tag:blogger.com,1999:blog-1899606766246433608.post8554653293367963134..comments2023-11-08T12:09:20.020-05:00Comments on Prove Me Wrong: The Myth of the "Sub Prime" CrisisJonhttp://www.blogger.com/profile/10530680372103907969noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-1899606766246433608.post-3653932620523785922011-03-17T18:11:22.591-04:002011-03-17T18:11:22.591-04:00The difference in your and Paul's understandin...The difference in your and Paul's understanding is that he would call the period in the decade prior to the end of BW the breakdown. Also, his solution isn't to limit the freedom of anyone, but to expand the freedom of individuals to use gold and silver as currency rather than to restrict freedoms.Darf Ferrarahttps://www.blogger.com/profile/00396174363474177403noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-28312788952963707452011-03-17T17:00:29.327-04:002011-03-17T17:00:29.327-04:00I think Ron Paul regards the B/W breakdown as the ...I think Ron Paul regards the B/W breakdown as the key element leading to the decline of our economy. Here's something he wrote about it:<br /><br /><i>For example: Before the breakdown of the Bretton Woods system, CEO income was about 30 times the average worker's pay. Today, it's closer to 500 times. It's hard to explain this simply by market forces and increases in productivity. One Wall Street firm last year gave out bonuses totaling $16.5 billion. There's little evidence that this represents free market capitalism.</i><br /><br />http://www.lewrockwell.com/paul/paul370.html<br /><br />Haven't looked at your link yet, but will.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-470742557507088972011-03-17T16:33:44.502-04:002011-03-17T16:33:44.502-04:00Keynes said he was against speculators, but he mad...Keynes said he was against speculators, but he made all his money by speculating. After he lost all of his money speculating, that is. He was backed by family wealth instead of the government, so he was able to get back in the game.<br /><br />I won't get into how good or bad speculation is. You might agree that some level of speculation must be good, otherwise we wouldn't know how consumer preferences change. For an interesting experimental result check out <a href="http://www.michaelcovel.com/2009/08/17/nobel-prize-winner-vernon-smith-on-bubbles/" rel="nofollow">this link</a> <br />.<br /><br />The issue I have with the pro-Bretton Woods position you have taken is that it assumes that the Bretton Woods could be maintained. It couldn't because of the US policy of guns and butter. Another way to say that would be to say there was a bubble in dollars. This required a huge reallocation of capital resources that was going to be painful, and restraining capital wouldn't have changed that. Not to mention, the BW required US hegemony. Why would you want to go back to a system that requires US hegemony?Darf Ferrarahttps://www.blogger.com/profile/00396174363474177403noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-39350865127303890132011-03-17T10:51:23.478-04:002011-03-17T10:51:23.478-04:00The label is from the title of the article I linke...The label is from the title of the article I linked to.<br /><br />You say bubbles aren't a problem unless hedged by the Feds. Keynes and Patnaik say they are. It's certainly not an indisputable thesis. But it does sound plausible to me. How much of our investment pool is speculative? How rational are investors? Are they prone to euphoria? Speculators can quickly jump into an enterprise or commodity even if they don't believe the underlying assets are worth it, but merely in anticipation of other speculators jumping on the bandwagon and driving up the price. This drives actual allocation of resources. So people get in to construction and everything else. Bubble pops and the tremendous inefficiency is exposed.<br /><br />That's the theory. What about the facts? You had the bubble that popped in 1929. Then after Bretton Woods you didn't have any substantial bubbles that I know of. The restraints on capital were for the very purpose of preventing bubbles. Seems to have worked. We also saw large growth and it was egalitarian world wide. The dismantling of the framework intended to prevent bubbles has been met with slower growth and unequal growth. That suggests to me that resources were allocated in a far more efficient manner during the capital restraint phase.Jonhttps://www.blogger.com/profile/10530680372103907969noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-56432453043482003432011-03-16T13:11:41.913-04:002011-03-16T13:11:41.913-04:00By provokativly labeling this post "The Myth ...By provokativly labeling this post "The Myth of the "Sub Prime" Crisis" are you just trying to goad some of your readers who think that real markets might work into posting, or do you believe that Patnaik's thesis is indisputable?<br /><br />I lean toward believing that sub-prime was a problem. Arnold Kling on econolog has been fairly persuasive on this. He was an economist at Freddie until the mid-90's so he has some inside knowledge of how things had worked there. And by the way, asset bubbles aren't a big problem in a capitalist system unless they are implicitly hedged against loss by the Feds.Darf Ferrarahttps://www.blogger.com/profile/00396174363474177403noreply@blogger.comtag:blogger.com,1999:blog-1899606766246433608.post-38412733506631034922011-03-16T12:05:52.103-04:002011-03-16T12:05:52.103-04:00Oh okay, so its the speculators fault. I dont buy ...Oh okay, so its the speculators fault. I dont buy it.HispanicPundithttps://www.blogger.com/profile/10220166238164432290noreply@blogger.com