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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (87431)	12/21/2000 11:38:11 PM
From: sjemmeri	Read Replies (3) \| Respond to of 132070

Wayne, Did Fed policy contribute to the South Sea and tulip bubbles? Is a system of money based on shiny rocks any more sound then one based on pretty shells or fluffy feathers? Don't you think people (given individual freedom) will find a way to game any system? It boils down to human beings making emotional decisions. Booms and busts will come and go. Maybe the monetary system can impact the size/speed of boom/bust cycles a little - not enough to matter. steve

To: Freedom Fighter who wrote (87431)	12/22/2000 12:44:18 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Wayne - Now you've done it! You simply haven't been paying attention to Alan Greenspan. There is a reason that he is always obscure and ambiguous. Your post is simply too clear to avoid being nitpicked to death, and you have only yourself to blame for what follows (-g-) - If you want to sum up the differences between Austrian economists and the mainstream it really comes down to the monetary system. ... No, the differences are far more fundamental, and would exist even in a system of barter. The Austrian belief is that all economics flows from acting individuals trying to improve their lot as seen by their own lights, as evidenced by their own actual choices, made for their own reasons. Mainstream economics assumes an economic structure imposed from above, employs economic history, mathematical models and statistics to try to draw economic conclusions. Austrian economics rejects these constructs completely as deeply flawed and invalid. ...The mainstream believes that the Fed is there to prevent the excesses of capitalism from causing a severe business contraction and all the political risks that would entail. Austrians believe that unsound monetary systems cause the excesses and the Federal Reserve System falls into that broad category. ... It is more that the mainstream believes that the economy must be controlled and the Austrian school believes that all government interventions in the economy, of which the monetary system is a major one, are destructive. The real role of government is to guarantee the sanctity of private property, without which no economy can exist, except for the rule of theft and force. ...It has apparently been extremely difficult for society to come up with a system of increasing the money supply and credit that is in sync with economic activity and savings. We have faulty stats and very subjective ideas about economics to being with. ... It is not only difficult, but impossible, and unnecessary as well (see below). Economic statistics are also impossible, simply because all economic values are in fact subjective, and vary from one individual to another, and from second to second for each individual. These subjective values cannot be added or subtracted to or from one another. ...It is those things that contribute to money being too easy or too tight - which then leads to economic miscalculation, a huge supply of capital to fund greed that doesn't come from savings, etc.... and ultimately boom and bust. ... Yes, this seems correct. Money is simply another economic good that has a subjective value for a given individual at a given time and place. When the government attempts to set the price or supply of money, it destroys the balance of supply and demand. When investment funds are too easily available, investments are made for future production that overwhelm the future ability to consume that can only come from current savings. Once this has happened, the investments must be liquidated, destroying the profitability of both wise and foolish investments. ...In theory, Gold has some advantages over the VERY LONG TERM. However, we were never really on a true gold standard to begin with because we always had fractional reserve banking. The second problem was the occasional huge gold strikes or gold draughts etc... that lead to the supply of gold not matching economic activity at all in the short term. ... No, yes, maybe and no. The advantages of a true gold standard are NOT limited to the long term at all. What is most important is that the supply of money cannot arbitrarily be subject to a high rate of change, either positive or negative. This rules out any kind of fractional reserve system, but does not rule out 100% backed paper or electronic gold certificates, to the extent that they are trustworthy. To the extent that the short term rate of change is not excessive, the long term is simply an accumulation of the short term changes and it will not matter whether all of the short term changes are cumulative or offsetting. There is no question that new technologies of gold extraction and/or new discoveries would negatively impact the usefulness of monetary gold by creating short term rapid rates of change in the quantity of gold as above. Any reasonable amount of gold is sufficient to support any reasonable level of economic activity. As long as the rate of change of the quantity of gold is contained, the economic value of whatever gold exists will adjust as necessary, and the adjustment required will be of a similar order to that required every day as the subjective value of all economic goods adjusts to every kind of change. END OF NITPICK -g- Regards, Don

To: Freedom Fighter who wrote (87431)	12/22/2000 1:17:00 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Wayne - This might be of interest - Message 15069967 "...Just yesterday, the FASB announced monumental changes in how goodwill is accounted for. As everyone knew, the Pooling of Interests method of merging companies is no longer allowed. (This bothered many companies in Silicon Valley, including acquisitive Cisco, because of the requirement to amortize goodwill.) The surprise, at least for me, is that the FASB has also indicated that companies no longer need to amortize goodwill. They suggest that a one-time write-off of excess goodwill be taken when a company is acquired, and then just leave the remainder un-amortized on the balance sheet. This is extremely important, since companies like WIND can now acquire other companies without the silly constraints associated with trying to qualify for pooling. They can use any combination of stock, cash or anything else of value. This frees WIND to buy back stock any time they choose outside of the quiet period, without issuing euphormisms about buying stock to compensate for options. For example, WIND could start buying stock tomorrow to squeeze the shorts who are aggressively tanking the stock. It also means any future acquisition adds to upcoming revenues. This is extremely important given the current economic environment. In an upcoming lackluster year for revenue growth, companies will savor the revenue gains now possible through acquisitions without suffering the earnings-deadening amortization of goodwill. In summary, 2001 is shaping up as the biggest M&A year of record because: 1. Tech stocks are at bargain levels, and can be bought with cash as well as stock. 2. The purchase method, the only way left to acquire, does not require restating past revenues, meaning that acquired revenues show up as growth. 3. Excess goodwill need not be amortized, lowering the apparent earnings, while having no effect on cash. 4. The Clinton antitrust police will be replaced by less onerous regulators. Microsoft was the first out of the shoot with the just-announced purchase of Great Plains Software. Expect a whole lot more. In particular, expect WIND to acquire along with everyone else, and possibly be acquired like a lot of others." Regards, Don