I thought I better post this because austrian economics is so popular

Discussion in 'Economics' started by morganist, Jul 9, 2009.

  1. Interesting point RC! It may be that the best position is to stockpile on arable land (owned without a mortgage) and stockpile food, water, clothing, etc. - a position I am not against :D The big question is: When does it fail in the ball of fire? A week from now...a month from now..a year from now...how much time to prepare?

    -gastropod
     
    #11     Jul 10, 2009
  2. You clearly know nothing about Austrian economics or Objectivism. What you mention is the very basis of both philosophies.
     
    #12     Jul 10, 2009
  3. Specterx

    Specterx

    It's easy to see why the old Gold Standard would have failed: the problem is fractional-reserve banking. Say the peg is $1=1 ounce of gold, there's $100 in circulation and 100 ounces of gold in the vault. If the banks magically create another $100 without having to come up with 100 ounces of gold, then the true value of your currency relative to gold has just changed, negating any benefits from the gold standard. Eventually the imbalances get so great that you have a crisis.

    If banks were required to have 100% reserves on deposit accounts, all lending was in the form of bonds or CDs, and the interest rate was determined by some market mechanism rather than the Fed, it seems to me that extreme bubbles and severe financial crises would be a thing of the past. You would still have speculative bubbles and shocks, people would make bad investments and so on, but these processes wouldn't be nearly as self-reinforcing as they are now - either to the upside or the downside.
     
    #13     Jul 10, 2009
  4. In that, many economic belief models share many traits with religions, rather than with scientific theories.
     
    #14     Jul 10, 2009
  5. I agree with RC on most of the points he made previously.

    As to banning fractional-reserve banking, that's yet another completely unrealistic idea. As I mentioned in another post, the reason we have fractional-reserve lending is because people want to earn interest. Unless you somehow ban all yielding instruments, you're gonna have fractional-reserve banking (look at the origins of the system; it coming into existence is not a random coincidence). Moreover, even systems that ban interest (islamic banking) have found it virtually impossible to ban fractional-reserve lending in a capitalist system. It's just basic human greed and any hopes to eradicate it are completely misguided. Best you can hope for is regulate it to prevent "bi-polar" excesses.
     
    #15     Jul 10, 2009
  6. Daal

    Daal

    I disagree. The reason objectivism and austrian economics are popular, specially with young people, is because they promise a lot, objectivists think they know everything so do austrians regarding economics. As a result its very seductive for people to join, they can choose the normal world where they wont know a lot of stuff or join these cults where they will know everything and will be working towards a utopian world that is almost perfect(according to them)
     
    #16     Jul 10, 2009
  7. Specterx

    Specterx

    Ayn Rand's stuff is unrealistic. No doubt about it. But IMO there are still some features of Austrian economics that can and should be implemented - namely removing the government's control over interest rates, banning fractional-reserve banking, and fixing (as nearly as possible) the quantity of money in circulation.

    On that last point, imagine trying to build a skyscraper, ordering materials measured out in inches or feet, when nobody can agree on (and nobody really knows) exactly how much 'length' an inch or a foot represents. It would be inefficient, chaotic, and probably impossible - but that doesn't seem to stop us from trying.
     
    #17     Jul 10, 2009
  8. Reread Specterx's post. The desire to earn interest would still be fulfilled without fractional reserve banking. Lending would simply occur through bonds (MBS, CDO for example) or term deposits.
     
    #18     Jul 10, 2009
  9. That is because economics is not a science.
     
    #19     Jul 10, 2009
  10. NKNY

    NKNY


    haha, I was waiting for the same thing as I was reading....
     
    #20     Jul 10, 2009