Would be most appreciated. I am about to go up against a true intellectual: He has 2 PhDs, but he doesn't know a goddamned thing about economics. Here is what he said
"Regulation is the issue. Turns out that when the markets were unregulated (before the Great Depression) the country went through boom/bust cycles every 8-10 years. After regulation was introduced, no more b/b cycles. Start taking away regulation in the '80s, the b/b stuff starts over.The question is not whether regulation is good, but how much, where, and watched over by whom."
Yes, he's wrong. Of course he's wrong. But in the medium we are using, I will need the very shortest (yet complete) explanation of the business cycle I can get.
Knight of BAAWA, you may know him: It's Massimo Pigliucci.
Read my Nolan Chart column "Me & My Big Mouth"
Right, and as far as I know, Marx advanced no theory of a business cycle, nor did he identify any mechanism or feature of capitalism that would cause a business cycle. He just guessed, saying basically 'correlation is causation and capitalism causes business cycles'.
McDuffie:Right, and as far as I know, Marx advanced no theory of a business cycle, nor did he identify any mechanism or feature of capitalism that would cause a business cycle. He just guessed, saying basically 'correlation is causation and capitalism causes business cycles'.
I wish I knew this answer. Howerver I would venture to guess that your understanding is correct.
The fallacy about the individual bringing up the "7 lean years" is that yes, it effected the business cycle, but it was something beyond the control of the market place...there was going to be a period of prolonged drought where little to nothing would grow....that's going to effect any economy, regardless of how socialistic or capitalistic they are.
Resident Christian Minarchist.
Austroglide:2. Clearly, capitalism hasn't been around for 3000 years - more like since the 1830's.
The WORST depression in the history of the United States happened after the creation of a central bank. Before that, all recessions were relatively short - 1 or 2 years tops.
We have had severe economic turmoil despite the proliferation of regulations. Think of the stagflation of the 1970s, or the current Great Depression II.
I can't believe it. I just cannot believe it!
BAAWA, Massimo all but admitted that he won't even consider any economic argument or explanation for the current downturn unless it involves deregulation as an explanation. He is not even willing to look at the business cycle theory. He won't even, for the briefest moment, consider that the 1980s wasn't a period of deregulation, or that the boom/bust cycle is a mysterious, inherent feature of capitalism.
This is Dr. Massimo Pigliucci, Ph.D, Ph.D! Whose website is called Rationally Speaking, and yet he won't consider or even look at any other view of economics than the mainstream view.
Man, I lost a lot of respect for him.
Sukrit Sabhlok:The WORST depression in the history of the United States happened after the creation of a central bank. Before that, all recessions were relatively short - 1 or 2 years tops.We have had severe economic turmoil despite the proliferation of regulations. Think of the stagflation of the 1970s, or the current Great Depression II.
Not only that but the recessions/depressions, before the creation of the Fed, only affected a certain sector of the economy.
My favorite online shop: www.cafepress.com/libertyphile
McDuffie: I can't believe it. I just cannot believe it! BAAWA, Massimo all but admitted that he won't even consider any economic argument or explanation for the current downturn unless it involves deregulation as an explanation. He is not even willing to look at the business cycle theory. He won't even, for the briefest moment, consider that the 1980s wasn't a period of deregulation, or that the boom/bust cycle is a mysterious, inherent feature of capitalism. This is Dr. Massimo Pigliucci, Ph.D, Ph.D! Whose website is called Rationally Speaking, and yet he won't consider or even look at any other view of economics than the mainstream view. Man, I lost a lot of respect for him.
Thanks, I didnt realize that, but it makes sense.
(1)
McDuffie:Now, a self-described economic journalist (with 20 years experience) has chimed in:After 20 years a a journalist writing exclusively on economy this is real news for me. The boom-bust cycle is a built-in feature of capitalism and it has been working for at least 3000 years, long before there was any central banks.
(2)
Austroglide:...capitalism hasn't been around for 3000 years - more like since the 1830's.
(3)
Curius Dentatus:Wrong!
(4)
Dude, seriously....The Point boat just sailed and you missed it.
McDuffie: Would be most appreciated. I am about to go up against a true intellectual: He has 2 PhDs, but he doesn't know a goddamned thing about economics. Here is what he said "Regulation is the issue. Turns out that when the markets were unregulated (before the Great Depression) the country went through boom/bust cycles every 8-10 years. After regulation was introduced, no more b/b cycles. Start taking away regulation in the '80s, the b/b stuff starts over.The question is not whether regulation is good, but how much, where, and watched over by whom." Yes, he's wrong. Of course he's wrong. But in the medium we are using, I will need the very shortest (yet complete) explanation of the business cycle I can get. Knight of BAAWA, you may know him: It's Massimo Pigliucci.
Here is the shortest I can think of..any consumption not driven by production i.e. printing press, will cause an artificial boom then a bust.
Hi how are you? all these answeres here are great. I can add my own but it would just be redundant..lol why reinvent the wheel? But what I'll tell you is to do the history on the great depression..Murray Rothbard's book: Americas Great Depression will help. To help your case, I will let you in on some history that "economist" probably has no clue of..The ggreat depression of 1920. last 1 year. Pres. Warren Harding decided to "deregulate the market" by cutting GOv. spending, lowerng taxes..and most important, NO MONETARY INFLATION! read hes inogural speach. He called what we know as stimuluses today-government experiments..fast forward to 1930s when Hoover refused to allow a merket correction i.e. resession. He kept wages artificially high causing mass unimployment..among other disaters..Just look through history...when ever the gov. steped aside and let the market do what it does best, Adjust..things actually adjust...
Manny Mars
Sukrit Sabhlok: The WORST depression in the history of the United States happened after the creation of a central bank. Before that, all recessions were relatively short - 1 or 2 years tops. We have had severe economic turmoil despite the proliferation of regulations. Think of the stagflation of the 1970s, or the current Great Depression II.
depression of 1920 was much more intense..Great depression just lasted longer...Waren harding didnt "stimulate the economy 1920, you have a 1 year resession, Hoover, and FDR loved to print, you have a 12 year resession...
The shortest but also in my experience easiest to understand explanation is in terms of price controls. Either through direct government intervention or the instutional affects of something like fractional reserve banking there is a floating price control below market on capital. This causes, as with all other price controls, overconsumption which then leads to a disincentive to produce more and an eventual shortage of capital. As with any other thing subject to a price control, people overconsumed and used the thing in question for what would normally have been seen as uneconomical means (malinvestment). As with any other thing subject to a price control, the incentive to produce more was removed (lower interest rates discourage real savings).
The rest is just specifics to the process itself and how it works in a modern economy.
"The whole idea of central banks causing the cycles in economy is surreal"
-Well, there are 'boom and bust' cycles outside of the effects of central banking. They are caused by people making poor investments, and when those poor investments fail, a realignment is necessary. The 'bust' period comes. This 'cycle' is a natural occurence in the market- it is a healthy occurence. It is a sign that bad investments are failing, and being channeled to more productive areas. We can all hope that this occurs! It is what keeps the market in tip top shape.
What you should fear is not the regular upward trend of the market (yes, people still fail in free markets- and its a good thing!), but centrally planned economic booms. Reason being that large amounts of people make very poor investments due to the artificially low interest rates and/or a number of interventionist economic 'stimulation' (people start ventures that otherwise would not be profitable, lots of jobs, lots of growth). This causes a whole host of problems which always ends in a realignment of the market. Though the 'bust' period is difficult, it is necessary after the unsustainable boom. There is no getting around it (you can't create wealth out of thin air, no matter how many economists say so). Realignment is a necessity for the economy if it is to have true growth. The question is not if we can prevent the 'boom and bust' cycle, but if preventing it is something to strive for.
Let the market regulate itself! The only market failure I see is the failure to let the government regulate it.
pablofrancisco:Well, there are 'boom and bust' cycles outside of the effects of central banking. They are caused by people making poor investments, and when those poor investments fail, a realignment is necessary. The 'bust' period comes. This 'cycle' is a natural occurence in the market- it is a healthy occurence. It is a sign that bad investments are failing, and being channeled to more productive areas. We can all hope that this occurs! It is what keeps the market in tip top shape.
A lot of people tend to miss this point. Errors exist all the time, that's not the issue. The issue is why so many of the same type of error happen at the same time. You don't have to explain regular business failures because people are imperfect and that's your explanation. Another analogy I like to use is Blackjack. Get sixty players and you'll see some cautious ones, some risky ones. Generally speaking the games will hum along, some people getting lucky, some not. If you take twenty of them and out of no where double their betting funds, you'll see a marked change in that group's risk taking. Get someone to stand behind them and shout, "Hey, if you lose don't worry, my name is The Government and I'll pick up the tab no matter what!" Everyone at every table will be splitting kings and doubling down on crap hands soon after. And why not? There's no downside, only up. It's a nice way to demonstrate via analogy how making people feel rich despite their actual holdings makes them change their behavior.
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