Any Economists on ICMag

[mpd]

I guess it could be said that stimulating consumption hasn't done a dang thing. A stimulus to consumption is always (as in first) a stimulus to prices as market participants seek to address the additional demand with higher prices, then labor increases to the means of production. When the stimulus ends so do the jobs.

I think this proves that free-market economies are not cycles but linear events:

There is a stimulus to the demand schedule for capital investment. This stimulates the demand schedule for the production of labor. This stimulates competition which moderate prices. Politicians have the awful habit of trying to buy votes by pretending that stimulating the south end of the beast (consumption) will make it work just as if they had fed the north end of the beast which it obviously can't.

Therefore:

Every stimulus to the non-productive side of the private-sector economy for the purposes of increasing consumption is always going to be counter-productive and create more unemployment than what existed before the cycle because; the cost of government cannot be avoided and government refuses to undertake its fiscal policies in strict adherence with the dictates of Rational Choice Theory.

That aught get the discussion perkin' along this morning (or so it is to be hoped)...

 

[Justa6655321]

Excellent thread!

I don't disagree with your ideas in a general normal functioning economy. A couple of things pertaining to this market....we are in a depression because of a lack of consumer confidence and stimulating spending is an attempt to changed that attitude. And the most importantly today's economy is deflationary and any increase in prices might be healthy. Competition from places like China had made it almost impossible to raise prices. A little inflation is always better than the alternative.

 

[danimal7]

no beef at all! i was pretty medicated when i posted this earlier. very cool... what is the premise of the book? i really don't have too much experience outside of basic keynesian econ. would love to hear about it.

-tom

Dude,IMO
John maynard Keynes(philosophy) is the stupid somebitch that got us into this mess in the first place.
Keynes=counterfeit = not so free market
the model for future economic stability is in the philosophy of Austrian
economics by Ludwig Von Mises -a true monetary Architect

basiclly if we didn't have the govt's counterfeiting paper
we wouldn't have these cycles of boom and bust!

PS.... I may not know my ass form a hole in the ground
peace bros
D

 

[flubnutz]

didn't gold take a 10% dump today on the news out of dubai?

 

[mpd]

The market was off about 3% this morning when I looked in on Fox Biz.

We'll get the affect of price increases due to the currency devaluation we suffered when Gentle Ben decided to be a rock star and dump a trillion dollars of funny money into the economy.

 

[mpd]

I'm wondering how Black Friday will go; my money is on a sharp decline. Man, is gold out of control or what?

 

[flubnutz]

im betting black friday doesn't turn out so bad ...

 

[Justa6655321]

The decline in the US dollar isn't always a bad thing. A cheaper dollar lowers the cost of American made goods oversees thus increasing sales. Second it increases the cost of foreign items here hopefully putting our items on par with countries that have an extreme low cost to produce or are subsidized by their governments. Sounds backwards but think about all the children makeing Nike shoes someplace is that fair to our hardworking people?I'm all for free market economys but the rest of the world doesn't play that way and there are countries that will dump shit here inorder to put Amercan companies out of business.

But the most important thing to remember about the dollar is it driven by interest rates! The return on investment here is poor when the fed has rates at zero. People move their money out of dollars into currency that will provide a better rate of return. Think bonds.

Hey a cheap dollar should allow other countries to invest in caital here. Think Toyota building plants here. More jobs for US workers.

Like i said before deflation is at our doorstep or maybe even already here.

 

[mpd]

The solution for children making Nike shoes is for those economies to stop artificially discounting their foreign exchange. The result is always the same; the economy becomes dollar-denominated via the black market and hyperinflation and a significant increase in the marginal disutility of labor and artificially suppressed worker incomes cannot be avoided and the record of the modern era fully supports this finding.

A cheap dollar has no good long-term impact other than to destroy purchasing power parity and anytime you destroy purchasing power parity deflation (as is happening now due to the latest trillion dollar increase in our currency supply - done ex nihilo I would add) our real incomes fall compared to other countries and that is a definite economic boo-boo of unprecedented proportions.

 

[Justa6655321]

Excellent MPD! Long term u are correct! However long term for the US is different fro
the rest of the world. The US will never devalue to a third world level. Hence the flight to quality when things go bad. IF...the dollar does fall then we will have a lot more problems than we do now.

 

[mpd]

Don't tell that to our president and central bank authority; they seem to think the Dollar would make great designer toilet paper.

 

[LJB]

No deflation spiral.

Didn't happen.

Is not happening.

Is not going to happen.​

 

[Justa6655321]

Look at the 09 drop on that chart! Wow!

Tell the people who's houses are worth less than half now what the paid for them that there is no deflation

 

[mpd]

It's got to happen. It's like night and day. You dump a slew of dollars in the economy and don't increase the asset pool, then the value of the asset pool is inflated.

Got to happen. Or should I say it is supposed to happen and just have a steamy cup of STFU?

 

[LJB]

Look at the 09 drop on that chart! Wow!

Our economy saw a temporary bout of deflation, or a dip in inflation, not a deflation spiral. not like 1929.

Tell the people who's houses are worth less than half now what the paid for them that there is no deflation

Asset price deflation. And to prevent it from spreading to a deflation spiral in the economy at large, the Fed is printing like crazy.

Note how oil prices fell rapidly, but picked right up again to the $80 level, despite the fact demand in the U.S. is still down at 2003 levels for gasoline and 1999 levels for truck, rail and airline fuels. (By the way, the population has grown since then)

We are on the cusp of big inflation and it's happening because of what they're doing to the dollar.

 

[mpd]

Man, that's a supply dump like there's no tomorrow. 1999 levels?

Last night the Obama slaves on CBS reported on Black Friday:

"Holiday shopping is up, though sales are down 8%."

That's verbatim. Why can't those fringe media tards just tell the truth and be done with it?

 

[mpd]

Now I am hearing that retail sales are up; fractionally, but still up. I haven't seen any of the math yet, so I don't know if the models are to be trusted or not. We'll have to see. Here's hoping everyone spent all their neighbor's money. Save, spend, save, spend. Washington should make up its mind about what it expects out of us since we made up our minds regarding our expectations of Washington long, long ago.

 

[Justa6655321]

mpd, more people are shoping but they are buying less per person. I think retail sales will down 1% from last year but profits will be higher. Companies have figured out how to increase the bottom line.

 

[mpd]

OIC. Then, there's that...

 

[mpd]

Well, today is the jobs summit. We're going to have people come to the White House, be sent off into working groups by the President and then they will declare that they have a cure for unemployment at the end of the day. We already did this with the economic summit and the health care summit, so no there will be no surprise in the outcome.

The devil - as they say - is in the details...

There is still a sizable portion of our population that believes the government should be in the jobs business, even though our government is ordered as an endogenous participant in our private-sector economy. This means the government (the devil) eats off our plate, so before the government can create a job, someone (or someones) have to lose their job(s) because:

1. The costs of government cannot be avoided in the outcome; and

2. The government refuses to follow the dictates of Rational Choice Theory, thus compounding the original error of entering the private-sector economy and confiscating its wealth to create a job.

These two (2) conditions cannot be debated, like the speed of light, Rational Choice theory and the government's endogenous ordering are not simply great ideas, they are the law of the land.

Now, if we change the government's role to that of being exogenous to the private-sector economy, then everything changes, but what are the odds the politicians will actually do something that benefits someone other than the politicians and the corrupt bankers that support their powers and perks?

So, what will today's "prescription" be?

Another expensive appropriations bill that will fail to live up to its promise?

The government admitting the obvious and cutting taxes?

More government takeover of private-sector enterprises such as is being seen in Venezuela where there is a crippling energy shortage, water shortage, food shortage and shortage of other elementary commodities? Why is it that socialism always leads to shortages? Ever thought that one over? Really gave it a think?

Where will they rub their dick-skinners next in our economy?