We discuss competing business cycle theories, Austrian here
ITT: Financial Crises
Henry Clark
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Luke Kelly
Austrian economics is bullshit because praxeology is retarded.
Matthew Campbell
Bls no hate krugman
He is as much of a good guy as he is stupid
Ryan Perez
Post-Keynesians have the best understanding of the business cycle.
Austrians are absurd. As are Necolassicals like Krugman.
Parker Reed
I still don't understand modern banking. If all money is debt and the amount owed is always outpacing the amount that exists how can it all be payed back?
If it can't be payed back because there literally isn't enough money to do it doesn't that mean the system is inherently unstable?
I feel like a juggalo asking how magnets work. It's just beyond me.
John Rodriguez
He is a Keynesian who uses some New-Keynesian methods?
Caleb Thomas
It simply relies in ever expanding credit, which through inflation is meant to incentivize growth
Tyler Gomez
It works because the debt is not designed to be paid back instantaneously, in fact, sometimes you would hurt the creditor if you were to do so.
It is sort of like: "You will give me your cow today and I will in return give you all the apples from my apple tree for the next five harvest seasons". If the tree does not produce apples, the guy who gave you the cow will starve. That is why he will do it only when he has enough confidence, that it will happen, e.g. you have fifty healthy apple trees. And if you give the guy all the apples that would grow during the five years, he might not be able to eat them and they would rot.
Brayden Baker
Say's law is wrong because money, unlike other commodities, doesn't HAVE to be realized by a sale... money can lay dormant in hoards. Commodity money isn't really valueless so there is a desire to hoard it and keep it out of circulation. Money not in circulation serves as a store of value. The real objective value of the money commodity, not simply its fluctuating supply, determines absolute prices. The supply of money does not affect the level of prices.
Money is unlike other commodities primarily because:
M→C . . . P . . . C′→M′.
These are capital advanced (M→C), production (P) and realization (C′→M′)
The producer of the money commodity has no realization moment because money itself is immediately realized. All other commodities must be converted into money or the circuit of capital cannot be renewed. If an excess supply of one of these commodities occurs, either the price falls or a portion of the output cannot be sold. In both cases a part of the value produced is not realized. The use value of the commodities remains but it is useless to the capitalist himself who produced it simply for its potential to be realized as more money capital. The money commodity need not be realized since it's already realized value in its most liquid form.
The internal contradictions of capitalist development generally occur as a result of real developments within the production process itself but are merely manifested as monetary crises or crises of liquidity.
Austin Taylor
>If all money is debt
Not all money is debt... commodity money still exists and will always reassert itself in times of crises
>and the amount [debt] owed is always outpacing the amount [debt] that exists how can it all be payed back?
The creation of credit merely aggravate the realization crisis. Say you want to buy a trailer, which retails at $10,000. The trailer only costs $5,000 to build, so at a retail price of $10,000 it yields an industrial profit of $2,500 and a profit to the dealer (who bought the trailer wholesale at $7,500) of $2,500. However, you don't have $10,000, so the dealer arranges financing, which results in you signing a ten-year mortgage for $20,000. The commodity (the trailer) has now been realized, and the dealer is in possession of a $20,000 mortgage. However, the dealer needs cash to carry on his business, so he "discounts" this mortgage to a finance company which gives him $12,000 in cash for the mortgage. The finance company may then rediscount the mortgage (say for $14,000) to another finance company to get cash itself. This rediscounting can go on indefinitely, realizing a sum of money each time the mortgage changes hands. By the time the process is complete, the trailer has generated many thousands of dollars in sales over and above the real value of the trailer itself.
In the meantime, the trailer has fallen apart, and you're unable to pay off the mortgage because you've been laid off. It is easy to see from this example how in an economy where real goods are difficult or impossible to realize money will find its way into the sale of paper.
Julian Stewart
Praxeology cannot be retarded because it is based on deductive argumentation. And considering that whole deductive argument is constructed correctly, you can't really get more rigid argument than that.
Whole purpose of praxeology is to be unfalsifiable.
David Allen
*ding* *ding *ding*
youtube.com
Michael Evans
Exactly, it's rather ingenious
Eli Allen
>If all money is debt
Wait what?
I thought just the majority of money was debt. I mean there are still some people and companies who have liquid cash, for example, not to mention unleveraged assets.
> the amount owed is always outpacing the amount that exists how can it all be payed back?
I think it's because people are constantly creating value, expanding populations make consumer markets and labour pools larger, while post-industrial technological advances and spreading education systems mean, at the moment at least, industries get more and more efficient meaning net-costs drop even though on a nominative level "the amount owed" increases, the capacity to pay it back actually grows father than that rate.
That's why you look at somewhere like Japan with an aging population, early compulsory retirement, and according to Clay Christensen there's been no real growth segments or new "disruptive" industries. Compared to the US which has Silicon Valley among other burgeoning newish industries.
I also think that's why Merkel was so pro refugee: to combat a shrinking population she wanted to brain drain Syria's well moneyed/educated refugees for cheap (compared to increasing the birthrate and waiting and spending cash on 18 years to create a new generation of German workers), readymade white-collar workers.
Nolan Cooper
>My intelligence is most supreme
>What do you mean people are actually not doing what I think the ought to do?
>What do you mean my autismo brain is not superior to empirical evidence?
Anthony Wood
In a nutshell: As long as our ability to service the debt doesn't diminish (ie. as long as our GDP grows at a sufficient rate), then the national debt can continue to grow indefinitely
Isaiah Brooks
Is this guy ever correct?
Carson Cruz
He used to be correct in the 90s
Brayden Evans
>The internal contradictions of capitalist development generally occur as a result of real developments within the production process itself
What does this mean?
Asher Ward
>deductive argumentation.
You mean axiomatic argumentation. Austrian economists can argue anything when they assume anything fundamental about human behavior.
Nicholas Reyes
No its retarded lol
First of all it doesn't even follow the laws of deductive implication, and uses Mises's warped and incorrect version of "deduction". Second of all, the fundamental basis of all of Austrian econs conclusions are based upon the idea that action implies uncertainty, which it doesn't. I can still execute purposeful locomotion even if I had a view of everything within my future.
Its epistemically fucked and is a misconstrued version of Immanuel kants synthetic-analytic dichotomy.
Keep that pseudoscientific bullshit out of here.
That only refutes part of Says law. The other part is refuted by the existence of nominal and real rigidities within rational markets.
Hardly. Just because Keynes said it doesn't mean its right. Post-Keynesians have really retarded views on monetary policy and fiscal policy. The crowding out effect exists, equilibrium in markets exist, super low indefinite interest rates cause inflationary gaps, and using inflation to combat recessions only raises the inflation expectations.
The only rational school of thought is that of the New Keynesians.
Keynes refuted that bullshit back in the 30s, along with Friedman in the 60s and 80s, and just recently a paper on firm investment plans and interest rates refutes it as well. Stop holding onto retarded and irrelevant economic beliefs that only exist because of your anti government tendencies, and actually follow a school of thought that has some merit to it.