Financial crisis ! whats your opinion and why :)

We have a human system.


Take a look at crime. Crime is not nice for most people. It exists, we combat it by making things laws that govern what people can and can't do.

You say this is a bad system, we shoudln't relly on laws - removing laws would make everything o.k.

Do you think the world runs on fluffy pink cotton candy?

We should not rely on arbitrary government regulation. It will simply fail. Either through ineptitude, through corruption or by simply doing more harm than good.

The point is that anybody who knows anything about monetary policy knows that the current financial system we have is very unstable. It is only kept up, just about, by government help. I think a system that needs government help simply to exist is a bad system, because sooner or later the government will screw it all up and the house of cards will collapse.

A system that relies on the right person in government at the right time, is a bad system. Instead we should have an automatic system that is not prone to sudden collapse.

Notice how I actually have some specific policy subscriptions, at least the desired end result, and compare this to the people who say new regulation of the banking system is what is needed. Notice how vague and unclear what specific regulations they would introduce. That is the very nature of arbitrary government regulation, vague and unclear.

wut?

For a start, I assume you are giving up on abolishing child labor...

Ok, Lets see if I can get this straigt - I say there is unemployment and if you abolish NMW employers will lower wages for those currently on NMW this because of the huge competition for jobs.

You then reply with "see, you admit that NWM causes unempolyment".

Yes you're very specific in exactly how you wish to destroy capitalism. I think you might secretly be a revolutionary Marxist, its the only possible explanation for you wishing to destroy one of the pillar stones of the western world.

Full reserve banking is effectively nationalising the banks. Instead of the free market system being able to extend credit and create liquidity, the government is given a monopoly on that facility, and the banks are reduced to being merely a conduit. That's a seriously hardline left wing, anti-capitalist, statist policy. As a moderate liberal, it instinctively repulses me.

You really should change your username to "Classic Statist".

Well I somewhat agree, much to my own disgust.

What is quite funny (and shows how much **** you have been talking) is that you criticise me on the basis of saying, "ohhh you are driven by ideology" or "you do not care what the facts are". But in reality I am promoting a policy that does give all the power to create money to the government. Which proves that I am able to put ideology aside and think about economics divorced from philosophy, unlike you.

If I was really driven entirely by ideology, don't ya think I would be promoting a gold standard?

If you weren't driven by ideology then you wouldn't be so damn intransient and unable to be reasoned with. I just think you believe whatever you're told by the lastest blog post from the deluded idiots on mises.org, which is a hotchpotch of conspiracy theories, misapprehensions and lies. Hence the reason your ideology is inconsistent and self-contradictory.

None of the professionals in any of those disciplines would agree with you on the fundamental assumptions of your belief system.

Its getting pretty desperate when you have to convince yourself that every professional sociologist, economist and philosopher in the world disagrees with you because they are all part of some dastardly global left-wing conspiracy theory, rather than accepting the simple fact that maybe you're wrong and you need to reconsider things a little, maybe read some more unbiased sources.

Well...not sure I want to get involved in this 'discussion' given the amount of hyperbole and s***-flinging...but I'll just weigh-in quickly with my 2 cents:

There's no **** flinging, its just me and CL repeating our usual friendly arguments.

The problem is the monetary framework. Full reserve banking is the solution for the time being.

http://en.wikipedia.org/wiki/A_Program_for_Monetary_Reform

So am I wrong in saying that this crisis is simply a regular feature of capitalism?

My understanding is that Keynesian economics took root after the Great Depression with Roosevelt's New Plan, and that the 70s saw a shift towards neoliberal economics. These resulted in the repeated bubbles in real estate, stock markets, and finance, and now generally neoliberals are on the retreat and a slew of Keynesians, New Keynesians, Neo-Keynesians, and Post-Keynesians are emerging from the woodwork demanding more regulation to sort of 'save capitalism from itself'. Both sides agree that free-market capitalism is the optimal solution for wealth creation, although they disagree on whether it is the optimal solution for social welfare.

My understanding on the current debate is that it is between deregulation and new, but different regulation. Whereas what is actually happening is that the economy is shaking itself, optimizing and reducing the labour force, so as to create a larger reserve army of labour, thereby putting downward pressure on wages, making companies profitable oncemore. The post WW2 boom cycle began to slow during the 70s, which resulted in an unprecedented debt explosion, where households tried to sustain consumption through mortgages and easy loans, and the governments tried to sustain growth through borrowing to inject funds into the system. These actions sustained consumption in the US through debt, which then spurred on the debt bubble that could not sustain itself. From what I recall from some essays back in business school (did an undergrad in international business), other reactions to the slowdown was more aggressive globalization, as well as pressures from the IMF and World Bank for developing countries to open up their economies to western competition.

Am I on the right track here? I know it's a brief rambling summary, but I'm trying to frame the debate and understand its context.

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But everything you purchase, the entire rotten foundation of your society, is based on the continued exploitation of societies without those rights.

We should not rely on arbitrary government regulation. It will simply fail. Either through ineptitude, through corruption or by simply doing more harm than good.

Well...not sure I want to get involved in this 'discussion' given the amount of hyperbole and s***-flinging...but I'll just weigh-in quickly with my 2 cents:

Isn't this crisis just an intrinsic feature of capitalism? A bust cycle in which the economy will restructure itself for the next boom? My understanding is that it is a bust cycle catalyzed by the debt crisis, which itself was a response to falling rates of profit due to increased competition from other countries.

Capitalism is an organism of self-interest and perpetual growth. Each consumer and each producer act in their own self-interest with utter disregard for others, where profit is the one and only goal.

Just an example from recent news, Coke is changing an ingredient so as to avoid having to put a notice on their cans that they contain carcinogens. Why didn't they do so long ago? - Because it would've cost them money, with no possibility of monetary return.
Now there is the possibility of losing money, so it has finally become worthwhile to change this ingredient. That is just a single example of a single player, now multiply that by thousands upon thousands of companies and factories polluting the earth and hiding unhealthy ingredients in their products because it's cheaper for them to do so.

Remember, nearly everything you buy comes from some sort of slave labour or child labour. From the cotton in your clothes, picked by kids in Africa and India, to your cell phones and gadgets, assembled in China and Vietnam. Your society functions with human rights like minimum wage, labour laws, child labour laws, and that makes you feel good. But everything you purchase, the entire rotten foundation of your society, is based on the continued exploitation of societies without those rights.

Now, some people believe that you can make a "good capitalism" by regulating these things, forcing companies not to pollute, forcing companies not to exploit children and workers both at home and abroad, but my belief is that this is just putting lipstick on a pig. I agree with Classical Liberal to a certain extent here, but I also believe that regulation is necessary for capitalism.

I remember reading recently that the Economist magazine was against the introduction of child labour laws 100 years ago, and against the lowering of the working day from 12 hours because these would hurt the economy and productivity. A few months ago I read an article in the Economist where they worried that the growing middle class in China would result in workers demanding more rights and higher pay - hurting the economy in the US. This article sadistically concluded that it's ok, we can still rely on the millions of Chinese peasants migrating to the cities for dirt-cheap labour, as well as other eminently exploitable countries like Vietnam and Cambodia, so all is not lost yet! We can still enjoy cheap ipads for decades to come! Phew!


Just as an addendum, I'm not partisan about this topic, and don't pretend to hold The Answer for all economic problems. I'm more interested in reaching the truth through cooperation and discussion than perpetuating my answer vs. yours. If I've said something false, I don't mind being corrected, as long as you can cite a source/ provide a logical explanation.

This is totally irrelevant to your debate but I wonder, do you have pictures of John Locke in your bedroom?