The Crash Course in Ecnomics

Belfast

http://www.chrismartenson.com/crashcourse

Austrian schools of Economics

John Fortune & John Bird on sub prime
http://www.dailymotion.com/channel/fun/video/x3bwjv_john-fortune-john-bird-on-the-south_fun?from=rss

Belfast

Look like were are going back to the economics of the 1930s.
trade wars tariff barriers and immigration control

Obama if he wins will go back to FDR's New deal

McCain if he wins will do some thing similar, but will not call it the new deal.

Economics like history repeats itself.

Belfast

The future of the US Dollar

Belfast

Could burning money be considered to be the new biofuel to combat global warming if the feds start printing money on the same scale as the Weimar Republic in the 1920's



Hyperinflation
http://en.wikipedia.org/wiki/Hyperinflation#Root_causes_of_hyperinflation

eamonnm79

Hi Belfast.
Im about half way through that chris martenson Economics crash course. Is it possible to feel empowered while you have poop in your pants?

Perhaps there will be a similar fall out as happened in the 30's but surely a political measure like rosavelt and Nixon made would be made again.

Cheers for the link anyhow!

Belfast

eamonnm79 wrote: »

Hi Belfast.
Im about half way through that chris martenson Economics crash course. Is it possible to feel empowered while you have poop in your pants?

Perhaps there will be a similar fall out as happened in the 30's but surely a political measure like Roosevelt and Nixon made would be made again.

Cheers for the link anyhow!

It is quite possible they may copy Franklin Delano Roosevelt or Nixon.

In my opinion copying Franklin Delano Roosevelt or Nixon will only make things worst.

eamonnm79

Agreed but it will put off the massive fall out for another while. Probobly make it worse but will at least put it off. (My hope for a delay is a little tounge in cheek to be honest)

I think if even 20% of American realised that the fed just print money when ever Politicians tell them too they would have lost 'market confidence' long ago.

The official line is that Lehman Bros collapsed because of a lack of 'Market Confidence' or so said the liquidators from PWHC on ITV news last night.
Oh yeah the fact that they were insolvent due to the huge over value of their assets poor regulation and some enron style auditing had nothing to do with it!
The whole system is so full of crap that the whole house of cards is in real danger of falling down.

Économiste Monétaire

eamonnm79 wrote: »

I think if even 20% of American realised that the fed just print money when ever Politicians tell them too they would have lost 'market confidence' long ago.

Evidence? Have you ever studied monetary theory? Do you even know how the Fed is structured?

eamonnm79

Have you watched the crash course in economics?
Because that would be what I am talking about.

Économiste Monétaire

eamonnm79 wrote: »

Have you watched the crash course in economics?
Because that would be what I am talking about.

No I didn't watch an internet crash course in economics. It doesn't stand as a substitute for spending years readying economic literature. So, I'll take that as a 'no' to my question.

If that course said there are politicians directly guiding the quantity of money the Fed prints then stop watching, just some advice.

eamonnm79

The topic of this thread was to do with a powerpoint presentation by an economist. Now I watched it and was surprised by a lot of the claims the guy made. I made a comment based on what this guy was saying.
He said that although the US dollar used to be linked to a gold standard it no longer is, and because of this, in effect the fed can create money. 'All money(dollars) is loaned into existance' he says.
Now if you have superior knowledge as to the way dollars are brought into existance by the fed I would be delighted to hear it. Hey even just send me a link or the name of a good book!
Frankly I hope this guy is making up what he is saying! Its scary!

To expect people to have formally studied monetary theory in order to make a comment on boards.ie is a little elitist dont you think?
Some of us are very curious about the way the emonomics of the world works, especially in these unstable economic times.
Instead of belittling people why not point them, in what you would consider, to be the right direction?

Économiste Monétaire

You said this:

I think if even 20% of American realised that the fed just print money when ever Politicians tell them too

That is not true. A politician does not sit in an office telling the Fed to print money. I have absolutely no qualms or problems with people being inquisitive about the economy, so stop trying to play up as a victim. I do have a problem when I see something like what you posted without any kind of source. It looked remarkably like a recent thread in the CT forum about monetary theory.

eamonnm79

UCD_Econ wrote: »

You said this:

That is not true. A politician does not sit in an office telling the Fed to print money. I have absolutely no qualms or problems with people being inquisitive about the economy, so stop trying to play up as a victim. I do have a problem when I see something like what you posted without any kind of source. It looked remarkably like a recent thread in the CT forum about monetary theory.

My source As I have already said is the name at the top of the thread and link to the accompanying Powerpoint presentation.
Now you can question the quality of the source but stop saying I dont have one when my source is the link at the top of the thread (which you refuse to watch).

Now is your chance to shine.
Tell me how this guy is completely wrong!
However first you will have to watch part 8 of the powerpoint presentation.

Économiste Monétaire

eamonnm79 wrote:

My source As I have already said is the name at the top of the thread and link to the accompanying Powerpoint presentation.
Now you can question the quality of the source but stop saying I dont have one when my source is the link at the top of the thread (which you refuse to watch).

Now is your chance to shine.
Tell me how this guy is completely wrong!
However first you will have to watch part 8 of the powerpoint presentation.

I watched the clip from part 8 while grabbing something to eat. I never once heard the exact phrase, or inference, that you referred to: politicians tell the fed to print money. Maybe I missed it. I’m assuming you’re talking about the process of open market operations (OMOs), specifically repurchase agreements. This is a method the Fed uses to conduct monetary policy. There is no great hidden agenda with it. You’re making way too general an inference from the process by saying that politicians have direct manipulation over the FOMC or Fed System. You might want to watch the first few minutes again. It was about 'creating money', not political influence over the Fed.

If you want to know more about open market operations, repos, the FOMC, or whatever - then ask. I never said I had a problem with people asking questions about the economy - that’s what the forum is for :rolleyes:

Flamed Diving

Bring back bartering, I say. And ban people from shirt-selling sheeps wool. That'll learn em.

SoCal90046

eamonnm79 wrote: »

Have you watched the crash course in economics?
Because that would be what I am talking about.

I think you're pushing it. I don't see the evidence to support your thesis.

SoCal90046

eamonnm79 wrote: »

The topic of this thread was to do with a powerpoint presentation by an economist. Now I watched it and was surprised by a lot of the claims the guy made. I made a comment based on what this guy was saying.
He said that although the US dollar used to be linked to a gold standard it no longer is, and because of this, in effect the fed can create money. 'All money(dollars) is loaned into existance' he says.
Now if you have superior knowledge as to the way dollars are brought into existance by the fed I would be delighted to hear it. Hey even just send me a link or the name of a good book!
Frankly I hope this guy is making up what he is saying! Its scary!

To expect people to have formally studied monetary theory in order to make a comment on boards.ie is a little elitist dont you think?
Some of us are very curious about the way the emonomics of the world works, especially in these unstable economic times.
Instead of belittling people why not point them, in what you would consider, to be the right direction?

Excellent. I think if you got scared and are planning to read more on the topic, you're in for a treat. One good perspective on the issue is the work of Milton Friedman; it makes for interesting reading. I found learning about money was an eye opener for me.

There's a definite fascination with gold; we all seem to learn from an early age that it's a store of wealth, a good thing to have. If you think it through, aside from the fact that it's rare and pretty non-corrosive, there's nothing really special about gold and certainly nothing that makes it 'money,' or some medium of exchange. Paper works as well, if we all accept it. Heck, frankly now we've even abandoned paper and are using 1's and 0's (just remembered a joke; it's coming in a minute).

I don't see any evidence that the US has been printing money. I don't have any fear that currencies worldwide are divorced from the gold standard. It makes for good copy--and it's a little scary the first time you hear it--but the fact that a currency isn't backed by an asset such as gold isn't a big deal.

So here's that joke. There are ten types of people in the world, those who understand binary and those who don't. (apologies)

leninbenjamin

SoCal90046 wrote: »

So here's that joke. There are ten types of people in the world, those who understand binary and those who don't. (apologies)

you don't really get that joke do you?

should read there are 10 types; otherwise it makes no sense.

Belfast

SoCal90046 wrote: »

Excellent. I think if you got scared and are planning to read more on the topic, you're in for a treat. One good perspective on the issue is the work of Milton Friedman; it makes for interesting reading. I found learning about money was an eye opener for me.

There's a definite fascination with gold; we all seem to learn from an early age that it's a store of wealth, a good thing to have. If you think it through, aside from the fact that it's rare and pretty non-corrosive, there's nothing really special about gold and certainly nothing that makes it 'money,' or some medium of exchange. Paper works as well, if we all accept it. Heck, frankly now we've even abandoned paper and are using 1's and 0's (just remembered a joke; it's coming in a minute).

I don't see any evidence that the US has been printing money. I don't have any fear that currencies worldwide are divorced from the gold standard. It makes for good copy--and it's a little scary the first time you hear it--but the fact that a currency isn't backed by an asset such as gold isn't a big deal.

So here's that joke. There are ten types of people in the world, those who understand binary and those who don't. (apologies)

Currency not being back by gold or silver is not a problem in it self.
Currency is only as good as the goods and service that back it.
The benefit that gold or silver standard is it limits the amount of currency that can be issued by the fed or any central bank, thus stopping more currency being issued that there are good and service to back it.

A gold or silver standard is only a way of limiting the supply of currency to stop what happen in France in 1719.

FIAT MONEY INFLATION IN FRANCE
How It Came, What It Brought, and How It Ended
by
Andrew Dickson White, LL.D., Ph.D., D.C.L
http://www.gutenberg.org/dirs/etext04/fiatm10.txt

Episodes of Hyperinflation
http://www.sjsu.edu/faculty/watkins/hyper.htm#CSA

Économiste Monétaire

eamonnm79 wrote: »

To expect people to have formally studied monetary theory in order to make a comment on boards.ie is a little elitist dont you think?

I totally missed this when I replied. I really hope you're not serious. Of course I expect someone to have studied monetary theory when they're making comments on monetary theory. Just like it is reasonable to expect anyone on the, say, physics forum to have studied the material they are talking about.

SoCal90046

Belfast wrote: »

Currency not being back by gold or silver is not a problem in it self.
Currency is only as good as the goods and service that back it.
The benefit that gold or silver standard is it limits the amount of currency that can be issued by the fed or any central bank, thus stopping more currency being issued that there are good and service to back it.

A gold or silver standard is only a way of limiting the supply of currency to stop what happen in France in 1719.

There's been no disagreement from me. I am not a believer in the gold standard.

SoCal90046

leninbenjamin wrote: »

you don't really get that joke do you?

should read there are 10 types; otherwise it makes no sense.

You missed it.

It's funnier if you spell it out. You only need to write the number 10 as two digits for those that would otherwise take a little longer time for it to click.

Minder

SoCal90046 wrote: »

I don't see any evidence that the US has been printing money.

Is that because in the US the M3 statistics are no longer printed and haven't been for several years?

Minder

UCD_Econ wrote: »

If you want to know more about open market operations, repos, the FOMC, or whatever - then ask.

Until the recent credit crisis, the Fed conducted monetary policy through Temporary and Permanent Open Market Operations. Now that situation is complicated with the addition of the Term Auction Facility (TAF), the Term Securities Lending Facility (TSLF) and the Primary Dealer Credit Facility (PDCF). The class of collateral required for these facilities is being amended every week as the crisis unfolds.

Can anyone explain how monetary policy is effected by these new facilities?

Belfast

SoCal90046 wrote: »

There's been no disagreement from me. I am not a believer in the gold standard.

A Gold or Sliver standard as you say in theory should be no different from fiat money.

Fiat money (paper money not backed by gold or silver) work on the principle trusting central bank not to print more money that their are goods and servies in the economy to match them.

In the past and present central banks have always printed more money than there are goods and services to back them.

if you think that gold standards is a bad idea, how do you propose that central banks be stopped from abusing their trust and printed more money than there are good and services to match them, thus causing inflation.

Économiste Monétaire

Minder wrote:

Is that because in the US the M3 statistics are no longer printed and haven't been for several years?

The Fed doesn’t have complete control over M3. Since the move away from monetary targeting they’ve stopped recording it. Also, the ECB only has a reference value for M3.

Minder wrote:

Until the recent credit crisis, the Fed conducted monetary policy through Temporary and Permanent Open Market Operations. Now that situation is complicated with the addition of the Term Auction Facility (TAF), the Term Securities Lending Facility (TSLF) and the Primary Dealer Credit Facility (PDCF). The class of collateral required for these facilities is being amended every week as the crisis unfolds.

Can anyone explain how monetary policy is effected by these new facilities?

Good question. Of course, the purpose of the facilities is to provide liquidity, varying by facility and their effects vary also. You can argue over exact implications, some could be inflationary if utilised poorly (just like any other policy). Their purpose to provide flexible options to the current liquidity crisis (and promote stability through their existence alone).

The PDCF is along the lines of the discount window (for deposit institutions) and is intended to give primary dealers liquidity at their discretion (rather than predetermined auctions). It’s short term, maturing one day after request, and the Fed charges a premium for the facility so it is not abused. It will have an effect on monetary policy but the Fed will attempt to correct this by OMOs. Its effect is twofold, the obvious being short term liquidity and the second to promote confidence that dealers have access to the facility.

The TAF is available for depository institutions at an auction rate. It was brought in to help break the lock on the interbank markets. The effect on monetary policy, specifically inflation targeting, is kinder than that of the DW. The delivery isn’t immediate, the amount offered and date of settlement are both fixed in advance. Again, the Fed intends to offset the implications by OMOs.

The TSFL isn’t like the TAF in its effect on inflation (affecting reserves). Primary dealers exchange their securities for a loan of treasury securities, the transaction is considered ‘reserve neutral’.

There is debate whether some of these will remain, permanent, after the crisis rescinds. The Fed doesn’t want the same criticism that it received from Friedman et al about how it prolonged the depression in the 30’s.

That's what I understand of the new lending facilities. I'm interested in your view of their implications.

mcerc

So is this martenson lad talking a load of .......? Or is there any truth or backbone to it. I am at chapter 5 and thinkin about packin it in. Although the stuff he was saying about the hockey stick curve representing many of current situations did seem some what truthful.

fanny_mae

I've watched as far as chapter 12 and so far, I'm enthralled. I can't wait to watch the rest of it. I have my skeptic radar set to max (:pac:) while watching so I'm still not drawling any conclusions.

I'm not an economist so I don't know how to go about verifying what he is saying. Can someone who knows a little more make a comment on the content of his videos? Is any of what he is saying true? Because if it is, then it pretty scary.

silverharp

fanny_mae wrote: »

I've watched as far as chapter 12 and so far, I'm enthralled. I can't wait to watch the rest of it. I have my skeptic radar set to max (:pac:) while watching so I'm still not drawling any conclusions.

I'm not an economist so I don't know how to go about verifying what he is saying. Can someone who knows a little more make a comment on the content of his videos? Is any of what he is saying true? Because if it is, then it pretty scary.

I watched some of it , he obviously feels like its his duty to "scare" people , the general criticisms or weaknesses of the current system are valid from a certain point of view, some would argue that the weakesses arent important, either way it doesnt imply that the system will fall apart anytime soon. needless to say its probably not the time to be buying an off the plan development on the costa del sol:) hmm... thinking about it bring it on, it will be great to see the end of all those property porn programmes on channel 4 etc.:P

fanny_mae

silverharp wrote: »

the general criticisms or weaknesses of the current system are valid from a certain point of view, some would argue that the weakesses arent important, either way it doesnt imply that the system will fall apart anytime soon.

Thanks for the reply. So the criticism of the current system is valid in your opinion but you don't think it will fall apart anytime soon. He reckons it will fall apart in the next 20 years ... would you agree with that or is that still too soon? Or do you think there won't be the apocalyptic end to the current system that he seems to think is inevitable?

silverharp

fanny_mae wrote: »

Thanks for the reply. So the criticism of the current system is valid in your opinion but you don't think it will fall apart anytime soon. He reckons it will fall apart in the next 20 years ... would you agree with that or is that still too soon? Or do you think there won't be the apocalyptic end to the current system that he seems to think is inevitable?

I caught that bit about the next 20 years being different from the last, apart from it being a truism , he is arguing that the current system will fall apart because alot of charts are going parabolic, and to be fair if you looked at US debt it took 200 years to run up a 10trillion tab and this year alone enough funds are being committed to make a fairly good stab at doubling it, so from his point of view it is "tracking". I dont agree with everything in the video as he has thrown peak oil and population growth into the mix as well, which in a way are mutually exclusive issues.
All I can say is that it is a time to be "defensive" try to get out of debt etc. and dont worry about it too much , people and societies are innovative so I'd leave the Mad Max scanarios on the shelf for now

fanny_mae

silverharp wrote: »

All I can say is that it is a time to be "defensive" try to get out of debt etc. and dont worry about it too much , people and societies are innovative so I'd leave the Mad Max scanarios on the shelf for now

I'm not too worried about the Mad Max scenario - I don't think things will get that bad. As I said, I'm wondering how muchof the "Crash Course" should be taken with a pinch of salt. From what I can tell, he seems to be saying it as it is.

From my point of view, I have no grounding in economics (I'm an engineer) but I'm finding what's going on now really interesting. I'm not rubbing my hands with glee when I hear of job cuts or market losses or anything like that. What I mean is, I find myself very interested in how we got here and what are the possible ways out.

silverharp

fanny_mae wrote: »

I'm not too worried about the Mad Max scenario - I don't think things will get that bad. As I said, I'm wondering how muchof the "Crash Course" should be taken with a pinch of salt. From what I can tell, he seems to be saying it as it is.

From my point of view, I have no grounding in economics (I'm an engineer) but I'm finding what's going on now really interesting. I'm not rubbing my hands with glee when I hear of job cuts or market losses or anything like that. What I mean is, I find myself very interested in how we got here and what are the possible ways out.

It might be worth reading something like the Mish blog, there is a good history going back a few years and if there were particular aspects that you were interested in , Mish has probably covered it at some point, he has over the years done some very interesting articles on the nature of money, inflation etc.

http://globaleconomicanalysis.blogspot.com/

Paul Krugman is not a big fan of the ostrich school of economics.

http://www.slate.com/id/9593

silverharp

Deleted User wrote: »

Paul Krugman is not a big fan of the ostrich school of economics.

http://www.slate.com/id/9593

"The hangover theory, then, turns out to be intellectually incoherent; nobody has managed to explain why bad investments in the past require the unemployment of good workers in the present."



I think Krugman is the ostrich here, he has a very compartmentalised view of how an economy works, there is no way to draw a line between the bad investment and good workers.
He ignores the build up of debt in the US and his only ability seems to be to smile when a GDP number is going up and frown when it is going down, and to print enough money to turn the frown upside down.