What Was the Source of Recessions Pre-Supply Side Economics

Economics is...

Not a science. :eek:

At best, it is an "informed speculation". :)

Do we have "schools" of chemistry? Or of physics? No, not really, because those fields have limited variables, and the outcomes of experiments may be reliably predicted. But we have "schools of economics, Keynsian and Austrian being only two of many (and they splintered into shards by the egomaniacal rending of "economists".) :eek:

Harry Truman (?) remarked once he wished all economists had only one arm, because they all kept saying, "on the other hand". :D

History, like English or Music or Philosophy is classified in with the Humanities, so pretentions to Asimovian psychohistorical prediction is at best a laughable conceit. :eek:

Right next to the Humanities are the Social Studies group, psychology, sociology, economics (or political economy, if you prefer), with it's pretentious sibling "political science". These are not sciences. We have not yet, and perhaps never will, charted all the relevant variables. :(

Shucks, we aren't even sure how the variables relate to each other. We have sometimes some inspired guesses. But there are insufficient amounts of honest fact available on which to make "scientific" conclusions. And lots of folklore. Yeah, lots of campfire stories. :p

Unfortunately, each "school" adheres to a different set of Legends and Myths. And the butterflies are savage and feral, to say the least... not a tame one in the pack. :mad:

So, everyone is free to argue the point(s) about the functioning of the economy, just as arguing politics. With as much authority granted to the ditch-digger as to the PhD. Because, at bottom, it's all opinion anyway. And everyone has at least one of those. :rolleyes:
 
Excatly.

And note, I've always been careful to separate out Keynes' ACTUAL theory (which I will concede isn't a BAD idea, if practiced AS he did, it's acutally a very, very old theory, just updated, I suggest you see Jospeh's advice, in the Bible) vs. what is CLAIMED to be his.

I disagree with that government is _smarter_ than the free market, nor do I agree with the stock market as a indicator on how HEALTHY the economy is. (I don't. I suggest for research, research where job creation came from, pre Great Recession, and then look at EXCATLY what the Stock market represents, in real terms: Hint, it's the health of a SUBSET of the economy.)

I didn't even say government should not have ANY say, I do think in certain cases (I pointed out the FDIC, for example, which I agree with, hell, I'll go as far as to state that if the gov's on the hook for the deposits, the goverement should take reasonable precautions to PROTECT them, and require banks that want their FDIC logo, what they can't do, since we DO have a good idea of bad loans/bets in the economy now. I will even admit that protection from abusive monopolies and leveling the field so everyone's on the same level, outside money to spend on their businesses/activies, and drive, is a good thing.)

I EVEN STATED, in my examples a case of _good government intervention_ in the economy.
(Truman's post war GI bill activites.)

What my study of history has taught me about economics: "There is no single right answer"

Do I favor a more free market (Like Chile, which is close to Austrian ideals, or Singapore?) Yes.
Do I think a government has an intrest IN the economy, and should take some actions? Or do some 'economic' work? At times, yes. The "private" sector won't do certain things (certain roads come to mind...), or if they do, would cost more than the government, even with what is to me, it's built in problems, would spend directly. (Let's say this: I despise President Johnston the most out of post WW2 presidents, for example)
 
Aye, there's the Rubarb

Excatly.

And note, I've always been careful to separate out Keynes' ACTUAL theory (which I will concede isn't a BAD idea, if practiced AS he did, it's acutally a very, very old theory, just updated, I suggest you see Jospeh's advice, in the Bible) vs. what is CLAIMED to be his.

Yes, quite.

And Joseph's advice was basically just common sense (if you have a surplus, don't fritter it away.)

Unfortunately, there arose a Pharaoh who knew not Joseph (but did revel in an ideology.)

Which, in relation to the topic under discussion, leads me to favor pragmatic solutions regardless of whether it fits with some ideology or not.

Because far too often, when the theory loses to the facts, it is the facts which are swept under the rug. (With the eternal-caveat that one solution is not going to work for all time and in every place.)
 
I agree with what someone said above, I think MageOhki, that the economy is complex like a weather system is complex.

To me, the response is to pick a handful of the most important things, and I think far and away the most important number for a modern economy is current growth rate. And then , medium step, feedback , medium step, feedback. But I have a heck of a hard time selling that!

The other area of tension for me, is this focus on indefinite growth in a finite world. Somehow we need to be about increasing open fields for people and more good options, while at the same time doing s better job and being smarter on resources.
 
Yes, quite.

And Joseph's advice was basically just common sense (if you have a surplus, don't fritter it away.)

Unfortunately, there arose a Pharaoh who knew not Joseph (but did revel in an ideology.)

Which, in relation to the topic under discussion, leads me to favor pragmatic solutions regardless of whether it fits with some ideology or not.

Because far too often, when the theory loses to the facts, it is the facts which are swept under the rug. (With the eternal-caveat that one solution is not going to work for all time and in every place.)

Yep. Excatly.

There is no one cause of recessions, though 'oversupply' of one specific TYPE, generally seems to be the key, in a modern economy. The problem is, what _triggers_ that recession, 'the over supply' of various items, is always apparently different.

Example: it's usually accepted that the Austrian banks calling in loans, began the Great Depression (NOT the Stock Market crash, which was a effect, not a cause). Why did the banks call in the loans? But, looking _deeper_ you see a decade of farmers getting deeper and deeper into debt, due to extremely low food prices (one of the reasons FDR chose to pay farmers NOT to grow, though honeslty, THIS is one of his actions I disagreed with. I'd have simply BROUGHT the surplus.) Given that farmers by and large lived off credit, see above. Banks began to realize they were getting VERY badly overextended, and so a bank loan call run started, which, given the stock market was being traded ON margin, triggered the crash.

It's why some beilve (and note: I don't), the stock market is an indicator of the economy's health. Mabye _trailing_ indicator of a specific sector, now, given margin and buy on loan have gone away, but I generally prefer to look at the price of COMMIDITIES, such as food, labour (both wages and numbers of workers as a %) and raw material. Price of food gives a good idea what's going on in credit markets, while raw material (iron, copper, rare earths) gives an idea of what's going on in manf. more than actual production, since the prices of raw material are acutally reflective of 6 months into the FUTURE production, at the least. As well as spot inventories. And, now, cargo shipping indexes.

The previous recession/depression (1919), was a easy one. End of war production/troops coming home. Capital crunch at the SAME time a Labor surplus hit.


And note: I've been careful to keep AWAY from pre 1900 recessions/et al, since they're a lot... different, and in a lot of ways, modern economic activity is a post 1900 situation.



Apollo is right, in a way, that Ben's choice to make capital easy to aquire (QE, effectively ZIR, et al), likey helped the economy from getting worse. the 2008 event was a capital crunch, no questions. However, where the capital was SPENT, is not, given data here and there.

Side note: I wasn't specific on TARP. Yes, I agree that the loans were paid back, and that it was somewhat helpful.

But question: Wouldn't it have been better to have the government acutally _buy_ up all the homes that were troubled, and readjust the loans to reality, or a longer period of time?

Instead of bailing out the big banks/et al direclty?

Something to think about. Since, as I pointed out, three other data points do NOT indicate the economy has improved.

1: Historical average growth (3.9%, pretty constant, btw) has not returned to normal. (As I pointed out, there's only been one president to date in his 2 terms that has NOT had 3% or better growth economically, for a whole year. Why can be debated)

2: Work force % is _still a good 3.5 or so % below recession hit (62.x% vs 66%, that's a _bad_ thing) Wages, in PPP terms (ie, real purchasing power) HAVE GONE DOWN.
NOW, to be fair, the historical AVERAGE, pre 1970: 58%. You COULD argue, and I WILL state I can't disagree, that the 60%+ rate is an aberration, and we're in the process of resetting FROM that aberration. (I don't know.)

3: Inflation contrary to the numbers the media reporting IS happening. Now, to be fair, I'm not a "all inflation is bad", person, but the fact the books are being cooked, makes me wonder. (Again, how much did you pay for gas and food in 2006, and how much now?)

4: Small business starts and creation has been since the recession _extremely_ low. And given that at least 2/3rds of all new jobs COME from small businesses... (Why?)

Yep.

There be problems.

This is what I _see_.

Why, is the issue, and I'll be even MORE honest, that rational people can disagree, or argue for and agasint various 'root causes'

And in some cases, have both or more be RIGHT.


To be honest, Economists are still searching/asking/trying to understand the WHY for recession triggers.

Are they a natural function of the economy? (Quite possibly, at least in this reality).

Or are they an sign something ELSE is wrong, that often has nothing to do with the underlying fundamentals of economic theory?

If you can answer that, there's a nobel prize or two in your future.
 
Last edited:
I'm somehow reminded of that quote: "Who are you going to believe? Me or your lying eyes?"

3: Inflation contrary to the numbers the media reporting IS happening. Now, to be fair, I'm not a "all inflation is bad", person, but the fact the books are being cooked, makes me wonder. (Again, how much did you pay for gas and food in 2006, and how much now?)

Please tell us, who is cooking these books ?
 
Why? Where's your justification for this? If the government forms a corporation (ala the FDIC) to INSURE the deposits, where is the rationale for the government to have a say in how the deposits are spent by the actual 'owners' of the deposits?

I'm sorry, I don't see that logic. If you say: the goverment run corporation should have a right to say how much of 'reserves' a bank should have on hand to be insured, besides it's payments, no quibble. But saying excalty how the money MUST be spent, by private people? Why should they?

That's not a free market, that's command economy. Indirect, but still is.

I don't see the logic, or the justification for it.

No different than saying people can't commit suicide and expect a hefty insurance payout, or that smokers have to pay more insurance premium. If you want the government to be involved, it gets to be involved anything else is hair splitting.

No quibble here, money is a shortcut to move beyond pure barter economies, and in a way, money is just a more advanced form of barter. Banks just store that 'vaule'

Yet it does, please see several nations. Sorry, try again. And where did I say it was a safe place to store vaule?
I didn't.

It's an implicit argument you are making by disagreeing with "printing" money. You just don't want to connect the dots, because it would lead to the inevitable conclusion that macroeconomics isn't the same as personal finances. Moral hazard is always a problem, but when the Fed Chairman (supposedly objective party) doles out cheques and in the end it is all paid back, moral hazard is a moot point.

Good question on how bad it could have gotten. As for the 'hero': Again, take a look at _actual growth of the economy (even as crooked as some suspect our books are), and work force rates. I disagree with your view.

And how do we know he didn't _extend the problem_?

Is the stock market a vaild comparison of actual economic strength?
I look at home ownership rates (DOWN).
Work force rates (DOWN)
Acutal PPP incomes (DOWN)

Try again.

Agreed. I do not say this wasn't a bad idea.

Inflation rates are... curious. How much did it cost you to buy a pound of hamburger in 2006, and now? Same with gas. (I can tell you I paid less in 2006)
Again: Keynes' theory was NOT printing money. Others included that (and it's an old, old practice...) I will concede the US has not suffered significant damage from it, YET.

Go back to my cooked books suspicion

And go see the Stock market.. .and why I question it's vaule as health of an economy.

If you belive that, so be it.

I _disagree_.

I point out Harding, et al, and Vockner's actions in the late 70's and early 80's

This is more easily explained as the transfer of manufacturing overseas, and the inability for financial services / services / business industry to handle all of that. Yes it was a bubble, it popped in 2008, but it was a long time coming. Now you have men like this http://money.cnn.com/2016/05/04/news/economy/america-left-behind-white-men/ now for men like this, how can you blame Ben Bernanke or any sort of cooked books or government interference? The problem is specific and direct -- inability of the economy to absorb people without information age skills.

I assume by mentioning cooked books and Volcker Rule, you are trying to say right now is stagflation. Well, the reason why I asked you how bad it could get, is to see if you could compare to the recessions of the 90's or the 70's. Anyone who was around at that time can tell you, it was much, much worse then with much lower economic growth and opportunities. If you want to say "cooked books" and go on about how contracting the money supply and stopping inflation could make 2008 better, the onus is on you because all the public numbers say different and more importantly there are more basic explanations for America's problems. Things look pretty bright right now, unless you have the skills of the men in that article. The solution would be a GI Bill-esque retraining program (more government intervention).

Still doesn't change the fact that Bernanke is a world hero, at least by accident if not on purpose. You can disagree if you want, but I do not want to live in a world where the money supply contracts. If you don't believe in economics and like history better, just use your common sense. What happens if the money supply contracts? What do you think happens when there is less money around? Do you think there will be more economic transactions or less? Worse still, what happens to people who have mountains of money (hint -- they get more wealth FOR FREE)? These are the questions you should answer, instead of saying "printing money is wrong" by default.
 
...3: Inflation contrary to the numbers the media reporting IS happening. Now, to be fair, I'm not a "all inflation is bad", person, but the fact the books are being cooked, makes me wonder. (Again, how much did you pay for gas and food in 2006, and how much now?)...

Inflation, like interest, compounds over time. A very low inflation rate of 2% adds up to 22% over 10 years; 2.5% is 28%. In addition, prices of certain goods will be above and below the overall figure. There's nothing nefarious going on, and certainly no cooking of the books. In any case, a little inflation is better than deflation, which leads to very bad things when people expect the value of things to drop and they start deferring consumption. By any reasonable measure, inflation over the past two decades has been quite modest. Ask someone who lived through the 1970s what real inflation looks like.
 
Put all the responses in one.
I'm somehow reminded of that quote: "Who are you going to believe? Me or your lying eyes?"



Please tell us, who is cooking these books ?


Can't recall the excat office off hand (too many government offices!): BUT, CPI has had several indicators (very much useable) removed, by the Federal gov.

No different than saying people can't commit suicide and expect a hefty insurance payout, or that smokers have to pay more insurance premium. If you want the government to be involved, it gets to be involved anything else is hair splitting.
And I never said that was wrong on WHO is being insured. Period. But, telling those who directly 'own' the debt (in banking terms, your checking/savings account is a DEBT on the bank) what to do is what I'm pointing out.

I'm ALL in favor of a restored Glass Segal, after all.

This is more easily explained as the transfer of manufacturing overseas, and the inability for financial services / services / business industry to handle all of that. Yes it was a bubble, it popped in 2008, but it was a long time coming. Now you have men like this http://money.cnn.com/2016/05/04/news/economy/america-left-behind-white-men/ now for men like this, how can you blame Ben Bernanke or any sort of cooked books or government interference? The problem is specific and direct -- inability of the economy to absorb people without information age skills.
Some disagree (I think it's more complex than that, btw, but that's my view.). Note that I never specifically defined WHAT the credit crunch in 2007 was. I can see about a half dozen (including several issues NOT discussed on the board) reasons for the Capital crunch. Suffice it to say, my view of the credit crunch is a LOT different than your theory. Note exactly what I stated: I called the 2007 event a _capital_ crunch. Never on what CAUSED it.
I assume by mentioning cooked books and Volcker Rule, you are trying to say right now is stagflation. Well, the reason why I asked you how bad it could get, is to see if you could compare to the recessions of the 90's or the 70's. Anyone who was around at that time can tell you, it was much, much worse then with much lower economic growth and opportunities. If you want to say "cooked books" and go on about how contracting the money supply and stopping inflation could make 2008 better, the onus is on you because all the public numbers say different and more importantly there are more basic explanations for America's problems. Things look pretty bright right now, unless you have the skills of the men in that article. The solution would be a GI Bill-esque retraining program (more government intervention).
No, I am NOT trying to say. I'm going to mention this elsewhere, but I'm going to make a very pointed point: "Don't assume. Do not read more than I'm acutally saying" I'm the LAST person to do that with because I know ALL too well how implicit and side speech works, and how screwed up it can be.

Are we in stagflation? Ask me in 8-10 years. As for being around in the 70's... I was, Sorry! And looking for a job then too. (Yep, I'm that old): Let me say this. What _I_ see? See with my own eyes, talking to people, and acutally those on the lower end of the pole: I don't know if we're worse than the 70's. I suspect we might be. I do know that small business starts are _way_ down. BELOW the 1970's levels.

>> And as noted, new jobs come from them. Take it for what you will.

Still doesn't change the fact that Bernanke is a world hero, at least by accident if not on purpose. You can disagree if you want, but I do not want to live in a world where the money supply contracts. If you don't believe in economics and like history better, just use your common sense. What happens if the money supply contracts? What do you think happens when there is less money around? Do you think there will be more economic transactions or less? Worse still, what happens to people who have mountains of money (hint -- they get more wealth FOR FREE)? These are the questions you should answer, instead of saying "printing money is wrong" by default.

By who's words? I know people who absoultly hate him. PhD's in Business AND in economics, some billionaires, too. SOME people think he's a hero. I never stated ETHEIR WAY. I dislike the fawning he _gets_, when WE DON"T KNOW yet. My view: he did the best he could with his paradigm and the situation he understood, with the amount of issues he had. Do I think he did the right thing? I disagree with it, but _he might have been right_. (and I will even state for the record, that QE, ie, direct buying of T-bills, IF they're held to time, by the FR, given laws we have on the books, _might be the best solution for the US Debt problem!_) Time will tell. My view IS NOT OF AN ECNOMIC major. I stated previously: HISTORIAN.

Meaning, I don't make snap judgements or call a man a hero or a villain til a good bit of time afterwards.

It's why I might _STATE_ I BELIVE XYZ is going to be revered or judged badly, but it's a BELIF. Not the truth, and that's subject to change.


>> As to answer what I think happens when there's 'less' money in the system, gee: RECESSION. What do you think Capital crunch means?

Again, see below. I'm getting _really_ tired of people reading more into what I state, and NOT reading what I state to see what I mean. I flat out stated, that some recessions are an credit/capital crunch, meaning _less money_.
Amazing that.

Do NOT assume, do not read more into what I'm saying than anything. That way leads madness.

What happens when less 'money' (note the quotes) is deflation: Borrowers get screwed, savers are rewarded. (Side note, the US for the majority of it's first 150 or so years had deflation, very mild, but deflation)

Inflation is the reverse.
Again, you assume that I like one of them. I don't. I don't dislike one or the other. My preference is for zero inflation or deflation, but in the situation the Federal balance books are(assuming they're right), I'd lean towards inflation as being MUCH better than deflation.
It's an implicit argument you are making by disagreeing with "printing" money. You just don't want to connect the dots, because it would lead to the inevitable conclusion that macroeconomics isn't the same as personal finances. Moral hazard is always a problem, but when the Fed Chairman (supposedly objective party) doles out cheques and in the end it is all paid back, moral hazard is a moot point.
Those are YOUR dots. You again, assume. Don't. And no one's objective. EVERYONE is Biased. Everyone. Me, you, EVERYONE. That's what the term paradigm means.

The trick is _understanding_ that.

I've never brought morality into this discussion, nor will I. Simply because I don't think it's needed, nor the point I'm discussing.
Though I'll point out: "WHO pays back the checks, and how?"

I've been very careful NOT to bash anyone, nor state some things that I do think are true, but have no proof or validity, except a hunch or two.

I Dislike printing money for a completely DIFFERENT reason, from my HISTORY focus.

Printing money has the PROVEN potential to be abused, far more often than it helps. (or do the words hyperinflation mean anything to you?) Generally(NOT ALWAYS, to be clear!), when nation-states 'print' money, it destroys the confidence IN The currency. Both externally, AND INTERNALLY. We see this in Venz. RIGHT now.

Money, at it's heart (ANY MONEY, GOLD INCLUDED!) is in the end, _trust and confidence_ based. Printing money has the severe proven potential to destroy that trust.

THAT's why I don't like it. I even admit at times, CAREFUL (it's possible, I guess, and one could say the post WW2 history has been exactly this on a grand scale.) printing of money CAN work, and SHOULD be done. (Note my point about QE's long term possible effect)

I can give you a list on them. My view is this: CAREFUL 'debasement' of a currency MIGHT help. How often are people careful?

Again, I'm not a Neo-Kenysian, I'm an Austrian (somewhat, to be honest, I disagree with some aspects of the Austrian schools, as well as some aspects that they take it to. There are some neo-Kenysian theories that are proven to WORK, too. I did point out the GI bills of post WW2, did I not? Lazzie-Fair is JUST as bad as command economy to me. That way leads what I hate the most: Crony Capitalism WHICH is what I think we're AT right now.) type thinker, in economic terms. Process that, WITH a _HISTORY_ focus before you leap to assumptions that aren't right.

Again, do not assume. If you're thinking I mean one thing, where I didn't type it, there's a good chance you're wrong, without a clear cut view of my paradigm.

Inflation, like interest, compounds over time. A very low inflation rate of 2% adds up to 22% over 10 years; 2.5% is 28%. In addition, prices of certain goods will be above and below the overall figure. There's nothing nefarious going on, and certainly no cooking of the books. In any case, a little inflation is better than deflation, which leads to very bad things when people expect the value of things to drop and they start deferring consumption. By any reasonable measure, inflation over the past two decades has been quite modest. Ask someone who lived through the 1970s what real inflation looks like.

Yet... gas, after I deduct for taxes: about 35% higher, concede that is partially due to oil prices being batshit insane off and on, and in flux.
Better examples:
Hamburger: 1.49 a pound in '06 (CA), now, 2.79 in SD!
Bread: average about .99, now about 1.59.
SAME BRAND. AND _less ounces per package_. (I had the maker CONFIRM this to me, personally)

I can go on, do you want me to?

Again: If I did my math right, per what the US government has released: My prices PER OUNCE on staples should be about 19-21% higher.

Average price per ounce? About 35%. (I know it's more than 30%, less than 40%)

Personal experience. You tell me.

Again: I lived in the 70's. Was a teen, yes, but I did. And so did my uncle, and mother: BOTH of which are saying to me: "Huh, this is familiar." Is it as bad? not 100% sure, honestly. I don't THINK it is, but it's not _good_ either.

One thing _everyone I've talked to_ who was over 22 in 1970, and working: "It seems our paycheck isn't going as far as it did back then..." _everyone_.

Stagflation technically is when _wage growth_ keeps enough pace with inflation.

meaning _PURCASCING POWER_ hasn't fallen in work hours.

That's why I've been careful to mention _PPP_. NOT actual 'cash'

I, myself, have a good job, and my paycheck has gone up more than my costs (it's nice getting promoted)

But what _I_ am hearing? Isn't good at all. You might hear differently, but this is what _I_ hear, and what _I_ see, and what my records show.

Take it for what it's worth.

education for your information: PhD History (Speicality: Asian), PhD Political Science (IR). I do have a minor in econ, but that was 15 years ago, so.

One thing why I dislike the comparison to the 70's: The situations are NOT the same (sorry, in some ways the _results are the same, agreed!_)

In the 70's, work force PARTIPATION PERCENTAGE (note this, the number of people looking/having work vs. total working age population, however defined) was _INCREASING over that decade, from the 58.x% or so of average American 1900-1967 period, to the 66.x% peak. This combined with the baby boom generation FULLY hitting the workforce, _at the same time_ their elders were STILL IN IT, and NOT getting out in the numbers expected, AS WELL as the start of the massive electronics boon, for productivity. Not to mention as well as Japan, Europe, et al finally recovering from post WW2 issues, and US companies _not being nimble enough to adapt FAST_.

Ergo: Yes, there were less jobs for each worker, because as a function of the work force %, there WERE. 70's recessions to me, were the classic oversupply recession, due to oversupply of LABOUR. 07's event is a bit different, as I've stated.

In this recession/depression (depends how you define it) we have _shed_ 4% of that number. Is it good? Is it bad? I _don't know_. History argues that it MIGHT be. (Again, I keep pointing this out: the 70's to 2007 part. rates are an abnormality, in some ways)

One other point: I DO NOT LOOK at what's good for 6-18 months.

I look at the _DID IT WORK OVER LONG TERM_. Hades, I'm not even sure PERSONALLY, Vockner's rule WORKED for Regan, as much as his "Let's confront the Evil Empire and push their economy to breaking" theory.

THAT"s why I feel calling Ben a hero _now_ is wrong. I'm also not calling him a villain. His QE/keeping capital flowing _might have been the right solution LONG TERM_. I don't know. I don't _THINK_ so, but I honestly don't think it's his fault if so, and I'm quite prepared (happily so, even!) to be proven wrong here, in 10-20 years.

If you go "For that moment" ala, Ben acting as a ER doc? I can concede with no problems he likey is a hero.

But, for _long term_ ala Internists? That's what bugs me. Bugs me a LOT.

And to be even MORE fair to ANY Fed Chairman: They can't do it alone, or even do half, hades, a THIRD of the lifting, and I have serious issues with several other people who have the power to affect the economy.

For your information: My general view of the role of the government in economy:
1: Provide a LEVEL playing field. (No winners or losers, folks, gov's track record isn't the best here, historically! (Not that they haven't done on occasion well, btw.))
2: Spend money the most effective way to attain the goals that the people who consent to the goverment's existence/goverance want.
(Yes, THIS DOES mean if it's cheaper/more effective, even with Gov's built in ineff's. to own a shipyard, or tank plant, the gov SHOULD)
(Yes, this does mean, I belive the gov't has a role in social services/social net, I might argue on WHAT it is, but I don't disagree that it has a role)
That's it. Nothing more, nothing less.

So: Back to the bank one.

Yes. It is a desire of the governed, to have their deposits protected. The Feds should, if no private companies have stepped up (which they did not!) to insure them. Yes, the Feds _can_ and _should_ (FOR SELF INTREST, and PROTECTING the Taxpayer's money! It's NOT THE GOVERMENT'S, it's the TAXPAYER'S!) establish conditions to BE insured ON THE BANKS ALONE. And the banks SHOULD have the right to -refuse- those conditions, on the condition that they don't get insured, and their deposits ARE NOT PROTECTED.

If you read: "You don't think the gov't's job is to bail out corps, you're right." Outside EXPLICT NATIONAL INTREST, the gov't has no reason, or need to pick winners or losers in the market.

Apollo IMPLIED (and if he did not intend so, I apologize to him, because it's wrong to do so) that Gov't has the right to say what's done with each individual account, that's where I disagree. If he did not intend such, again, I apologize.
 
Put all the responses in one.

Can't recall the excat office off hand (too many government offices!): BUT, CPI has had several indicators (very much useable) removed, by the Federal gov.


And I never said that was wrong on WHO is being insured. Period. But, telling those who directly 'own' the debt (in banking terms, your checking/savings account is a DEBT on the bank) what to do is what I'm pointing out.

I'm ALL in favor of a restored Glass Segal, after all.

Well then, you hold contradictory opinions, because Glass Steagall tells banks what they can or can't do with depositor's money. Volcker rule (GS lite) tells banks what they can or can't do with depositor's money, namely they can buy government bonds or municipal bonds, but they can't buy hedge funds and so on.

Some disagree (I think it's more complex than that, btw, but that's my view.). Note that I never specifically defined WHAT the credit crunch in 2007 was. I can see about a half dozen (including several issues NOT discussed on the board) reasons for the Capital crunch. Suffice it to say, my view of the credit crunch is a LOT different than your theory. Note exactly what I stated: I called the 2007 event a _capital_ crunch. Never on what CAUSED it.

Well if you subscribe to the Austrian view of economics I would have thought you would subscribe to the actions of individuals to explain economic issues. That's the problem with cherry picking to fit a particular outcome or view; if you look holistically from an Austrian point of view, whole segments of the population which are undereducated or underskilled or underemployed explains perfectly all our current economic problems. And it puts the onus on the individual and individual failings rather than blaming Voodoo economics and so on. It's rather hard to explain away, earning $35 dollars / hour with one man working and the wife not, going down to $12 dollars an hour (if lucky) with both working with zero benefits and job security. Of course since you haven't shared I will assume your views are either controversial or off-topic.

No, I am NOT trying to say. I'm going to mention this elsewhere, but I'm going to make a very pointed point: "Don't assume. Do not read more than I'm acutally saying" I'm the LAST person to do that with because I know ALL too well how implicit and side speech works, and how screwed up it can be.

Are we in stagflation? Ask me in 8-10 years. As for being around in the 70's... I was, Sorry! And looking for a job then too. (Yep, I'm that old): Let me say this. What _I_ see? See with my own eyes, talking to people, and acutally those on the lower end of the pole: I don't know if we're worse than the 70's. I suspect we might be. I do know that small business starts are _way_ down. BELOW the 1970's levels.

>> And as noted, new jobs come from them. Take it for what you will.

By who's words? I know people who absoultly hate him. PhD's in Business AND in economics, some billionaires, too. SOME people think he's a hero. I never stated ETHEIR WAY. I dislike the fawning he _gets_, when WE DON"T KNOW yet. My view: he did the best he could with his paradigm and the situation he understood, with the amount of issues he had. Do I think he did the right thing? I disagree with it, but _he might have been right_. (and I will even state for the record, that QE, ie, direct buying of T-bills, IF they're held to time, by the FR, given laws we have on the books, _might be the best solution for the US Debt problem!_) Time will tell. My view IS NOT OF AN ECNOMIC major. I stated previously: HISTORIAN.

Meaning, I don't make snap judgements or call a man a hero or a villain til a good bit of time afterwards.

It's why I might _STATE_ I BELIVE XYZ is going to be revered or judged badly, but it's a BELIF. Not the truth, and that's subject to change.


>> As to answer what I think happens when there's 'less' money in the system, gee: RECESSION. What do you think Capital crunch means?

Again, see below. I'm getting _really_ tired of people reading more into what I state, and NOT reading what I state to see what I mean. I flat out stated, that some recessions are an credit/capital crunch, meaning _less money_.
Amazing that.

Do NOT assume, do not read more into what I'm saying than anything. That way leads madness.

What happens when less 'money' (note the quotes) is deflation: Borrowers get screwed, savers are rewarded. (Side note, the US for the majority of it's first 150 or so years had deflation, very mild, but deflation)

Inflation is the reverse.
Again, you assume that I like one of them. I don't. I don't dislike one or the other. My preference is for zero inflation or deflation, but in the situation the Federal balance books are(assuming they're right), I'd lean towards inflation as being MUCH better than deflation.

Those are YOUR dots. You again, assume. Don't. And no one's objective. EVERYONE is Biased. Everyone. Me, you, EVERYONE. That's what the term paradigm means.

The trick is _understanding_ that.

I've never brought morality into this discussion, nor will I. Simply because I don't think it's needed, nor the point I'm discussing.
Though I'll point out: "WHO pays back the checks, and how?"

I've been very careful NOT to bash anyone, nor state some things that I do think are true, but have no proof or validity, except a hunch or two.

I Dislike printing money for a completely DIFFERENT reason, from my HISTORY focus.

Printing money has the PROVEN potential to be abused, far more often than it helps. (or do the words hyperinflation mean anything to you?) Generally(NOT ALWAYS, to be clear!), when nation-states 'print' money, it destroys the confidence IN The currency. Both externally, AND INTERNALLY. We see this in Venz. RIGHT now.

Money, at it's heart (ANY MONEY, GOLD INCLUDED!) is in the end, _trust and confidence_ based. Printing money has the severe proven potential to destroy that trust.

THAT's why I don't like it. I even admit at times, CAREFUL (it's possible, I guess, and one could say the post WW2 history has been exactly this on a grand scale.) printing of money CAN work, and SHOULD be done. (Note my point about QE's long term possible effect)

I can give you a list on them. My view is this: CAREFUL 'debasement' of a currency MIGHT help. How often are people careful?

Again, I'm not a Neo-Kenysian, I'm an Austrian (somewhat, to be honest, I disagree with some aspects of the Austrian schools, as well as some aspects that they take it to. There are some neo-Kenysian theories that are proven to WORK, too. I did point out the GI bills of post WW2, did I not? Lazzie-Fair is JUST as bad as command economy to me. That way leads what I hate the most: Crony Capitalism WHICH is what I think we're AT right now.) type thinker, in economic terms. Process that, WITH a _HISTORY_ focus before you leap to assumptions that aren't right.

Again, do not assume. If you're thinking I mean one thing, where I didn't type it, there's a good chance you're wrong, without a clear cut view of my paradigm.



Yet... gas, after I deduct for taxes: about 35% higher, concede that is partially due to oil prices being batshit insane off and on, and in flux.
Better examples:
Hamburger: 1.49 a pound in '06 (CA), now, 2.79 in SD!
Bread: average about .99, now about 1.59.
SAME BRAND. AND _less ounces per package_. (I had the maker CONFIRM this to me, personally)

I can go on, do you want me to?

Again: If I did my math right, per what the US government has released: My prices PER OUNCE on staples should be about 19-21% higher.

Average price per ounce? About 35%. (I know it's more than 30%, less than 40%)

Personal experience. You tell me.

Again: I lived in the 70's. Was a teen, yes, but I did. And so did my uncle, and mother: BOTH of which are saying to me: "Huh, this is familiar." Is it as bad? not 100% sure, honestly. I don't THINK it is, but it's not _good_ either.

One thing _everyone I've talked to_ who was over 22 in 1970, and working: "It seems our paycheck isn't going as far as it did back then..." _everyone_.

Stagflation technically is when _wage growth_ keeps enough pace with inflation.

meaning _PURCASCING POWER_ hasn't fallen in work hours.

That's why I've been careful to mention _PPP_. NOT actual 'cash'

I, myself, have a good job, and my paycheck has gone up more than my costs (it's nice getting promoted)

But what _I_ am hearing? Isn't good at all. You might hear differently, but this is what _I_ hear, and what _I_ see, and what my records show.

Take it for what it's worth.

education for your information: PhD History (Speicality: Asian), PhD Political Science (IR). I do have a minor in econ, but that was 15 years ago, so.

One thing why I dislike the comparison to the 70's: The situations are NOT the same (sorry, in some ways the _results are the same, agreed!_)

In the 70's, work force PARTIPATION PERCENTAGE (note this, the number of people looking/having work vs. total working age population, however defined) was _INCREASING over that decade, from the 58.x% or so of average American 1900-1967 period, to the 66.x% peak. This combined with the baby boom generation FULLY hitting the workforce, _at the same time_ their elders were STILL IN IT, and NOT getting out in the numbers expected, AS WELL as the start of the massive electronics boon, for productivity. Not to mention as well as Japan, Europe, et al finally recovering from post WW2 issues, and US companies _not being nimble enough to adapt FAST_.

Ergo: Yes, there were less jobs for each worker, because as a function of the work force %, there WERE. 70's recessions to me, were the classic oversupply recession, due to oversupply of LABOUR. 07's event is a bit different, as I've stated.

In this recession/depression (depends how you define it) we have _shed_ 4% of that number. Is it good? Is it bad? I _don't know_. History argues that it MIGHT be. (Again, I keep pointing this out: the 70's to 2007 part. rates are an abnormality, in some ways)

One other point: I DO NOT LOOK at what's good for 6-18 months.

I look at the _DID IT WORK OVER LONG TERM_. Hades, I'm not even sure PERSONALLY, Vockner's rule WORKED for Regan, as much as his "Let's confront the Evil Empire and push their economy to breaking" theory.

THAT"s why I feel calling Ben a hero _now_ is wrong. I'm also not calling him a villain. His QE/keeping capital flowing _might have been the right solution LONG TERM_. I don't know. I don't _THINK_ so, but I honestly don't think it's his fault if so, and I'm quite prepared (happily so, even!) to be proven wrong here, in 10-20 years.

If you go "For that moment" ala, Ben acting as a ER doc? I can concede with no problems he likey is a hero.

But, for _long term_ ala Internists? That's what bugs me. Bugs me a LOT.

And to be even MORE fair to ANY Fed Chairman: They can't do it alone, or even do half, hades, a THIRD of the lifting, and I have serious issues with several other people who have the power to affect the economy.

For your information: My general view of the role of the government in economy:
1: Provide a LEVEL playing field. (No winners or losers, folks, gov's track record isn't the best here, historically! (Not that they haven't done on occasion well, btw.))
2: Spend money the most effective way to attain the goals that the people who consent to the goverment's existence/goverance want.
(Yes, THIS DOES mean if it's cheaper/more effective, even with Gov's built in ineff's. to own a shipyard, or tank plant, the gov SHOULD)
(Yes, this does mean, I belive the gov't has a role in social services/social net, I might argue on WHAT it is, but I don't disagree that it has a role)
That's it. Nothing more, nothing less.

So: Back to the bank one.

Yes. It is a desire of the governed, to have their deposits protected. The Feds should, if no private companies have stepped up (which they did not!) to insure them. Yes, the Feds _can_ and _should_ (FOR SELF INTREST, and PROTECTING the Taxpayer's money! It's NOT THE GOVERMENT'S, it's the TAXPAYER'S!) establish conditions to BE insured ON THE BANKS ALONE. And the banks SHOULD have the right to -refuse- those conditions, on the condition that they don't get insured, and their deposits ARE NOT PROTECTED.

If you read: "You don't think the gov't's job is to bail out corps, you're right." Outside EXPLICT NATIONAL INTREST, the gov't has no reason, or need to pick winners or losers in the market.

Apollo IMPLIED (and if he did not intend so, I apologize to him, because it's wrong to do so) that Gov't has the right to say what's done with each individual account, that's where I disagree. If he did not intend such, again, I apologize.

Well, I'm sorry that people "read into" your words or assume, but you do tend to write a lot. As for the history focus, I will agree that printing enormous amounts of money is bad; for example, North Korea was doing a currency reform for a few years that went well, then Kim just had to inflate it all and blow it up ruining the savings of thousands of ordinary people. You seem to be very concerned with moral hazard. Yes, government doesn't pick "winners and losers". However, government does create conditions necessary for investment, and one of those conditions is sufficient non-frozen capital in the market for loans, investment and payroll to happen. If people start hoarding, start penny pinching then the money is useless. It's not how much money exists, it's how much money moves and how much money is available to move for new businesses.

Another condition is making money slowly inflate, so hoarders don't just stash their money somewhere and get real value for free, or worse as someone mentioned above the whole thing goes into a deflationary death spiral where nobody spends because everyone expects everything to be cheaper, but since nobody spends it gets even worse... this is even worse than stagflation.

The final condition (and I think this is where we will disagree) is to apply the rules unevenly to the little guy and the big guy because, guess what, the big guy can hire expensive laywers and accountants and skirt around all the rules or stash it offshore legally or make shell companies or tons of nasty schemes, while the little guy doesn't have the resources or skill to fight. It cannot be an "even playing field" in terms of rules, because big multi-national corporations with more money and power than governments in some cases will have the advantage by default by virtue of having mountains of money. I see no problem with government giving the small guys tax breaks, lighter rules, even grants and loans, because of the distortive effect of money. Like it or not, the government is a huge part of the economy, and is not a neutral observer. This is simply the reality, that it buys and employs a large segment of the population (and always will).

You are the first person to have "lived through it" to claim that now is worse than the 70's. (I was NOT around in the 70's so I can only go by what I hear). With proper investments and capital you could have come from 2008 to now unscathed, and possibly with huge gains in your stock portfolio and/or huge wins in your career. I generally agree that wealth has gone to the top few percent and paystubs don't go as far as they used to, but those as you say have a multitude of factors. There may even be the rather unpopular and offensive one, that people in general do not have the education / experience / training to survive in a mostly information / service centric economy. This I believe is the default position, since everyone must take responsibility for their own actions, and Austrians / libertarians / conservatives / independents / capitalists should be receptive to that sort of argument because it places the onus (and responsibility) on the individual.
 
And All The Old Guys Say

When I was a kid -- in the '50's (so sez all the Old Farts)... bread was 25 cents a loaf, today it's $2.50. Ditto for gas, 25 cents a gallon then, $2.50 a gallon now. Most other goods, save those connected with electronic tech are similar. (A 1970 Pinto was $1,999.99. Don't know what's comparable today.)

OK, so, now that we all have derailed the original question, should it be asked again?

What was the source of recessions Pre-Supply side economics?

Anyone?
 
Recessions are usually caused by 1 or more of 4 factors:

1) Excess inventory is created
2) Excess investment
3) Excess credit
4) Excess inflation

1) Inventory recessions are the most common and typically most mild. Producers extrapolate demand trends that turn out to be inaccurate. They then in turn slow production until the excess inventory works its way through the system. This is your basic business cycle.

2) Excess investment happened with the housing bubble and bust, the dot.com bubble and bust, Japan in the 80s and 90s, among other examples. These have been common in developing economies starting with the US in the 19th century, Asian Contagian in the late 90's and very possibly China now. Money seeks out new opportunities, too much money flows in driving asset prices up and then is followed by a collapse. This typically leads to long-term disinflation or deflation.

3) Excess credit often coincides with point two although not always (dot.com is an example). As with point two, banking crises were/are quite common in emerging countries/industries. I separate this from point 2 mainly because an asset bust that corresponds with a credit crisis is so much worse than strictly an asset bust.

4) Inflationary recessions are usually caused by the government/banking response designed to stifle inflation - central bank hikes interest rates which in turn slows demand. In normal environments, this may correspond with an inventory recession - Fed concerned about inflation hikes rates => demand for goods declines => inventory needs to be worked off. Obviously hyper inflation is a whole different animal.

If you want to get a PhD you can explore a whole lot of nuance about all the factors that exist underneath these points. But this is a fair starting point.
 
When I was a kid -- in the '50's (so sez all the Old Farts)... bread was 25 cents a loaf, today it's $2.50. Ditto for gas, 25 cents a gallon then, $2.50 a gallon now. Most other goods, save those connected with electronic tech are similar. (A 1970 Pinto was $1,999.99. Don't know what's comparable today.)

OK, so, now that we all have derailed the original question, should it be asked again?

What was the source of recessions Pre-Supply side economics?

Anyone?

This was answered by different posters; namely that there is nothing special about supply side economics and the business cycle (depressions, recessions, stagflation, inflation, etc.) is normal for an economy. In other words, the question itself seems crafted to draw in pro and anti supply siders, so one shouldn't be surprised that the thread was "derailed". If one wants to claim that the business cycle is abnormal, the burden is on them.

Not that it has really been derailed... comparing relative strengths of economy in the 70's, 40's, 90's and so on absolutely answers the question. Supply side economics as a term didn't start until the mid 70's with Reagan and has heavy connotations of time periods / decades, so you will obviously get comparisons between different time periods. If that was not intended then the question should be worded completely differently. Dunning's answer is ideal and he answers the question, but he has chosen to ignore the almost-flame-bait part of the question of blaming / praising supply side.
 
Top