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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (774122)	3/21/2014 1:19:12 PM
From: Bilow	1 Recommendation Recommended By bentway Read Replies (2) \| Respond to of 1574307

Hi mindmeld; Re: "What is most interesting is what happens after the recession/depression is over, in response to central bank manipulations. Typically, during recessions/depressions, the central banks lower rates and engage in massive monetary stimulus, such as QE or other similar methods. That doesn't typically result in inflation during a recession/depression, but rather it artificially lowers the price of money, which typically spurs increased investment or other uses of that money. Inflation only comes later, after the economy has picked up steam from all the mal-investment. Then the low interest rates and increased money supply can serve to drive up prices across the board. It's a loaded spring. It's similar to what happened in the lead up to the 70s and 80s. Eventually, rates got out of control. Hopefully, this time, the Fed gets ahead of the curve, but I don't give them too much of a chance to be prescient. They have a dismal record at that."; I agree with this pretty much completely. Where we differ is in how important that eventual high inflation is. I think it's a very cheap price to pay for the privilege of not having our country fall into anarchy and get taken over by the communists. I guess you're not so worried about it. But the fact is that the population is voting more and more in favor of big government and these tendencies grow larger during recessions. We need to get out of this recession any way we can to avoid letting the Democrats take over permanently. And yes, we will have inflation, but if you look at the recent history of this country, you will see that inflation is very good for the Republicans. Re: "This is simply not true. A fair rate of interest is determined by the willingness of the borrower to pay and the assessment of the risk of lending to the borrower by the bank."; You're claiming that a "fair rate of interest" does exist. Fine. If you and your buddy agree about this fair rate of interest, you should be perfectly content to write up a contract that specifies it. You can then borrow money from or lend money to your buddy. Nothing the Fed is doing prevents you from running around telling everyone what your fair rate of interest is. What the heck, so you say that 3 or 4% is fair? Fine, why don't you pay people this interest rate when they deposit money with you? Of course you'll have to make some sort of guarantee, but that shouldn't be a problem. Re: "My key point is that if the central bank NEVER intervened, the market would do it for them."; I think you're missing out on a key fact of human behavior. Humans are a type of primate and are known for extensive imitation. Humans create bubbles and panics without any need for intervention by central banks or anyone else. This is why panics and bubbles have been present in every capitalist society since capitalism was first invented. There was no central bank that fed the "tulip bubble", that was simple human behavior. Booms and busts happen in every country, not just the one controled by the Fed. And the power of the millions of individuals in a society the size of the US is far greater than the power of the central bankers or politicians. We create these booms and busts, not the central banks. The central banks might do a little to aggravate the situation and they might do a little to alleviate it, but they do not create booms and busts and they have no power to stop them. This is why booms and busts are universal behavior in market economies. It's simple positive feedback. -- Carl

To: RetiredNow who wrote (774122)	3/21/2014 1:36:44 PM
From: Bilow	Read Replies (3) \| Respond to of 1574307

Hi mindmeld; Re our differences on central bank and inflation and all that. The system we've had since 1913 is more than 100 years old. You want to replace it with a system that is radically different. I see your fanaticism as more dangerous than that of Obama and health care. Instead of replacing 15% of the economy with an untested scheme based on twisted and untested ideas of economics, you want to replace the whole foundation of our capitalist system with an untested scheme based on twisted and untested economics ideas. Sure you're on the opposite side of the political spectrum from the liberals but your ideas are just as untested. What I see is a system that has worked incredibly well for 100 years. Yes there are still booms and busts but there were booms and busts long before the Federal Reserve was created. When I see people claiming they have a solution to illness and death (make them more efficient by bringing big government into it) I look for my wallet because I know they do not understand the thing they are promising to create. And when people promise that they have a solution to the booms and busts which have been present in capitalism for a thousand years in a hundred nations, I also look for my wallet. I don't trust you because you can show us no history of any country where these ideas were (a) implemented for a reasonable length of time (say 50 to 100 years) and where the result was an absence of booms and busts (or any other improvement over our current economic system). Since our financial system booms and busts are a slow thing that takes generations to go through a cycle, we cannot determine whether the ideas or good or bad until we have watched the system go through several generations. Best would be say three or four cycles, maybe 120 years or so. The essence of conservatism is the belief that doing things the old way is typically better (and definitely safer) than the untested ideas of theoreticians. If an idea is worth exploring, then it needs to be explored in a small and safe way. Making sudden changes to an entire economic system is a bad idea. If you can figure out a way of cutting the economy of, for example, Texas, away from the Federal Reserve, then please share it. I likely will support it. Maybe Puerto Rico should be used to explore your ideas. And if, given a reasonable length of time say 50 or 100 years, if Puerto Rico thrives, and avoids booms and busts, then sure, we can give it a try here. Same thing goes with the climate change folks. It's just theoretical ideas unsupported by the wisdom of experience. Maybe I'm wrong on this. Maybe there is a major country where your ideas on central banking have been tested for a couple of generations. Name the country. -- Carl