Islanders were probably pretty optimistic as they chiseled their last statue too...

Sat, 10/15/2011 - 16:52 | 1777573 Fluffybunny
Fluffybunny's picture

So is Keen saying that, Supply and Demand is bullshit?

Sun, 10/16/2011 - 15:01 | 1779090 Seer
Seer's picture

I don't know, but what I do know is that, as far as I've heard, most "supply and demand" based systems fail to take into consideration a finite planet.  If this observation is correct, then I guess that everything is pretty much "bullshit" :-(

Sat, 10/15/2011 - 17:08 | 1777593 porrannor
porrannor's picture

Please, anybody explain why Ron Paul is not viewed as such politician that can take on the neoclassicals and redefine the economical landscape? He has proven to be capable to the very thing. He has challenged the FEDs and its existence, he has challenged the current monetary system and the need to go back to gold. SO WHAT GIVES? Who else if not him?

Sat, 10/15/2011 - 17:24 | 1777621 RSloane
RSloane's picture

You answered your own question. He challenges.

Sat, 10/15/2011 - 17:26 | 1777628 Dr. Acula
Dr. Acula's picture

You're neglecting the fact that most voters are retarded.

"Nearly Half Of Detroit's Adults Are Functionally Illiterate, Report Finds"

http://www.huffingtonpost.com/2011/05/07/detroit-illiteracy-nearly-half-education_n_858307.html

 

Sat, 10/15/2011 - 17:40 | 1777654 porrannor
porrannor's picture

I understand the limitations of voters but how about the Keen himself.  Instead of referring to Ron Paul as such politician He does not see one up to the task. Ron Paul is not a nirvana but it is a good start. 

Sun, 10/16/2011 - 05:16 | 1778482 AnAnonymous
AnAnonymous's picture

You're neglecting the fact that most voters are retarded.

/////////////////////////////////////////////////////////////////////////

Made me laugh.

Fact? How? Voting is mandatory in the US? What is the voter turnout rate in Detroit for example?

I dont have it but useless actually.

Most favourable numbers give something like 45pc of Michigan voters casting a vote. 65pc other do not vote.

So, at this point, in the non US cheap propaganda world, one should show that actually the 'retarded' vote at the exclusion of the non retarded.

Again, another typical US citizen trait, rejecting facts as facts point at them not as the solution but as the problem.

Cheap propaganda one: The majority is dictating to the minority what to do. This is what they call 'democracy'.

Facts: in Michigan, for example, 45pc (a minority) dictates the majority (65pc) what to do.
US trick here: deny the existence of non voters. Rescale 45pc to mean 100pc (so it means that 27pc voters are dealt as they constitute an absolute majority)

Cheap propaganda two: most voters are retarded.

Fact:A sharper analysis show that actually that the average voter profile excludes 'retards'

A typical US citizen trait: their system is perfect. Be it for economics, justice, politics, if it fails, it is never because of inherent flaws in the system, always because of alien causes.

So here, dumb voters.

US citizens being duplicitous, well, they can not admit that the current world order, the US world order is not the result of dumb people but of intelligent people.

Property being a zero sum game, US citizens usually try to justify who must own at the exclusion of others, intelligent people over dumb people etc...

Sun, 10/16/2011 - 15:14 | 1779123 Seer
Seer's picture

"So, at this point, in the non US cheap propaganda world, one should show that actually the 'retarded' vote at the exclusion of the non retarded."

Ah, excellent point!

I'm neither retarded (some would argue otherwise) or "non-retarded" (some would argue otherwise) and I opt to cast my "vote" of "disapproval of the entire system" by NOT voting in its rigged affairs: I'm a member of George Carlin's "club."  I am perfectly justified in lambasting others for keeping (electing) their own nooses!

Having previously supported Ron Paul I realized his value in opening up the debate by which we can end all this shit.  But, obviously, TPTB understand that this is exactly what would happen should Ron really get traction.  The unfortunate part is that I don't think that Ron himself really understands this: eternal optimist, not good when the optimism actually results in perpetuating that which you're against (TPTB will control thing whether there's a Fed or not; they'll do so as long as there are levers of power, just as the Bolsheviks did; and Ron SHOULD understand this).

Ah, to the consternation of others, I've been arguing that Grover Norquist was correct, that govt SHOULD be shrunk down to a size that would fit in a bathtub and then down the drain.  But he and his ilk believe that they'd be the next Bolsheviks, that they would be able to continue to wield their power without ANY interference from govt (which they'd have a tighter control over)- ha ha!  I'll watch as they go over the cliff WIT govt, smile, and then continue on down the path of sustainability and diversity (and no gods or masters).

Sat, 10/15/2011 - 17:13 | 1777606 nmewn
nmewn's picture

We're finally getting to the core of the onion.

The hijacking of a flawed theory, by statists, because it was the most useful tool at hand to hold the people in economic bondage.

Sat, 10/15/2011 - 17:28 | 1777630 AustriAnnie
AustriAnnie's picture

Flawed reasoning is a useful tool for manipulation.  

Sat, 10/15/2011 - 18:39 | 1777769 nmewn
nmewn's picture

Absolutely.

I can't believe we even have to discuss Keynes. After the 70's when stagflation took hold the prescription was proven a falsehood.

But the "vested interests" created yet another falsehood to try and cover the first falsehood...neo-Keynes.

They are like a damn cult.

Sun, 10/16/2011 - 11:11 | 1778739 RSloane
RSloane's picture

I don't believe it either. And yes, they are exactly like a damned cult.

Sun, 10/16/2011 - 15:20 | 1779140 Seer
Seer's picture

Yeah, couldn't happen to any other system, could it?

As long as there's some sort of power center there WILL be corruption.

Orthodoxy IS orthodoxy.  Next in line?

Ah, but to feel superior, until one's own orthodoxy is put into the field of play (where it'll be corrupted and attacked until it too is unrecognizable from that which it was promoted as).

Clearly our faults lie with human hubris.  Not seeing this as being changed by anything.  Only hope is to limit the consequences: BIG = FAIL.

Sat, 10/15/2011 - 17:20 | 1777612 pain_and_soros
pain_and_soros's picture

OWS found the right target perhaps even without the benefit of listening to Steve Keen, but simply realizing that the financial system and those running it are the problem....

From the interview, Steve Keene in response to whether facism can be headed off....

"The real cause has been the growth of the financial sector and that is the sector we should target.  As long as the state system continues trying to revive the financial sector & get back to the previous behaviour...the only way out of it is for that to be reversed.  If you want to head off facism, I think what you have to have is a politician willing to take on the financial sector and we don't have that yet."

Interviewer: "Now how do they do it, because where does the money come from?"

SK: "It's not the money..David Graeber has written a great new book called 'Debt: The first 5,000 years' & he's argued at the end of it, something that I 've been arguing for and Michael Hudson for a long, long time and Anne Pettifor, you need a Debt Jubilee.  We need to abolish the debt.  And then if that means the banks need to be reconstructed, let's do it.  And if the bank employees that they say we need their expertise, no we don't. All their experts that have run large, sophisticated ponzi schemes that are so sophisticated they don't even know it is one.  So we have to abolish the debt, large amounts of it ...not a case of case by case, but across the board, hand over the financial system and force banks to continue providing working capital to firms, stop them foreclosing on houses, etc., etc. - that sort of action is necessary.  But we are so far from that action right now, I think there is going to be lots of chaos before you get to the stage where a politician will have the courage that Eisenhower had & bring in changes like that."

 

Sat, 10/15/2011 - 17:29 | 1777633 AustriAnnie
AustriAnnie's picture

"If you want to head off facism, I think what you have to have is a politician willing to take on the financial sector and we don't have that yet."

What you have to have is a populace not willing to leave their finances in the hand of politicians.

There, fixed it.

Sat, 10/15/2011 - 17:38 | 1777647 AustriAnnie
AustriAnnie's picture

To fight fascism (control of finances by politicians) we need a politician to control the financial industry.  Genius!  We just need an enlightened politician of good and ethical character to control it all!  Why didn't we think of that sooner! /sarc

No wonder we're doomed.  Even people who see the problem think the solution is an enlightened politician.

 

Sat, 10/15/2011 - 18:13 | 1777717 pain_and_soros
pain_and_soros's picture

Either you didn't listen to the entire interview or you are as dumb as you sound

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