Ok here goes what? I don't think so. Back up a little bit and recall that you were the one making a blanket statement about consumption in saying that it doesn't matter how capital is spent, that investing in one's business vs investing in hookers is of equal value. Also note there is a clear difference between creating value and simply transferring capital from one agent to another. I was the one saying that it makes a difference how capital is spent- I was the one saying that the variables matter, that consumption sometimes creates value and sometimes not depending on what choices are made. So for you to now ask "what" and "who" is hypocritical, as you were the one offering the original blanket perspective rather than recognizing the many variables in the equation. The "according to who" question is an out of place appeal to authority that doesn't really make sense- if this matter can only be settled by appealing to some certified economics bigwig then there's really no point in us joe blow traders discussing it, hey? Do you want to cite sources of nobel prize winners or do you want to share views here? The current debt cycle is destructive for the economy as a whole- there will always be those in position to benefit from greater misfortune. But in this case bankers will come to regret the debt cycle also when all is said and done. Greed and short sightedness leading to downfall is woven through the thread of human history. There is a difference between good and bad debt of course, depending on the amount incurred and to what purpose- but hey, now we're back at the importance of smart choices here aren't we, what a surprise. Friendly disagreement is all good- but for you to say my perception is that of the "old" and that you have an "entire picture" view, implying a myopic view on my part, is insulting. I think your criticism of what I said in regards to consumption is as unfounded as your larouche comparison, which I am glad to see you backed down on. I am still waiting for a clear argument to back up what's left of what you said. My point stands that in a system of economic free agents, where benefit is derived from the choices of those economic agents, choices matter. Are you really trying to dispute that? And I'm still waiting to hear the basic economic theory that I'm lacking. If you want to call off the debate and bury the hatchet I'm willing, but not if you want to continue suggesting that I am missing the "bigger picture" or putting forth antiquated views. I'm surprised to have touched a nerve here, but if you want to end this you can. If you want it to keep going let's dispense with rhetoric and veiled insults and get down to thrashing out our points of disagreement.
trading pieces of paper back and forth does not create wealth but bubbles. neither does a service economy like the u.s. where to use an old example i wash your laundary and you wash my laundary adds to gnp. good call
dark, the "according to who" question is not an appeal to authority but rather asking "according to who" is no value created. certainly not the individuals involved in the transaction. i thought this was clear. value and choice are relative, subjective terms that is what i was trying to say. we are coming from totally different paradigms on this issue, therefore it is best for me to not continue with the debate. peace, surfer
That's not true. It's no coincidence that wealthy economies also have a high mkt cap as % of GDP, ie how much of their economic production is capitalized (ie given a present valuation) by the markets. If you go back to classic invisible hand and the theory that prices serve to guide allocation, then the more of a countries assets come under the capital markets, the more efficient the invisible hand. It's all about efficiency of capital utilization.
Fair enough- you are one of my favorite guys on this board and I'd prefer to keep things copacetic anyway. Though I would like to point out that while value may be subjective from a personal preference standpoint, from an economic growth and wealth creation standpoint value is not subjective at all. Given time, decisions can be measured in respect to their positive or negative contribution to growth- not measured perfectly of course, but measured nonetheless. If this were not true, the markets would not work.
Your last sentence is key- trading pieces of paper is not what creates the wealth, efficient capital utilization is what creates the wealth. The shuffle generally facilitates that end but sometimes fails spectacularly.... like democracy, capital markets are a flawed and imperfect system that happens to be better than any other system available- and thus also like democracy, the system is prone to break down when participants take temporary leave of their senses.
Trading pieces of paper doesn't create wealth. Tell that to the Las Vegas Chamber of Commerce. How naive are you people. So a whore house isn't an investment (even though it makes money) but Kmart was (even though they went bankrupt). Wow I guess that it doesn't matter what type of economy you have as long as you have means of production, kind of like the old Soviet Union, eh!
Thanks. Someone used the word arrogance. That's appropriate. It will be hubris if he acts on his assumptions as if they were solid. g