View Full Version : Supporters of Capitalism Are Crazy, Says Harvard
March 18th 09, 02:22 AM
Here's another thought: given how many Keynesian economists predicted
a return to depression conditions when World War II spending came to
an end, and that what we instead got was the single most robust year
the private economy has ever seen, isn't it a little strange that not
one of these economists went back and reexamined his premises?
On the other hand, consider the names Jim Grant, Peter Schiff, Ron
Paul, and Jim Rogers. Apart from having predicted the current crisis —
unlike anyone at the Harvard conference and indeed unlike the paper-
tiger economists they unsurprisingly preferred to spar with during
their deep-thinking session last weekend — one thing these men have in
common is that they are all Austrian economists, they all believe in
the Austrian theory of the business cycle, and they all pin the blame
for the crisis on the Fed, a nonmarket institution. These men believe
in the real free market, not the centrally planned market of Alan
Greenspan, Ben Bernanke, and the Federal Reserve. And they saw a
crisis coming at a time when everyone else was predicting new highs
for the Dow and singing the praises of a world economy that was more
robust than it had ever been.
Maybe that's why people believe in market economics: unlike the Rube
Goldberg models of their counterparts in the profession, the things
Austrian economists write and say actually have some connection to the
People who believe in the market economy support a social order in
which free individuals make voluntary contracts with each other, and
no one can initiate physical force against anyone else. Is that vision
so obviously unattractive that we have to refer its supporters for
We might instead wonder at the psychological condition of those who
would denounce such a system: might they be motivated, for all their
noble talk, by nothing but base envy of those with more material
wealth than they, or by a pathological desire to dominate other
I'm sure that will be covered at next year's conference.
On Mar 17, 9:22*pm, Don Tiberone > wrote:
hey don, did you learn Mandarin yet, move to china, the next economic
super power, and renounce your citizenship yet:)
china, one of the worlds largest consumers of commodities is facing
deflation as demand world wide plummets:The drop in prices raises the
risk that deflation will become entrenched, squeezing company margins,
prompting wage cuts and eroding consumer demand
i see nothing here telling me that inflation is about to explode.
although, i do see lots of the scenarios that china is facing almost
deflation is a depression. deflation eats up capital faster than it
can be printed. deflation is the direct results of a lack of demand,
to call for governments to cut taxes on the wealthy, cut back
spending, and slash wages and jobs is at best, insane. and its what
crank science is calling for.
why not just pour gasoline on a fire? its what hoover and mellon
China’s Consumer Prices Fall 1.6%, Signaling Deflation Threat
By Li Yanping and Nipa Piboontanasawat
March 10 (Bloomberg) -- China’s consumer prices fell for the first
time since 2002 after commodity costs declined, stoking concern that
deflation will undermine efforts to revive the world’s third-biggest
Consumer prices dropped 1.6 percent in February from a year earlier,
the statistics bureau said today, after gaining 1 percent in January.
The median estimate in a Bloomberg News survey of 10 economists was
for a 1 percent decline. Producer prices fell 4.5 percent, the most in
a decade, after a 3.3 percent decline.
The drop in prices raises the risk that deflation will become
entrenched, squeezing company margins, prompting wage cuts and eroding
consumer demand. Premier Wen Jiabao is relying on a 4 trillion yuan
($585 billion) stimulus package to spark a recovery after a collapse
in exports dragged economic growth to the weakest pace in seven years.
“The government has to make sure its stimulus package kicks in in time
to boost domestic demand,” said Wang Tao, a Beijing-based economist at
UBS AG. “Faltering global demand will result in exporters selling more
goods back to China’s domestic market, adding deflationary pressure.”
Inflation climbed to the highest in more than a decade in February
2008 as a week-long Lunar New Year holiday boosted spending and
blizzards disrupted food supplies. This year, the holiday was in
Metal and oil prices have fallen because of weaker demand caused by
the global economic slump. China’s food prices, which account for
about a third of the consumer-price index, have also cooled.
Volkswagen Cuts Prices
Manufacturers cutting prices in China include Volkswagen AG, which
reduced last month the prices of some locally made models by as much
as 12 percent amid tumbling demand. House prices in 70 cities fell 1.2
percent in February from a year earlier, the biggest drop since data
began in 2005, the government said today.
China’s economy, which expanded 6.8 percent in the fourth quarter, may
grow 6.7 percent in 2009, the smallest gain in almost two decades,
according to the International Monetary Fund.
A trend toward global deflation is becoming more obvious as the
international financial crisis keeps spreading, Premier Wen said March
5 in his annual speech to China’s parliament, as he reaffirmed the
nation’s 8 percent growth target for this year.
In Japan, consumer prices failed to rise in January for the first time
in more than a year.
Still, European Central Bank President Jean Claude Trichet, who
chaired a meeting of global central bankers yesterday in Basel,
Switzerland, said deflation was “not something we consider a high
probability at all at a global level.”
Spur to Spending
Temporary deflation in China may spur consumer spending and cut
production costs, according to UBS’s Wang. “The current low-price
environment has also offered an opportunity for the government to
raise controlled prices such as utility prices including electricity
and water,” she said.
China isn’t yet facing “typical” deflation, where falling prices are
accompanied by shrinking loans and money supply and an economic
recession, central bank vice governor Yi Gang said, according to the
state-run Xinhua News Agency.
China’s banks extended 1.6 trillion yuan of loans in January, double
the record set a year earlier, after the government removed quotas
limiting lending. Money supply expanded at the fastest pace in more
than a year.
The central bank has “sufficient” policy tools to combat deflation, Yi
said, without elaborating.
Likely declines in consumer prices from February through June won’t
trigger “aggressive” interest-rate cuts, partly because the
government’s stimulus package will be inflationary, said Sun Mingchun,
a Hong Kong-based economist at Nomura Holdings Inc.
The central bank may make a single 27 basis-point reduction this year,
taking the one-year lending rate to 5.04 percent, as “a symbolic
reaction to deflation,” Sun said.
To contact the reporters on this story: Li Yanping in Beijing at
Last Updated: March 9, 2009 22:10 EDT
free trade collapsed last year, long before any talk of
protectionism:Foreign direct investment in China fell for a fifth
month in February as companies trimmed spending to weather the worst
financial crisis since the Great Depression
just as it collapsed long before smoot-hawley. free trade helped
bring on the latest collapse, just as it did in 1929.
as the worlds economy imploded last year, foreign direct investment,
followed it down.
so much for the protectionism crap caused the depression, and will
cause this one.
protectionism helped get us out of the last one, and created the
worlds largest, most richest middle class the world has ever seen.
Foreign Direct Investment in China Falls 15.8% on Global Crisis
By Li Yanping
March 16 (Bloomberg) --Foreign direct investment in China fell for a
fifth month in February as companies trimmed spending to weather the
worst financial crisis since the Great Depression.
Investment dropped 15.8 percent to $5.83 billion from a year earlier,
the commerce ministry said at a briefing in Beijing today. That
compared with a 32.6 percent decline in January.
National Semiconductor Corp., a California-based chipmaker, said last
week that it would shut plants in China and Texas and eliminate more
than 1,700 jobs to cut costs as sales slump. China’s government is
relying on a surge in domestic lending and investment to revive growth
in the world’s third-biggest economy.
“Foreign direct investment into emerging markets is one of the
casualties of this sort of global slowdown,” said Dwyfor Evans, a
strategist in Hong Kong at State Street Global Markets LLC.
China’s government said last week that it will simplify approvals for
overseas capital entering the nation by giving local governments more
authority to approve such spending.
Worldwide, foreign direct investment fell 21 percent last year to $1.4
trillion because of tight credit, the global recession and falling
profits, the United Nations Conference on Trade and Development
estimates. It’s likely to decline further this year, the organization
In developing economies, investment rose 3.6 percent last year, UNCTAD
estimates. While China reported a 23.6 percent increase in investment
from abroad in 2008 to a record $92.4 billion, the inflows of cash got
smaller each quarter.
To contact the reporter on this story: Li Yanping in Beijing at
Last Updated: March 15, 2009 22:15 EDT
don't be fooled by the free market house of cards called china:
Exports tumbled 25.7 percent from a year earlier, China’s Falling Crop
Prices Crimp Farm Incomes, don't switch to Mandarin quite yet:)
Dollar, Yen Rise as China Export Slump Spurs Demand for Safety
By Yasuhiko Seki and Ron Harui
March 11 (Bloomberg) -- The dollar and the yen gained after the
Chinese government said exports plunged by a record last month,
reviving demand for the two currencies as a refuge from the financial
The U.S. and Japanese currencies gained versus higher yielders such as
the Australian dollar after China’s customs bureau said the trade
surplus narrowed to the least since February 2006, adding to concern
the global recession is deepening. The euro ended a three-day gain
versus the yen on speculation European Central Bank council member
Erkki Liikanen will signal policy makers may cut interest rates
“The sharp plunge in exports means China’s growth could slow, boding
ill for the region’s economies,” said Masashi Kurabe, head of currency
sales and trading in Hong Kong at Bank of Tokyo-Mitsubishi UFJ Ltd., a
unit of Japan’s largest publicly traded bank by assets. “This appears
to be sparking buying of the dollar and the yen.”
The dollar rose to $1.2655 per euro as of 1:43 p.m. in Tokyo from
$1.2682 late in New York yesterday. The U.S. currency traded at 98.47
yen from 98.67 yen. The yen advanced to 124.62 per euro from 125.13
Australia’s dollar dropped to 64.25 U.S. cents from 64.59 cents late
yesterday. It earlier touched 64.92, the highest level since March 5.
China’s trade surplus narrowed to $4.8 billion in February, about an
eighth of the amount in the prior month, the customs bureau said.
Exports tumbled 25.7 percent from a year earlier and imports fell 24.1
China’s trade data was “so shocking that it halted flows into
currencies of resource-rich nations,” said Masahiro Sato, deputy
general manager of treasury division at Mizuho Trust & Banking Co. in
Tokyo. “Prior to the data’s release, there had been optimism that
China would come out of a global recession faster than any other
Demand for the euro weakened on speculation ECB member Liikanen in a
speech today in Helsinki will signal that the central bank still has
scope to reduce its key rate from a record low of 1.5 percent. Policy
makers are ready to lower rates to zero if necessary, ECB Executive
Board member Lorenzo Bini Smaghi said, according to a report in
Boersen-Zeitung newspaper yesterday.
“The euro area’s economy is likely to keep deteriorating and interest
rates are expected to fall further,” said Masanobu Ishikawa, general
manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s
largest currency broker. “The euro will probably weaken” to $1.2610
and 124.60 yen today, he said.
The Dollar Index, which the ICE uses to track the greenback’s
performance against the currencies of six major U.S. trading partners,
fell 0.1 percent to 88.85. The index climbed to 89.624 on March 4, the
strongest since April 2006.
The dollar fell earlier after Citigroup Inc. said this quarter may be
its best since 2007, sparking buying of riskier assets including
stocks and higher-yielding currencies such as the Australian dollar.
Foreign-exchange volatility, a measure of risk implied by option
prices, was close to a four-month low, according to an index compiled
by JPMorgan Chase & Co. Options traders see currencies of the Group of
Seven industrialized nations fluctuating by an annualized 17 percent
in the next three months, compared with 27 percent on Oct. 24, which
had been the most since the index started in 1992.
To contact the reporter on this story: Yasuhiko Seki in Tokyo at
; Ron Harui in Singapore at .
Last Updated: March 11, 2009 01:13 EDT
China’s Falling Crop Prices Crimp Farm Incomes, Official Says
By William Bi
March 12 (Bloomberg) -- China’s agricultural prices may fall further
this year, slowing growth in rural incomes in the world’s most
populous nation, said a government official.
“The pressure from declining agricultural prices is high,” Yin
Chengjie, vice chairman of agricultural and rural affairs of the
National People’s Congress, said in Beijing at China’s annual
parliament meeting. “We cannot be optimistic about growth” in farm
incomes this year, he said.
Prices of agricultural products, including cotton, soybeans and corn
have fallen in China after bumper harvests while restaurant sales and
output in food processing declined. Collapsing exports have dragged
the world’s third-largest economy to its weakest growth in seven
years, costing the jobs of 20 million rural migrant workers and
raising concerns of social unrest.
“Boosting rural incomes is key objective for maintaining social
harmony” and ensuring interest in farming, said Yin, who is a former
vice minister of agriculture and now helps draft rural development
polices. The government has made priority to stabilize crop prices and
create rural jobs, he said.
China’s annual rural incomes rose by 2,000 yuan ($292) in the five
years to 2008, the biggest gain recorded for a five- year period, Yin
said. Last year, income per capita in the countryside rose 621 yuan
from 2007 to 4,761 yuan a year, or a growth of 8 percent adjusted for
inflation, he said.
To prevent rural incomes from sliding, the government has raised
spending on agriculture, including direct subsidies for growing grain,
investing in irrigation and rural infrastructure, raising prices of
key crops, and increasing reserves of staples such as pork and
vegetable oil, Yin said.
The government will continue boosting key reserves and tighten its
control on food prices, Yin said in a March 10 interview.
Soybean prices in China have declined 23 percent in the last year
while corn has shed over 7 percent. China’s grain output rose 5.4
percent last year from 2007 to a record 529 million tons, according to
the ministry of agriculture.
While China’s grain supplies are “abundant,” allowing it to be a net
grain exporter last year, overall global food supply remains “tight,”
and prices may still rise, Yin said. China will continue to boost
output by raising efficiency and productivity in the main growing
regions, he said.
The government is also helping farmers start businesses in their home
regions and upgrading their skills to increase their employability,
To contact the reporters on this story: William Bi in Beijing at
Last Updated: March 11, 2009 22:06 EDT
nflationary, deflationary, you decide:China’s manufacturing shrank for
a seventh month in February as the global financial crisis cut exports
and growth across Asia
China’s Manufacturing Shrinks as Crisis Cuts Demand (Update1)
By Kevin Hamlin
March 2 (Bloomberg) -- China’s manufacturing shrank for a seventh
month in February as the global financial crisis cut exports and
growth across Asia.
The CLSA China Purchasing Managers’ Index rose to a seasonally
adjusted 45.1 from 42.2 in January, CLSA Asia-Pacific Markets said
today in an e-mailed statement. A reading below 50 shows a
Japan’s factory output plunged a record 10 percent in January and Hong
Kong’s exports fell by the most in 50 years. Chinese Premier Wen
Jiabao may announce increased welfare payments to boost consumption at
this week’s meeting of the National People’s Congress in Beijing,
adding to a 4 trillion yuan ($585 billion) economic stimulus package.
“Manufacturing activity is still contracting, only at a more moderate
pace than at the end of 2008,” said Eric Fishwick, head of economic
research at CLSA in Hong Kong. Increases in the PMI and measures of
orders are “encouraging,” he said.
The Shanghai Composite Index fell 0.4 percent as of 11:30 a.m. local
The PMI increased for a third month from a record low of 40.9 in
An index of export orders rose to 39.5 in February from 36.3 in
January. A measure of orders climbed to 44.2 from 39.9. An employment
index increased to 46.6 from 45. Output climbed to 43.9 from 39.7.
“We expect increased support for consumers, particularly a greater
focus on medical expenses and support for low-income households,” said
Ben Simpfendorfer, an economist at Royal Bank of Scotland Plc in Hong
Kong. “There’s growing concern that the fiscal stimulus is overly
focused on fixed investment.”
Lenovo Group Ltd., the world’s fourth-biggest personal- computer
maker, said Feb. 25 that it will cut 450 jobs in China to reduce costs
because of the global economic slump. Lenovo last month reported its
first quarterly loss in three years as sales slumped on falling demand
in the U.S. and China.
Plunging exports and imports forced 20,000 small and medium-sized
companies in the southern Guangdong province to close since October,
shedding 2 million jobs, Nanfang Daily reported Feb. 24, citing an
unidentified government official.
Still, new loans surged to a record in January as the government
pressed banks to support the stimulus package. On Feb. 28, Wen cited
the lending as evidence that government measures “have shown
He also said that retail sales grew 18 percent in January and power
output and consumption increased from the middle of last month.
“While early signs of economic stabilization are encouraging, it
remains to be seen if this uptrend is sustainable,” Jing Ulrich, head
of China equities at JPMorgan Chase & Co. in Hong Kong, said today.
The Politburo, the Communist Party’s top decision-making body, pledged
last month to counter the economic slump by “massively” increasing
government investment, spurring consumption and expanding social
security. It didn’t say if this meant adding to the stimulus package,
which runs through 2010.
Sun Mingchun, a Hong Kong-based economist with Nomura Holdings Inc.,
said Feb. 25 that stimulus spending may be doubled, creating an
The slowdown has prompted speculation that the government will cut its
8 percent economic growth target for this year. Deputy Commerce
Minister Zhong Shan said Feb. 20 that it may be reviewed at the
legislature’s annual meeting.
Liu Tienan, vice chairman of the National Development and Reform
Commission, restated the goal at a briefing in Beijing on Feb. 27 and
said China has “the conditions” and “the confidence” to meet it.
To contact the reporters on this story: Kevin Hamlin in Beijing at
Last Updated: March 1, 2009 22:33 EST
China’s 2009 Rebound Is Pure Fantasy: William Pesek (Update1)
Commentary by William Pesek
March 6 (Bloomberg) -- The idea that China can grow strongly as the
world unravels is a fantasy. Ditto for the view that China is going to
save the global economy.
China is already slowing, of course. The third-biggest economy grew
6.8 percent in the last quarter of 2008. Such growth sounds like
heaven just about everywhere else. Yet for an economy at China’s level
of development, one that zoomed along at a 13 percent pace in 2007,
Premier Wen Jiabao was wrong to err on the side of caution yesterday
when he delivered the Chinese equivalent of the U.S. State of the
Union address. He said the country’s 8 percent growth target is within
reach, indicating an additional stimulus package isn’t needed. It’s a
bad call, and Wen is likely to regret it as 2009 unfolds.
Markets are sensing as much. On Wednesday, stocks around the globe
soared on hopes that at least one major economy would skirt disaster.
Markets came back to Earth yesterday after China quelled stimulus
speculation. As the global meltdown deepens, it probably means the
export demand that drives China won’t return until well into 2010.
Here are five reasons a Chinese rebound in 2009 may not pan out:
1. World growth is collapsing. This isn’t hyperbole, but a sobering
fact. The International Monetary Fund can’t downgrade its global
growth estimates fast enough as the credit crisis overwhelms economies
as diverse as Ireland, Japan, the United Arab Emirates and the U.S.
Asian governments are increasing spending to soften the blow from
falling asset prices, consumer spending and manufacturing. The
European Central Bank is struggling to keep up with the region’s
The trillions of dollars of wealth being lost as markets plummet are
depleting public coffers and damaging consumer psychology. It’s not a
good environment for any government hoping for a revival in global
2. China’s key customer is in hiding, indefinitely. Just when you
thought conditions in the $14 trillion U.S. economy couldn’t get any
worse, they “deteriorated further” in almost all corners of the
country over the last two months, the Federal Reserve said in its
regional business survey.
Wang Hanmin, a sales manager at Yixing Bochangyuan Garments Co. in
Jiangsu province, spoke for many this week when he said exporters are
facing a “life and death” crisis. Exporters are so worried that they
are calling on the government to weaken the yuan after the biggest
slump in overseas sales in more than a decade.
One thing is for sure: The U.S. consumer isn’t about to help China out
of this dilemma.
3. A lack of tools. It’s important to remember that the 4 trillion
yuan ($585 billion) spending plan unveiled in November was more spin
than reality. Much of it wasn’t new, but a tally of existing spending
efforts. They were never going to boost a $3.3 trillion economy
China’s almost $2 trillion of currency reserves would seem to give the
nation considerable policy latitude. Yet China’s vast economy lacks
the financial infrastructure to get the bang it needs from its
stimulus in yuan. Would building more roads, bridges and dams do the
“Eight percent GDP doesn’t really tell you anything about job
creation,” says Stephen Green, Shanghai-based head of research for
China at Standard Chartered Plc. “Many of these projects are not
The spending will help, but such projects didn’t propel growth as
hoped over the last 30 years. Exports did.
4. All those U.S. Treasuries. Financing loads of new projects could
prove dicey, even for cash-rich China. Any move to draw down $696
billion of U.S. government debt could leave China with major losses
and prolong the U.S. recession.
That leaves domestic lending institutions. If China wants to avoid a
Japan-like bad-loan crisis, or something far worse, it has to be
careful about massive public-works projects with questionable economic
Of course, there’s the “official” gross-domestic-product figure, and
then there’s the real situation in the most populous nation. The
double-digit drops in exports among China’s biggest trading partners
in Asia show how bad things are getting. Offsetting those trends won’t
be easy and it won’t be cheap.
5. Rebalancing takes time. Just as the U.S. needs to become a nation
of savers, China needs more consumers. That’s a destabilizing, decade-
long process that requires the creation of national safety nets and
more education and health-care spending.
Making that transition would be a big enough challenge with a healthy
world economy. Doing it while Group of Seven members are in recession
and developing Asia is slowing rapidly will prove extraordinarily
Wen wasn’t exaggerating yesterday when he said China faces its “most
difficult” year of the past 30. How much China’s export collapse is
hurting can been seen in the 20 million migrant workers who are
suddenly unemployed. The risk of social unrest is higher than at any
time since 1989, the year of the Tiananmen Square protests.
China’s top-down system has worked extraordinarily well in recent
years. It’s still a stretch to think the country can turn its economy
upside down in this ever-worsening environment.
Wen says China needs to “reverse the economic slide as soon as
possible.” Too bad officials in Beijing think their work is largely
done. It’s not, no matter what the official spin is.
(William Pesek is a Bloomberg News columnist. The opinions expressed
are his own.)
To contact the writer of this column: William Pesek in Tokyo at
Last Updated: March 5, 2009 19:07 EST
March 18th 09, 02:51 AM
> On Mar 17, 9:22 pm, Don Tiberone > wrote:
> hey don, did you learn Mandarin yet, move to china, the next economic
> super power, and renounce your citizenship yet:)
You're a bit behind the times, aren't you? I haven't had any emerging
market stocks since August of last year. Incidentally, China's stock
market is one of the few that is actually up this year, up big I might
* Keynes thought that he had invented a way to end credit
contractions. But, because he was ignorant of market history he didn't
know that almost every century has an example of some intellectual
having a personal revelation about avoiding or prematurely ending a
post-bubble contraction. An early example occurred with the post-1618
bust, when in 1622 Missleden prescribed adding credit to a credit
* The forever-esteemed editor of The Economist, Walter Bagehot,
wrote in 1873: "A panic in a word, is a species of neuralgia, and
according to the rules of science you must not starve it. The holders
of the cash reserve must be ready... to advance it most freely for the
liabilities of others."
No problems, if the right thing is done at the right time. As
noted below, the subsequent period was described as "The Great
Depression" and it ran from 1873 to 1895.
Actually, such sound advice had been implied by the Bank of
England in a report following the big problem in 1825: "We lent by
every possible means and in modes we have never adopted before; we
took in stock on security, we purchased Exchequer bills, we made
advances on Exchequer bills, we not only discounted outright, but we
made advances on Exchequer bills of exchange to an immense amount, in
short, by every possible means... seeing the dreadful state in which
the public were, we rendered every assistance."
The subsequent general contraction endured from the climax of the
bubble in 1825 until the mid 1840s.
* At the height of the 1929 mania the Fed with its "elastic"
currency was celebrated, as the old system was condemned. The
following is by John Moody:
"The old breeder of financial panics, the National Banking Law,
which had been a menace to American progress for two decades, has now
been replaced by a modern, scientific reserve system which embodied an
elastic currency and an orderly control of the money market."
In so many words, "nothing could go wrong".
* Similar confidence in the old system prevailed as the 1873
bubble came under the usual credit changes that signal a top. A
leading New York paper, the Herald, editorialized:
"True, some great event may prick the commercial bubble of the
hour, and create convulsions; but while the Secretary of the Treasury
plays the role of banker for the entire United States it is difficult
to conceive of any condition of circumstances which he cannot control.
Power has been centralized in him to an extent not enjoyed by the
Governor of the Bank of England. He can issue the paper
representatives of gold, and count it as much as the yellow metal
itself. [He has] a greater influence than is possessed by all the
banking institutions of New York."
In so many words, "nothing could go wrong".
Ironically, the editorial contained some totems that are still
deemed to have great power. Even today, for some the terms
"centralized", "banker for the U. S." and "influence" provide
considerable assurance. On the initial panic into late September, the
Herald editors extolled abiding confidence in the Treasury System with
"A crisis in our financial dealings has been met and passed without
loss of confidence... Here are growth, understanding, [and] increased
As it had done on previous crises, the Treasury added liquidity
and appeared to have avoided disaster. Under similar pressures,
today's Fed and Treasury have injected liquidity and on the technical
rebound into May such orthodoxy was celebrated: "The policy response
to financial asset deflation was not only extremely fast, but
extremely well coordinated. US policymakers deserve the Nobel Prize."
Back to all the confidences and issuance of liquidity in the early
panics of the post-1873 contraction. The usual business cycle
prevailed, but the recessions were stronger than the expansions. By
1884 leading economists began calling the prolonged contraction as the
"The Great Depression". Although it ended in 1895, it was still being
analysed as such until as late as 1939.
In order to preserve the notion about an infallible Federal
Reserve System, it has been expedient to lay the blame on the Fed
keeping too tight a policy during the post-1929 contraction. A couple
of notes suggest otherwise:
* A Fed memorandum following the 1929 crash explained "The drain
upon bank reserves was met in the classic way with a policy of free
By free they meant liberal and this was exemplified by George
Harrison, who was head of the New York Fed. As with today, the NY
branch was huge compared to the whole Reserve System and Harrison, in
discounting freely, exceeded his authority by a factor of six. This
was conventional theory and practice and as with a number of examples
did not prematurely end a post-bubble contraction.
* It seems that part of the tout at the top of the mania includes
a celebration of whatever central banking or treasury system that
happens to be in place. Naturally, with the recrimination and
revulsion that goes with any post-bubble contraction the prevailing
system will be criticized.
The first stage will likely be an ad hominem attack on the
personalities running the Fed. Bernanke will be worked over for not
providing the exact interest rate change that would have prevented the
contraction. The rate change of the perfect amount made with perfect
timing only exists in the imagination of interventionist economists.
Eventually, the contraction could become severe enough to prompt
rigorous scrutiny. This would involve examining the history of central
banking - not for policy errors, but for systemic inadequacy.
On Mar 17, 9:51*pm, Don Tiberone > wrote:
so far you have not picked anything right. hey, hows that investment
in oil doing for you:) or gold, i see its been over $1000,00 a ounce
twice now, only to fall back where it was about a year ago.
as far as china is concerned, i called it a house of cards years ago,
in fact, not long ago you were still shilling for them. you seem to
taken my advice though, eventually:) and get out of every ponzi scheme
that the austrian's endorse:) they are still stuck in the 1800's,
wondering what happened. 13 straight months of zero inflation, and if
the government had not spent, we would be in raging deflation right
you and your austrians are about as credible, and believable, as bozo
the clown was as a economist. and bozo, milton freidman, just passed
March 19th 09, 12:51 AM
on 3/17/09 9:22 PM Don Tiberone said the following:
> Here's another thought: given how many Keynesian economists predicted
> a return to depression conditions when World War II spending came to
> an end, and that what we instead got was the single most robust year
> the private economy has ever seen, isn't it a little strange that not
> one of these economists went back and reexamined his premises?
> On the other hand, consider the names Jim Grant, Peter Schiff, Ron
> Paul, and Jim Rogers. Apart from having predicted the current crisis —
> unlike anyone at the Harvard conference and indeed unlike the paper-
> tiger economists they unsurprisingly preferred to spar with during
> their deep-thinking session last weekend — one thing these men have in
> common is that they are all Austrian economists, they all believe in
> the Austrian theory of the business cycle, and they all pin the blame
> for the crisis on the Fed, a nonmarket institution. These men believe
> in the real free market, not the centrally planned market of Alan
> Greenspan, Ben Bernanke, and the Federal Reserve. And they saw a
> crisis coming at a time when everyone else was predicting new highs
> for the Dow and singing the praises of a world economy that was more
> robust than it had ever been.
> Maybe that's why people believe in market economics: unlike the Rube
> Goldberg models of their counterparts in the profession, the things
> Austrian economists write and say actually have some connection to the
> real world.
> People who believe in the market economy support a social order in
> which free individuals make voluntary contracts with each other, and
> no one can initiate physical force against anyone else. Is that vision
> so obviously unattractive that we have to refer its supporters for
> psychological evaluation?
> We might instead wonder at the psychological condition of those who
> would denounce such a system: might they be motivated, for all their
> noble talk, by nothing but base envy of those with more material
> wealth than they, or by a pathological desire to dominate other
> I'm sure that will be covered at next year's conference.
thanks for posting this!
March 19th 09, 02:42 AM
On Mar 17, 8:54 pm, wrote:
> On Mar 17, 9:51 pm, Don Tiberone > wrote:
> so far you have not picked anything right. hey, hows that investment
> in oil doing for you:) or gold, i see its been over $1000,00 a ounce
> twice now, only to fall back where it was about a year ago.
Like I said, were you in a coma for a year and just woken up? I've
stated here on the record, that I sold out on oil around the 115 range
or so. I forget exactly what price. Around August or so.
For the record, I am UP this year. Granted, barely up, but that's
better than what the markets are doing. Actually, I've been more or
less break even since October or so.
> as far as china is concerned, i called it a house of cards years ago,
> in fact, not long ago you were still shilling for them. you seem to
> taken my advice though, eventually:) and get out of every ponzi scheme
> that the austrian's endorse:) they are still stuck in the 1800's,
> wondering what happened. 13 straight months of zero inflation, and if
> the government had not spent, we would be in raging deflation right
> you and your austrians are about as credible, and believable, as bozo
> the clown was as a economist. and bozo, milton freidman, just passed
> away recently:)
You mean the way Marc Faber has not only called the commodities and
emerging markets boom but called their collapse as well? He was dead
on accurate on both the boom and the bust and he's called for the
latest rally as well. You were a broken record the entire time.
As far as I'm concerned, there were only three economists of note in
the 20th century: Mises, Keynes, and Irving Fisher. All the other
economists are spear-carriers in one of these three camps. Keynes was
a fake. If you read his General Theory, you find that it is
convoluted, incoherent, and horribly written. This is in contrast to
virtually everything else he ever wrote. This indicates that he could
not put the pieces together. The pieces did not fit; there was no
coherent economic theory guiding the book.
Fisher was altogether different. He dominates current free-market
theory because Milton Friedman was a follower of Fisher in every
sense. Friedman made his reputation with his Monetary History of the
United States, which was basically Fisher with footnotes. Anna
Schwartz provided the footnotes.
On Mar 18, 9:42*pm, Don Tiberone > wrote:
> On Mar 17, 8:54 pm, wrote:
> > On Mar 17, 9:51 pm, Don Tiberone > wrote:
> > *so far you have not picked anything right. hey, hows that investment
> > in oil doing for you:) or gold, i see its been over $1000,00 a ounce
> > twice now, only to fall back where it was about a year ago.
> Like I said, were you in a coma for a year and just woken up? I've
> stated here on the record, that I sold out on oil around the 115 range
> or so. I forget exactly what price. Around August or so.
no i have not been in a coma. i just got sick of telling you that it
was a "BUBBLE". so i quite paying attention to you. you babbled/
parroted every "its different this time" psychobabble till i could not
take it any more.
then when it became apparent i was right, you pulled out of the
bubble after it had popped:)
> For the record, I am UP this year. Granted, barely up, but that's
> better than what the markets are doing. Actually, I've been more or
> less break even since October or so.
good for you. but i do not get suckered into bubbles. i never lost a
dime, and i am up quite a bit. and have been since the 1990's:)
> > *as far as china is concerned, i called it a house of cards years ago,
> > in fact, not long ago you were still shilling for them. you seem to
> > taken my advice though, eventually:) and get out of every ponzi scheme
> > that the austrian's endorse:) they are still stuck in the 1800's,
> > wondering what happened. 13 straight months of zero inflation, and if
> > the government had not spent, we would be in raging deflation right
> > now.
> > *you and your austrians are about as credible, and believable, as bozo
> > the clown was as a economist. and bozo, milton freidman, just passed
> > away recently:)
> You mean the way Marc Faber has not only called the commodities and
> emerging markets boom but called their collapse as well? He was dead
> on accurate on both the boom and the bust and he's called for the
> latest rally as well. You were a broken record the entire time.
yea right, he came around to the obvious, which i predicted, and
right before the collapse. anyone can do that. but, i predicted they
would collapse as they started their rise, long before faber ever said
to get out.
> As far as I'm concerned, there were only three economists of note in
> the 20th century: Mises, Keynes, and Irving Fisher. All the other
> economists are spear-carriers in one of these three camps. Keynes was
> a fake. If you read his General Theory, you find that it is
> convoluted, incoherent, and horribly written. This is in contrast to
> virtually everything else he ever wrote. This indicates that he could
> not put the pieces together. The pieces did not fit; there was no
> coherent economic theory guiding the book.
laugh, laugh, iceland, the baltic tigers, eastern europe, ireland,
singapore, china, all austrian success stories. all followed the
advice of the free market cranks you so adore.
> Fisher was altogether different. He dominates current free-market
> theory because Milton Friedman was a follower of Fisher in every
> sense. Friedman made his reputation with his Monetary History of the
> United States, which was basically Fisher with footnotes. Anna
> Schwartz provided the footnotes.
and all but keynes have been completely discredited. where have you
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