Search results matching tag 'Business Cycle'

How would you respond to this post?

abskebabs — Tue, 20 Oct 2009 23:15:32 GMT

I was debating the subject of the recession, arguing the Austrian line that he bailouts and stimulus should not have been passed, and the recession should have been allowed to run its course. I got the following reply:

"Your argument is basically that if we prevented businesses from borrowing for several years... if we let their manufacturing stop... killing their suppliers and laying off their employees... and if we prevented people from paying their bills for several years so their creditors also failed... and so they too would layoff their employees furthering this self-propagating/cascading set of failures... and if we allowed consumption and production to fall nearly to zero for more than 98% of the population... that, as a result, employment would have gone up and the depression would have ended within 1-2 years?

That doesn't make any sense. It dismisses too many of the connections in the system, and glosses over the real-world impact of demolishing the existing system and killing the major players in just a few short weeks.

We can't even rebuild the World Trade Center after 8 years, and you're arguing that a mass extinction event of all of the world economies and major players in banking would only have a negative effect lasting for 1?

I'm sorry. I'm not drinking that particular brand of kool-aid."

The thread is at the following address:

http://www.scienceforums.net/forum/showthread.php?t=44073

I was just wondering, how would you respond to such a comment?

economic indoicators that support or refute business cycle in modern times

sthomper — Fri, 11 Sep 2009 00:17:48 GMT

this link -- http://mises.org/story/3556

claims that "in December of 2007, currency was $763.8 billion, while, as just noted, the monetary base as a whole was $836.4 billion."

i am not sure but i assume the fed reserves portion of the monetary base is physical currency too. paper dollars and coins, iow.

the above posted link also states "

as of December 2007, the total money supply of the United States, i.e., currency plus bank deposits of all kinds that are subject to the writing of checks, including the making of payments by debit card, was $6901.9 billion;[3] at the same time, the monetary base was $836.4 billion. Accordingly, the amount of fiduciary media in the United States was equal to the difference, which was $6065.5 billion. This was the sum of money representing transferable claims to standard money,...."

as i understand this ( i assume it isnt a lie , i am not sure) the vast majority of dollar transactions are performed not with dollars but with 'promises of dollars', what i guess is known as dollar-credit.

it is also my understading of this information that the true currency isnt much much of an economic good, in that it is printed paper with different numbers and base metals said to represent portions of the numbered papers value. iow, basic currency expansion rate could probobly be not too far off from the credit expansion rate???

the mises sites have stated that it is credit expansion that creates business cycle faux-pas.

is their a collection of economic indicators other than money supply figures that show where dollar-credit creation can be directly linked to economic cycle faux-pas?

something like inventory liquidations per quarter or transport ships stuck at dock, idle factories, etc and their funding sources?

thanks

Austrian fractional-reserve free bankers...

britainland — Sat, 29 Aug 2009 13:42:05 GMT

Are there any works by these economists that explain why fractional-reserve free banking wouldn't cause business cycles? I recall Hayek accepting that it would cause business cycles, but that this was a price worth paying for the economic benefits; is this the general view?

Re: The Austrian Business Cycle Theory is Flawed

sthomper — Mon, 17 Aug 2009 03:32:44 GMT

what would be a distinction between homogenous capital and heterogenous capital?

"Cameco Australia's $4-million 1999 exploration program now equals Cameco's uranium exploration program in Saskatchewan."

http://www.cameco.com/media/news_releases/1999/?id=371

i am not sure if the above linked info is true. but it mentions that a company called cameco spent 4 million on uranium exploration.

scenario...

if the 4 million was a bank loan...i guess loaned (as i have read at mises sites and others) from various types of deposit accounts and the bank added credit (based on 10 % RR) in the amount of 3.6 million would this be the process that could lead to boom/bust cycles described at mises.org?

some of a 4 million dollar loan is spent from a lending bank to set up a mining operation in the wilderness.....but the townspeole where the lending bank was still spend credit as if it was money (3.6 million dollars) .

iow

the original 4 million dollar loan purchased distant capital goods for mining and many goods and items in the town along with the 3.6 million in bank credit now in depositors accounts....pushing up various prices of consumer goods

i am unclear about unpleasant changes the production arrangement mentioned in the post.

would the additional credit-spurred demand of consumer goods be the be the catalyst for malinvestment?

for instance, a sudden increased demand for office supples leading to additional malinvestmetns in office supplies?

if 3.6 million in bank credit had not been created would the bank loan likely not have taken place?