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Right Wing Ideology Fails in Economics As Well

No. Science (AKA free-market capitalism) is based on pure reason.

Like I said, I don't accept reason as an absolute. I view it more as a tool that allows us to answer those questions that are capable of being answered. All empirical science is based on human perception, and human perception is limited by man's senses and the observable universe. So, in that sense, scientists are taking it on faith that their view of the universe reflects its true state. And economics is a long way from being a pure science, because humans don't always perform as expected, nor, perhaps, should they:

[W]e find that the more a cultivated reason applies itself with deliberate purpose to the enjoyment of life and happiness, so much the more does the man fail of true satisfaction. And from this circumstance there arises in many, if they are candid enough to confess it, a certain degree of misology, that is, hatred of reason, especially in the case of those who are most experienced in the use of it, because after calculating all the advantages they derive, I do not say from the invention of all the arts of common luxury, but even from the sciences (which seem to them to be after all only a luxury of the understanding), they find that they have, in fact, only brought more trouble on their shoulders. rather than gained in happiness; and they end by envying, rather than despising, the more common stamp of men who keep closer to the guidance of mere instinct and do not allow their reason much influence on their conduct.

From Fundamental Principles of the Metaphysic of Morals, by Immanuel Kant


The only rational way to judge social rulesets is by the principle of evolutionary competitive advantage - a ruleset that leads to the greatest long-term economic growth (that is the greatest fulfillment of materialistic wants) is the most desirable. Those economic laws are not an arbitrary construct - like fundamental laws of physics, they exist whether you believe in them or not.

I get nervous whenever someone uses a word like "only," because that implies there is absolutely NO other rational means to judge social rulesets. I'm all for maximizing happiness and living the good life, just as long I do it morally and ethically. It's also "good" if I aid my community not simply as a byproduct of supplying a good or service, but also because I maintain a sense of altruism. Anyway, maybe the most desirable existence is not in amassing large quantities of material goods, but in the simple life of living with a few basics. Personally, I think I would do just fine living in a tropical paradise loaded with mangoes, pineapples, coconuts, and throngs of gorgeous, exotic women adorned with nothing but fragrant tuberose leis. :mrgreen:
 
Immanuel Kant is the second most irrational and destructive "intellectual" in the history of Western Civilization, the worst of course being Karl Marx.
 
You likely want to blame liberals and minorities for the oversight failure so you latch on the CRA myth.

Not minorities, just liberals. ;) And the problem was not as simple as some folks (mostly liberals) thought it was:

"From the current handwringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards--at the behest of community groups and "progressive" political forces.… For years, rising house prices hid the default problems since quick refinances were possible. But now that house prices have stopped rising, we can clearly see the damage done by relaxed loan standards."

The point here is not that low-income borrowers received mortgage loans that they could not afford. That is probably true to some extent but cannot account for the large number of sub-prime and Alt-A loans that currently pollute the banking system. It was the spreading of these looser standards to the prime loan market that vastly increased the availability of credit for mortgages, the speculation in housing, and ultimately the bubble in housing prices.

The American Spectator : The True Origins of This Financial Crisis
 
Immanuel Kant is the second most irrational and destructive "intellectual" in the history of Western Civilization, the worst of course being Karl Marx.

No, the worst is Ayn Rand. At least Marx had a conscience. ;)
 
You don't need a "con-science" when you have a rational moral philosophy - the latter is far, far more effective.

And have you ever read a real biography of Karl Marx (i.e. that wasn't published by communists)?
 
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And have you ever read a real biography of Karl Marx (i.e. that wasn't published by communists)?

Nope. My exposure to Marx came from an undergraduate survey class in college. I studied mostly political philosophy from the Early Enlightenment to the Late Renaissance. I had some basic exposure to political economy--Adam Smith, J.S. Mill, Marx, Hegel, Ricardo, Malthus--the usual suspects. Honestly, I think I've learned more about this stuff since I started debating several years ago on political message boards like this one. Normally, the bigger the asshole (opponent), the more I learn, because the harder I work. That's an a priori truth. :lol:
 
My job is not to educate you. You could have googled "6% Republican Scientist" and had your answer before in 5 seconds.

Here you go...now run along.

Community Reinvestment Act - Wikipedia, the free encyclopedia

The evidence is overwhelming the CRA story that wingers tell is a load of crap.

You made this claim:

The CRA/Housing crisis myth is an urban legend. I'm very familiar with it. Is started from a factless IBD editorial. Additionally I've posted in the past Congressional testimony from Bush Administration officials that told Congress point blank the CRA had nothing to do with. Furthermore I've posted multiple statements by experts stating the CRA was a non issue.

And to support it, you provided a link to wikipedia that notes that there is an ongoing controversy as to whether the CRA had a significant effect or merely a minor effect. Do you see why it's hard to believe what you're saying here?

Comptroller Dugan Says CRA not Responsible For Subprime Lending Abuses

FDIC: Speeches & Testimony - 12/17/2008

As I understand it, CRA loans in aggregate outstanding never came close to anywhere near 10% of the total housing market loans outstanding. Blaming the CRA is like blaming a $5k over budget expense account for why Enron went bust.

From one of the CRA's defenders:

In the February 2008 House hearing, law professor Michael S. Barr, a Treasury Department official under President Clinton,[64][109] stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. He noted that approximately 50% of the subprime loans were made by independent mortgage companies that were not regulated by the CRA, and another 25% to 30% came from only partially CRA regulated bank subsidiaries and affiliates.

That would seem to indicate that around 25% of subprime loans were made by fully CRA-regulated banks while another 25% were from partially CRA-regulated banks. We can argue over the impact of those loans, but it seems clear that the ratio doesn't resemble $5k:Enron.
 
That would seem to indicate that around 25% of subprime loans were made by fully CRA-regulated banks while another 25% were from partially CRA-regulated banks.

But the loans themselves were not CRA. Furthermore, remember that the subprime itself was never covered under regulation, meaning any bank could sell them.

We can argue over the impact of those loans, but it seems clear that the ratio doesn't resemble $5k:Enron.

Only if we ignore aggregate totals.

LS-564: TREASURY DEPARTMENT RELEASES CRA STUDY

The study focused on lending trends in 305 U.S. cities between 1993 and 1998. Highlights include:

* $467 billion in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers.

That's $77.83 billion in CRA loans per year.

There are $11.25 trillion home mortgages as of 2008 outstanding.

Banking, Mortgages & Credit Statistics

There is no way that $77.83 billion in annual CRA loans could even remotely cause the mess we see today when the aggregate total of home mortgages vastly surpasses even aggregate CRA loans.

Most Subprime Lenders Weren’t Covered by CRA | The Big Picture

Even in recent years, there's no way CRA caused this mess. Sheer materiality levels alone eliminate it even on the premise of 100% defaults which we know isn't true.

And we're not even accounting for the potential $1.6 trillion AIG derivative exposure.

CRA is nothing more than a scapegoat.

Point is, the real frackups were with the big banks not subject to CRA issuing often double to triple the amount of CRAs, poor banking practices, AIG's London Office, and Fannie/Freddie. In 2005, non-CRA subprime lending was almost more then aggregate CRA prior to 1998.
 
What I'm referring to is the idea that, in order to maintain full employment, government should maintain high levels of aggregate demand by making up for shortfalls in private-sector spending. It's the old supply-side, demand-side debate in which some people (like me) believe that demand should come from savings, not borrowing. Borrowing is fine if it's used for a productive purpose that provides a return greater than the cost--and if you can afford it. I just don't happen to think that Cash for Clunkers and programs designed to keep buyers in their homes at bubble prices qualify as productive uses of taxpayer funds.
The Keynesians however are right about corporate-capitalism. That doesn't mean the likes of Krugman and neo-keynesians have great analysis of economic reality, you'd have to go to Keynes himself and the post-keynesians for a much firmer base, just they are correct that the state intervention that caused corporate-capitalism needs more and more to maintain it. If you took the gov't support that is generally called keynesianism away tomorrow and left corporate-capitalism otherwise intact it would not bounce back stronger than ever, it would likely suffer extreme problems and likely collapse.
 
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The Keynesians however are right about corporate-capitalism. That doesn't mean the likes of Krugman and neo-keynesians have great analysis of economic reality, you'd have to go to Keynes himself and the post-keynesians for a much firmer base, just they are correct that the state intervention that caused corporate-capitalism needs more and more to maintain it. If you took the gov't support that is generally called keynesianism away tomorrow and left corporate-capitalism otherwise intact it would not bounce back stronger than ever, it would likely suffer extreme problems and likely collapse.

That's because we've got this mentality now that failure is always bad. Well, if a company is slow, inefficient, and in debt up to its eyeballs, maybe it should go under. We had panics and depressions in the 19th Century, but the capitalist economies still grew, because when crunch-time came the lumps got washed away. The American economy had its fastest period of growth when there was no central bank tasked with maintaining full employment. Now we've got economists talking about how we've managed to abolish depressions. How arrogant is that?

All we've done with this reflationary, bailout mentality is allowed capital to remain deployed unproductively in less efficient and bubble assets so that with each successive economic cycle we fall deeper and deeper into mediocrity. The Japanese bought the Kool-Aid that government spending will get their economy on track, except that now they spend most of their tax receipts on two line items--debt service and social security. They keep trying to reflate their way out of a deflationary funk, but it gets tougher with each passing day for a Japanese to get his hands on a yen.

We wrongheadedly assume that the solution to our economic troubles is more government intervention and regulation. I think Reagan was right: Government is the problem. Everywhere one looks, government is making it easier for households and businesses to assume more risk, but then we let them shift that risk to the taxpayer. Who cares if a bank plays casino in the financial markets when we've got FDIC insurance (which, by the way, is getting a bit frayed at the edges at the moment)? :confused: Who cares if a family borrowed beyond their means to buy a McMansion while their neighbor choked for years on Top Ramen and Kraft Mac in order to save up for a modest home when we can socialize Mr. and Mrs. Piggy's stupidity? :confused: And who cares if a mortgage is made on a crack house in Pacoima if that mortgage is just as golden as a U.S. Treasury bond, since it's backed by the full faith and credit of the U.S. Government? :confused:
 
Only if we ignore aggregate totals.

LS-564: TREASURY DEPARTMENT RELEASES CRA STUDY

That's $77.83 billion in CRA loans per year.

There are $11.25 trillion home mortgages as of 2008 outstanding.

Is there any reason you're looking at total CRA lending from 93-98 and then comparing that to total subprime lending as of 2008? Those don't really seem to be comparable to me.

edit: Furthermore, this isn't the only way in which the CRA could have had a negative impact on the market.


* But even during the crisis, CRA loans didn’t default at higher rates than other mortgages. CRA banks aren’t failing more than other financial institutions, CRA areas aren’t hotspots of defaults. What about that?

In part, this is evidence that the lending standards of the CRA had spread to the rest of the mortgage market.

* I thought you said CRA loans caused this crisis.

Nope. It isn’t losses from CRA loans that drove the crisis (although they are disproportionately responsible for losses at some banks). Instead, the CRA required lax lending standards that spread to the rest of the mortgage market. That fueled the mortgage boom and bust.

* So how and why did the CRA lax lending spread to the rest of the mortgage market?

The structure of the CRA regulations encouraged the spread. Banks that were the best at making CRA loans were allowed to grow by making acquisitions and opening new branches. This created a kind of political-financial Darwinism that reward the biggest enthusiasts for lax CRA lending standards. Of course, the most successful people under this regime were not the types who needed their arms twisted to make loose loans. They were who were predisposed to engage in loosey-goosey finance, who discovered that the CRA had made the world their oyster.

As for the “why” part of your question, the answer is a bit ironic. Banks making CRA loans initially expected that defaults would be higher due to lax lending standards. When they discovered the low-income borrowers had an unexpected propensity to pay their mortgages. After years of data poured in showing that borrowers were paying mortgages despite high LTVs, low down payments and unconventional income measures, bankers began to believe that many of the traditional measure of credit worthiness were overly conservative. Recall what I said earlier about how mortgage service providers started pursuing low-income borrowers in part because of the CRA.

What they didn’t take into account was that different types of borrowers may behave differently, and that much of the data on those lax lending mortgages was warped by increasing home prices. Wealthier, more sophisticated borrowers ruthlessly default when their mortgage goes underwater, for example. What’s more, the reversal of housing prices meant that defaults across all borrower classes increased.

Making matters worse, President Bush pushed hard for lax lending standards. He wanted to expand minority and low income home ownership far beyond what the CRA required. So he pushed even harder for the broadening of these lending standards.

* Wait. So you’re saying that the CRA's lax lending to low income borrowers became dangerous when it was extended more broadly?

In part. Ironically, the low income lending practices, particularly when undertaken on a limited basis in a low-securitization and rising house price period, seemed safe. This led to the practices being spread across the much broader category of loans. In a sense, you can look at the mortgage mess as what happens when CRA lending was applied much more broadly. If we'd confined the lax lending standards to just the geographical areas and low-income borrowers directly targeted by the CRA, our mortgage crisis would be far more manageable.

Studies have suggested that only 6 percent of subprime loans were extended by CRA-regulated lenders to either lower-income borrowers or neighborhoods in the lenders' CRA assessment areas. Since these loans suffer from outsized losses (for reasons not yet clear), we'd still have a major problem. But it would probably be only about 1/4 of the size of the current mortgage mess.

* That doesn’t sound very Republican of you.

I told you from the start this wasn’t some plot to make the GOP look good.

But don't get carried away with this irony. Now that we are in this crisis, loans located in low income areas are almost twice as likely to be in foreclosure as other loans. There's also an unfortunate racial angle, with African Americans being 1.8 as likely to be in foreclosure as whites, and Latinos being 1.4 likely to be in foreclosure.

What's more, an enormous amount of subprime loans were made to lower-income borrowers target by the CRA. Forty-five percent of subprime loan originations went to lower-income borrowers or borrowers in lowerr-income neighborhoods in 2005 and 2006, where the foreclosures are almost twice as likely. This suggests that the kind of low income borrowers targeted by the CRA are likely to be responsible for the majority of subprime foreclosures.

Here's How The Community Reinvestment Act Led To The Housing Bubble's Lax Lending
 
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I do like the twin arguments, often proposed from the same ideological backgrounds:

1. Business cycles happen, it's natural, and therefore must be good.
2. It's government's fault we have any bad business cycle.

Greenspan recognized his ideological blindness, blindness no doubt in part due to Ayn Rand's ideas, if only others could learn from is lesson.

-Mach
 
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I do like the twin arguments, often proposed from the same ideological backgrounds:

1. Business cycles happen, it's natural, and therefore must be good.
2. It's government's fault we have any bad business cycle.

No rational economist believes that business cycles are natural - they are caused by violent (and thus irrational) government interference, and are undesirable. Scientific economists may be substantially outnumbered by government-biased economists, who are funded by governments for the benefit of maintaining and expanding their power, but they cannot change the scientific facts, only obscure them.


Greenspan recognized his ideological blindness, blindness no doubt in part due to Ayn Rand's ideas, if only others could learn from is lesson.

Greenspan is sort of the Darth Vader of Objectivism, except he didn't turn on the emperor... yet... :lol:
 
Is there any reason you're looking at total CRA lending from 93-98 and then comparing that to total subprime lending as of 2008? Those don't really seem to be comparable to me.

Read the rest of my post. CRA loans are largely immaterial, especially when compared to aggregate housing mortgages. And I did include numbers up to 2007 I believe.

The problem with the article you gave (not to mention it gives a relatively low impact of CRA upon the mess) is that it ignores how CRA issuing banks got warned about bad loans and cut back. The real problem was non-CRA issuing banks that have no such regulations or warnings. And your article essentially states that questionable people got into making loans, not that CRA by itself was the problem. At least it does recognize that Bush's ownership society was partially at fault.

Also remember that CRA has been in existence for 30 years. If CRA by itself was really the cause of this problem, we would have seen this happen much, much sooner.

Like I said earlier, the real problem was total abandonment of conservative best practices. Notice that many banks across the country who didn't engage in subprime aren't in messes, from New Jersey to Hawaii.
 
Read the rest of my post. CRA loans are largely immaterial, especially when compared to aggregate housing mortgages. And I did include numbers up to 2007 I believe.

Again, it's not just the loans themselves - it's the policies they resulted in.

The problem with the article you gave (not to mention it gives a relatively low impact of CRA upon the mess) is that it ignores how CRA issuing banks got warned about bad loans and cut back. The real problem was non-CRA issuing banks that have no such regulations or warnings. And your article essentially states that questionable people got into making loans, not that CRA by itself was the problem. At least it does recognize that Bush's ownership society was partially at fault.

Also remember that CRA has been in existence for 30 years. If CRA by itself was really the cause of this problem, we would have seen this happen much, much sooner.

Like I said earlier, the real problem was total abandonment of conservative best practices. Notice that many banks across the country who didn't engage in subprime aren't in messes, from New Jersey to Hawaii.

*How could a piece of 1977 legislation be significant to the deterioration of mortgage standards 25 years later?

The CRA was not a static piece of legislation. It evolved over the years from a relatively hands-off law focused on process into one that focused on outcomes. Regulators, beginning in the mid-nineties, began to hold banks accountable in serious ways. Banks responded to this new accountability by increasing the CRA loans they made, a move that entailed relaxing their lending standards.

* That’s still too early. Why would changes in the mid-nineties result in a mortgage boom a decade later?

Throughout the nineties banks, as banks lowered their mortgage standards, mortgage rates remained high. The laxity was spreading but the incentives for borrowers to re-finance even under relaxed standards remained low. New buyers often still didn’t know that some of the loosey-goosey mortgages existed. Speculators had an internet bubble, so they weren’t yet attracted to real-estate. Treasury rates were not yet so low that investors seeking yield would pour into mortgage backed securities. Securitization levels were low enough that banks weren’t yet willing to fully embrace the loose standards. The historical data on default and loss rates from the lax lending were not yet available, so they weren’t embraced by banks or the broader market.

But as the years went by, these factors changed. The Fed pushed interest rates down. This made refinancing more attractive, and created an investor demand for yield. Fannie and Freddie popularized low-income securitization. Low defaults and loss rates from lax loans made them seem not as risky as previously expected. A shrinking consumer asset base thanks to the dot com bust created a demand for home-equity loans and high loan-to-value loans, as consumers exchanged high-interest credit card debt for low interest home debt. Speculators seeking higher returns and ordinary home buyers became aware that lax lending standards would allow them to buy bigger homes with little or no money down.

In short, the lax lending standards created in response to the CRA had dug a pit that was waiting to get filled when the circumstances were right.

* Ah ha! So it wasn’t the CRA that caused the mess. It was everything else!

Of course it wasn’t the CRA that caused everything. The CRA was a factor in lowering lending standards. This was a necessary, although not sufficient, cause for the mortgage mess.

...

* What about "No Money Down" Mortgages? Were they required by the CRA?

Actually, yes they were. The regulators charged with enforcing the CRA praised the lowering of down payments and even their elimination. They told banks that lending standards that exceeded that of regulators would be considered evidence of unfair lending. This effectively meant that no money down mortgages were required. A Treasury Department study published in 2000 found that the CRA had successfully lowered down payments not just for CRA loans, but for all mortgages.

* Explain the shift in loan to value away from the traditional lending requirement of 80%.

Again, the regulators told banks that much higher LTVs was an appropriate way to meet the CRA obligations.

* What about the elimination of payment history? How about income requirements?

Regulators instructed banks to consider alternatives to traditional credit histories because CRA targeted borrowers often lacked traditional credit histories. The banks were expected to become creative, to consider other indicators of reliability.

Similarly, banks were expected by regulators to relax income requirements. Day labors and others often lack reportable income. Stated-income was a way of resolving the gap between actual income of borrowers and reported income. The problem, of course, comes when the con-artists and liars come into the game.

* Did the CRA require banks to develop automated underwriting systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible?

This was another lending innovation praised by regulators to the point that it became mandatory for banks. Those who were not employing automated underwriting would be putting their CRA ratings at risk. Automated underwriting was seen as a way of eliminating bias in lending.
 
Whoa there.

"the lax lending standards created in response to the CRA"

That's a big assumption the article you cited does not prove. The foundations of the article's claim of CRA was the cause is just as likely to argue that it was the accounting scandals that drove money away from the stock market into real estate which caused bubbles and a drive to sell more loans.

Furthermore, the article doesn't make much sense. The guy argues that the lending standards caused the rest of the issued loans to decline, yet acknowledges that low defaults on CRA have been causing standards to change. Huh? How can standards that have low default be causing high defaults?

I don't even know what that guy is really arguing. On one hand he claims CRA lending standards caused the rest of the industry to go bad....but then recognized that the standards for CRA which have low defaults are extending to the rest of the market. How can he blame standards that result in low defaults for high defaults?

The article is somewhat schizophrenic.
 
That's because we've got this mentality now that failure is always bad. Well, if a company is slow, inefficient, and in debt up to its eyeballs, maybe it should go under. We had panics and depressions in the 19th Century, but the capitalist economies still grew, because when crunch-time came the lumps got washed away. The American economy had its fastest period of growth when there was no central bank tasked with maintaining full employment. Now we've got economists talking about how we've managed to abolish depressions. How arrogant is that?

All we've done with this reflationary, bailout mentality is allowed capital to remain deployed unproductively in less efficient and bubble assets so that with each successive economic cycle we fall deeper and deeper into mediocrity. The Japanese bought the Kool-Aid that government spending will get their economy on track, except that now they spend most of their tax receipts on two line items--debt service and social security. They keep trying to reflate their way out of a deflationary funk, but it gets tougher with each passing day for a Japanese to get his hands on a yen.

We wrongheadedly assume that the solution to our economic troubles is more government intervention and regulation. I think Reagan was right: Government is the problem. Everywhere one looks, government is making it easier for households and businesses to assume more risk, but then we let them shift that risk to the taxpayer. Who cares if a bank plays casino in the financial markets when we've got FDIC insurance (which, by the way, is getting a bit frayed at the edges at the moment)? :confused: Who cares if a family borrowed beyond their means to buy a McMansion while their neighbor choked for years on Top Ramen and Kraft Mac in order to save up for a modest home when we can socialize Mr. and Mrs. Piggy's stupidity? :confused: And who cares if a mortgage is made on a crack house in Pacoima if that mortgage is just as golden as a U.S. Treasury bond, since it's backed by the full faith and credit of the U.S. Government? :confused:
I think the important point to stress is that the gov't has constantly been intervening for centuries, encouraging larger companies, larger supply chains and production runs, a more intertwined national and global economy. This means that many companies produce far more than they could if they were not subsidised in various ways from transportation subsidies to the buying of surplus products in the variously named industrial-complexes. Remove the gov't input without dealing with any of this and it would not be a few failures, it would be a basic collapse as most big companies and many others could not make a profit and the follow on effect to the rest of the economy would be massive.

So the Keynesians are correct that the gov't needs to intervene to keep corporate-capitalism going and to stabilise the business cycles, in fact it needs to intervene more and more. Of course it can't do this for ever. Sooner or later even the US gov't will be unable to afford to intervene any more and if we ever reach that time it is will make the great depression look like a picnic.

So the Keynesians, whether neo, new or post, are in my opinion more in tune with reality than some of the Chicago schools types and similar on this. However where they go wrong, as do the Chicago school types, is wanting to support this whole edifice. I say take it down. Not perhaps too quickly but let's try and take it down. It would be a very different economy, far more regionalised and localised but in the long-term I feel that is the only sustainable way.
 
I do like the twin arguments, often proposed from the same ideological backgrounds:

1. Business cycles happen, it's natural, and therefore must be good.
2. It's government's fault we have any bad business cycle.

Greenspan recognized his ideological blindness, blindness no doubt in part due to Ayn Rand's ideas, if only others could learn from is lesson.

-Mach

There is a disconnect there. Number 1 is cited as descriptive of natural variations within any market. In the example above, in early America, the cycle was much easier to discern and also much less destructive because of the relative lack of government intervention. Down cycles were caused by a number of factors, a drought for instance, but as conditions improved so did the markets... if you look at the actual history, the cycle was actually very regular and stable, with growth being the overall long-term trend. Downturns occurred periodically, every 20 years or so. Fast forward beyond the progressive era and you see a vastly different scenario. Small, periodic downturns are suppressed through invasive monetary policies and intervention on a much larger scale. Markets are "forced" to expand, but it is substantially artificial... this whole process creates longer periods of growth, but much more devastating and farreaching downturns (which are an invetiability). String-pulling has created a system that is inherrently unstable, where previously it was not.

There has been a trade-off from relatively slow, but stable growth over the long-term for extremely quick growth in spasms over relatively short periods, which--being built on a house of cards--eventually led to a big crash where the state once again will swoop in to save the day by applying force in different sectors (based on whatever happens to be the most popular statist economic trend du jour). The process repeats, the hole gets deeper.
 
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No rational economist believes that business cycles are natural - they are caused by violent (and thus irrational) government interference, and are undesirable. Scientific economists may be substantially outnumbered by government-biased economists, who are funded by governments for the benefit of maintaining and expanding their power, but they cannot change the scientific facts, only obscure them.

Business cycles are caused by market participants, and primarily result from finite resources, and the human condition, namely mortality + wants and needs. For you to suggest economists, and presumably yourself, believe all business cycles are the reulst of government "interference", is insane.

Greenspan is sort of the Darth Vader of Objectivism, except he didn't turn on the emperor... yet... :lol:
Greenspan admitted his thinking, which shares similar traits to yours, which you apparently got from the same propoganda, was flawed. He was correct in recognizing that fact of reality. He was part of a cult, he was neither objective, nor reasoned, in his approach, and he saw what that nonsense resulted in...failure. Demonstrable, rational, reasonable, objective, failure.

-Mach
 
Business cycles are caused by market participants, and primarily result from finite resources, and the human condition, namely mortality + wants and needs. For you to suggest economists, and presumably yourself, believe all business cycles are the reulst of government "interference", is insane.

You are entitled to your erroneous opinion - just don't force it on others.


Greenspan admitted his thinking, which shares similar traits to yours, which you apparently got from the same propoganda, was flawed. He was correct in recognizing that fact of reality. He was part of a cult, he was neither objective, nor reasoned, in his approach, and he saw what that nonsense resulted in...failure. Demonstrable, rational, reasonable, objective, failure.

Greenspan did the very opposite of what a free market capitalist would do.
 
You are entitled to your erroneous opinion - just don't force it on others.

Your position is of wild speculation, in which there is no actual evidence, empirical/historical/annecdotal to validate your claim. Government can be a catalyst in business cycles, but the only cause? No....




Greenspan did the very opposite of what a free market capitalist would do.

What would a bank that was not constrained by a central bank, do during a time of great economic despair? Maybe raise short term borrowing rates to reduce the amount of potential liabilities in the near term?

This is what happened during the great depression, under the premise of a gold standard. In order to stop the outflow of specie from the US, the Federal Reserve, under the guise of a gold standard actually raised short term borrowing rates. The rest is history....
 
You are entitled to your erroneous opinion - just don't force it on others.

Do you see the flaws in your attempt at reasoning? How can someone so aware of "the legitimate use of force", mistake my stating an opposing claim as "forcing others"? Mind boggling. Or were you warning me? Was that a threat of force? Such hypocrisy.

Greenspan did the very opposite of what a free market capitalist would do.
If free market capitalists can't survive the actions of a free market capitalist, maybe that's why it's a doomed fringe-philosophy.
 
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Your position is of wild speculation, in which there is no actual evidence, empirical/historical/annecdotal to validate your claim. Government can be a catalyst in business cycles, but the only cause? No....

Our positions are not in conflict. The the Austrian theory of the business cycle may be wrong. The Chicago School may be right. Can't we all just get along? You invest your money how you see fit, in whatever currency you see fit, and I'll invest mine. ;)


Do you see the flaws in your attempt at reasoning? How can someone so aware of "the legitimate use of force", mistake my stating an opposing claim as "forcing others"? Mind boggling. Or were you warning me? Was that a threat of force? Such hypocrisy.

Your philosophy requires initiating aggression against any serious competitors to your national bank monopoly (ex. a business network that accepts Liberty Dollars and not government currency), my philosophy does not.


If free market capitalists can't survive the actions of a free market capitalist, maybe that's why it's a doomed fringe-philosophy.

The Federal Reserve is not free market capitalism.
 
I still have faith in the free market. I have no faith in government, other than a firm belief that it will continue to **** everything up.

I don't understand how you can have so much faith in the free market. While I feel it has been an incredibly useful tool for the production and distribution of a large number of commodities, there are other areas where it has completely fallen on its face.

We've been listening to stories about how everyone benefits when the wealty benefit for 30 years now, and despite the fact that the rich have indeed gotten richer and richer, the "rising tide" has yet to lift a single other boat.

What is your faith in the market rooted in, exactly?
 
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