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Government responsible for collapse of economy.
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Flamed Diving wrote: »could you summarise why the philosophy of 'letting the banks rot' failed so spectacularly in 1929-33?
that was the philosophy?
it would be hard to keep somethings like that consise since its a complicated subject and rather offtopic for this thread, but anyways since you asked
1.
in the great depression the US and world were on gold standard, if the money gets hoarded due to fear of the market things turn nasty as there isnt enough money to go around (liquidity crunch)
now we are were not on gold standard
the central banks can quite literary create money out of thin air now (try to do that with gold), and thats exactly what they have done in US, UK and EU with billions appearing in all sorts of schemes with funky names such as Quantative Easing
2. heres graph of GDP contractions for UK, quite "spectacular" no
? im trying to find one for ireland and us
source
3. it was the continuing interference (Read: bailouts) in the markets in the 30s depression by the governments that prolonged the pain (sounds familiar?) what little money was available was wasted and misalocated on centrally planned projects by Roosevelt, whole book freely available here to read > http://mises.org/rothbard/agd/contents.asp
4. this Nobel prize winner would disagree with you0 -
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that was the philosophy?
Yes. Fiscal deficits were a big no-no. Pure Capitalism (as you call it) was at play, where it was every man for himself, etc. That is all well and good if you exclude financial markets.it would be hard to keep somethings like that consise since its a complicated subject and rather offtopic for this thread, but anyways since you asked
I know it is, just like I said it is. But thanks for pointing it out as if I didn't.1.
in the great depression the US and world were on gold standard, if the money gets hoarded due to fear of the market things turn nasty as there isnt enough money to go around (liquidity crunch)
now we are were not on gold standard
the central banks can quite literary create money out of thin air now (try to do that with gold), and thats exactly what they have done in US, UK and EU with billions appearing in all sorts of schemes with funky names such as Quantative Easing
Right. But it was precisely because the Fed refused to increase the money supply (M2) that many of the banks collpased (you like your libertarian heads so ref: M. Friedman for why and how, there are more, but his stuff is easy to follow). It was the opinion of the time that fiscal and monetary austerity must be maintained, while the "bad" banks and businesses failed. This created the chain reaction that we are doubtlessly familar with. Your denial of this policies existence is amusing. Surely you came across it while scurrying around your various "Austrian School" websites?2. heres graph of GDP contractions for UK, quite "spectacular" no? im trying to find one for ireland and us
source
This demonstrates nothing. You don't even know why.3. it was the continuing interference (Read: bailouts) in the markets in the 30s depression by the governments that prolonged the pain (sounds familiar?) what little money was available was wasted and misalocated on centrally planned projects by Roosevelt, whole book freely available here to read > http://mises.org/rothbard/agd/contents.asp
Whole slanted books available at. Is that what you mean? Why not pull out some socialist worker website while you are at it? You seem to be getting a little confused about the matter. How about going back to basics on the matter at hand:
http://en.wikipedia.org/wiki/Great_Depression#Monetarist_explanations
Arguments from authority have to be the most pathetic form of argument. I know very well who Stiglitz is. Wheras you may have read his pop economics books, I have read his assymetric information theory papers from the 1970s for which he actually shared that Nobel. Stop regurgitating what you find on websites. It's sad.
My work is done here. :cool:0 -
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Flamed Diving wrote: »Whole slanted books available at. Is that what you mean? Why not pull out some socialist worker website while you are at it? You seem to be getting a little confused about the matter. How about going back to basics on the matter at hand:
http://en.wikipedia.org/wiki/Great_Depression#Monetarist_explanations
thanks for making a point for me
the great depression:
* was caused (interest rate & monetary fiddling)
* and prolonged (bailouts, new deal)
by government interference in the markets
all of that is repeating again (tho this time there are other variables such as not being on gold standard and theres the matter of china and india flooding world with cheap labour)
if you read 2 paragraphs below what you linked earlier you would see the austrian explanation > http://en.wikipedia.org/wiki/Great_Depression#Austrian_School
which is where i stand
btw did you hear of the depression in the 20s where there was no interference and the markets rebounded very quickly?
very interesting video here
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ballinatray wrote: »NAMA cost €54,000,000,000 carried by the tax payer. In return all first time mortgage holders, should have their properties re-valued as at 2009 values. Particularly, those mortgaged since 2005.
I have no problem with them having their properties revalued, but not their mortgages.
You were doing so well with your first post opneing the thread, but we cannot have a bailout for everybody.
We shoudln't even have a bailout for some of those already included, but that is argument flushed out by some economists, or would be economists, later in the thread.NAMA and bank bailouts have opened up a pandoras box
and hence should have never been allowed to happen
now everyone and anyone wants their "bailout"
Very true, but there had to be rescue of some sort, maybe full guarantees as part of nationalisation, for primary truly systemic institutions i.e. AIB and BOI.
The rest I believe could have gone to the wall.ballinatray wrote: »true capatilism works on the principle of supply and demand playing a part in setting pricing...Hence gold is more valuable per ounce tahn copper but a false market was created with property in Ireland like "Ponzi " scheme. and sadly many young people were duped into believing they were queing for a dwindling resource outside the auctioneers offices...now we see vast swathes of property lying idle...at census 2007 records show 260,000 empty units now estimated at 370,000 units excluding nama property, how much more lies idle while young people struggle with incredible negative equity.....
Even though I balme government, banks & other vest interests for pushing the bubble and I blame the banks for ridiculous loans, I still believe people have to take level of personal responsibility.
Some people felt they had to get on property ladder, not out of their current personal cicrumstances, but because others were doing it.
In this chunk of people were the ones who had no savings, had to rely on renting to pay mortgage and either misled lender or sometimes along with lender doctored their accounts to get bigger mortgage.
They are not blameless in this.
To paraphrase the sage of Springfield, Homer J simpson.
It takes two to borrow, one to borrow and one to lend.
BTW who cares how many residential properties lie empty ?
I care how many commerical properties (not tlaking bloddy retial parks either) lie idle, because that is a true measure of how well the eocnomy is doing.Wrong, NAMA hasn't cost the tax payer a single cent, it is designed to be self financing, and if there is a shortfall the banks will pay for this via increased corporation tax
He he he.
Ever hear of how our credit rating is doing, or how the credit rating of the banks are dropping, thus making government borrowing & bank borrowing costs higher ?
I hope your post is p*** take because if it isn't then by God you are an opitmist.
Care to buy a field in Mayo, good deal sure to rise soon, get in nowi worked as a bricklayer on housing estates in galway and there were certain areas of the county where houses commanded way higher prices than others because people thought it was more fashionable to live there.
take oranmore for example where 4 bedroom detached houses were making 500,000 euros.
you could drive 20 miles out the road to tuam where the equivalent size house could be bought for 220,000 euros.
why should the government compensate people who wanted to live in houses which were clearly overpriced from the start.
Sorry, but Tuam ehhhh.
How can you compare Tuam to Oranmore ?
BTW both were overpriced.I am not allowed discuss …
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thanks for making a point for me
the great depression:
* was caused (interest rate & monetary fiddling)
* and prolonged (bailouts, new deal)
by government interference in the markets
all of that is repeating again (tho this time there are other variables such as not being on gold standard and theres the matter of china and india flooding world with cheap labour)
if you read 2 paragraphs below what you linked earlier you would see the austrian explanation > http://en.wikipedia.org/wiki/Great_Depression#Austrian_School
which is where i stand
btw did you hear of the depression in the 20s where there was no interference and the markets rebounded very quickly?
very interesting video here
You seem to be struggling a little (I would never accuse you of quote-mining). Let me help you:
Monetarists, including Milton Friedman (your hero?) and current Federal Reserve System chairman Ben Bernanke, argue that the Great Depression was mainly caused by monetary contraction, the consequence of poor policymaking by the American Federal Reserve System and continued crisis in the banking system.[21][22] In this view, the Federal Reserve, by not acting, (let 'em fail) allowed the money supply as measured by the M2 to shrink by one-third from 1929 to 1933, thereby transforming a normal recession into the Great Depression. Friedman argued that the downward turn in the economy, starting with the stock market crash, would have been just another recession.[23] However, the Federal Reserve allowed some large public bank failures – particularly that of the New York Bank of the United States – which produced panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. He claimed that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.[24] With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch.[25]
One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time the amount of credit the Federal Reserve could issue was limited by laws which required partial gold backing of that credit. By the late 1920s the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. Since a "promise of gold" is not as good as "gold in the hand", during the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. On April 5, 1933 President Roosevelt signed Executive Order 6102 making the private ownership of gold certificates, coins and bullion illegal, reducing the pressure on Federal Reserve gold.[26]
The remainder explains another reason why the Fed witheld on supplying M2. However, one should not get drawn into this question, as it may easily confuse. The only thing people should worry about in this case is the consequence of inaction on behalf of the relevant authorities. Despite what libertarian nutjobs will tell you in books, markets are not efficient and allowing the economy "cleanse itself" naturally does not work.0 -
Flamed Diving wrote: »You seem to be struggling a little
not at all, you just again highlighted my points
short version:
its quite obvious that this recession and the great depression was caused and prolonged by manipulation of and interference in the markets
long version:
from your own quotes
it was the meddling by the newly created FED that led to the Depression, same as it was the meddling in rates that created this recession, see interferenceFlamed Diving wrote:Monetarists, including Milton Friedman (your hero?) and current Federal Reserve System chairman Ben Bernanke, argue that the Great Depression was mainly caused by monetary contraction, the consequence of poor policymaking by the American Federal Reserve System
and hence why laws were passed afterwards ensuring that banks insure a certain percentage with newly created FDIC (Federal Deposit Insurance Corporation), in case of bank run FDIC covers depositsFlamed Diving wrote:the Federal Reserve allowed some large public bank failures – particularly that of the New York Bank of the United States – which produced panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed.
last year alone FDIC has covered deposits of ~150 banks that went (and were allowed) to go bankrupt in US, hence protecting the depositors
similar schemes exist in EU and here, until our braindead government decided to "insure" all deposits and protect all bondholders no matter how much it costs
as i pointed out the money supply was based on the gold standard back then, and there is only so much gold, hence why when hoarding occurs its so disastrousFlamed Diving wrote:With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing.
.
once again the problem here is that the money supply is in the hands of the governments and central banks, not determined by the market itself, once again it all falls down to interferenceFlamed Diving wrote: »Despite what libertarian nutjobs will tell you in books, markets are not efficient and allowing the economy "cleanse itself" naturally does not work.
they quite efficiently rebounded in the earlier 20s depression with no interference, its all the historically documentedFlamed Diving wrote: »the only thing people should worry about in this case is the consequence of inaction on behalf of the relevant authorities..
the government had acted in the 30s with huge public works projects like the New Deal, all that accomplished was to misalocate even more money at a tight time and prolong the Depression
once they stopped meddling (the govt quite simply had no more money left) the markets rebounded0 -
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not at all, you just again highlighted my points
short version:
its quite obvious that this recession and the great depression was caused and prolonged by manipulation of and interference in the markets
long version:
from your own quotes
it was the meddling by the newly created FED that led to the Depression, same as it was the meddling in rates that created this recession, see interference
and hence why laws were passed afterwards ensuring that banks insure a certain percentage with newly created FDIC (Federal Deposit Insurance Corporation), in case of bank run FDIC covers deposits
last year alone FDIC has covered deposits of ~150 banks that went (and were allowed) to go bankrupt in US, hence protecting the depositors
similar schemes exist in EU and here, until our braindead government decided to "insure" all deposits and protect all bondholders no matter how much it costs
as i pointed out the money supply was based on the gold standard back then, and there is only so much gold, hence why when hoarding occurs its so disastrous
once again the problem here is that the money supply is in the hands of the governments and central banks, not determined by the market itself, once again it all falls down to interference
they quite efficiently rebounded in the earlier 20s depression with no interference, its all the historically documented
the government had acted in the 30s with huge public works projects like the New Deal, all that accomplished was to misalocate even more money at a tight time and prolong the Depression
once they stopped meddling (the govt quite simply had no more money left) the markets rebounded
Now I can rightly accuse you of quote mining. You are a waste of time.0 -
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https://www.youtube.com/watch?v=czcUmnsprQI
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