The people which matter in Britain

[vonHayek]

Hmmm, you didn't specify "free-floating", you merely specified "floating".

No I'm not.

But it doesn't, that's the point.
What it does like any financial institution, is make a "best guess" constructed around past trends.
You know, using those models you people are so fond of, the ones that have little concordance with reality?

No, you referred (in passing) to some opinions of yours. That's hardly "support".

Well, ok, 'free floating'!

Yes, the central bank makes a best guess of course and you mention the problem with that in the same sentence - these models don't have much concordance with reality that's entirely the point. They make best guesses and policy on what they think is best - and just look where that gets us!

In a free society the interest rate would be set by the market i.e. the supply of loanable funds vs the demand for loanable funds.

The 'opinion' of mine that says the economic cycle as evidence of the destructive nature of central banking and fractional reserves is a very well documented theory. I can give numerous references should you wish.

So there we have it, central banking is stupid in general, the evidence is the fragile nature of the banking system that it supports and the destructive cycles is produces.

 

[ViolentPanda]

Well, ok, 'free floating'!

Yes, the central bank makes a best guess of course and you mention the problem with that in the same sentence - these models don't have much concordance with reality that's entirely the point. They make best guesses and policy on what they think is best - and just look where that gets us!

I look, I see.
It gets us as far as trusting the model(s) you favour.

In a free society the interest rate would be set by the market i.e. the supply of loanable funds vs the demand for loanable funds.

"A free society" does not and cannot exist, at least not in the way your interests would be served by it, i.e. a society free to be cattle.

The 'opinion' of mine that says the economic cycle as evidence of the destructive nature of central banking and fractional reserves is a very well documented theory. I can give numerous references should you wish.

I'm sure you can.
The interesting point about "economic cycles" is that they're so often referred to as being a phenomenon which establishes the context and validity of economic policy and activity, and yet those who most often use them in such a way almost always divorce these cycles from the context in which they occur.
As you appear to be doing.
Nice try, though.

So there we have it, central banking is stupid in general, the evidence is the fragile nature of the banking system that it supports and the destructive cycles is produces.

Oh dear.

 

[vonHayek]

I don't favour any model, I favour a free market with no-one telling others what they think the price of credit should be.

Well, whether a free society could exist i guess is actually irrelevant, I shouldn't have put that. There is a very simple banking reform that could lead to the interest rate being determined entirely by the supply and demand for loanable funds (without a central bank that is). that is simple 100% reserve banking. That is all nothing more, nothing less.

Economic cycles do define and influence economic activity and policy sure. But I'm not talking about fiscal and monetary policy. I'm talking about what actually causes these cycles. I believe what causes these cycles is the flexible money supply brought about by fractional reserve banking and it's necessary guardian the central bank.

You say 'oh dear' but what exactly do you have to back that up? What on earth are you talking about? I'm saying central banking is rubbish for my evidence I give you the current (and almost all other) boom bust cycles. what do you give me? flippant little smilies that just say 'I haven't really got anything to back up what I'm saying so I'll just make it look as though i know what I'm talking about in some vaguely patronising manner' nice one.

 

[elbows]

I speculate that one reason you are met with ridicule, is that whilst free market fundamentalism certainly has some true believers, its quite widely regarded as very silly.

It requires a belief in the power of free markets that is little different than the belief in a god. For whilst it is possible to demonstrate a variety of flaws in the present system, eg central banks, actual evidence to support the power and possibility of genuinely free markets is in short supply.

It is also a belief system that is attractive to some people with extremely dodgy motivations. For example it often appeals to people who have some financial power, and whose notions of freedom are more to do with the fact that their power is restricted by other powers, eg a centralised government.

It completely ignores the reasons why some sort of management and control of markets was implemented in the first place. Namely, that people with power in these markets abuse their positions, and are not acting in the best interests of everyone, and that no, there is not some wonderful natural equilibrium that free markets will come to if left to their own devices. It relies on the corruption and misuse of the words of Adam Smith.

On the few occasions where these ideas have been allowed to influence monetary policy, it has been a failure. It is not taken seriously by many within the elite, where only an extremely watered down version of free market ideologies stands any real chance of gaining traction.

The present economic system is a house of cards, and I suppose the precarious state its in now does create some potential for the free market fundamentalists to push their agenda. However I expect this to be met with widespread ridicule, as if there is one time intervention in markets is justificed, it is now, because they are broken basket-cases which require state life-support so we dont all end up hungry within weeks.

 

[vonHayek]

I disagree (obviously) but thanks for the polite response!

 

[elbows]

Well I am fascinated by this stuff and am trying to learn more.

I think that some of the criticisms of central planning by Austrian School people, are quite useful. But Ive simply never understood where they get such strong belief in the power of price mechanism. For me that seems like the worst of both worlds, it is open to abuse by powerful people & entities, and the madness of crowds. And whilst most central regimes we have seen have not been very good at being truly democratic, I dont know how any democracy would be possible with markets, so long as all players within the market are not equal.

Anyways I suppose some of Hayek's agenda gained traction from the 80's onwards, namely deregulation, but thats precisely the sort of thing that is being blamed for the present woe (even if poor central planning is to blame too), and so his legacy will probably erode. On the other hand his supporters will be able to say that the market failed because it want free enough, it had been distorted, but Im not sure thats going to carry too much traction.

I do find it quite interesting how much such beliefs lurk beneath many US libertarians, fringe ranters, conspiracy theorists and goldbugs. This is what alerted me to the Austrian School in the first place, well that and reading about Thatchers doomed monetarist policy. I suppose they are a right-wing response to certain left-wing forces that were strong in the earlier part of last century. They are useful at exposing the potential horrors of too much central power. However just as many people have a problem believing that human nature is compatible with certain anarchist ideals, many find their beliefs in market and price as an alternative, to be even less compatible with humanity and decency. I wish we lived in a world where different countries could try out radically different systems of organisation, so we'd have more experience on what might actually work in practice, as without it, its just a battle of beliefs.

 

[ViolentPanda]

I don't favour any model, I favour a free market with no-one telling others what they think the price of credit should be.

A free market is an idealisation incapable of being brought to reality, therefore your "free market" is actually a model designed to approximate what you believe a free market that will best serve your interests would be.
Come on, this is fundamental stuff!

Well, whether a free society could exist i guess is actually irrelevant, I shouldn't have put that. There is a very simple banking reform that could lead to the interest rate being determined entirely by the supply and demand for loanable funds (without a central bank that is). that is simple 100% reserve banking. That is all nothing more, nothing less.

Which is unlikely ever to happen because it would circumscribe the ability of banks to make money from money.

Economic cycles do define and influence economic activity and policy sure. But I'm not talking about fiscal and monetary policy. I'm talking about what actually causes these cycles. I believe what causes these cycles is the flexible money supply brought about by fractional reserve banking and it's necessary guardian the central bank.

And you explain the economic cycles that occurred before the "modern" (i.e. post-1820s) boom of fractional reserve banking...how?

You say 'oh dear' but what exactly do you have to back that up? What on earth are you talking about? I'm saying central banking is rubbish for my evidence I give you the current (and almost all other) boom bust cycles. what do you give me? flippant little smilies that just say 'I haven't really got anything to back up what I'm saying so I'll just make it look as though i know what I'm talking about in some vaguely patronising manner' nice one.

I say "oh dear" because you appear to be addicted to putting all your eggs in one basket. "X causes Y", no thought given to how other factors interact to precipitate or exacerbate problems.
It's not patronisation, it's despair.

 

[ViolentPanda]

Well I am fascinated by this stuff and am trying to learn more.

I think that some of the criticisms of central planning by Austrian School people, are quite useful. But Ive simply never understood where they get such strong belief in the power of price mechanism.

I've always seen it as a reaction to (or against) history. If you're (historically, geographically and socially) surrounded by price being (in fact much of life being) governed by powerful external forces (the Church, the monarchy, the state), then investing faith in a belief system that rebuts those external forces and claims to exist outside of influence might seem a rational thing to do.
Until you actually analyse what it would actually mean socially, something that Smith did (which is why I'd say it's worth reading "The Wealth of Nations" in it's entirety to anyone thinking of doing so), but that his ideological descendants couldn't be arsed with.

 

[phildwyer]

Until you actually analyse what it would actually mean socially, something that Smith did (which is why I'd say it's worth reading "The Wealth of Nations" in it's entirety to anyone thinking of doing so)

And which you obviously have failed to do. In TWON, Smith's entire project is to construct a sphere called the 'economy' which can be analysed apart from its extraneous effects.

So, unless you just want to skip the formalities and admit that you are lying, again, perhaps you will point us to a passage in the text where Smith does what you claim?

 

[ymu]

And which you obviously have failed to do. In TWON, Smith's entire project is to construct a sphere called the 'economy' which can be analysed apart from its extraneous effects.

So, unless you just want to skip the formalities and admit that you are lying, again, perhaps you will point us to a passage in the text where Smith does what you claim?

And here he is. Did you forget to change logins again Phil?

 

[elbows]

And here he is. Did you forget to change logins again Phil?

No, the free market was left to decide the login, but those dastardly central bankers ruined it all by daring to distort the pure will of the market, now see what they've done.

 

[ViolentPanda]

And which you obviously have failed to do. In TWON, Smith's entire project is to construct a sphere called the 'economy' which can be analysed apart from its extraneous effects.

So, unless you just want to skip the formalities and admit that you are lying, again, perhaps you will point us to a passage in the text where Smith does what you claim?

Interesting.
You still haven't managed to get past the need to present yourself as omniscient, as someone fit to stand as arbiter of what is "right" or "wrong", of who "lies" and who speaks the "truth".
Interesting too that you believe that you know what I have or haven't read.

Is your middle name "Hubris", by any chance?

 

[Louis MacNeice]

And which you obviously have failed to do. In TWON, Smith's entire project is to construct a sphere called the 'economy' which can be analysed apart from its extraneous effects.

So, unless you just want to skip the formalities and admit that you are lying, again, perhaps you will point us to a passage in the text where Smith does what you claim?

This, as I'm sure you realize given even a moments reflection, is a very stupid thing to write; perhaps your need to win the argument has compromised your critical faculties.

Louis MacNeice

 

[ViolentPanda]

This, as I'm sure you realize given even a moments reflection, is a very stupid thing to write; perhaps your need to win the argument has compromised your critical faculties.

Louis MacNeice

Phil is an alchemist of sorts.

he can spin dross from even the best gold.

 

[sleaterkinney]

tbh, I think if Ireland was outside the euro it would be even more fucked, it would be a lot more vunerable to a run on the punt (like the uk is having now) and the banks.

Brown will never join the euro, he's too much of a control freak, plus <tinfoil hat> The US wouldn't let him</tinfoil hat>

 

[ViolentPanda]

tbh, I think if Ireland was outside the euro it would be even more fucked, it would be a lot more vunerable to a run on the punt (like the uk is having now) and the banks.

Brown will never join the euro, he's too much of a control freak, plus <tinfoil hat> The US wouldn't let him</tinfoil hat>

I don't think it's so much a blatantly open thing of "the US wouldn't let him" so much as the fact that he, most of his contemporaries, and many of the younger generation of "new Labour" politicians are so thoroughly Atlanticist as to actually tacitly weigh whether what they do accords to the US's wishes in most political decisions.

 

[elbows]

I think its impossible to say how much direct control the US have brought to bear on the UK in all sorts of areas since World War 2.

There certainly seem to be some good reasons why the USA would be trying to ensure the Euro wasnt too successful, lest it erode the magic of the dollar that it gets from being the standard world reserve currency.

I dont know if the change in circumstances around the globe that the credit crunch is bringing, will change US policy in regard to these things. There was a funny article about Obama meeting Cameron earlier in the year, and Obama thought Cameron was a lightweight for spouting on about UK-US relations and being skeptical about Europe. The article made it sound like times had changed, and the USA now wanted Britain to be a fully functional EU member, rather than a trojan horse, but that might just have been the views of the article writer rather than the Obama administration.