Interesting article on Real Estate/financial crisis

Discussion in 'Politics, Religion, Social Issues' started by mcrain, Mar 8, 2010.

  1. mcrain macrumors 68000

    mcrain

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    #1
    I thought we might get some interesting discussion from this article.

    http://www.nytimes.com/2010/03/08/opinion/08krugman.html

    There is a discussion about how Ireland did not have many of the factors that existed in the US, but did have four factors that were similar. It's an interesting discussion.

    I found the following discussion about deregulation interesting:

    There's more, and like I said, it's interesting regardless of your POV.
     
  2. Ugg macrumors 68000

    Ugg

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    #2
    Krugman is a very astute man. His columns are succinct and to the point. The fact that he won the Nobel Prize for Economics doesn't hurt either.

    He is right on as far as I'm concerned. There came a point, sometime after the Savings and Loan Debacle when American regulators somehow convinced the American people that the Emperor was indeed wearing clothes and that if only they would suspend belief in common sense, they too could wear such golden raiment.

    I remember thinking at one point that Greenspan truly was godlike but there came a point when he said something to the effect that the young turks on Wall Street were so smart that even he didn't understand what they were doing. At that point, my belief in him began to waver. Whenever policy is dictated by social misfits, then we should know the party is over.
     
  3. rdowns macrumors Penryn

    rdowns

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    All I have to say is we are 14 months into Obama's administration and none of the root causes of our financial collapse have been addressed.
     
  4. Eraserhead macrumors G4

    Eraserhead

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    Given its going to requires lots of international cooperation its not a total surprise. To be effective it'll need the US, EU, China (Hong Kong) and Singapore to agree at the very least.
     
  5. leekohler macrumors G5

    leekohler

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    #5
    As long as congress continues to do nothing, things will stay the same. Sorry- I can't blame Obama for this. The best things we could do for our country right now:

    1. Nationalize health care and get that burden off the backs of our businesses. There's a reason we have a difficult time competing with other countries. A big one is all the benefits that companies have had to shoulder. Our businesses will be more free to offer better products at lower prices.

    2. Get out of Iraq and phase out Afghanistan. Let people fight their own wars and run their own countries. We have done too much damage to both of these places.

    3. No more bailouts. If we have to have a hard fall, then so be it. We cannot prop up failing businesses any longer. I have to agree with our more conservative members here. We can no longer afford this kind of thing.
     
  6. kavika411 macrumors 6502a

    kavika411

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    #6
    1. I increasingly agree, but am not quite there yet.

    2. Agree completely.

    3. Agree completely.
     
  7. Desertrat macrumors newbie

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    #7
    Re the S&L debacle during Reagan's tenure: S&Ls had restrictions upon them--"regulation"--controlling the maximum amount of interest which they could pay to those who had savings accounts and CDs. 4%? Some such. When Volcker raised the Fed rate in 1970 to some 15% or more and held it there into around 1983, the S&Ls were screwed. With CDs paying 12% elsewhere, the source of funds for lending to homebuyers went dry up in a heartbeat. So, some reduction in regulations to keep S&Ls from going broke.

    But we had a helluva recession, remember? All because of the high Fed rate. Business activity came to a screeching halt, and folks lost jobs. Couldn't make house payments. We also had the reverse oil shock, with crude dropping below $15/bbl. The oil patch went broke, which led to bumper stickers around Odessa: "Oh, Lord, give me one more boom. I promise I won't piss it away, next time."

    Consider a fed rule for what folks keep calling "insufficiently regulated" banks: If the collateral value of a mortgaged property falls below the remaining balance on the mortgage, it is "non-performing"--even if the mortgage payments continue to be made on time. The only way a mortgagee can avoid the loan being called is to pay down in cash so the collateral value and the appraisal are the same. If too high a percentage of a bank's loan portfolio is "non-performing", the FDIC takes over--the bank being defined as a failure, even if the actual cash flow into it is normal.

    In normal times, banks pay an insurance premium to FDIC which generally takes care of the commonly small number of bank failures. When the fed rules kick in during a major recession which is full of foreclosures, the FDIC goes broke and you taxpayers then have to do the bailout thing.

    So: When property values fall during a serious recession, appraised values fall below remaining balances on mortgages. Even if payments are made on time, the loan becomes non-performing. And, of course, in a serious recession, many mortgagees can't make their payments on time and thus become non-performing. Therefore, dead banks, FDIC takeovers. Then bailouts.

    IOW, federal regulation contributes greatly to foreclosures, bank failures and tax-dollar bailouts.

    As far as Krugman's prescience inferred from his Nobel Prize, I can only note that there were two such Nobel folks making investment decisions at Long Term Capital Management, which went down the tubes to the tune of some $4 or $5 billion in losses. A cynic might say that's a 2:1 vote against Krugman. :D

    Since Krugman is a Keynesian and we're finally seeing that Keynesian thought is what has caused most of the present debacle, I can't find myself agreeing with him. The Austrian School is now being proven correct; von Mises et al. When Greenspan did his 180 from being a Randian Goldbug to following Keynes, his ideas for monetary policy accelerated the debasement of our currency. That policy has continued with Bernanke and Geithner--at an even greater rate. It ain't gonna get better with age.

    We've already seen how errors in messing with derivatives wiped out Barclay's Bank, Enron and Long Term Capital Management. Allegedly, the totality is in the hundreds of trillions of dollars; I've even seen rather wild-eyed guesstimates of a quadrillion. The truth seems to be that nobody knows. But all it will take for one hellvua crash is for somebody to guess wrong on interest rates and do it at the wrong time. Think dominoes, or a house of cards. In the meantime, you might as well take up praying. Most of the big banksters on Wall Street and in central banks around the world are doing just that. And maybe buy some shares in Maalox.
     
  8. itcheroni macrumors 6502a

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    #8
    Krugman can't see the forest for the trees. There is only one similarity among all financially troubled countries you need to know: debt.

    "First, there was irrational exuberance: in both countries buyers and lenders convinced themselves that real estate prices, although sky-high by historical standards, would continue to rise.

    Second, there was a huge inflow of cheap money. In America’s case, much of the cheap money came from China; in Ireland’s case, it came mainly from the rest of the euro zone, where Germany became a gigantic capital exporter."

    I can't believe how clueless this guy is. The cheap money coming "from China" is a very shallow understanding of the situation for a Nobel laureate. China has the power to hurt the value of our dollar by selling the dollars they have but only we have the power to set our own interest rate which makes money either cheap or expensive to borrow.

    If interest rates were 4% rather than the 1% at the time, First, the exuberance would not have existed and Second, money would not be cheap.

    I agree we need "some" regulation. But monetary policy causes the problems; regulation can only prevent problems from occurring in a specific area. If you have 0% interest rates, you've already laid the groundwork for a crisis, the only question is how it will unfold.

    I remember seeing Krugman on Charlie Rose before 2008 and he stated there might be an economic downturn which wouldn't be nearly as bad as the recession of Bush's first term. Over the next few years, his theories will be discredited.
     
  9. mcrain thread starter macrumors 68000

    mcrain

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    #9
    How? What trends will signal his theories being proven wrong? What do you think will happen?
     
  10. Shivetya macrumors 65816

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    #10
    He will not cross campaign donors. He might take to the airwaves and act all indignant and such but he will make sure there are enough loop holes to fly a few golden parachutes through.

    The whole health care reform in Congress is one big gift to Wall Street.
     
  11. Signal-11 macrumors 65816

    Signal-11

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    Aww come on. Let's not pretend like the Nobel Prize for Econ is a real Nobel Prize.
     
  12. mcrain thread starter macrumors 68000

    mcrain

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    #12
    So much of these discussions boil down to people arguing that the health care system is broken and needs some sort of fix. The people on the left variously argue for universal health care, public option, reform of some sort. Those on the right seem to recognize that health care needs reform, but offer only small band-aids (if that). Do any of these arguments from the right sound familiar?

    From -> http://mason.gmu.edu/~amcdonal/Propaganda Techniques.html

     
  13. Desertrat macrumors newbie

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    mcrain asked, "What trends will signal his theories being proven wrong?"

    Well, how about the trend that's been obvious and which has been reported on for the last 35-ish years? The loss of buying power by the middle class is a known trend.

    Keynes theorized that the money supply would be inflated by 2% to 3% per year, and this would increase business activity and wages in an expanding economy--and would do so forever and ever, Amen.

    1. The money supply has rarely had its inflation as low as 2% to 3%. Check the growth in M1 and M3 over the decades. Recent decades have seen growth closer to 10% than 3%.

    2. That an expanding economy be healthy necessitates several things. One is a long-term balance, on average, of trade. Ongoing deficits are severely bad, as they contribute to the eventual loss of buying power of the currency. Another is that the expansion, if measured as we do in GDP, be indexed for consumer price inflation in order to have a true picture of growth or contraction. Another is savings as a source for investment capital. Another is a tax system with rates which leave investment capital in the private sector.

    3. The events long expected and written about by Austrian School economists are happening right now, even as we type.

    "What do you think will happen?"

    Funny you should ask. :) This email just came in some fifteen minutes ago. I saw nothing in it which adds to or changes my own conclusions derived over these last half-dozen years:

    http://www.caseyresearch.com/displayCwc.php?e=true

    "Anyway, the dollar has existed for many years, even though it's degraded over time – first with the creation of the Federal Reserve in 1913, then with the repudiation of domestic gold redeemability in 1933, then with the repudiation of international redeemability in 1971. Even though the government has created trillions of new ones, the dollar is still thought of as some kind of a cosmic standard. In point of fact, it's no better than the Argentine peso and will have the same fate.

    These IOUs have a quite ephemeral reality and are far too easy to create – there's literally no limit at this point. We don't even have to actually print them anymore, they're created by computer strokes – so it's unrealistic to expect fiscal restraint on the part of any government over time. It's just too tempting to spend money to make people feel richer than they really are, buying votes."

    The fundamental flaw in Keynes' thinking was that there would be fiscal restraint. Maybe Keynes' ideas could have worked at a farm-tractor engine speed, but TPTB have been turning the crank at F1 levels. Regardless, it's failed.

    Gresham's law always applies, today as in the France of John Law's time, as in Rome with the degradation of their coinage. Nowadays it's done electronically.

    'Rat
     
  14. Signal-11 macrumors 65816

    Signal-11

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    Hey dude.

    The Nobel Prize in Economics is in fact, not technically a real Nobel Prize. Look it up.

    [​IMG]
     
  15. Gelfin macrumors 68020

    Gelfin

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    'Rat, how does ersatz money rolling off of a government-owned printing press fundamentally differ from ersatz money effectively spoken into existence by manipulation of swiss-cheese regulations on Wall Street? Why is one so bad it must not be done and the other so innocuous that we should instead encourage more of it by weakening the regulations we have?

    How would you know the difference between reduced middle-class buying power resulting from a failure of Keynesian theory underlying the former, and reduced middle-class buying power resulting from all the dollars from the latter going into the pockets of the rich and widening the wealth gap, thus sucking the value of the middle class' money right out from under them?

    Why isn't the creation of currency decoupled from the actual productive effort that gives the currency value problematic no matter what the provenance?
     
  16. Desertrat macrumors newbie

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    Gelfin, I'm not really sure I understand your questons. But I'll try to finger something out. :)

    "...how does ersatz money rolling off of a government-owned printing press fundamentally differ from ersatz money effectively spoken into existence by manipulation of swiss-cheese regulations on Wall Street?"

    I don't see that Wall Street manipulations create money. Mostly, they seem to have been borrowing at 0.25% from the Fed and buying Treasuries which pay 3.5%. They've done the same with bailout money, over and above whatever they already had.

    "Why is one so bad it must not be done and the other so innocuous that we should instead encourage more of it by weakening the regulations we have?"

    No relationship that I see. The government is now having trouble persuading foreigners to buy our debt. The Fed, now, is buying Treasury bonds instead of their being bought by foreigners. (The foreigners haven't entirely quit, but they're buying tens of billions less per bond issue.) That, in essence is what's called "monetizing the debt" which always leads to degradation of the buying power of the currency. There are no regulations over any private-sector entity which apply.

    "How would you know the difference between reduced middle-class buying power resulting from a failure of Keynesian theory underlying the former, and reduced middle-class buying power resulting from all the dollars from the latter going into the pockets of the rich and widening the wealth gap...?"

    The reduced buying power is due to the increased number of dollars. As with grains of sand in the desert, the more there is of something, the less any individual unit is worth. That's basic Economics 101. The middle class sees more impact than the wealthy, but both lose buying power. The problem for the middle class, and even moreso for the poor, is that the fixed overhead of daily life is a higher percentage of net income than for the wealthy.

    "Why isn't the creation of currency decoupled from the actual productive effort that gives the currency value problematic no matter what the provenance?"

    Okay, so what is money? From today's "Conversations With Casey" (linked in my previous post):

    "Aristotle, in the fourth century BC, was the first person to define what money is. And what is it? It's a store of value and a medium of exchange.

    The paper we use today is a medium of exchange – it got that way because governments made it illegal not to accept it – but it's not a good store of value. And it's rapidly and radically becoming less of a store of value. What we use as money today is actually not money; it's currency. Technically, that's simply a word that indicates a government substitute for money.

    What does make for good money? Again, Aristotle gives us the answer. It's something that has five characteristics: it's durable and divisible, consistent and convenient, and has value in itself."

    So how do you "decouple" it? If I understand the question at all, I see no way to do so. Whatever value there is to work varies with the complexity and required level of skill. Whatever value there is to property varies with the amount which is available and the demand for it. A free marketplace sets values via billions of individual decisions. What's important there is that it is unlikely that everybody will be wrong at the same time. The smaller the number of decision makers, the more liklihood of error--which is what bankrupted the USSR.

    Currency is used in place of real money because of the power of government--and government has now proven that it cannot be allowed to define currency as money. Government has proven to be too irresponsible to be allowed to control our money. This present mess is the proof. And prior to 1933, the government had very little control over our money; since then, total control.
     
  17. mcrain thread starter macrumors 68000

    mcrain

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    #17
    http://nobelprize.org/
    So, technically, it is not part of Alfred Nobel's will, but it was adopted as a prize by the Nobel foundation and is administered and awarded by the foundation.

    So, other than having not been founded by Alfred, it is, for all intents and purposes, a Nobel Prize, and its winners are Nobel Laureates. Does that about sum it up?

    [​IMG]
     
  18. Signal-11 macrumors 65816

    Signal-11

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    LOL.

    You can go through all the mental gymnastics you want, it ain't a real Nobel Prize.

    Mostly because Economics isn't a real science.
     
  19. Gelfin macrumors 68020

    Gelfin

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    #19
    You're not looking especially closely, then. Wall Street is lousy with practices that allow two different entities to claim the same asset on their balance sheets at the same time, to lay claim to assets that do not exist, as with alleged insurance accompanied by a "side letter," and to invent money out of thin air by convention rather than production. The entire derivatives market is a case of applying the "loaves and fishes" treatment to whatever real money exists, to the point that it is impossible to distinguish real money from invented money. Speculating on future value of an asset in this way is fundamentally no different from borrowing from the future through a central government bank, particularly when every player is permitted to assume an unrealistically beneficial outcome for himself by manipulation of risk models.

    Both create dollars on paper without creating the underlying value that powers dollars, and there is no reason not to expect both to cause inflation. The only difference is how the burden of that inflation is distributed.

    That's exactly the difference you don't seem to be getting. The reason archcapitalists prefer Wall Street printing money to the government printing money is that inflation caused when the government prints money cuts more or less evenly. When Wall Street prints money, only the middle class loses buying power, because the very source of the inflation is the wealthy arrogating to themselves all those made-up dollars. The rich never lose buying power under that regime, because their practices define "buying power" for everyone.

    I have long been a fan of Aristotle's. At his best he is insightful beyond his times; however, at his worst he uses ad hoc reasoning to justify unsupportable intuitions. This is the man who would declare anatomical traits of animals divined through intuition and reason rather than looking at animals.

    Aristotle had a problem with his definition of money, and so do you. Money has historically not necessarily fit any of those criteria. At the most obvious extreme, the giant stone money of Micronesian history is only durable, and possibly consistent. In a barter economy goods themselves are currency. This ultimately fails convenience and consistency, but both best represents the actual value of the economy, and is anything but durable. It is possibly also the only system ever used that actually passes the "value in itself" criterion.

    I think I am correct in inferring from your statement about the government making it illegal to use "real money" that you understand precious metals to be "real money," but this is a shallow understanding. The only thing that is actually ever valuable is the fulfillment of human needs. The only things that are valuable "in themselves" are the things that are used (and usually consumed) in that fulfillment. Ignoring its limited practical uses (and I certainly consider aesthetic uses to be practical for this purpose), gold's value as something to have simply sitting around is entirely notional. The "Econ 101" explanation is that gold derives value from its scarcity, but this is hardly more than hand-waving.

    In fact, in an expanding economy, the scarcity of an elemental currency becomes a liability rather than an asset. The thing that made gold plausible is that although it is hard to find, once found it is relatively cheap to extract compared to the commonly accepted value of the result. If, between us, we have three gold coins in circulation, this is a perfectly reasonable economy so long as neither of us ever does more than what we agree to be three gold coins worth of work for one another. If another person joins the economy, or one of us finds a more effective way to work, we need more gold coins. If a lot more people join the economy, then we need a lot more gold to represent the total work done by those people, or we have to start redefining the value of our total work output to represent fractions of whatever amount of gold we've been able to hoard. Either is a problem, the former because gold is scarce, and the latter because of massive deflation. The value of a single gold coin becomes astronomical.

    No matter how you slice it, it's just as artificial a representation of the things that are actually valuable as is paper currency, except the amount of paper currency in circulation can be intentionally adjusted to the agreed-upon normative value of the actually valuable things, whereas with a scarce hard backing we must adjust our ideas about the value of our real product to match the amount of backing medium at our disposal.

    As soon as I stop trading one of my chickens for a bag of your oats, currency is to an extent decoupled from value. We intentionally abandon the economic accuracy of direct barter for the convenience of a system of normative representation, as well as the larger-scale economic projects it enables.

    To hear anti-government types rally around a "free marketplace" without "government interference" has long been funny to me, on account of the way it totally ignores the fact that money, whatever its backing, is government. Money, and your accession to have your transactions mediated through that money, inherently reduces the number of decision makers, and gives more power to some decision makers than others, historically typically the guy whose face appears on your gold. On some accounts, national currencies were invented for exactly that reason. The King wants a piece of the action so the merchant and artisan classes don't steal the show by virtue of being the people who are up to their elbows in meeting human needs, which, again, is value.

    Your assertion that "billions of individual decisions" average out to good decisions is an article of faith, and one that has failed again and again. What is a bubble if not billions of individual bad decisions ganging up on us? Millions of people seeking their own advantage in the same way, and all seeking to exploit one another before some other guy can do the same to him, can easily amount to a concentration of horrible decisions. People make good decisions for themselves, not for a whole economy, and the two are not necessarily compatible. The idea that the whole economy will just tend to itself is not just unproven but disproven.

    I am in no way suggesting that Soviet-style central planning is preferable, and your implication that that is the only alternative is an abusive false dichotomy. There is a common sense middle ground between having the Minister of Shoes declare how many shoes must be produced and consumed in the following year, and simply letting the economy run amok and bankrupt thousands every fifteen years when the music stops and we realize how few chairs there really were.

    Once again you seem to think "money" is a natural resource. I'm all for experiments in disintermediating government from money, but such a thing has not been seen in modern western civilization, ever. Government does define money. Unless you have a very interesting proposal I haven't heard yet, forcing government to be responsible is the only option we have, and by extension, forcing the market to be responsible.

    Also while you're busy blaming recent government actions for the current financial situation, try to keep in mind that prior to 1933 the kind of turmoil we have just experienced was normal, rather than a once-in-a-century event.
     
  20. Desertrat macrumors newbie

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    #20
    Gelfin, I still don't see how Wall Street's doings create money in the sense of what the citizenry has available as the green folding stuff or that is invested in some sort of savings or property. I sorta follow some of the machinations for all these derivatives and such--although I'll grant in an imperfect manner. Still, it's a bunch of paper assets which aren't really available for spending. Wealth on paper.

    But every fiat money in the history of mankind has wound up with ever less buying power. Regardless of what one calls "money", governments inflate and degrade until there is some sort of collapse, albeit not necessarily total. Governments made more of it and it became less valuable. That's not my opinion; that's history.

    The stone money of Yap wasn't very portable, for sure. But, neither divisible nor convenient.

    The thing about gold and silver is that they are not readily subject to degradation, except by alloying as the Romans did. Governments generally cannot inflate the money supply. As long as there is honest coinage, there's no harm done in having government set standards. Still, the early folks in the American west used gold dust as well as coinage; awkward, but doable.

    The drawback to precious metals is that there is an inherent limit to the volume of business activity when there is a large and inventive population. Just not enough of it available to keep up with the volume of trade. Seems so to me, anyway, which is why I don't think the idea of going back to a gold standard is viable.

    "As soon as I stop trading one of my chickens for a bag of your oats, currency is to an extent decoupled from value. We intentionally abandon the economic accuracy of direct barter for the convenience of a system of normative representation, as well as the larger-scale economic projects it enables."

    That may be decoupling on an individual basis, one-on-one. But it seems to me that the whole idea of a medium of exhange obviates decoupling. And why would one be concerned or care about decoupling? Not all chickens have the same value; same for the oats. And people don't want to spend all day dickering over comparative values, so they use the medium of exchange as it suits them. Your chickens ain't as good as his chickens, so I'll take my money over to him.

    As far as a free marketplace, total freedom just can't happen. People band together to create governments to control cheats and thieves by other means than just shooting the crooks. So, the idea of a level playing field comes into play, which obviously means some amount of regulation. But, as with vanilla extract, the fact that some is good doesn't mean that a lot is better. Limited interference seems better that bunches thereof.

    The history of the last eighty years is one of ever more government interference in the private sector, ever more messing with the money--and look where we are today. Isn't that the real bottom line? "Look where we are today." Poor folks didn't do it. Joe Sixpack didn't do it. Most of the wealthy folks weren't causal. All that's left is government and the big money folks who are all one big happy family. The big money folks have been enabled by government from Revolutionary times until now, have they not? We've had the occasional falling-outs, of course, but the net effects were soon worked around and that family did the stay-together game.

    As far as the billions of decisions thing, sure, sometimes a majority can go wrong. But our recent two bubbles were enabled or created in large part by the monetary and taxation policies of government--and the need to figure out how to make money after the demise of our industrial society. Toss in the old Madison Avenue techniques with TV advertising and a TV society is off to the races. On balance through history, though, the non-bubble years outnumber the bubble years.

    I've used the Soviet central-planning thing because noises from the Administration and the Congress seem to favor an increase in governmental planning. Hell's bells, I've watched that sort of thing for over thirty years. Why else a college degree in "Planning" as a qualification for a government job? So I'm back to my vanilla extract notion.

    Booms and busts have been pretty-much normal through history, sure. I'm still stuck with the example, though of the post-WW I bust of 1920 which is described as severe--but the government did nothing and the bust was soon ended and we had the Roaring Twenties. Then I read about 1929 and Hoover's actions and FDR's actions and the various economic decisions of the 1930s and I can't avoid disgust at a repetition thereof.

    The only thing I see that's different between the 1930s and now is the use of language to make it seem different.

    I dunno. What's patently obvious is that we can't trust governments of the modern era to behave responsibly with respect to money supply and spending.

    So I may not know and understand enough about "money", but I do know enough about that folding green stuff that these last thirty years have been lived on my own terms and only vaguely affected by anybody else. Except the BossLady, of course. :D And I don't figure that'll change anytime soon...

    Pax,

    'Rat
     
  21. mcrain thread starter macrumors 68000

    mcrain

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    #21
    I thought the article was pretty interesting, but you guys are talking about stuff that I'm not ashamed to admit that I do not understand. Wow, I'll never win the Nobel prize for economics. ;)
     
  22. Desertrat macrumors newbie

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    #22
    Don't feel bad, mcrain. Neither will I. :D A lot of what I've come to believe about "money", these last few years, comes from what's been said by the folks at Agora and Doug Casey's crowd and such as Evans-Pritchard. Since their predictions of gloom and doom were made years ahead of the reality of this present mess, they have more credibility with me than do the happy-noise crowd who have been and still are running monetary policy--who never saw it comng.

    Lots of amusement in all this. For instance, Ron Paul will talk about the utility of the gold standard and catch a bunch of snark over it. Okay fine, he's a dumb-bunny, right? Okay, how come those folks in India, China, Mauritius and Venezuela are right in there with him about owning gold? Are the Chinese dumb? I note that India snapped up 200 tonnes of IMF gold in a heartbeat, and gossip has it that China and India are possibly going to bid against each other for the remaining 191.5 tonnes of IMF gold. Tiny Mauritius bought ten tonnes, and even poor ol' broke-back Venezuela is talking about buying ten tonnes. (32,015 ounces to the tonne; $1,116 spot price this morning.)

    As far as governments and fiat money, consider this little gem from this morning's edition of EverBank.com's "Daily Pfennig":

    "Treasury Secretary Geithner is taking some heat in Europe. The EU has proposed regulating hedge funds and private equity funds which operate in Europe in an attempt to make financial disclosures more transparent. Geithner is vehemently opposed to the EU proposals, and has enlisted the backing of the UK. Geitner is afraid the tighter regulations will lead to discrimination against US firms operating in Europe. The Europeans continue to be upset about the role Goldman and other US banks played in attempting to bring down the euro. It will be interesting to see how all of this plays out."

    Okay: "...the role Goldman and other US banks played in attempting to bring down the euro."

    Guess what: With Ron Paul's gold standard, this would not be possible at all. I note in cynicism that Geithner is part of an administration which promised transparency.

    I realize that finding humor in all this is similar to telling jokes while in Auschwitz, but there ya go...

    'Rat
     
  23. Ugg macrumors 68000

    Ugg

    Joined:
    Apr 7, 2003
    Location:
    Penryn
    #23
    Gold I understand, paper money I understand, trading values I understand. Credit default swaps and other forms of banking gambling I do not understand.

    Whenever banking methods need a PHD to understand, I think it's fair to say that we're being scammed. Betting that a country will default on its bonds is also pretty scary.

    It's time to rein in the banks and stop creating new forms of gambling with the public's money.
     
  24. mcrain thread starter macrumors 68000

    mcrain

    Joined:
    Feb 8, 2002
    Location:
    Illinois
    #24
    Yo mamma so fat... sorry, i couldn't resist.
     
  25. splitpea macrumors 6502a

    Joined:
    Oct 21, 2009
    Location:
    Among the starlings
    #25
    Locking money to the gold standard is not the same thing as stockpiling gold.
     

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