63 replies to this topic

[niner]

The $40 trillion in CDS is a huge fraud that cannot be punished because neo-liberals and democrats for some reason deregulated.

It would be more accurate to say "because neo-liberals, including both Republicans and Democrats..." or some other variation. Otherwise it sounds like neo-liberal = Republican. To be sure, most of them are, but Clinton had a couple guys on board with neo-liberal tendencies, yet they identified themselves politically as Democrats.

[JLL]

Extreme neo-liberals think that absolutely no laws are needed to control markets.(#2)

Anarchists think that absolutely no laws are needed to control social behavior(#4)

I'm not sure this is the case... at least not from what I've read about anarchism/libertarism. Again, I can really only speak about anarcho-capitalism, or voluntarism, or the free markets, since that is what I subscribe to. The rest I don't know about.

Anyhow, anarchists do not think that laws aren't needed to control social behavior - they also don't think laws aren't needed to control markets. They just think those laws should be provided by the market, not the government. A private law system. So, depending on what you mean by "laws", you are either correct or wrong; but the dividing point is not social behavior vs. markets - it's private laws vs. state laws.

People need to go to jail for committing business fraud.(#2)
People need to go to jail for preventing others from enjoying their freedom.(#4)

The anarchist would most likely rephrase that as "people can be punished for committing business fraud or preventing others from enjoying freedom." Whether going to jail is an appropriate punishment is debatable.

The reason I can not understand this, is that people in the Authoritarian/Neo-liberal quadrant have a huge logical dissonance going. They believe in Law and Order if it is a social issue. And they don't believe in Law and Order if it is an economic issue.

Perhaps you're right; I don't know about authoritarians or neo-liberals, I only know about anarcho-capitalists.

I also don't know what exactly you mean by regulation, but in those days of yore the markets regulated themselves by not using bank notes of bankers who proved untrustworthy. They were quickly driven out of the market.

This works on a village level, people pretty much know who to trust. But on a big city trade level, or a world trade level, trade would stop because people could not trust each other.

In the audio link I posted earlier, Hoppe refutes this argument. I'm not even sure how what you say would happen in practice. If people from city A are all using money from private banker X, and people from city B are all using money from private banker Y, then two things are possible:

1) Either the money of bankers X and Y is sound and the citizens are wise to use them, or
2) The money is not sound, and the citizens are foolish to use them

In scenario 1) trade is clearly not a problem; people from city B will see that "okay, these other guys are using this money, so it must be sound; let's trade".

In scenario 2), well, the both citizens are now using unsound money but still believe they are using sound money (otherwise they wouldn't use it). If it's unsound, eventually people will find out, and citizens of city B will think citizens of city A are idiots for having adopted it and will never use their money again. The next time they trade, citizens of city B will require that they only use money from a private banker they trust.

If we look at history, they somehow managed to trade internationally even though not all currencies were the same (and not all were backed by gold).

This kind of "emergent order" has happened regularly in history. For example, merchants from different states developed their own laws to deal with each other, since one state's laws didn't have authority in another state. If I now argue that without monopolistic laws, there would be a market for private laws and supply would emerge, most people will say "no, that just doesn't work, that's not realistic" - but it did happen and it did work.

This is the disconnect I am talking about. You are willing to put people in jail for social crimes, but unwilling to put people in jail for market crimes. Why do you think it is a good idea that the government trys and punishes people for murder, and at the same time do not want protection from fraud for market crimes?

The $40 trillion in CDS is a huge fraud that cannot be punished because neo-liberals and democrats for some reason deregulated.

I don't think it's a good idea that the government trys and punishes people for murder.

Does that resolve the disconnect?

[JLL]

The video starts by explaining that the primitive bartering system would be inconvenient today. At least they have this right. Then they
extoll on the virtues of a 100% gold standard. Why gold and not resveratrol, for instance? Well, gold is more valuable than RSV. But
the price of gold is $995 USD/ounce while platinum's price of $2,032 USD/ounce is more than twice that of gold. So why aren't they talking about the
platinum standard? Better yet, rhodium is usually the most expensive of the precious metals, over 4.5 times more expensive than platinum, with
a current price of $7,150. WOW! Let's go for the rhodium standard.

The fact that gold is more valuable than resveratrol is not why they (and I) think gold is a good basis for money. Lew Rockwell writes:

"There is nothing intrinsic about gold that makes it money. It has certain properties that lend itself to monetary use, like portability, divisibility, scarcity, durability, and uniformity. But these are just descriptors of certain qualities of the metal, not explanations as to why it became money. Gold became money for only one reason: because that’s what the markets chose."

A platinum standard would work as well; maybe not as well as gold, but much better than a paper standard. There are some things in the metal itself that explain why gold was chosen and not copper, but I doubt you're interested in that.

Then we are told that hadn't the colonies abandoned the gold standard they would have lost the war of independence. We'll still be British
subjects. Save the queen and all that.

Waging a war when you can't print money freely is often impossible, that is true. Whether or not that's a bad thing is debatable. If you're all for wars then you pretty much have to be all for fiat currencies as well.

Had we stuck with the gold standard we would have lost the world wars. Hooray for the gold standard.

This presupposes that the opponent is using fiat currency to fund the war; with two gold-based currencies, things are again equal. Note that it's the governments that benefit from fiat currencies, never the citizens.

The last I checked gold standard is not adopted anywhere in the world. These Austrian guys were not even able to convince their own government.

You are correct: it is not adopted anywhere and indeed they were not.

On the other hand, the Austrian guys were not able to convince their own governments that taxation is bad, either. That's because they're not interested in what's good for the government, they're interested in what's good for the people. The gold standard is bad for the bureaucrats of a war-warging state.

I explained in a previous
post why a small inflation is necessary.

Actually, you posted that a small inflation is necessary, not why it is so. Why is it so?

Inflation means that the money loses value. But 100% gold standard is not a guarantee against inflation. If we adopt the 100% gold standard what
would happen if the Russians discover huge gold deposits?

Inflation, by its very definition, means an increase in the amount of money. As a result, money loses value. Money could lose value for other reasons as well, but that would not be inflation. Hence, inflation is not equal to money losing value.

And again you're right, a 100% gold standard is not a guarantee against inflation. However, it was used all over the world up until a few decades ago, because the markets decided it was the best currency; one of the good things is that inflation with gold is very low. There are production costs involved, so digging up gold would even become unprofitable if somehow zillions of tons of gold just emerged on the market. We also have a fairly solid grasp of how much gold exists in the earth.

For the Russians to significantly influence inflation rates under a gold standard, they would have to find a gold deposit unlike any other in the history of mankind, which seems unlikely.

The gold standard is just a monetary system. Any monetary system is based on a unit of value, ounce of gold, dollar, pound, euro, peso, etc. It
should be up to the people of a country or federation to adjust the value of that unit with respect to other things. People delegate this
to a government, central bank or whatever. In the US is the Federal Reserve. If we don't like the way they operate we should change the
rules.

The difference between an gold and a peso is that nature controls the amount of the former and man controls the amount of the latter.

A dollar was invented to be worth a certain amount of gold; if you returned your dollars to the bank, you would get a certain amount of gold back. The dollar in itself wasn't what was valued, it was the gold that was valued. The value of the dollar depended entirely on one's chance of redeeming it in gold. If you couldn't trade that dollar for gold, the dollar became useless.

A few decades ago this link between gold and dollars was cut, so that now when you return your dollar to the bank, you get a dollar. The value of the dollar is not measured against anything; its value is the dollar itself.

In historical times, if a banker had suggested that sandcakes are the perfect currency, and that only he can issue sandcakes, and that he promises he will not make too many sandcakes so that the amount of sandcakes in circulation will not be too large, people wouldn't have touched his "money".

The only reason fiat currencies can exist is because they used to be redeemable in something else. Right now, the only thing that makes a dollar have value is the fact that there is not an endless amount of dollars in circulation and because people expect the amount of dollars in circulation not to rise too much. If people were certain that the amount of dollars will increase exponentially, they would quickly discard their currency and switch to something else.

People keep their dollars (well some do) ONLY because they have faith in the people who operate the printing press.

If you think it's a good idea to have faith in them, that's fine by me. Go ahead. I don't have faith in governments in general, much less in some guys who have the ability to print as much money as they can. Remember that fiat currencies have only existed for 30 years or so. Perhaps you're right and we have moved on from barbaric times. But perhaps the Austrians are right and fiat currnecies are an experiment gone wrong.

[Mixter]

Vote now: http://www.petitiono...s/petition.html

http://www.govtrack....?bill=h110-2755
http://www.house.gov...2/cr091002b.htm

The honest solution would be to abolish the federal reserve to
prevent money supply inflation. We need a gold standard of
1 oz : x USD for a firm x (x=1000?). This will work fine for a
longer time as the real economy is not set to grow significantly
as it did in the 1900s era. Other adaptions and fixes to the system
will be necessary but would have to be done around this cornerstone.
Deflation would happen more often, but would be toothless since it
could not be followed by hyperinflation with a gold standard.

There might be other solutions than a firm gold standard,
but not with the element of human corruption in the markets.

PS: Last not least, this would also make the whole borrowing, unpayable
debt and subprime lending game, and the derivatives around it, go away.

Edited by mixter, 12 December 2008 - 09:02 AM.

[inawe]

Actually, you posted that a small inflation is necessary, not why it is so. Why is it so?

A couple of days ago I wrote: "A little bit of inflation is good for the economy. When people know that something will be slightly more
expensive in the future, they buy it now (that's if they have the means). Deflation kills the economy. People expect things to get
cheaper so they don't buy stuff now". I believe it's still a true reflection of human nature.
Commerce is still bartering, but now in an indirect way. You barter an hour of your labor, or your luck at the
stock market for a bottle of wine or whatever. This bartering is made much easier by using an intermediate unit of value. Can be a fraction
of an ounce of gold, dollar, euro ... As explained in the first paragraph, it's good for the economy if this unit undergoes a
continuos slight devaluation. This is much harder to control with gold with a value that depends on external factors.
Gold has been going up with respect to most "strong" currencies. Was on average $650/ounce in 2006, $750/ounce in 2007 and $995/ounce now
(I think). Suppose we still had the 100% gold standard in the US. Your dollars had a value in gold. You had an old car and were thinking in
buying a new one. The car you liked was worth 46 ounces of gold in 2006. 44 onces in 2007. So last year you saw the car getting cheaper
the more you waited. You would have never bought the car, expecting that the more you wait the cheaper it'll get. That's deflation.
Besides monetary policy there are other ways of influencing the economy. Like taxation policy, etc.
We, the citizens of a country put some guys in charge of making sure things work out OK. If it turns out that these guys in charge are idiots who screw up, we
have only ourselves to blame.

[david ellis]

This is the disconnect I am talking about. You are willing to put people in jail for social crimes, but unwilling to put people in jail for market crimes. Why do you think it is a good idea that the government trys and punishes people for murder, and at the same time do not want protection from fraud for market crimes?

The $40 trillion in CDS is a huge fraud that cannot be punished because neo-liberals and democrats for some reason deregulated.

I don't think it's a good idea that the government trys and punishes people for murder.

Does that resolve the disconnect?

Yes, and my world has become bigger. I had it kind of wrong, I thought anarchists did not believe in law, but they do, private law, not state law. I amend all of my statements about law to mean "state law". I think anarcho-capitalists are neo-liberals and anarchists combined. Reading wikipedia made me think so.

Being a libertarian, but only half way to anarchist, I appreciate what anarchists are about, but I think the fact that "private law" has spontaneously appeared and disappeared doesn't make it familiar and fully known.

Personally, I can imagine a very frightening world of "private law", it seems to me that justice would be in constant tension with justice on one side and the biggest pile of money on the other side.

Communism and fascism have been tried and found extremely wanting in justice. The remaining two points, neo-liberalism and anarchy remain relative unknown as to their desirability. Maybe nirvana lies that way, but I don't think so, our trips to the extremes of Communism and Nazism were failures. So the trip to two extremes at once doesn't on the face of it doesn't seem to have much chance for success.

[inawe]

This has more to do with the effects of the mess

[david ellis]

This has more to do with the effects of the mess

Putting on my Bush hating hat. What do you expect from the guy that appointed Brown head of FEMA. A treasury secretary whose has only saved his old bosses bonuses and salaries at Goldman Sachs. There may be some other people saved, but Paulson says he has lost track of who he saved. Hah!

[david ellis]

The $40 trillion in CDS is a huge fraud that cannot be punished because neo-liberals and democrats for some reason deregulated.

It would be more accurate to say "because neo-liberals, including both Republicans and Democrats..." or some other variation. Otherwise it sounds like neo-liberal = Republican. To be sure, most of them are, but Clinton had a couple guys on board with neo-liberal tendencies, yet they identified themselves politically as Democrats.

The point I wanted to make was that this is a bi-partisan clusterf**k. If there are any Democrats who are neo-liberals they should change their party association forthwith. Neo-liberals are as far right as you can get. (there is always a good chance that I am missing something here. I thought Anarcho-capitalists were a myth. Strange things happen, neo-cons couldn't get enough traction in the extreme left wing of the democratic party, so they jumped over to the extreme right wing of the welcoming republican party.) This game of musical chairs is too fast for me. I am out, no place to sit. The leaders of my party are to the right of Eisenhower. Where do I go?

Edited by david ellis, 13 December 2008 - 12:44 AM.

[david ellis]

WHO CARES WHAT HAPPENED? THE BIGGEST MESS SINCE 1929, AND NO DISCUSSION. Does anyone want to defend Alan Greenspan, Bill Clinton, Ronald Reagan, Milton Friedman, and other accused parties?

Edited by david ellis, 13 December 2008 - 12:51 AM.

[niner]

I don't think it's a good idea that the government trys and punishes people for murder.

Does that resolve the disconnect?

It creates a much bigger problem. You seem to be arguing in favor of a society ruled by warlords. Is that it? We have a pretty fair example of that; it's called Somalia. Doesn't seem like a place I'd like to live.

[niner]

WHO CARES WHAT HAPPENED? THE BIGGEST MESS SINCE 1929, AND NO DISCUSSION. Does anyone want to defend Alan Greenspan, Bill Clinton, Ronald Reagan, Milton Friedman, and other accused parties?

Though some are more guilty (a lot more) than others, I can't defend anyones actions in this mess. It is probably counter-productive to blame persons or parties. We should instead be blaming policies and ideologies. The ideology at fault is laissez faire capitalism. The policies at fault were rampant deregulation and cheap money.

[eternaltraveler]

laissez faire capitalism

give me a break. When have we ever had laissez faire capitalism?

You're blaming an ideology that has never been enacted.

Edited by elrond, 13 December 2008 - 01:40 AM.

[eternaltraveler]

deregulation and cheap money

and the government encouraging poor lending practices for political reasons, and money being based on nothing other than the government's hot air (which enabled it to be cheap, heck, you don't even need to print it, you lend me 100 billion dollars, and I'll lend you 100 billion dollars, hey we just created 200 billion dollars)

Also calling "deregulation" a problem isn't helpful. That makes it sound like the solution is any random regulation. The problem was deregulation so stupid it seems like it was designed that way. What regulations do you think would be helpful? I'm sure you can think of some regulations that exist now that you don't think are helpful.

Edited by elrond, 13 December 2008 - 01:48 AM.

[eternaltraveler]

i also forgot to mention the most important reason for this present mess.

People have a short memory and it's been awhile since our last lesson. We were due. Now if the government doesn't go too overboard with their "re-regulation/ bailing out of everyone and their grandmother" people will learn their lesson.

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

[niner]

laissez faire capitalism

give me a break. When have we ever had laissez faire capitalism?

You're blaming an ideology that has never been enacted.

Sigh. Ok, what do you want to call the de-regulated, "free market" blah blah economics generally popularized under Reagan and generally associated with Republicanism of the past quarter century?

[niner]

deregulation and cheap money

Also calling "deregulation" a problem isn't helpful. That makes it sound like the solution is any random regulation. The problem was deregulation so stupid it seems like it was designed that way. What regulations do you think would be helpful? I'm sure you can think of some regulations that exist now that you don't think are helpful.

The problem stems from ideologues who never met a regulation they didn't want to get rid of. When John McCain said "I'm a deregulator", he was saying to his fellow Republicans, "I'm one of you." Elrond, I think you are just looking for a problem here. Obviously the problem is "bad" deregulation. I don't see how you go from "deregulation" as practiced by the Right over the past twenty five years being a problem to "any random regulation" being good.

[niner]

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

That's all well and good, but when people who were being prudent and not taking unreasonable risks get hammered along with the people who caused the problem, or even worse, instead of the people who caused the problem, then the magic of the market isn't working right.

[eternaltraveler]

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

That's all well and good, but when people who were being prudent and not taking unreasonable risks get hammered along with the people who caused the problem, or even worse, instead of the people who caused the problem, then the magic of the market isn't working right.

they weren't paying attention. Many people did not get hammered. This bubble has all been obvious for the last ten years

What you're really saying is that people who have no idea what they are doing put their money in things and expected it to just magically increase because some other guy that didn't know anything told them it would be a good idea. Yes a lot of this has happened. This is part of the lesson.

Of course the level of debt in this country is staggering. The economy has been based on a pyramid scheme of ever increasing debt. The fundamental reason we are in a hole is because the majority of people are simply taped out, and the economy is used to them spending money like they never have to pay it back. Well they do. This is another part of the lesson.

Oh and all those banks stupid enough to lend to people who can't pay them back, and then trade around all this useless debt to each other deserve to fall like dominoes.

Edited by elrond, 13 December 2008 - 04:31 AM.

[niner]

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

That's all well and good, but when people who were being prudent and not taking unreasonable risks get hammered along with the people who caused the problem, or even worse, instead of the people who caused the problem, then the magic of the market isn't working right.

they weren't paying attention. Many people did not get hammered. This bubble has all been obvious for the last ten years.

You must have made a tidy profit then.

[eternaltraveler]

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

That's all well and good, but when people who were being prudent and not taking unreasonable risks get hammered along with the people who caused the problem, or even worse, instead of the people who caused the problem, then the magic of the market isn't working right.

they weren't paying attention. Many people did not get hammered. This bubble has all been obvious for the last ten years.

You must have made a tidy profit then.

I certainly haven't lost.

I didn't know how long the talking heads and various flavors of "analysts" could manipulate everyone into thinking everything was all peaches and creme. I did not think it would be this long.

Edited by elrond, 13 December 2008 - 05:22 AM.

[niner]

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

That's all well and good, but when people who were being prudent and not taking unreasonable risks get hammered along with the people who caused the problem, or even worse, instead of the people who caused the problem, then the magic of the market isn't working right.

they weren't paying attention. Many people did not get hammered. This bubble has all been obvious for the last ten years.

You must have made a tidy profit then.

I certainly haven't lost.

Being out of the market is certainly a way to avoid losing, but it also avoids making any money.

[JLL]

A couple of days ago I wrote: "A little bit of inflation is good for the economy. When people know that something will be slightly more
expensive in the future, they buy it now (that's if they have the means). Deflation kills the economy. People expect things to get
cheaper so they don't buy stuff now". I believe it's still a true reflection of human nature.

I can see that this argument is quite appealing at first sight, but I think it's incorrect.

First, there is the historical evidence: we've only had fiat currencies for 30 years or so, and yet people have bought/traded things since the dawn of time. People in the 19th century didn't just wait for things to become cheaper - even though they did get cheaper. People buy things now instead of later because they value the fact that they get to enjoy it now more than they enjoy the possible discounts in price from buying it later. That is a true reflection of human nature.

Ludwig von Mises writes about this better than I ever could:

The alleged advantages that the champions of fiat money expect from the operation of the system they advocate are temporary only. An injection of a definite quantity of new money into the nation's economy starts a boom as it enhances prices. But once this new money has exhausted all its price-raising potentialities and all prices and wages are adjusted to the increased quantity of money in circulation, the stimulation it provided to business ceases. Thus even if we neglect dealing with the undesired and undesirable consequences and social costs of such inflationary measures and, for the sake of argument, even if we accept all that the harbingers of "expansionism" advance in favor of inflation, we must realize that the alleged blessings of these policies are short-lived. If one wants to perpetuate them, it is necessary to go on and on increasing the quantity of money in circulation and expanding credit at an ever-accelerated pace. But even then the ideal of the expansionists and inflationists, viz., an everlasting boom not upset by any reverse, could not materialize.

A fiat-money inflation can be carried on only as long as the masses do not become aware of the fact that the government is committed to such a policy. Once the common man finds out that the quantity of circulating money will be increased more and more, and that consequently its purchasing power will continually drop and prices will rise to ever higher peaks, he begins to realize that the money in his pocket is melting away. Then he adopts the conduct previously practiced only by those smeared as profiteers; he "flees into real values." He buys commodities, not for the sake of enjoying them, but in order to avoid the losses involved in holding cash. The knell of the inflated monetary system sounds. We have only to recall the many historical precedents beginning with the Continental Currency of the War of Independence.

http://www.mises.org/efandi/ch17.asp

This is much harder to control with gold with a value that depends on external factors.

Indeed it is, which is precisely why gold is superior to fiat currency.

Gold has been going up with respect to most "strong" currencies. Was on average $650/ounce in 2006, $750/ounce in 2007 and $995/ounce now
(I think). Suppose we still had the 100% gold standard in the US. Your dollars had a value in gold. You had an old car and were thinking in
buying a new one. The car you liked was worth 46 ounces of gold in 2006. 44 onces in 2007. So last year you saw the car getting cheaper
the more you waited. You would have never bought the car, expecting that the more you wait the cheaper it'll get.

What if your old car broke down? Would you wait six years to get a new one just so you could save a few bucks? Maybe you would, but most people wouldn't and don't - just look around to see how carelessly people spend money. They're not thinking years ahead in most things, because people have time preferences that are balanced towards now instead of later.

That's deflation.

Deflation is a decrease in the money supply. Cars getting cheaper as time progresses has nothing to do with the money supply - or rather, it need not have anything to do with it. Computers have been getting more efficient and cheaper all the time - and this is despite inflation running rampant. The reason is technological advancement and more efficient means of production.

If it turns out that these guys in charge are idiots who screw up, we
have only ourselves to blame.

I agree.

[JLL]

Personally, I can imagine a very frightening world of "private law", it seems to me that justice would be in constant tension with justice on one side and the biggest pile of money on the other side.

This is a reasonable worry to have. It's also one that has been discussed at length by anarcho-capitalists.

If you're interested, here are some articles on the subject of private law and corruption:

http://www.lewrockwe...molyneux37.html

The article tackles this argument specifically:

In a society without a government, whatever agencies arise to help resolve disputes will inevitably turn into a replacement government. These agencies may initially start as competitors in a free market, but as time goes by, one will arise to dominate all the others militarily, and thus impose a new state upon the population. The instability and violence that this civil war will inflict upon the population is far worse than any existing democratic state structure. Thus a stateless society is far too risky an experiment, since we will just end up with a government again anyway!

And a couple of general articles on private law / dispute resolution organisations:

http://www.lewrockwe.../molyneux1.html
http://mises.org/rot.../mes/chap13.asp
http://mises.org/story/2497
http://mises.org/story/2265

Here are some historical examples of stateless law:

http://mises.org/story/2542

On anarchy in Somalia and their law system:

http://mises.org/story/2701

Communism and fascism have been tried and found extremely wanting in justice. The remaining two points, neo-liberalism and anarchy remain relative unknown as to their desirability. Maybe nirvana lies that way, but I don't think so, our trips to the extremes of Communism and Nazism were failures. So the trip to two extremes at once doesn't on the face of it doesn't seem to have much chance for success.

The "extremes are bad" is a common argument, but I feel that it doesn't really hold upon closer inspection. It's like saying that slavery shouldn't be abolished simply because that would be too extreme, and that moderation is better, so that, say, 50% of the slaves can be free but that's it. Or that we shouldn't ban the beating of slaves, because that would be too extreme, and we already saw what happens when we take to the other extreme - slaves get beaten to death - so moderation must be good in beatings also; let's say that it's okay to beat them only on Mondays and Wednesdays.

Likewise, if you're an immortalist, you don't wish for a little bit of death in your life, or that we only expand lifespans to 150 years, because anything beyond that would be too extreme.

The goodness and badness of extremities depends not on extremity itself, but on the thing we are taking to an extreme.

[JLL]

I don't think it's a good idea that the government trys and punishes people for murder.

Does that resolve the disconnect?

It creates a much bigger problem. You seem to be arguing in favor of a society ruled by warlords. Is that it? We have a pretty fair example of that; it's called Somalia. Doesn't seem like a place I'd like to live.

Of course that's not what I want. Who in their right mind would want that? There is an article on Somalia in the links I posted in my reply to david that might answer some of your questions. How to prevent the warlord scenario in general is answered in the first article I posted a link to.

[eternaltraveler]

A market correction, even a major one, is not a market failure. It's the market doing what it's supposed to do. Bubbles need to pop, and people need to have a bad experience from it so they can learn for a couple decades.

That's all well and good, but when people who were being prudent and not taking unreasonable risks get hammered along with the people who caused the problem, or even worse, instead of the people who caused the problem, then the magic of the market isn't working right.

they weren't paying attention. Many people did not get hammered. This bubble has all been obvious for the last ten years.

You must have made a tidy profit then.

I certainly haven't lost.

Being out of the market is certainly a way to avoid losing, but it also avoids making any money.

I'm not going to go into any detail over my personal investment strategy. But it certainly hasn't been one of keeping my assets from working for me.

[eternaltraveler]

Another note. ”investing” in insolvent markets isn't investing. Its just stupid.

[inawe]

Ludwig von Mises writes about this better than I ever could:

Once the common man finds out that the quantity of circulating money will be increased more and more, and that consequently its purchasing power will continually drop and prices will rise to ever higher peaks, he begins to realize that the money in his pocket is melting away. Then he adopts the conduct previously practiced only by those smeared as profiteers; he "flees into real values." He buys commodities, not for the sake of enjoying them, but in order to avoid the losses involved in holding cash.

He's right here. But von Mises misses the main point. Skilled people in control, can adjust the inflation rate (1-1.5% /year ?) so consumer
spending is enough to fuel the economy but not too much to wipe put savings. If the currency is pegged to gold, this is impossible to do.

The only way to enforce a gold standard is by having convertibility. One of the best things Nixon did was to end the convertibility. If
convertibility were in effect now, we in the the US, would be completely f***ed.

With this, I exit the discussion on the gold standard since I don't think I can add anything new or different.

[JLL]

I (and probably Mises as well) would ask: Where are all these "skilled people"? Certainly not in central banks.

A gold standard need not be "enforced".

[david ellis]

Read the story of the man who shorted Wall Street and profited from the debacle. A quick look at how corrupt Wall Street is from the inside.
I am disheartened, it is much worse than I imagined. Disheartened, because the penalty will be what we deserve, worse than I imagine. All who voted for this bi-partisan debacle are responsible. Our votes for Clinton and Bush, all of congressmen and senators.