patrick.net

And it is beautiful! A couple more bailouts and we will reach the goal of 99% below poverty. Now go eat your fried foods and watch your moving pictures.

Also should note that the poor wretch waiting for the soup kitchen to open has an environmentally sustainable "green" bag. Kudos to him for protecting the environment so that I may despoil it.

Huntington Moneyworth III, Esq says

Also should note that the poor wretch waiting for the soup kitchen to open has an environmentally sustainable "green" bag.

He'll need to eat that green bag to survive.

shrekgrinch says

The public sector unions were propped up as was Chrysler and General Motors (union jobs were at risk, after all). And Wall Street and the Banks were totally propped up. It ain't a Depression for them.

Fair enough. I agree with that. But as you suggest, that's not really avoiding a depression but protecting a small group at the expense of everyone else.

shrekgrinch says

next generation of economists who don't worship FDR's as

I think it's more of a Keynesian worship than an FDR worship. FDR wasn't even mentioned in my economics class back in 1993. The text and the professor completely revolved around the models of John Maynard Keynes. Sure, the course mentioned some per-Keynesian ideas, which it called "classical economics, but it never mentioned the Austrian model.

I would also argue that it is precisely Keynesian ideas that have gotten us into this whole mess.
shrekgrinch says

Welcome to Obama's America! You just summed up The One's philosophy about business policies rather smartly.

Obama's America is the same as Bush's America. Are you really suggesting that the Republicans are any better on these issues? In this respect, both parties are exactly the same.

Both parties tax and borrow to spend recklessly. The only difference is what they spend the money on. Dems spend it on welfare, and Repubs spend it on killing brown foreigners with funny sounding names. Bill Maher's analysis in the other thread was spot on.

But push comes to shove, both parties always defend the interests of Wall Street, the big banks (not the small ones), and transnational corporations.

shrekgrinch says

low skilled, poorly educated people in America have become rather useless in our economy as far as production is concerned

And the same thing is happening to high skilled, heavily educated people in America. Our economic system is broke on many levels.

Wow Shrenk, I don't care for the Neo Libs ether, but I'll take "New Deal" FDR polices over "Raw Deal" Bush Obama economic policies any day of the Millenia.

Dan8267 says

I would also argue that it is precisely Keynesian ideas that have gotten us into this whole mess.

OK--please make that argument. I'm all ears.

tatupu70 says

Dan8267 says

I would also argue that it is precisely Keynesian ideas that have gotten us into this whole mess.

OK--please make that argument. I'm all ears.

There you go.

If you want me to dumb this down, I'll give the following example.

The ultimate Keynesian solution to our current depression, which resulted from the housing bubble, is simply to burn everyone's house, condo, apartment, or shack to the ground. No exceptions.

Doing so will generate a huge demand in housing which will support high real estate prices and spur the entire housing industry. It will put builders back to work to replace the houses burned down. It will create demand for furniture factors since the contents of the houses were also destroyed. It would introduce quadrillions of dollars of economic activity.

Best of all, since we don't count the destruction of the houses as a loss to GDP, burning and rebuilding the entire nation will quadruple our GDP! Talk about growth! And imagine all the jobs created by this plan. It's not just in the housing industry and related fields. We'll have increase demand for doctors and pharmaceuticals as children die from pneumonia while waiting for shelter to be rebuilt. And think of all the business for funeral homes this would produce. That's putting the fun back in funeral.

All in all, Keynesian economics states unequivocally that burning our nation to the ground like Nero did to Rome is the solution to all our economic problems. Anybody got a fiddle?

Dan8267 says

There you go.

Not sure how you could dumb it down any more than that powerpoint does, but it's clear he doesn't understand Keynes or the current economic problems. I didn't see one reference to wealth inequality in his slides...

Dan8267 says

The ultimate Keynesian solution to our current depression, which resulted from the housing bubble, is simply to burn everyone's house, condo, apartment, or shack to the ground. No exceptions.

Interesting strawman, but that's not the ultimate Keynesian solution at all.

It's really NOT that complicated. When 50% of the population has no money, an economy will always grind to a halt. How this is not obvious to everyone is beyond me.

shrekgrinch says

The public sector unions were propped up

Which is why 500,000 public workers have been laid off since Obama took office. You should know shrek, consdiering that your own state leads the nation in teacher layoffs.

shrekgrinch says

It was Hitler and Tojo who finally got us out of that mess, not FDR.

THanks for admitting that Keynesian economics works. What do you think WWII was? Hint: It was nothing more than a massive govt. spending program. It was a New Deal 2.0. Instad of spending moeny to build roads and bridges, we instead spent money to blow up roads and bridges.

tatupu70 says

Interesting strawman, but that's not the ultimate Keynesian solution at all.

Simply saying that something is a strawman doesn't make it so. This is becoming the new "insert argument here" tactic when people can't think of a rebuttal.

tatupu70 says

It's really NOT that complicated. When 50% of the population has no money, an economy will always grind to a halt. How this is not obvious to everyone is beyond me.

That is obvious. The question is why does 50% of the population have no money? The answer is partly because the economy grinded to a halt. Another part is that Keynesian economics says that any demand, even wasteful, artificial demand, is a good thing. The housing bubble disproved that.

Followers of Keynes still believe that the bubble was a good thing and the bust was the bad thing. Austrians realize that the bust was the painful, but necessary solution to the excess and malinvestments of the bubble. The bust should have been accepted rather than fought. The losses should have been realized as quickly as possible rather than covered up. The guilty firms should have been left to die instead of being protected from their mistakes by government.

Had this happened, then trust would have been restored and commerce could have continued after a brief, but painful pause. Instead, we have a protracted depression.

Dan8267 says

Another part is that Keynesian economics says that any demand, even wasteful, artificial demand, is a good thing. The housing bubble disproved that.

See--that's where you are wrong. Keynes doesn't say that at all.

Dan8267 says

Followers of Keynes still believe that the bubble was a good thing and the bust was the bad thing

Please show me one person who believes the bubble was a good thing. You are good at posting strawmen arguments. I'll give you that.

Dan8267 says

The bust should have been accepted rather than fought. The losses should have been realized as quickly as possible rather than covered up. The guilty firms should have been left to die instead of being protected from their mistakes by government.

Really? Who cares if the economy implodes? Unemployment at 50%? Riots on the streets? That's preferable to the current situation?

Dan8267 says

Had this happened, then trust would have been restored and commerce could have continued after a brief, but painful pause. Instead, we have a protracted depression.

That's a nice fairy tale, but there is no reason to think things would have actually worked out that way.

tatupu70 says

Please show me one person who believes the bubble was a good thing. You are good at posting strawmen arguments. I'll give you that.

Again, just because you call something a stawman, doesn't make it so. Now, if you don't want to accept what I'm saying, there is nothing I can possibly say to convince you otherwise. All I can do is point you to the evidence. If you choose to ignore that, it's all on you. I'm not going to even try to convince you otherwise. Invest how you see fit

I will give you the benefit of showing this one last time, that yes, Keynesian is bad and Austrian is good. And I'll put it in video form to make it easy to absorb. But you'll actually have to listen to the video.

> Please show me one person who believes the bubble was a good thing.

--> The following video shows a dozen people who believed the bubble was a great thing. Turn on your speakers and take out the cotton from your ears for best results. And don't make me go frame by frame through this video pointing out the people and what they said.

Peter Schiff, Austrian Economist, predicts economic crisis and coming inflationary depression.

And if that's not enough. Here's another classic.

Peter Schiff Was Right 2006 - 2007 (2nd Edition)

Again, if you're not even willing to be open to admitting that Keynesian Economics is flawed, there's nothing I can do about it.

tatupu70 says

Dan8267 says

Had this happened, then trust would have been restored and commerce could have continued after a brief, but painful pause. Instead, we have a protracted depression.

That's a nice fairy tale, but there is no reason to think things would have actually worked out that way.

Yeah, that's the great thing about not giving counterplans a chance. When all the shit hits the fan, the people who's policies failed miserably can always say, "well, it would have been worse if we had tried it your way" without there being any evidence one way or the other.

How about this, how about us trying it my way and then we'll see. Let's put the theory to the test. The status quo has already fucked things beyond belief, so what's so bad about trying something new?

Dan8267 says

The following video shows a dozen people who believed the bubble was a great thing. Turn on your speakers and take out the cotton from your ears for best results. And don't make me go frame by frame through this video pointing out the people and what they said.

I'll admit that I didn't last the 10 minutes, but I didn't see anyone saying that a bubble is a good thing. Could you post who they were? And what they said?

Dan8267 says

Again, if you're not even willing to be open to admitting that Keynesian Economics is flawed, there's nothing I can do about it.

I'm certainly open to it, but I'm waiting for you to provide any rational arguments explaining your position. I really don't think you understand Keynesian economics and that is part of the problem.

Dan8267 says

Yeah, that's the great thing about not giving counterplans a chance. When all the shit hits the fan, the people who's policies failed miserably can always say, "well, it would have been worse if we had tried it your way" without there being any evidence one way or the other.

Or people can say--it would have been much better if you had only done it my way...

I wouldn't say the policies failed miserably though. Things are definitely better than they were in 2008. Unemployment is falling. The US is working trough the housing issues. The economy has moved off the edge of the chasm.

How about 1937? Wasn't that trying it your way?

Dan8267 says

Awesome. Discrediting all Keynesians because Ben Stein made a poor stock prediction? Now that is perfectly log.ical

tatupu70 says

It's really NOT that complicated. When 50% of the population has no money, an economy will always grind to a halt

I'm a little sick and tired of the wealth inequality BS. There is a reason there is wealth inequality and it isn't because an evil 1% decided it would be a good thing that people were not able to make a living and grind the economy to a halt. The evil 1% were just playing the game set forth by the corrupt government goons. If they don't play the game, they'll be a loser and someone else will be crowned the winner. I'm not saying they are saints (see above, I called them evil) but they are playing by the rules - which is buy the politicians before someone else does. The revolving door between wall street and Washington pretty much explains why they were bailed out and we got the finger.

tatupu70 says

I'll admit that I didn't last the 10 minutes

That's what -- he? -- said

I could help you with that, but let's offline that conversation. I think of baseball and England.

tatupu70 says

Could you post who they were? And what they said?

As I said,

And don't make me go frame by frame through this video pointing out the people and what they said.

If you're too lazy to passively listen to the video, I doubt you'll actively read a transcript of it.

tatupu70 says

Discrediting all Keynesians because Ben Stein made a poor stock prediction?

Hey, you asked for one example. And no, one example doesn't discredit all Keynesian, but I could easily give you 1000 examples - oh wait, I just did in the two above videos. So, the example I quoted above is typical. It's good to illustrate the point.

tatupu70 says

How about 1937? Wasn't that trying it your way?

What the hell happened in 1937 that was Austrian?

tatupu70 says

Unemployment is falling. The US is working trough the housing issues.

Unemployment is not falling. The stats are starting to exclude more and more long-term unemployed from the labor force. What do you think the government counts when it tallies the unemployment figure? It counts the number of people getting unemployment benefits, which run out after so long.

I'm not sure what you consider "working through the housing issues". The answer to that is lower prices.

tatupu70 says

I really don't think you understand Keynesian economics and that is part of the problem.

Translation: You don't support Keynesian economics. Therefore, you must not "understand" it.

I assure you, I understand the theory better than most economists. You see, I can actually do the math. The typical "economist" can barely do arithmetic.

But what I know is irrelevant. By any standard, Keynesian economics has empirically failed. And since it has had no competition for 80 years, you can't blame anything but the theory itself.

Why do you hate public employees shrek? What do you have against police officers and air traffic controllers?

shrekgrinch says

Really? I guess you want unemployment levels as high as 25% and as low as 14% for about a decade then?

Actually shrek, unemployment went down to 1.5% during WWII. Again, WWII was a Keynesian govt. spending program.

"Don't recall seeing that under Bush."

Because under Bush we had a massive housing bubble. From 2001-2009, there were ZERO private sector jobs created. We lost 653,000 private sector jobs under Bush. The only job gains under Bush were in government and in government contractors. Jobs might have been growing on trees in DC and northern Virginia and Wall St., but that was not the case in most of the country.

Dan8267 says

If you're too lazy to passively listen to the video, I doubt you'll actively read a transcript of it.

OK--I wasted 10 minutes and watched it. As I expected, NOBODY said that they were pro-bubble. NOONE. Would you like to try again and show me ONE case of anyone saying they are for bubbles?

Dan8267 says

Hey, you asked for one example. And no, one example doesn't discredit all Keynesian, but I could easily give you 1000 examples - oh wait, I just did in the two above videos. So, the example I quoted above is typical. It's good to illustrate the point.

I'm still looking for one example. Keynes said nothing about picking stocks. That example is an utter fail.

Dan8267 says

What the hell happened in 1937 that was Austrian?

You'll have to do the research yourself.

Dan8267 says

Unemployment is not falling. The stats are starting to exclude more and more long-term unemployed from the labor force.

Wrong again. Here are the job creation numbers:

http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth

Dan8267 says

I'm not sure what you consider "working through the housing issues". The answer to that is lower prices

Well, not exactly. That's part of the solution. The other part is making sure capital is available for qualified borrowers.

Dan8267 says

But what I know is irrelevant. By any standard, Keynesian economics has empirically failed.

That shows a lack of understanding. The factors that have weakened our economy have little or nothing to do with Keynes. Poor trade policies, poor tax policies, and too much governmental spending. And before you spout the usual anti-Keynesian BS. Keynes was not for government spending. During normal or good economic times, true Keynesians would be running surpluses not deficits. The real problems started with Mr. Reagan.

EightBall says

I'm a little sick and tired of the wealth inequality BS. There is a reason there is wealth inequality and it isn't because an evil 1% decided it would be a good thing that people were not able to make a living and grind the economy to a halt. The evil 1% were just playing the game set forth by the corrupt government goons

You don't think some of the 1% bought and paid for government officials to write the laws? And make the rules?

In any event, however we got to this place, we need to fix it. We won't have a healthy economy until the wealth disparity problem is fixed.

shrekgrinch says

it wasn't keynesianism that created a hostile business climate during the New Deal Era, i

I'll agree that the New Deal was based on Keynesian Economics (KE), but there's far more to KE than that. Also, the New Deal came long after the First Great Depression started, so you can hardly make the case that the New Deal caused the depression.

More importantly, back in 1971 then President Richard Nixon famously quoted Milton Friedman, "We are all Keynesians now.". Both Democrats and Republicans have embraced KE and ignored any other possible economic model. So, I'd say the problem has permeated both parties. The are both guilty of this. And Richard Nixon was no lefty. He used to have hippies neutered for fun.

shrekgrinch says

Because the Dems from Obama all the way down to idiots

I'd say that about both parties.

shrekgrinch says

If you are unfamiliar with Peggy Joseph, just watch this:

Yep, I remember that. The idea that you won't have to work to put gas in your car just because a black guy was elected president sounded stupid back when Peggy said it. It sounds just as stupid now. It would be interesting if someone did a follow up interview with her to see if she learned anything over the past few years.

However, your point is made. There are certainly a lot of fools in the Democratic Party that actually believed that Obama was going to magically change the world by running on a unicorn that shitted rainbows. I think that was an SNL sketch.

However, what you are neglecting is that there are a lot of Republican fools who are just as irrationally religious about nonsensical dogma like "if you don't tax the rich, money will magically trickle down to the poor" which has been empirically disproven over the past 30 years.

Both parties are delusional.

shrekgrinch says

Dan8267 says

And the same thing is happening to high skilled, heavily educated people in America.

No. I was referring to people who produce actual value. Liberal Arts professors on tenure don't fall under that category at all despite all the 'heavy education' wasted on them, for example.

As was I. I was referring to high tech engineers in networking, software, biotech, nanotech, etc. I thought that was obvious, but then again, I live in the software industry so I talk about stuff like this with colleagues all the time. Perhaps it's not so apparent to those outside the field.

I'll agree that Liberal Arts is bullshit and a waste of resources.

shrekgrinch says

I guess you want unemployment levels as high as 25% and as low as 14% for about a decade then?

Isn't that what we have right now if you correctly measure the unemployment level? If you count underemployment, aren't we over 25%?

And ultimately, this is because the basis of trust has been utterly destroyed and the economy will only recover when that trust is restored. The fastest way to restore that trust is to make people realize their losses and to prosecute fraud. Only when that is done, will commerce resume to pre-depression levels. And while this depression is going on, we are permanently losing real wealth that could have been produced if we just stopped playing accounting fraud games.

shrekgrinch says

Something that its diehards refuse to acknowledge. It can't be falsifiable. Therefore it is based on faith, not logic or science.

Exactly. And diehards of any political faith do this. It's the argument that pro-torture people made during the Bush administration and it's the argument that pro-bailout people are making during the Obama administration.

This is the most disgusting thing about politics. I want X to be true therefore the only valid evidence is that which supports X. Screw everything else. It's like the exact opposite of the Scientific Method.

HousingWatcher says

Actually shrek, unemployment went down to 1.5% during WWII. Again, WWII was a Keynesian govt. spending program.

Yes, WWII ended the Great Depression. I think it did so mainly because the militarization of our economy restored trust and that trust continued after the war. I think that the trust had more to do than the demand. And I know I'm fighting an uphill battle against KE by saying that.

The fact is that we have spent more, adjusted for inflation, on warfare in the past ten years than we did during WWII. If increasing aggregate demand through war was truly an economic benefit, then the economy should be better now than it ever was. It should have also been a boom time during the Vietnam War. The fact is, since WWII, there has not been an association with war spending and economic prosperity.

Furthermore, the use of war to improve an economy, even if it did work, would be downright evil. Getting America out of the First Great Depression was not worth allowing the Holocaust to happen or the loss of 48,231,700 lives.

Wouldn't it be far better to take all the military industry jobs and refactor them to rebuild New Orleans and our nation's infrastructure? Isn't the development of capital goods a better economic strategy than the destruction of civil engineering projects through warfare?

tatupu70 says

As I expected, NOBODY said that they were pro-bubble.

Surely, you smart enough to understand that the person does not have to utter the exact words, "I'm pro-bubble" to indicate that they were for the housing bubble. In fact, no pro-bubble person would use the word bubble to describe the bubble. That's the whole point. They used the term "housing boom". It's always a boom, not a bubble, to those who are in favor of it.

And people wonder why I act like Captain Obvious. It's because you have to tell people obvious things many times before they accept it as true.

tatupu70 says

Dan8267 says

What the hell happened in 1937 that was Austrian?

You'll have to do the research yourself.

Although I'm willing to play devil's advocate against any idea before accepting it, I'm not willing to spend my time supporting your arguments without proof of cheese. If you want to convince me of something, you're going to have to make a good case for it yourself.

tatupu70 says

Wrong again. Here are the job creation numbers:

http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth

Tatupu, there is no way that you could possibly be so naive as to accept the government's statistics on unemployment. Statistics released by government serve one purpose: to make the government look as good as possible. Please tell me, you don't believe their inflation statistics too.

Trusting government statistics on unemployment and inflation is like trusting Philip Morris, now Altria, statistics on smoking and cancer.

tatupu70 says

That shows a lack of understanding. The factors that have weakened our economy have little or nothing to do with Keynes. Poor trade policies, poor tax policies, and too much governmental spending. And before you spout the usual anti-Keynesian BS. Keynes was not for government spending. During normal or good economic times, true Keynesians would be running surpluses not deficits. The real problems started with Mr. Reagan.

Tell that to the 99.9% of economists and politicians who are Keynesians. They seem to have a very different understanding of KE than you have.

Ron Paul, Austrian, predicted the bubble, the bust, and the depression

Joe Scarborough: How could it be that you knew this on the banking committee in 2003 and nobody else did until after the collapse.

Ron Paul: I would think that the easiest explanation is Washington, DC is permeated by Keynesian economic thinking. Very few even know the name Austrian Economics and understand the business cycle.

Keynesian Economics vs. Austrian Economics

And since you keep asserting that I have no understanding of KE, let me clarify it for you

Keynesian school – All recessions are bad and must be suppressed by government actions. This protects established businesses and jobs. The methods are elaborate and costly, but a benefit to the public overall.

Austrian school – When markets stray too far from reality they must be purged by adversity. This clears unneeded or failing enterprises so capital is not allocated wastefully, and new businesses can emerge. Periodic small recessions are the price of a healthy economy, although in principle they can also be avoided through wise allocation of resources.

To illustrate, pay attention to the part of the videos above that go like this:

Peter Schiff (Austrian): It's not wealth that has increased in the past few years, we haven't increased our productive capacity. All that's increased is the paper value of our stocks and real estate. But that's not real wealth.

Arthur Laffer (Keynesian): Of course it is!

Schiff then goes on to describe how realizing losses (a recession) is the only way to cure the economy of the sickness of malinvestment.

But, of course, I understand nothing about economics like I understand nothing about physics because you assert so. Remind me again, which one of us built a robot with a neural net brain in graduate school? Oh yeah, that was me. I may be wrong about some things, but I am never clueless about a subject matter when I express an opinion. I form opinions very slowly and only after intense research.

Dan8267 says

Surely, you smart enough to understand that the person does not have to utter the exact words, "I'm pro-bubble" to indicate that they were for the housing bubble

I didn't know that there was a code involved. My mistake.

Dan8267 says

And people wonder why I act like Captain Obvious. It's because you have to tell people obvious things many times before they accept it as true.

Nothing is obvious here except maybe to you. Some people didn't understand that housing was unsustainable due to degraded underwriting standards. That much is true. But, if they did understand it, NONE of them would have been pro-housing. I'll say it again. NOBODY was or is pro-bubble. To think otherwise is just idiotic.

Dan8267 says

Tatupu, there is no way that you could possibly be so naive as to accept the government's statistics on unemployment. Statistics released by government serve one purpose: to make the government look as good as possible. Please tell me, you don't believe their inflation statistics too.

Oh, you're one of those. It makes it very difficult to debate with you. Any numbers you don't agree with are suspect. But any stats that you like are OK, right? Like when job creation was highly negative--those numbers are correct, I'm sure. Numbers from Mish are right too, huh?

Dan8267 says

Keynesian school – All recessions are bad and must be suppressed by government actions. This protects established businesses and jobs. The methods are elaborate and costly, but a benefit to the public overall.

Completely incorrect. Government actions are not intended to protect established businesses and jobs, but rather to try to limit the feedback loop of job losses and reduced spending.

Dan8267 says

Schiff then goes on to describe how realizing losses (a recession) is the only way to cure the economy of the sickness of malinvestment

And how is that at odds with Keynesian thinking at all? Malinvestment needs to be penalized (realized), but good investment shouldn't be penalized also as collateral damage.

tatupu70 says

Some people didn't understand that housing was unsustainable due to degraded underwriting standards. That much is true. But, if they did understand it, NONE of them would have been pro-housing. I'll say it again. NOBODY was or is pro-bubble. To think otherwise is just idiotic.

That's the definition of being pro-bubble. They all advocated policies and investments that supported and inflated the bubble and led to the collapse.

What you mean to say is that nobody is pro-depression, i.e., no one would advocate deliberately creating a depression in order to make short-term financial gains.

However, you are also wrong about that. The too-big-too-fail banks would definitely do it all over again. And why not? They are in better shape now than they were before the bubble. They were protected from their malinvestments, got to keep all the ill-gotten gains, and they eliminated most of their competition from small banks that went under. Those small banks didn't own high-ranking politicians.

tatupu70 says

Completely incorrect. Government actions are not intended to protect established businesses and jobs, but rather to try to limit the feedback loop of job losses and reduced spending.

I'm going to have to call bullshit on that. The entire purpose of the U.S. automobile bailout was to protect specific U.S. jobs in that specific industry and those specific companies so that those specific voters in the rust belt would not vote the current crop of politicians out of office. It had nothing to do with limiting a feedback loop. It was about securing votes by securing jobs.

Government is very selective about which jobs it protects and who is allowed to be fucked over.

tatupu70 says

And how is that at odds with Keynesian thinking at all? Malinvestment needs to be penalized (realized), but good investment shouldn't be penalized also as collateral damage.

Austrian Economics would say let the big banks fail and let smaller, smarter banks gain market share. Keynesian Economics says don't let them fail, protect them at all costs. Remember, Ben Bernanke is known for having studied the First Great Depression and his policies are based on Keynesian Economic Theory. And unfortunately, so many people in the media have drank the Kool Aid, that Bernanke appeared on the cover of Time Magazine.

And that's a pretty gross glorification of someone who has wrecked our economy, caused massive unemployment, and kept basic necessities like food and shelter unaffordable. Still, he's portrayed as a hero.

Yes, Hitler's also made the Person of the Year cover, but his image wasn't made to glorify like Bernanke's image is above. Bernanke's a freaking 3D dollar bill, the image of prosperity!

Dan8267 says

That's the definition of being pro-bubble. They all advocated policies and investments that supported and inflated the bubble and led to the collapse.
What you mean to say is that nobody is pro-depression, i.e., no one would advocate deliberately creating a depression in order to make short-term financial gains.

Nope--I said it how I meant to say it.

Dan8267 says

However, you are also wrong about that. The too-big-too-fail banks would definitely do it all over again. And why not? They are in better shape now than they were before the bubble.

Are you kidding me? That's just plain wrong. Please show me one of the TBTF banks that is in better shape now? They have taken HUGE losses (some went under, mind you). They had to massively dilute their owners' shares. And they continue to realize the losses with seemingly no end in sight. How exactly is that "better"??

Dan8267 says

I'm going to have to call bullshit on that. The entire purpose of the U.S. automobile bailout was to protect specific U.S. jobs in that specific industry and those specific companies so that those specific voters in the rust belt would not vote the current crop of politicians out of office. It had nothing to do with limiting a feedback loop. It was about securing votes by securing jobs.

And how exactly is the auto bailout an example of Keynesian economics?

Dan8267 says

Austrian Economics would say let the big banks fail and let smaller, smarter banks gain market share. Keynesian Economics says don't let them fail, protect them at all costs

Again--this is where I don't think you understand Keynesian economics. It most definitely does NOT say to protect/bail out failing industries. Where did you get that idea??

Great job with the Hilter reference though--it's a nice touch.

tatupu70 says

Nope--I said it how I meant to say it.

Fine, then you are simply wrong. I don't feel like arguing every minute detail. So let's just agree to disagree on these facts. Evidently, there's nothing on the Internet I can quote that will get you to accept my facts even if I show the video of the fact.

tatupu70 says

Are you kidding me? That's just plain wrong. Please show me one of the TBTF banks that is in better shape now?

Only one? Can I show you ten?

Bank of America: $907.3b in deposits, TARP participant.
Wells Fargo: $759.7b in deposits, TARP participant.
JPMorgan Chase: $639.7b in deposits, TARP participant.
Citibank: $320.8b in deposits, TARP participant.
PNC Bank: $188.1b in deposits, TARP participant.
US Bancorp: $151.9b in deposits, TARP participant.
Sun Trust: $118.5b in deposits, TARP participant.
Capital One Financial: $114.3b in deposits, TARP participant.
Toronto-Dominion (TD) Bank: $104.8b in deposits, as a Canadian bank it was not eligible for TARP funds.
BB&T: $95.0b in deposits, 2.12% market share, TARP participant.

tatupu70 says

And how exactly is the auto bailout an example of Keynesian economics?

If you don't understand that, you have no right to say that I don't understand Keynesian economics.

"Steven Rattner, arguing for the Keynesians, said that markets sometimes fail, and defended the auto bailout..."

The auto bailout was quintessential Keynesian Economics.

The Economic Perspectives blog sums it up nicely,

John Maynard Keynes, a British economist, popularized the notion that the government can and should play an active role in managing the macroeconomy. Keynes acknowledged that classical thought might have applicability over an extremely long time period, but “in the long run we are all dead.” If people wait for the macroeconomy to correct itself, they may not live long enough to see the changes. The severity and prolonged duration of the Great Depression convinced most people of the validity of Keynes’ insights. During the Great Depression, prices were falling, but that did not motivate an increase in purchases and employment as classical economics predicts. Even if people had income, they were reluctant to spend it because of uncertainty about the future.

Mainstream economics since the Great Depression is Keynesian economics. The overwhelming majority of economists around the world believe it is appropriate for the government to take actions to promote economic growth and to maintain low unemployment and low inflation. The debate in the United States is not whether the government should try to achieve these goals. Instead, the discussion is about what the government should do. Essentially, Republicans argue that public policies should primarily benefit businesses and the wealthy because they are the job creators. Democrats respond that making the wealthy richer will not cause them to hire more workers unless there is a significant increase in the demand for goods and services.

But what if Keynes was just wrong. What if the whole theory that WWII ended the First Great Depression because of increased aggregate demand is just plain wrong. What if the real reason WWII ended the First Great Depression was because business knew they could trust the government to eventually pay for goods and services rendered and that after the war consumers could be trusted to pay for goods and services due to the savings via war bonds and other instruments that were accumulated during WWII? What if the key is trust not demand?

And that is what you simply are not getting. If I'm wrong, then why isn't America currently experiencing an economic boom due to the $1 trillion spent on the war in Iraq and Afghanistan alone? And that's not counting our other undeclared wars and military operations or the quasi-military organizations like the TSA and the Homeland Security Agency. That's a lot of aggregated demand.

If I'm right, then it makes sense that no amount of military spending can fix an economy because it does not restore the trust necessary for commerce. But if I'm right, all the Keynesians are wrong. And that is something no Keynesian will ever admit as you have demonstrated.

You are simply not even open to the possibility that there are alternative explanations, and no math and no history will convince you otherwise. I have supported everything I have said in this thread. There is nothing more you can ask of me. I have already answered every question you thought could stump me, and I'm not even an economist. Image what a real Austrian Economist could say on this matter. Too bad there aren't any in America.

Dan8267 says

Fine, then you are simply wrong. I don't feel like arguing every minute detail. So let's just agree to disagree on these facts. Evidently, there's nothing on the Internet I can quote that will get you to accept my facts even if I show the video of the fact.

OK fine. You have posted a video that shows Peter consistently saying that there was a housing bubble. I'll wholehearted agree that he saw it coming when others didn't. Only that has nothing to do with the discussion at hand. How does Keynesian economics relate to poor underwriting standards?? And the repeal of Glass Steagal?

Dan8267 says

Back in 2002, the top 10 banks controlled 55 percent of all U.S. banking assets. Today, the top 10 banks control 77 percent of all U.S. banking assets.

Again--if you had posted that the TBTF banks control a higher percentage of assets, then I'd agree. But, you didn't. You said they are in better shape and would do it all over again. Which is completely idiotic. They have all incurred and will continue to incur HUGE losses from the housing bubble. Just out of curiosity-do you think Lehman is better off? Or WAMU?

Dan8267 says

If you don't understand that, you have no right to say that I don't understand Keynesian economics

I think I've hit upon your misunderstanding of Keynesian economics then, if you believe bailouts of failing companies is Keynesian in nature. Because it most definitely is NOT.

Dan8267 says

You are simply not even open to the possibility that there are alternative explanations, and no math and no history will convince you otherwise. I have supported everything I have said in this thread. There is nothing more you can ask of me. I have already answered every question you thought could stump me, and I'm not even an economist. Image what a real Austrian Economist could say on this matter. Too bad there aren't any in America.

I'm very open to the possibility. That's actually why I've been debating, because I'm curious to other ideas. But all you've presented is strawmen arguments--trying to frame Keynesian as something it's not and then knocking down the strawman.

You have provided no math. No explanations other than the videos that are useless. Again--how does Peter predicting the housing bubble discredit Keynes? I saw the bubble too when I lived in CA. Does that mean I'm from the Austrian school too?

Dan8267 says

If I'm wrong, then why isn't America currently experiencing an economic boom due to the $1 trillion spent on the war in Iraq and Afghanistan alone? And that's not counting our other undeclared wars and military operations or the quasi-military organizations like the TSA and the Homeland Security Agency. That's a lot of aggregated demand.

Because the money isn't getting to the right people--as evidenced by the wealth disparity being close to the highest in US history. You might also notice the other time when disparity was at this level.

Dan8267 says

If I'm right, then it makes sense that no amount of military spending can fix an economy because it does not restore the trust necessary for commerce.

OK--I won't be closed minded. Do you have any measures of "trust"? What exactly do you mean by "trust"? Trust in what?

Do you even know what a Straw Man argument is? It's called a "straw man" argument because the attacker is deliberately attacking a position that his opponent is not taking. The metaphor is that the attacker sets up a man made of straw, attacks the fake straw man, which cannot defend itself because it is not real. Then the attacker declares victory.

You have consistently misused this term. So here's an example of a Straw Man argument.

Republican: The deficit is too high. We must cut spending.

Republicans: Why are you trying to dismantle the entire military and leave us defenseless?

If you are asserting that I have ever, ever used a Straw Man argument, then you are an outright liar. I have shown actual video of Keynesians debating with Austrians on the issue of the current financial crisis. I have quoted their actual words. That, by definition, cannot be a straw man argument.

It appears that you are taking the Fox News approach of repeating a lie until the audience believes it. I would hope that no one on this site is dumb enough to fall for your tricks. The evidence I have presented is overwhelming, whereas you have offered absolutely no evidence at all to counter. Everything you've said has been an assertion, unfounded in reality.

And so ironically, you end your last rant with an actual Straw Man argument.

Do you have any measures of "trust"?

Yes, because if you cannot precisely measure trust in some standard unit like liters, it must have no effect whatsoever on the economy. That's a perfect example of a Straw Man argument.

I forgot to comment on how ridiculous it is to state that going from a 55% market share to a 75% market share isn't considered a big gain in any industry. Especially when all the execs get record breaking bonuses while doing so. Yeah, I'm sure those bankers would undo all that if they could. The rest of us would like to fail as well as these bankers.

If this helps, a lot of people hide their real income and look a lot more poor to the government. Not everyone, but quite a large number of folks do do that.