Have you seen the "Fear the Boom and Bust" video?

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markf57's picture
markf57
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Have you seen the "Fear the Boom and Bust" video?

Funny video!

"Fear the Boom and Bust" a Hayek vs. Keynes Rap Anthem

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ccpetersmd
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Re: Have you seen the "Fear the Boom and Bust" video?

Excellent!

I don't normally envision beautiful party girls when thinking about economics, but it would help...

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James Wandler
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Re: Have you seen the "Fear the Boom and Bust" video?

Thanks markf57,

It was entertaining.  Unfortunately this is the usual situation where economics is discussed but the monetary system is not.  I wrote the producers with my thoughts (see below).  Since change is crucial, and their video has 160,000+ views, I thought it was too important not to attempt to send an opportunity for change.

Cheers,

James

[email protected]; [email protected]

"Thank you for the entertaining video,

 Have you considered that the monetary system is the root of all of the problems and has nothing to do with either Hayek or Keynes?

Elaborate theories obscure the very simple fact that money is being loaned into existence by private banks, supported by central banks, but the interest on the loans are not put into the money system.  Thus new loans must be continually created to allow debt servicing on old loans.  Since interest compounds therefore there must be a compounding increase in the amount of loans issued.  This requires continuous growth in the economy to allow new loans to continue to be issued.  If growth slows and new loans do not continue to be issued into the economy then defaults occur as the system has a shortage of money to meet the debt (the money is the amount of originally issued debt but without the interest).

For completeness, it is true that banks do record the other side of the entry and therefore create money in its records equal to the interest.  Some of the money does pass up through the bank as a dividend to shareholders which can, in theory, be obtained (through competition) by borrowers to service their loans.  However much of the money is retained by the banks for growth or hoarded by certain parties (individuals, corporations, sovereign wealth funds, certain governments) so borrowers are unable to obtain the money to service their loans.  Accumulated monetary imbalances throughout the world have exaggerated the problem requiring extensive efforts by central banks to try to keep the monetary system functioning. 

This debt based monetary system requires continuous growth of new loans, which only can occur with the continuous growth in the economy to support the issuance of new loans at an exponentially compounding rate.  This growth is supported by energy which occurs either sustainably (i.e. from the sun) or from ancient stored sunlight (i.e. fossil fuels).  Since Peak Oil is a certainty (all oil fields increase in production until they begin to decline in production – and this will occur globally as it has already happened for the US in 1970), then, at some point, global energy from fossil fuels will plateau and begin to decline.  Thus at some point global growth becomes impossible, and therefore a monetary system requiring continuous growth becomes impossible.

Many people believe we are currently at Peak Oil now and link the financial crisis to the plateau in energy production. 

If so, then the global financial crisis will continue to deepen until we realize that our debt based money system is not compatible with a world of physical limits.

The way out is to change the monetary system to be in harmony with sustainability.

Macroeconomists have an obligation to the world to consider these straight forward matters as quickly as possible to limit further damage.

The key point is that there is an opportunity here to devise such a monetary system.  This should appeal to macroeconomists heavily schooled in mathematics.  The challenge of our civilization is there for the taking…

I would be happy to discuss this further with you if you were interested.

Kind regards,

James Wandler"

 

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Re: Have you seen the "Fear the Boom and Bust" video?

James Wandler wrote:

Elaborate theories obscure the very simple fact that money is being loaned into existence by private banks, supported by central banks, but the interest on the loans are not put into the money system. Thus new loans must be continually created to allow debt servicing on old loans. Since interest compounds therefore there must be a compounding increase in the amount of loans issued. This requires continuous growth in the economy to allow new loans to continue to be issued. If growth slows and new loans do not continue to be issued into the economy then defaults occur as the system has a shortage of money to meet the debt (the money is the amount of originally issued debt but without the interest).

Bravo...very well said!

You are right, and the Austrian & Keynesian economic "beliefs" are fundamentally unsound as neither addresses what you have said.  To the two belief systems, the exponential growth of debt doesn't exist.

Austrian and Keynesian beliefs are like our two political parties - a false choice as neither is close to correct.  Both are a waste of time.

Larry 

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Re: Have you seen the "Fear the Boom and Bust" video?
DrKrbyLuv wrote:

James Wandler wrote:

Elaborate theories obscure the very simple fact that money is being loaned into existence by private banks, supported by central banks, but the interest on the loans are not put into the money system. Thus new loans must be continually created to allow debt servicing on old loans. Since interest compounds therefore there must be a compounding increase in the amount of loans issued. This requires continuous growth in the economy to allow new loans to continue to be issued. If growth slows and new loans do not continue to be issued into the economy then defaults occur as the system has a shortage of money to meet the debt (the money is the amount of originally issued debt but without the interest).

Bravo...very well said!

You are right, and the Austrian & Keynesian economic "beliefs" are fundamentally unsound as neither addresses what you have said.  To the two belief systems, the exponential growth of debt doesn't exist.

Austrian and Keynesian beliefs are like our two political parties - a false choice as neither is close to correct.  Both are a waste of time.

Larry 

Larry,

You are constantly harping on Austrian's (and specifically Ron Paul) but most of them don't believe in fractional reserve banking, bank created debt based money, fiat currencies, or central banking and therefore your criticism seems a bit misplaced.  I assume you would agree if money was backed by a commodity, and not just created out of thin air, that charging interest for your loaned capital would not be a problem.  If so then why are you attacking them?  If not then why?

I usually find your posts interesting and well worth reading but I will have to say that lately some of your responses have bordered on disrespectful.

 

JAG's picture
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Bravo!

Bravo!

Its about time someone presented economic theory in a format geared to the younger generation.

This video is very well done and I applaud the considerable effort that it took to produce it.

Sometimes, its not what you say, but how you say it that matters most.

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Re: Have you seen the "Fear the Boom and Bust" video?

goes211 wrote:

You are constantly harping on Austrian's (and specifically Ron Paul) but most of them don't believe in fractional reserve banking, bank created debt based money, fiat currencies, or central banking and therefore your criticism seems a bit misplaced.  I assume you would agree if money was backed by a commodity, and not just created out of thin air, that charging interest for your loaned capital would not be a problem.  If so then why are you attacking them?  If not then why?

Hi goes, sorry if I am coming across as against people instead of issues and ideas.  I think Austrian & Keynesian economics are belief systems, pseudo sciences, and both have been proven wrong over and over again.  

I have a great deal of respect for Ron Paul; I voted for him in the last presidential election even though he wasn't on the Pennsylvania ballot.

If you're interested, here is a link to why I think that neither economic "theory" is relevant  - Austrian & Keynesian Theories Vs. Mathematical Facts  

Just like republicans and democrats, neither camp challenges the status-quo.

Larry        

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Re: Have you seen the "Fear the Boom and Bust" video?
DrKrbyLuv wrote:

goes211 wrote:

You are constantly harping on Austrian's (and specifically Ron Paul) but most of them don't believe in fractional reserve banking, bank created debt based money, fiat currencies, or central banking and therefore your criticism seems a bit misplaced.  I assume you would agree if money was backed by a commodity, and not just created out of thin air, that charging interest for your loaned capital would not be a problem.  If so then why are you attacking them?  If not then why?

Hi goes, sorry if I am coming across as against people instead of issues and ideas.  I think Austrian & Keynesian economics are belief systems, pseudo sciences, and both have been proven wrong over and over again.  

I have a great deal of respect for Ron Paul; I voted for him in the last presidential election even though he wasn't on the Pennsylvania ballot.

If you're interested, here is a link to why I think that neither economic "theory" is relevant  - Austrian & Keynesian Theories Vs. Mathematical Facts  

Just like republicans and democrats, neither camp challenges the status-quo.

Larry        

Looking at your other thread, I don't see much to it.  The main reference seems to be your statement.

The specie of money doesn’t matter.   If our money were backed by gold, the gold would simply be transferred to those who collect the interest.  We saw this in 1933 when the gold standard collapsed and we lost most of our gold.

We have discussed this elsewhere but the collapse of the so-called "Gold Standard" in the 1930's  is not particularly relevant because any REAL gold standard would be incompatible with fractional reserve lending and the post WWI monetary inflation.

Larry, once again you really don't answer the question.  If money was backed by a commodity and then loaned out, should the person that put his capital at risk be allowed to collect interest on the loan?  Note that this person is not creating capital out of thin air and is therefore puting his capital at risk of non-replayment.  If your answer is yes to this question, please explain (or point to) what exactly you criticism with Austrian theory is.

Personally I don't think that any monetary system will work for very long because I don't think that any system will be able meet the long term monetary goal of being  "a store of value".  Everything's value is different to different people at different times so to expect a money to act as a permanent store of value seems like an impossible goal.  I think we would be far better served in the long run with monetary competition and some creative distruction.

 

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Re: Have you seen the "Fear the Boom and Bust" video?

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Vanityfox451's picture
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"Toto, I've A Feeling We're Not In Kansas Anymore ..."

Larry,

thought you might like this interview of Peter Schiff by Stefan Molyneux. ...

... I liked a particular sweet spot around the 9.15 marker where Schiff said :-

"Hopefully, one day we won't say Austrian economics because we'll just say 'economics', because Austrian economics 'Is' economics. Keynesian? That's like saying Austrian economics is astronomy and Keynesian economics is astrology. They don't have anything in common ..."

... please put your seats in an upright position, your tray tables up and fasten your seatbelts, we are returning back to our regular scheduled program ...

Best,

Paul

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Re: Have you seen the "Fear the Boom and Bust" video?

Does anyone remember the old Saturday Night Live skit were Phil Hartman is selling a computer program called virtual reading? It was just reading a book on the computer where the computer would turn the pages for you. Everyone got a big laugh from it back then but it looks like with Jobs new product its a reality that everyone will pay $500.00 bucks for.

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Re: Have you seen the "Fear the Boom and Bust" video?

Vanityfox451 wrote:

... I liked a particular sweet spot around the 9.15 marker where Schiff said :-

"Hopefully, one day we won't say Austrian economics because we'll just say 'economics', because Austrian economics 'Is' economics. Keynesian? That's like saying Austrian economics is astronomy and Keynesian economics is astrology. They don't have anything in common ..."

Hello Paul, I'm not a big fan of Peter Schiff's opinions on the wars (neocon) or on economics.  Austrian and Kenysian economics are both belief systems - Kenysians look more towards macro economics while Austrian deals with micro economics; and Austrian beliefs have a heavy lean towards libertarianism as they see it.  I apologize to all if I am taking away the focus of this thread by answering Paul's and goes211 questions about the Peter Schiff's interview and commodity money.

Peter Schiff claims in the video that "Austrian economics is economics...Keneysian economics is almost like a religion, they just somehow believe that a mystical power that exists in the hands of the government, and somehow if government borrows money it can create prosperity...that if they print money, they can create purchasing power...none of it works."

Neither Austrians nor Kenysians address the core issue - should money be issued as debt or credit?  Both theories are firmly in the bankers camp in suggesting banks; not government should issue money, and they should issue it as debt.  The problem with our economy is not that we have too much money, the problem is that we have too much debt.  There is no way that we, our children, and grandchildren can ever pay the debt.  Neither camp gets it.

I agree with William Jennings Bryan when he said  - complete speech link

"Mr. Jefferson, who was once regarded as good Democratic authority, seems to have a different opinion from the gentleman who has addressed us on the part of the minority. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business.

I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business."

The discussion over who creates the money has been going on for hundreds of years and only recently has it dropped completely out of the conversation by two false pseudo sciences.  Both miss the all important fundemental issue of our age.  

Schiff' suggests in the video that the solution is to raise interest rates and to cut back on spending.  He obviously has no interest in math or he would understand that we are in fact drowning in interest debt.  Raising interest rates is medicine that will kill the economy.  He also suggests cutting back on spending while wanting to simultaneously increase military spending, after all, Iran needs attacked and we need more troops in Afganistan and Pakistan.

If you look at the problem mathemtatically, I think two things should be obvious.  We need interest free and some debt free money injected into circulation by the government. 

 goes211 wrote:

Larry, once again you really don't answer the question. If money was backed by a commodity and then loaned out, should the person that put his capital at risk be allowed to collect interest on the loan? Note that this person is not creating capital out of thin air and is therefore puting his capital at risk of non-replayment. If your answer is yes to this question, please explain (or point to) what exactly you criticism with Austrian theory is.

If people or businesses want to lend their money, then they should be compensated with a return.  Unfortunately, there is not enough existing money to sustain our economy.  Every day money is being destroyed through the repayment of bank debt, our money supply inherently contracts and must be supplemented by a constant stream of new money.  If no new money is created, we will fall into a deeper and deeper depression with debt defaults growing at an accelerating pace.

Does anyone think that banks have enough money to buy commodities to be used as money?  They would need to borrow the money which makes the intended commoditiy money debt money - which is the problem.  We know the government is broke, and they too would have to borrow money to buy the backing commodities.

Larry  

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Re: Have you seen the "Fear the Boom and Bust" video?

James,

Thank you for writing the producers, and for your clear and concise definitions of peak oil and the fundamental unsustainability of our monetary system.

 

Wendy

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Re: Have you seen the "Fear the Boom and Bust" video?
DrKrbyLuv wrote:

Neither Austrians nor Kenysians address the core issue - should money be issued as debt or credit?  Both theories are firmly in the bankers camp in suggesting banks; not government should issue money, and they should issue it as debt.  The problem with our economy is not that we have too much money, the problem is that we have too much debt.  There is no way that we, our children, and grandchildren can ever pay the debt.  Neither camp gets it.

How are the Austrians (which are against central banking)  firmly in the bankers camp?  Their is no way under a proper commodity monetary system, to get into the current level of debt.  Is it any real surprise that the Austrian's don't consider your core issue to be the most important.  They probably feel that if someone would have listened to them in the first place, it would not be as much of an issue.

DrKrbyLuv wrote:

The discussion over who creates the money has been going on for hundreds of years and only recently has it dropped completely out of the conversation by two false pseudo sciences.  Both miss the all important fundemental issue of our age.  

Nice.  Everyone that disagrees with you is clearly fallen under the spell of some sort of pseudo science.  It must be quite painful to have all the answers and be surounded by such ignorance.

DrKrbyLuv wrote:

Schiff' suggests in the video that the solution is to raise interest rates and to cut back on spending.  He obviously has no interest in math or he would understand that we are in fact drowning in interest debt.  Raising interest rates is medicine that will kill the economy.  He also suggests cutting back on spending while wanting to simultaneously increase military spending, after all, Iran needs attacked and we need more troops in Afganistan and Pakistan.

I think he would argue that raising interest to realistic rates would certainly cause very painful economic readustments and many defaults but the damage has already been done to the economy and the correction is actually the cure.

DrKrbyLuv wrote:

If you look at the problem mathemtatically, I think two things should be obvious.  We need interest free and some debt free money injected into circulation by the government. 

I understand that is your proposed cure but I think others believe it could have (possibly even worse) adverse effects about which I realize you disagree.  Maybe your proposal is part of the solution but do you really believe that the government can create enough credit money to retire the current debt money with some servere econonmic consequences?

DrKrbyLuv wrote:

 goes211 wrote:

Larry, once again you really don't answer the question. If money was backed by a commodity and then loaned out, should the person that put his capital at risk be allowed to collect interest on the loan? Note that this person is not creating capital out of thin air and is therefore puting his capital at risk of non-replayment. If your answer is yes to this question, please explain (or point to) what exactly you criticism with Austrian theory is.

If people or businesses want to lend their money, then they should be compensated with a return.  Unfortunately, there is not enough existing money to sustain our economy.  Every day money is being destroyed through the repayment of bank debt, our money supply inherently contracts and must be supplemented by a constant stream of new money.  If no new money is created, we will fall into a deeper and deeper depression with debt defaults growing at an accelerating pace.

Does anyone think that banks have enough money to buy commodities to be used as money?  They would need to borrow the money which makes the intended commoditiy money debt money - which is the problem.  We know the government is broke, and they too would have to borrow money to buy the backing commodities.

Larry  

I am glad to hear that you are not against charging usury / interest on risk capital.  Some people seem to believe a system can exist without interest and I just don't see how.

As for your question about there being enough money, that is a good question.  I doubt that we can transfer the curent obligations directly to any credit or commodity based system.  Getting from here to there will probably be quite painful.

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Re: Have you seen the "Fear the Boom and Bust" video?

Larry,

thankyou for what you've written. I am, as ever, fascinated with your take and willingly and happily study and digest the hard work you put into your posts. We've both come a long way in our thinking over the last year or so, and, meeting each other thread by thread on this forum from time to time has helped me gain a lot of perspective and personal growth from you, article by article.

I do sometimes feel that by simply writing a great deal here, some authors assume I'm fully expert in every facet and every topic that many write, simply based on the quantity of posts I've written and that, in itself, it gives pertinant reason to attack sometimes, for no other reason than because my views do not always stand for 'some' principle or another. 'Some' will actually chase me from thread to thread with insistance and cornering techniques. It's nice to see you are always polite, no matter how tenacious some followers looking to smite reasonable discussion into the gutter can be ...

I follow Peter Schiff in a way that helps in obtaining objectivity in the same way that I watch BBC News. On the subject of Peter Schiff I see adversity in his point of view agaiinst Keynesian ideal. On the subject of  BBC News, it sometimes feels as though, if it were a newspaper, it would at least have some substance to it so as to have something to hand to wipe my backside with? Here's to the long descent and filling in all these blanks ... Cool...

Take Care,

Paul

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Re: Have you seen the "Fear the Boom and Bust" video?

 

Larry,

Again,   the gold standard did not "fail" in 1933 because the gold standard ended at the outbreak of World War 1.    The more I read the more I realized how little I actually knew about the gold standard.

 The Panic Of 1819 is a great read                     

http://mises.org/daily/4020

Also,           The Monetary Breakdown Of The West,   The Gold Standard 1815--1914

http://mises.org/money/4s1.asp

 

 

 

 

 

 

 

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