A) Keynes was a Fascist - meaning, Keynsian is NOT Deficit spending into infrastructure, but deficit spending into BANKS (At interest), FDR for instance - fought with Keynes from 1942-1944 at Bretton Woods, because Keynes demanded a one world currency called the "Bancor" and Roosevelt wanted a Credit System (A system where money is issued INTO productive infrastructure
B) A Physical Economy is based on Scientific Advancement, the railway example in the essay explains this - without the modernization of Lincon's Railway this Nation would have gone bankrupt. The Railway Modernizations did numerous things, including (economically) connecting the inner U.S. and nulling the need for NAVAL shipping (which was far slower and more costly, and naval routes were controlled by the British Empire at the time).
I couldn't AGREE with you more, which is why i posted the History of our Nation (The United States if you happen to live elsewhere) which is the OPPOSITE of the Austrian School. The re-writing of History has been a tremendous burden on truth seekers.
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http://www.politicalcrossfire.com/forum/viewtopic.php?t=125165&postdays=0&postorder=asc&start=40
Here debunk this : Suppose we institute a Gold Standard - this is obviously going to CONTRACT the monetary supply of the Nation is it not? So, what do the millions upon millions of people who owe Mortgages, Commercial Loans, Installment Loans etc... going to do, when instead of getting 500 dollars a week pay - they get 50?. It is against contractual law to adjust a mortgage term! God Forbid we keep people in their homes?!? this is unacceptable to the Von Mises Community and a strawman argument (LAUGH) You want to be a debt slave for the (Short) remainder of your life (If this policy is instituted), have fun.
-Revolt 426
Uhm, if you wish to return to the STONE AGE, and reverse the progress of civilization, i guess you are right. We can indeed go back to the barter system, in any case - i highlighted major problems with implimenting Austrian policies, the major one being the Gold Standard and i still haven't seen an answer as to how we are not going to be debt slaves for eternity if one was implimented (If we aren't all killed first). As for your historical accounts - http://monetary.org/refute.htm
-Revolt 426
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| Quote: | I think you take metaphors a little too seriously. The Austrian School simply says let prices do what they do best, in the context of government enforcement of property rights and contracts. Austrians would also say that the market isn't perfect, but would then ask if the government solution is better than the problem. |
No, i don't take them too seriously as virtually all Austrian's argue exactly what i have posted, and Virtually all of them argue if their insane guidelines are met, the market will "Magically" be "Sound" - that is to say, witout ANY historic evidence since their system has NEVER been implimented!.
| Quote: | I'm sorry, but deregulation did not "create this crisis". The fact of the matter is that government regulations, especially in times of rapid technological change and innovation, cannot keep up. In other words, our system of creating law is very slow and reactionary. |
So you are saying, Derivative deregulation has not assisted in creating a 1.5 Quadrillion dollar bubble of ficticious finance capital? this is absurd.
| Quote: | False. The mortgage-backed security, a derivative, has been around since the late 70's. |
False, Reagan legalized Derivatives in 1982 and the Glass Steagall act allowed Commercial banks to speculate, hence creating MEGA , too large to fail banks. This wasn't a major issue , until Glass / Steagall was repealed, but regardless - Derivatives (Paper on Debt Securities) are the cause of this entire crisis in addition the productive % of our laborforce collapsing (due to a 40+ year neglect of our Physical Economic Infrastructure. Regardless of when "Mortgage Backed Securities" were created, Derivatives (And their De-Regulation) caused the bubble.
| Quote: | I've said it once, and I will say again - The U.S. Court of Appeals ruled that the Office of the Comptroller of Currency was correct in determining that Glass-Steagall did not apply to the underwriting of asset-backed securities by commerical banks. This occurred in the mid-80's. |
Yea as i mentioned above, this was the REAGAN Administration , and when the Act was finally repealed, Commercial banks got involved in CREATING and TRADING them which is now resulting in a massive debt bubble preventing them from lending (issueing credit) into production, which is why our economy is collapsing - because we don't produce anything anymore.
| Quote: | You have got to be kidding me! Redlining is one of the practices that helped created massive suburban sprawl and has lead this nation to its dependence on fossil fuels. And what exactly do you mean by "improve the population"? That doesn't really make sense. |
Uhm, i was obviously arguing against the fact that banks are able to open up branches in certain communities , and NOT issue any CREDIT to them just because they wish for these communities to remain undeveloped........ your diversion of the argument to "Fossil fuels" doesn't really make sense.
-Revolt 426
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| Quote: | No, I am saying that there are a number of forces at work here, not just deregulation. It is a combination of bad regulation in some areas, deregulation in others, our federal government's desire to subsidize mortgage debt - off the books through Fannie and Freddie, and the idiotic investment firms, pension funds, hedge funds ect, who thought they could buy up all of this crap with a huge risk premium, while assuming no risk. Besides, If it is so clear that deregulation is the cause, why did it take almost 20 years for this problem to come about? What other factors changed in the 90s and 2000s that might have had a larger impact on this crisis? Its important to ask these questions before just making a huge post on how deregulation is the problem. |
I am blaiming De-Regulation of the DERIVATIVE market, not "De-Regulation in General" , as anyone can see by the Original Post. Regardless of the jargon you have just posted that has absolutely nothing to do with the crisis, if A) Reagan did not legalize the creation and trading of Derivative's and B) The Glass Steagall Act were not repealed, there would be no Derivatives (Which are utterly useless Debt based financial securities that provide nothing for a real economy) , let alone Commercial Bank exposore to these derivatives........ which consiquently is restricting them from issueing credit into productive industry due to the crushing Derivative debt's.
Why did it take so long? Glass/Steagall was repealed in 1999 - that is a decade....... in addition, the economy has been Globalized. China is holding a massive amount of our debt, so as we securitized this debt based garbage, China took on the bill to allow us to substitute bubble based debt securities for real productivity.
In any case, the point is made that the Austrian school is against ALL regulations, which is a 100% absurd stance to take and which is the reason why i attacked them in this scenerio.
| Quote: | Btw, Why didn't our government replace Glass-Steagall with new legislation during the 20 or years between the U.S. Court of Appeals ruling, and 2007? |
Ahem, they repealed it in 1999 - how could they replace it before it was repealed?. The Glass Steagall act prohibited Commercial Banks from speculating with depositor currency. Repealing this opened the gateway to mega-bank consolidations that created "Too large to fail institutions" due to the very Derivative contracts that are interlinking them right now.
| Quote: | Of course you will ignore the origins of the mortgage-backed security when it makes your argument against the Austrian school look bad. The Austrian school is very critical of government involvement in the economy. Ginnie Mae, Fannie Mae, and Freddie Mac, all created by the federal government, invented these securities, created the market for them, and subsidized mortgage debt to the tune of trillions of dollars. Yet, you somehow find a way to forget about this when writing about the current financial crisis? That is a head-scratcher for sure. |
And you ignore the fact that Freddie and Fannie had to be PRIVATIZED for them to get involved in this securitizing of debt madness, while saying the "Governmnet" involvement in the economy was the reason. That is a had scratcher beyond the irrelivant origins of the "Mortgage Backed Security".
| Quote: | So to sum up, deregulation of the financial industry is a problem. But it is only one part of a much larger problem. Your essay fails to see the entire picture. |
No my essay highlights the was currency is issued is ALSO the problem, but you have obviously ignored that entire part of the essay and nit picked the De-Regulation part. Currently, the FED prints currency without labor, but with a promise for labor in the future. A Sound system would require each unit of currency upon entering circulation be monetized in EXCHANGE for labor, in the form of production expanding infrastructure. To monetize wealth is to monetize labor, not print currency and loan it to a bank at interest which allows the FED to suck currency out of the economy.
-Revolt 426
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