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| Economy |
| Why Americans Hate Economics |
| 2011-08-22 |
| h/t Donald Sensing ...How did modern economics fly off the rails? The answer is that the "invisible hand" of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new "macroeconomics," a witchcraft that began to flourish in the 1930s during the rise of Keynes. Macroeconomics simply took basic laws of economics we know to be true for the firm or family--i.e., that demand curves are downward sloping; that when you tax something, you get less of it; that debts have to be repaid--and turned them on their head as national policy. As Donald Boudreaux, professor of economics at George Mason University and author of the invaluable blog Cafe Hayek, puts it: "Macroeconomics was nothing more than a dismissal of the rules of economics." Over the years, this has led to some horrific blunders, such as the New Deal decision to pay farmers to burn crops and slaughter livestock to keep food prices high: To encourage food production, destroy it. |
| Posted by:g(r)omgoru |
| #8 the status of world reserve currency has the invevitable seed of mega inflation it it - as stated by Triffin shortly after Bretton Woods: The Triffin dilemma is the observation that when a national currency also serves as an international reserve currency (as the US dollar does today), there are fundamental conflicts of interest between short-term domestic and long-term international economic objectives. This dilemma was first identified by Belgian-American economist Robert Triffin in the 1960s, who pointed out that the country issuing the global reserve currency must be willing to run large trade deficits in order to supply the world with enough of its currency to fulfill world demand for foreign exchange reserves. The use of a national currency as global reserve currency leads to a tension between national monetary policy and global monetary policy. So if the $ is world money... it has to be funny money? |
| Posted by: Water Modem 2011-08-22 23:39 |
| #7 The basic premise of economics is that you have limited resources and unlimited wants. No aspect of left thinking can be reconciled with that premise. |
| Posted by: Iblis 2011-08-22 16:10 |
| #6 Bubbles still occurred when the world was on the sacrosanct Gold Standard and when economics was laissez-faire Which was one of the main rationales for the Fed. Just like the Energy Dept was established to make America energy independent. Given a mere decade or two, those rationales get forgotten and the beast created takes a life of its own that ultimately compounds rather than mitigates the original perceived problem. |
| Posted by: Procopius2k 2011-08-22 15:05 |
| #5 this has led to some horrific blunders This analysis omits the eternal phenomenon of economic bubbles. Yes, governments can promote and aggravate bubbles. Bubbles still occurred when the world was on the sacrosanct Gold Standard and when economics was laissez-faire. Farming surpluses are a type of bubble. American food prices have been among the lowest in the world. In Texas in the early 1980's, newly build housing was simply bulldozed in the aftermath of a housing bubble there. |
| Posted by: Anguper Hupomosing9418 2011-08-22 12:38 |
| #4 It seems simple enough to me. Exponents are not considered simple math by most people, and this ignorance is how economics, politicians & media can obscure & distort the issue. Main example is the Federal Reserve. Supposedly half of its mission is to maintain stable prices. In my ignorance I believe 'stable prices' = zero inflation. In the mind of the Fed, 'stable prices'= 98% devaluation of the US dollar since the creation of the Fed in 1913. Many basic assumptions and presuppositions in economic and political thinking are based on exponential economic growth projected to continue indefinitely. That is why people buy annuities - handing over a large fund with the expectation of getting MORE than was handed over, spread out over years. The MORE part is necessary to overcome the damaging effects of inflation, etc. If long term economic growth becomes 'stable' all bets are off and we are all in for a world of trouble. |
| Posted by: Anguper Hupomosing9418 2011-08-22 12:32 |
| #3 Simple math (1+1=2) is mis-understood? What a shame. It seems simple enough to me. |
| Posted by: newc 2011-08-22 11:32 |
| #2 I wish some other example than agriculture had been cited. American agribusiness is inherently more surreal than anything Salvador Dalà ever created. And the government response to it has always been extreme. In the first 20 years of the 20th Century, it had taken an extreme laissez-faire approach, despite enormous fluctuations in the markets that were causing chaos. Which was started with Lincoln's push to railroad industrialization, which created an immense agricultural boom on either side of the tracks throughout middle America from the early 1860's through the end of the frontier in 1910. "How 'Ya Gonna Keep 'Em Down on the Farm?" (After They've Seen Paree), was a pop song in 1919, and the answer to the question was "You don't". Returning veterans abandoned their farms in droves and moved to the cities. And then the damn Dust Bowl hit, wiping out farms from Texas to Canada. Tens of thousands of family farms. And even then, by the time the deflation hit at the start of the Great Depression, the remaining farmers still produced so much food that it was too cheap to be transported to market. Starvation in overabundance. "Ol' Frank's" response to all of this was massive over-regulation, something we still live with today. Close to the nationalization of all farm production. Barry and company are even pushing beyond this, with an effort to regulate all aspects of food production, in de facto nationalization. This includes the federal takeover of even small scale farms, and control over all surface water. And some downright weird regulations, such as the prohibition of any form of "live" food. That is, fresh food untreated with either radiation, anti-bacterial preservatives or at least Pasteurization, unprocessed and uninspected meats or produce, prohibition or control over medicinal herbs, etc. |
| Posted by: Anonymoose 2011-08-22 09:38 |
| #1 It is not unheard of that people hate things they do not understand, like budget constraints. |
| Posted by: Perfesser 2011-08-22 05:06 |