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  1. #51
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    The USA Reserve Bank is now creating money at zero interest. This is sure to create bubbles which will collapse in due course.

    Of course it was the creation of too much cheap money by the USA Reserve Bank that caused the last financial crisis. But the USA Reserve Bank never seems to learn.

    But all they have to do is to follow the example of Canada and Australia to avoid financial crises.

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    Quote Originally Posted by Victor View Post
    The USA Reserve Bank is now creating money at zero interest. This is sure to create bubbles which will collapse in due course.

    Of course it was the creation of too much cheap money by the USA Reserve Bank that caused the last financial crisis. But the USA Reserve Bank never seems to learn.

    But all they have to do is to follow the example of Canada and Australia to avoid financial crises.
    So I keep telling them!

  3. #53
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    Quote Originally Posted by freeeekyyy View Post
    Not surprisingly, you're still missing the point, and are intent on demonizing me rather than understanding the argument.
    I do understand your point and I'm not demonizing you. I simply think your argument against a minimum wage doesn't work at all. It simply does not follow that those who desire a higher wage must also desire inflation.

    Two, the value of money is determined by how much is out there.
    But the money supply does not increase if workers are paid more.
    If people are earning less for the same amount of productivity, their dollars have greater value. It's a fact.
    Of what relevance is that argument? How is that suppose to convince the working poor that a lower salary is better than a higher one?

    Minimum wage doesn't help anybody, it just means a business will be less likely to hire somebody who doesn't meet the necessary amount of productivity to be worth the minimum wage.
    That's capitalist dogma, not fact. It is just as easy to argue that powerful employers use their strength to coerce unfair concessions from their workers. The truth is somewhere in between.

  4. #54
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    Quote Originally Posted by Victor View Post
    The USA Reserve Bank is now creating money at zero interest. This is sure to create bubbles which will collapse in due course.

    Of course it was the creation of too much cheap money by the USA Reserve Bank that caused the last financial crisis. But the USA Reserve Bank never seems to learn.

    But all they have to do is to follow the example of Canada and Australia to avoid financial crises.
    They don't want to avoid financial crises. Financial crises make the individual actors very rich.

  5. #55
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    Quote Originally Posted by onemoretime View Post
    They don't want to avoid financial crises. Financial crises make the individual actors very rich.
    What is interesting is that zero interest is the policy of Social Credit.

    The Social Credit Party had some small success in Canada and New Zealand in the first part of the 20th Century. But to carry out their policy in full required the control of the Reserve Bank, and even though they had some electoral success, they never succeeded in controlling a Reserve Bank. And yet here we have the Reserve Bank of the largest economy in the world carrying out their policy of zero interest for the time being.

    My father was a Social Creditor and taught me all about it. In my opinion Social Credit depends on a no growth economy, a growing economy needs to put a price on money.

    Still, I think my father would be pleased to see a Reserve Bank charging no interest, in effect creating free money.

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    Quote Originally Posted by Victor View Post
    What is interesting is that zero interest is the policy of Social Credit.

    The Social Credit Party had some small success in Canada and New Zealand in the first part of the 20th Century. But to carry out their policy in full required the control of the Reserve Bank, and even though they had some electoral success, they never succeeded in controlling a Reserve Bank. And yet here we have the Reserve Bank of the largest economy in the world carrying out their policy of zero interest for the time being.

    My father was a Social Creditor and taught me all about it. In my opinion Social Credit depends on a no growth economy, a growing economy needs to put a price on money.

    Still, I think my father would be pleased to see a Reserve Bank charging no interest, in effect creating free money.
    It's a beneficial thing in a mostly agrarian economy. Unfortunately, in a wage economy, it can be crippling, especially when no one is hiring.

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    Quote Originally Posted by onemoretime View Post
    It's a beneficial thing in a mostly agrarian economy. Unfortunately, in a wage economy, it can be crippling, especially when no one is hiring.
    Well if it gets too much worse we can all join together with pitchforks, cans of gasoline, and plentiful packs of matches.

  8. #58
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    Quote Originally Posted by Thisica View Post
    The classical view of capitalism, espoused by Adam Smith, is one of self-interest which allows economic prosperity to occur in nations. It's this appeal to self-interest which allows individuals to participate in this market, and thus "get what they deserve".
    If not the interest of the individuals making up an economy, then who's interest is the economy to serve? This is why some people associate the morality of socialism with that of slavery (as an extreme slippery slope argument).

    But the reality is that society is made up of social creatures. The self interests of those creatures is much broader than the materialistic needs of the individual. But what does this interest consist of and how is it formed? Minds tend to reflect which it is exposed to. In a social sense, such predictions of individual interests can be quite chaotic, but can average out over a group. One can still say that those who are regularly exposed to the (extremely varied) plight of those with disabilities are likely to at least partially consider their plight in their overall sphere of economic interests. Likewise, there is a chaotic relationship between individuals and culture, which is an important force in shaping individual interests. (this can bring up a whole variety of philosophical and sociological questions which I won't get into here)

    It is important do distinguish between the ideology of capitalism and the practical importance of a market based economy.

    Why is the market so successful? Because it is the most powerful computational method of processing the (hard to measure) interests of the individuals in society. von Mises called it the economic calculation problem.

    By the way, Adam Smith never said that all will 'get what they deserve' in a market based economy.

    The fact is that initial conditions are not at all equal between individuals and even if they were, there are many practical limitations why currently existing or imagined market economies are unable to process (apply) information to a level that something resembling an equilibrium state could be reached.

    Economists (due to lack of computational power) like to make simplistic equilibrium trending models to justify their intuitions about the importance of market economies. But Coase's theorem, which suggests that efficient allocation of economic resources is invariant of initial allocation of property rights, buries a lot under "transaction costs". (At the very least, whether property rights can be precisely enforced, and the computational limitations I previously suggested).

    Quote Originally Posted by onemoretime View Post
    Capitalism only works when the source of wealth is limitless.
    This is simply not true. If wealth is 'limitless' then there is no economic question. If wealth is limited, then you have an economic calculation problem, subject to the limitations I mentioned above (among others).

    Quote Originally Posted by Thisica View Post
    The market economy is relatively easy to understand, since there are two major players, the producers and the consumers acting within the system. In this model, the government is not much involved.
    Such simplistic models are a problem because even in a minarchist state, either a government or defacto government is always involved, least of which to define and enforce the rules of economic transactions (including property rights) in the first place.

    Quote Originally Posted by Victor View Post
    The USA Reserve Bank is now creating money at zero interest. This is sure to create bubbles which will collapse in due course.

    Of course it was the creation of too much cheap money by the USA Reserve Bank that caused the last financial crisis. But the USA Reserve Bank never seems to learn.

    But all they have to do is to follow the example of Canada and Australia to avoid financial crises.
    Australia made the same mistake as the USA - by using a measure of 'inflation' that did not effectively measure the changes in the cost of living. How did they do this? In the mid 90s they systematically changed measures such as the CPI to ignore the costs that land values have on the inflation measure. You'd think that they'd at least increase the proportion of rent to make up for this, but no, it remains extremely low. See:
    http://www.abs.gov.au/AUSSTATS/abs@....2570B6001E7AA7
    Does 'house purchase' and 'rent' reflect the mean or median amount of income that the average Australian spends on housing costs?

    The CPI used by the Bank of England does not consider housing at all.

    The fact is that due to the way the monetary system is constructed, the way central banks measure inflation directly influences how resources are distributed, since this feeds back into the monetary supply. Those which are accounted for are controlled for inflation (and often reducing investment) and those which are not considered are free to inflate (such as land prices).

    This is one of the reasons why rent tends to be undervalued and lag significantly behind land prices in Australia.

    This is also why we have seen the creation of several bubbles since the mid 90s. First in terms of equities, since this market had much greater elasticity than real estate. But later into real estate, as equity prices became unsustainable. But this too eventually became unstable.

    Australia has been sheltered partially from the economic decline, the main reason of which is because our economy is relatively small and nationally cohesive, so the RBA had enough control as to prevent our real estate bubble from being popped. At least in the short term.

  9. #59
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    Quote Originally Posted by Architectonic View Post
    If not the interest of the individuals making up an economy, then who's interest is the economy to serve? This is why some people associate the morality of socialism with that of slavery (as an extreme slippery slope argument).

    But the reality is that society is made up of social creatures. The self interests of those creatures is much broader than the materialistic needs of the individual. But what does this interest consist of and how is it formed? Minds tend to reflect which it is exposed to. In a social sense, such predictions of individual interests can be quite chaotic, but can average out over a group. One can still say that those who are regularly exposed to the (extremely varied) plight of those with disabilities are likely to at least partially consider their plight in their overall sphere of economic interests. Likewise, there is a chaotic relationship between individuals and culture, which is an important force in shaping individual interests. (this can bring up a whole variety of philosophical and sociological questions which I won't get into here)

    It is important do distinguish between the ideology of capitalism and the practical importance of a market based economy.

    Why is the market so successful? Because it is the most powerful computational method of processing the (hard to measure) interests of the individuals in society. von Mises called it the economic calculation problem.

    By the way, Adam Smith never said that all will 'get what they deserve' in a market based economy.

    The fact is that initial conditions are not at all equal between individuals and even if they were, there are many practical limitations why currently existing or imagined market economies are unable to process (apply) information to a level that something resembling an equilibrium state could be reached.

    Economists (due to lack of computational power) like to make simplistic equilibrium trending models to justify their intuitions about the importance of market economies. But Coase's theorem, which suggests that efficient allocation of economic resources is invariant of initial allocation of property rights, buries a lot under "transaction costs". (At the very least, whether property rights can be precisely enforced, and the computational limitations I previously suggested).



    This is simply not true. If wealth is 'limitless' then there is no economic question. If wealth is limited, then you have an economic calculation problem, subject to the limitations I mentioned above (among others).



    Such simplistic models are a problem because even in a minarchist state, either a government or defacto government is always involved, least of which to define and enforce the rules of economic transactions (including property rights) in the first place.
    I think that the above comments demonstrate my incompetence as a student of political economy. Mea culpa. It's been actually three years since I properly learned economics, so in a way, it's my memory at fault.
    “To explain all nature is too difficult a task for any one man or even for any one age. 'Tis much better to do a little with certainty, & leave the rest for others that come after you, than to explain all things by conjecture without making sure of any thing.”—Statement from unpublished notes for the Preface to the Opticks (1704) by Newton.

    What do you think about me? And for the darker side, here.

  10. #60

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    Quote Originally Posted by Architectonic View Post
    If not the interest of the individuals making up an economy, then who's interest is the economy to serve? This is why some people associate the morality of socialism with that of slavery (as an extreme slippery slope argument).
    Well that's easy, elites.

    It is important do distinguish between the ideology of capitalism and the practical importance of a market based economy.

    Why is the market so successful? Because it is the most powerful computational method of processing the (hard to measure) interests of the individuals in society. von Mises called it the economic calculation problem.
    The calculation debate predates most of the modern computer software and hardware which can do simultaneous equations at a rate never before dreamed of, plus strictly speaking if the peter principle could be dealt with (which is a problem in any economy, predominantly market or public planning systems) then instructing managers to minimise costs would have the same net results.

    The rise of managerialism has made for a lot of convergence between economies, the ideological arguments, and I believe that a lot of the economic theorising falls into this category, are a smoke screen for people who want to pay less tax or eliminate social spending for reasons other than their tax bill.

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