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12-19-2008, 11:36 AM
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Quote: Originally Posted by Toro  I was pleased to see the "Austrian Critique" section conspicuously present at the link. |
12-19-2008, 11:41 AM
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Quote: Originally Posted by Toro Nice link, Toro.
I found this VERY INTERESTING Quote:
Milton Friedman suggested that a monetary authority can escape a liquidity trap by bypassing financial intermediaries to give money directly to consumers or businesses. This is referred to as a money gift or as helicopter money. The term helicopter money is meant to portray the image of a central banker dropping money on people from a helicopter. Political considerations make it difficult for a monetary authority to grant the money gift, because individuals and firms not receiving free money will exert political pressure. The monetary authority must act covertly to give gift money to specific individuals or firms without appearing to give money away. I find the above interesting given that Milton Friendman is better known as this: Quote:
Originally a Keynesian supporter of the New Deal and advocate of high taxes, in the 1950s his reinterpretation of the Keynesian consumption function challenged the basic Keynesian model. In the 1960s he promoted an alternative macroeconomic policy called monetarism. He theorized there existed a "natural rate of unemployment" and he argued the central government could not micromanage the economy because people would realize what the government was doing and shift their behavior to neutralize the impact of policies. He rejected the Phillips Curve and accurately predicted that Keynesian policies would cause " stagflation" (high inflation and low growth). He argued that a steady expansion of the money supply was the only wise policy, and warned against efforts by the treasury or central bank to do otherwise. Funny how he seems to have changed his tune now that the Banking Mafia has broken cpitalism, isn't it?
Guess we're all Kynesians now.  |
12-19-2008, 11:53 AM
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Quote: Originally Posted by editec Guess we're all Kynesians now. Psh, speak for yourself brotha. |
12-19-2008, 12:32 PM
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Quote: Originally Posted by Toro Okay. This stuff is a bit hard to grasp. So apparently most of the time the Fed can affect the economy...but not when there is no confidence. |
12-19-2008, 12:38 PM
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Quote: Originally Posted by Ravi Okay. This stuff is a bit hard to grasp. So apparently most of the time the Fed can affect the economy...but not when there is no confidence. They always can, but to what extent and how quick, are the variables. |
12-19-2008, 01:57 PM
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Quote: Originally Posted by Ravi Okay. This stuff is a bit hard to grasp. So apparently most of the time the Fed can affect the economy...but not when there is no confidence. Basically. The economy is about trust. When trust goes away, economic activity decreases.
When there is excess capacity, you have deflation. Cutting interest rates really cannot help the economy until the excess capacity goes away.
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12-19-2008, 09:27 PM
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Quote: Originally Posted by Toro Basically. The economy is about trust. When trust goes away, economic activity decreases.
When there is excess capacity, you have deflation. Cutting interest rates really cannot help the economy until the excess capacity goes away. Indeed. Conventional monetary policy ceases to work in a liquidity trap because when interest rates are zero or near zero, cash and treasury debt are perfect substitutes for one another. Thus, liquidity injections implemented by Central Bank purchases of treasuries do not have the normal intended effect. They simply pile up as bank reserves and in vaults. This is exactly what happened to Japan in the lost decade.
Brian |
12-19-2008, 09:32 PM
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Quote: Originally Posted by gonegolfin Indeed. Conventional monetary policy ceases to work in a liquidity trap because when interest rates are zero or near zero, cash and treasury debt are perfect substitutes for one another. Thus, liquidity injections implemented by Central Bank purchases of treasuries do not have the normal intended effect. They simply pile up as bank reserves and in vaults. This is exactly what happened to Japan in the lost decade.
Brian And this is why I think all the gimmicks to help housing will fail. Unless the excess inventory goes away, prices will continue to fall. Perhaps not as much if the gimmicks weren't there, but they will fall nonetheless.
I'm hoping to get a condo on the beach for 60% less than the peak a few years ago!
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12-19-2008, 09:37 PM
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Quote: Originally Posted by Toro Basically. The economy is about trust. When trust goes away, economic activity decreases.
When there is excess capacity, you have deflation. Cutting interest rates really cannot help the economy until the excess capacity goes away. Just another facet of consumer confidence and market psychology. Until lenders FEEL confident enough, no amount of central bank or treasury machinations is going to have any effect. It still appears we have pretty much found the bottom and in some cases moving beyond the bottom (aka the stock market saw it's bottom several weeks ago, and we are seeing at least some lending picking up) of this cycle. Don't see things getting a lot better anytime soon, but I doubt they will get any worse.
Lots of pent up demand, lots of pent up money just waiting for the dam to break. All the fed has done is pretty much guarantee we are going to have another asset bubble somewhere, very quickly yet again.... |
12-20-2008, 08:50 AM
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Quote: Originally Posted by Zoomie1980 Just another facet of consumer confidence and market psychology. Until lenders FEEL confident enough, no amount of central bank or treasury machinations is going to have any effect. I think you are 100% correct there.
Now given that you understand that, Zoom, how can you say that the banks were forced to lend money to people who were unworthy of getting those loans?
Or am I wrong, and that was never your position on that question? Quote: It still appears we have pretty much found the bottom and in some cases moving beyond the bottom (aka the stock market saw it's bottom several weeks ago, and we are seeing at least some lending picking up) of this cycle. Don't see things getting a lot better anytime soon, but I doubt they will get any worse. WALL STREET might not get worse, but I can assure you that we haven't seen the bottom on MAIN STREET, yet.
AS millions of us lose our jobs, the pain of this DEPRESSION has bearly begun to impact us.
You'll see. Quote: Lots of pent up demand, lots of pent up money just waiting for the dam to break. All the fed has done is pretty much guarantee we are going to have another asset bubble somewhere, very quickly yet again.... People need to work. I'm not sure even the ddelusional wankers who invest in Wall STREET are likely to forget that anytime soon.
When the employment picture gets better, the economy will begin recovering. |
12-20-2008, 12:35 PM
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12-20-2008, 09:17 PM
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Quote: Originally Posted by Zoomie1980 All the fed has done is pretty much guarantee we are going to have another asset bubble somewhere, very quickly yet again.... So according to you, the Fed has gone from having "zero effect" on the economy, to its actions guaranteeing an asset bubble.
Some of us have been trying to tell you that's one of their main problems, while you stuck your fingers in your ears and refused to admit it.
Now all the sudden you're willing to entertain it? |
12-21-2008, 07:11 AM
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Quote: Originally Posted by Toro that some people will never give up in their fight to prove that the real source of society’s ills is government attempts to help poor people
That's the philosophy that mostly drives the Republican party these days. |
12-21-2008, 08:52 AM
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Quote: Originally Posted by Ravi that some people will never give up in their fight to prove that the real source of society’s ills is government attempts to help poor people
That's the philosophy that mostly drives the Republican party these days. Uh Rav, this past year, the government hasn't done a whole lot to help poor people through this crisis. Maybe you haven't been paying attention, but the government pretty much took care of the rich this year.
They've probably shelled out more for the rich in one year than they have for the poor in the last couple years. |
12-21-2008, 09:37 AM
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Quote: Originally Posted by Paulitics They've probably shelled out more for the rich in one year than they have for the poor in the last couple years. Let's get real, shall we?
The government of the rich for the rich and by the rich shells out more to the superwealthy in the form of cozy contracts and tax bennies in any one year than they have given to the poor in the last fifty years. | | |
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