The Instigator
Spawktalk
Con (against)
Winning
5 Points
The Contender
LokiLoks
Pro (for)
Losing
2 Points

The Austrian Theory of the Business Cycle

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Post Voting Period
The voting period for this debate has ended.
after 3 votes the winner is...
Spawktalk
Voting Style: Open Point System: 7 Point
Started: 2/9/2012 Category: Economics
Updated: 2 years ago Status: Post Voting Period
Viewed: 1,940 times Debate No: 20981
Debate Rounds (4)
Comments (28)
Votes (3)

 

Spawktalk

Con

I have noticed that there are quite a few libertarians on this website. As such, I wish to challenge a theory many libertarians adhere to: the Austrian theory of the business cycle. In the first round pro will make his case for the theory. I will then explain my primary objections to it. We will then have several rounds of back and forth.
LokiLoks

Pro

I accept your challenge. I am an anarco-capitalist and fully subscribe to the Austrian theory of the Business Cycle.

Thank you for posting the debate. I am looking forward to hear your objections.
Debate Round No. 1
Spawktalk

Con

The Theory
Banks expand credit, artificially lowering the interest rate and thus making previously unprofitable ventures profitable. As capitalists begin to spend on these new projects the price of labor and capital rise. This is the boom. But paradise wont last. Eventually the banks will have to stop expanding credit because as soon as the public realizes that the inflation will not stop panic will set in in the form of hyper inflation. When the banks do stop expanding credit the natural rate of interest re-asserts its self (the interest rate that reflects actual savings). This causes interest rates to rise revealing projects that there made profitable by the lowered interest rate as
“malinvestments” that are no longer profitable. Resources, including labor, must be reallocated to their proper places in the economy. This is the bust.

Unstated Assumptions
My first line of criticism is that there are conditions which must be met for this theory to play out that are not always present in the economy. Firstly, as current times demonstrate, it is not always the fact that if credit is expanded and the interest rate lowered that that credit will be loaned out. Liquidity preferences must be in good condition for such to take place. Secondly, it assumes the economy is at equilibrium. The reason that this theory requires full employment is because if the economy is in disequilibrium such that some resources are underemployed then there can be an increased purchasing of those goods with out a raise in prices. Obviously, the economy is not always at at, or near, equilibrium. Thirdly, it assumes that an expansion of credit will primarily be spent on production goods rather than in final goods. It must assume this because if one invests in a final good then a future change in interest rates will not change one's accounting profit. As an example: if a bank lends the money to consumers for credit cards and then the interest rates rise the banks will have still made an accounting profit from their loans. Given these considerations, we can already see that this theory has limited applications.

Demonstrably False
Further, the theory has not stood up to empirical scrutiny. Mition Friedman recognized that if this theory was true we should see a correlation between the size of the boom and the size of the bust. He there fore assembled the data from nearly a century of cycles in the united states. He concluded “there appears to by no systematic connection between the size of an expansion and of the succeeding contraction” [1]. The theory also predicts that a recession will see rising interest rates. Yet this is often the opposite of what we see. In the recession of 2008-2009 the fed dramatically lowered short and long term interest rates [2]. Clearly, a theory which states that recessions are caused by rising interest rates can not explain ones in which interest rates fall.

Logically Flawed
The most important criticism of the ATBC is a theoretical one. The theory was formed by thinkers such as Von Mises and Hayek who believed that people would panic once they realized that inflation was continuous. They would try to ditch their currency for things with more stable value, objects of barter, in hopes of avoiding it. The currency would become worthless. In other words, people would panic and cause hyper inflation [3]. There is no doubt that Mises and Hayek believes this because of their own personal experience with the matter. But the proposition is easily revealed as false. Nearly everyone in the American economy has expected continuous inflation for decades. But there has been no panic and so no hyperinflation. Given such a climate, a central bank can continuously expand credit, at a mild rate so as to not scare people, and permanently artificially increase investment.


Sources:

1. http://www.google.com...
2. http://www.economy.com... (Pg 2)
3. http://mises.org...
LokiLoks

Pro

Upon reviewing Spawktalk’s explanation of the theory and his objections there was a critical issue with his explanation of the theory of the business cycle. He pulls a minor side note and claims it as the whole.

The Theory

Banks within a free market where competing currencies exist do not “artificially lower the interest rate.” Government and bank monopolies can, but free market banks cannot because the customer base will shift to another currency if arbitrary rates are used. Banks are driven by the marketplace forces of supply and demand.

The theory states that when there is greater saving, banks have a greater supply of money to lend, leading to a reduction in the cost that they can charge which is expressed in a lower interest rate. This is an accurate, not artificial, reflection of the demands of the market, which has indicated by saving that their immediate consumption levels have been met and they would prefer to defer consumption to a later point in time. High savings indicate low consumption now and higher consumption later. Low savings indicate high consumption now and lower consumption later. [1]

Spawktalk explains the boom as, “[when artificially lower interest rates are offered] previously unprofitable ventures [become] profitable [causing] the price of labor and capital to rise.” This is correct. The lower interest rates increases the number of capital investments, creating a greater demand for labor and capital, increasing the price for both.

My adversary then explains the bust as a result of “public [realization] that the inflation will not stop” forcing banks to stop expanding credit returning the system to its natural level “[causing] interest rates to rise[,] revealing… malinvestments… [which are corrected.]”

The public realization of inflation or lack thereof, has almost nothing to do with the bust except that it exacerbates the situation as it did in the Great Depression. Mises himself writes, “The fact that the two movements occur in opposite directions, so that they cancel one another, had been emphasized by Mill in order to show that the increase in the rate of interest caused by inflation would be counteracted by the circumstance that the additional quantity of notes, if issued by the banks (and the additional quantity of gold so far as it was used productively), have a reducing effect on the bank-rate of interest.”[2]

The bust is due to prices created by supply and demand when the new products that were created by the incorrect investments. The artificial supply of money or low interest rates that were created by the government (not banks) served as a substitute for what normally would have taken place, savings. Since the consumers do not have the savings to use for consumption, there is lower demand for the products. Low demand means prices must be dropped, bringing the profitability of businesses into question. It isn’t merely the new ventures that have had their profitability reduced, every other product/service that has similar desirability as the new product also has its prices drop due to the high supply and low demand in the sector. Lower prices mean lower profits, which mean reducing overhead, which means layoffs, closing down factories, etc. Of course some businesses will go bankrupt as well, which means that they don’t repay their debt, which can lead to bank failures as well.

Incorrect Unstated Assumptions
Spawktalk expresses concerns regarding “conditions which must be met.”

Condition 1: “Liquidity preferences must be in good condition [for credit to be offered]”

The Austrian business cycle is only applicable and discusses the effects of lending that is actually made and how the results will play out. If you look at any other economic model, they all make the same assumption. The question is whether one model more accurately evaluates the potential exchanges that exist. If an intervention is introduced to the scenario, it cannot be used to undermine the accuracy and effectiveness of the model. Government voided contract law for investors on a whim, forcibly confiscated property, and more which prevents sound lenders from taking risks they otherwise would have taken. These factors are just as relevant as Mother Nature. You may have well said, ‘it assumes that earthquakes or big snowstorms haven’t interfered with the marketplace.’

Condition 2: “it assumes the economy is at equilibrium.”

This is false. Mises wrote, “In the changing economy, there is no uniform rate of originary interest; there only prevails a tendency toward the establishment of such uniformity.” [3]

Condition 3: “it assumes that an expansion of credit will primarily be spent on production goods rather than in final goods.”The ATBC makes no such assumption. Here are the assumptions:
      1. lenders seek to lend at the highest profit rates for the shortest term;
      2. additional credit will fill low risk short term loans quickly
      3. additional credit to offer will accommodate higher risks and/or longer terms.
There is no assumption that the credit will go to longer terms or to higher risks, but the fact is that it tends to.

Spawktalk's claims that the ATBC is “Demonstrably False”

Milton Friedman’s assertion that the size of a boom and bust should correlate did not address Hayek’s concept of Bottlenecks or overlapping efforts of government to force "booms" during the busts. “The self-reversing effects of a money/credit injection exist even if the monetary increase occurs when unemployed resources already exist. The final outcome of the process may be delayed but does not change.” [4]

Spawktalk writes, “The theory also predicts that a recession will see rising interest rates” which is correct, but the fact that they didn’t rise is not a result of the market. When the interest rates are determined by the FED, the market has in no way determined them freely as the ATBC would indicate. The FED is not market driven, it is politically driven and its decisions are arbitrary.

Spawktalk writes, “A theory which states that recessions are caused by rising interest rates can not explain ones in which interest rates fall.” Yes, it can, and the explanation is a simple one: intervention by third parties making arbitrary changes without letting the market do it will let you do whatever you want to the rate which will subsequently produce a boom or bust later on.

A misunderstanding of the terms leads my adversary to conclude it is Logically Flawed

Spawktalk writes, “The theory was formed by thinkers such as Von Mises and Hayek who believed that people would panic once they realized that inflation was continuous.”

Panic is a very small portion of the theory and it wasn’t simply an expectation that inflation would be continuous, it was that it was continuously increasing or continuous at a very high level. Nobody was panicking about a 1-4% per year inflation rate, and neither Hayek nor Mises made a suggestion that they would. Fear of inflation purchases are easily supported by the increase in precious metal purchases when inflation rates rise.

Spawktalk maligns the credibility of Mises and Hayek with the statement, “There is no doubt that Mises and Hayek believes this because of their own personal experience with the matter.” Mises and Hayek were and are considered two of the most intellectually honest, skilled and educated economists in history. Insinuating that their personal experiences dictated their positions in economics is an ad homenim attack. If you have issue with their position, attack the position.

[1] The Theory of Money and Credit, Mises http://mises.org... pp339-346
[2] The Theory of Money and Credit, Mises http://mises.org... pp363
[3] Interest, Credit Expansion, and the Trade Cycle, Mises http://mises.org...
[4] Austrian Business Cycles, Plucking Models, and Real Business Cycles p10 http://mises.org...;
Debate Round No. 2
Spawktalk

Con

I would like to stress that my opponent did not address the substance of my arguments. We are instead debating what the theory is. Hopefully we can move on from this in the next round.

Theory:

Banks within a free market where competing currencies exist do not “artificially lower the interest rate.”...because the customer base will shift to another currency if arbitrary rates are used.

This claim makes the odd assumption that customers of banks will know how their banks have determined the interest rates they charge. For if they do not know this then they surely can not react to it. It further errors in calling a non-natural interest rate arbitrary. It is not. It is determined by the supply and demand for loans. Lastly, it assumes that consumers will uniformly object to participation in fractional reserve banking. Yet we are given no reason to suppose this.

My opponent then comments that “The public realization of inflation or lack thereof, has almost nothing to do with the bust except that it exacerbates the situation as it did in the Great Depression. “ This statement suggests that my opponent does not fully understand the theory he is trying to defend. The panic is used in the theory to explain why a bank can not issue artificial credit continuously. Why the bust must happen. As Mises states: “As long as the expansion of credit is continued this will not be noticed, but this extension cannot be pushed indefinitely. For if an attempt were made to prevent the sudden halt of the upward movement (and the collapse of prices which would result) by creating more and more credit, a continuous and even more rapid increase of prices would result. But the inflation and the boom can continue smoothly only as long as the public thinks that the upward movement of prices will stop in the near future. As soon as public opinion becomes aware that there is no reason to expect an end to the inflation, and that prices will continue to rise, panic sets in. No one wants to keep his money, because its possession implies greater and greater losses from one day to the next; everyone rushes to exchange money for goods, people buy things they have no considerable use for without even considering the price, just in order to get rid of the money. “ [1] We thus have a choice between panic induced hyper inflation and a bust.

My opponent then offers his own version of the bust. Before I explain its flaws I would like to note that a key feature of the bust is indeed the raising of the interest rates. As the Mises institute reports “Ludwig von Mises stated that the "crisis" (or "credit crunch") arrives when the consumers come to reestablish their desired allocation of saving and consumption at prevailing interest rates. “[2]

But on to my opponents expansion.

“Since the consumers do not have the savings to use for consumption, there is lower demand for the products.

In what way does a credit expansion stop savings? Why can not consumers take advantage of the same cheap credit expansion in order to consume? (IE credit cards) And why have firms miscalculated demand? My opponent indicates that it may have something to do with the idea that high savings now signals an increase in demand later, but he does not substantiate this view. And, honestly, firms would have to be quite foolish to have not noticed that interest rates have not been determined by savings for over a century.

“ Lower prices mean lower profits, “
This assumes that the cost of production will not also go down. Yet, should not firms decrease their own demand for inputs? Given such a simple consideration my opponents assumption about profits is revealed as unjustified.

Assumptions:

The Austrian business cycle is only applicable and discusses the effects of lending that is actually made and how the results will play out. If you look at any other economic model, they all make the same assumption. “

The primary point of the Keynesian revolution was that you can not assume liquidity preferences away.

This is false. Mises wrote, “In the changing economy, there is no uniform rate of originary interest; there only prevails a tendency toward the establishment of such uniformity.” “

I am well aware of mises's views on equilibrium. Since you did not respond to my argument all you have done is shown that mises's did not understand the assumptions of his own theory.

“The ATBC makes no such assumption. “

Again, you have failed to address my argument and simply declared it wrong.

Reality:


My opponent quotes hayek in such a way that does not help his cause. This isn't a short term view point. This is a sample of 100 years.

He then responds to my claim that a theory which posits that recessions are caused by raising interest rates can not explain a recession in which interest rates do not raise by pointing out that the government stopped them from raising. It would there fore seem that my opponent has conflated the proposition “raising interest rates cause recessions” with the proposition” conditions in which interest rates would rise if not for the government cause recessions”. His reply is there fore based on a proposition which I did not state and which does not correspond to the Austrian theory.

My opponent then repeats his misunderstanding of the role of panic in the Austrian theory.

My opponent then states
“Mises and Hayek were and are considered two of the most intellectually honest, skilled and educated economists in history. “ To which I respond: by who? I don't consider either of them particularly honest, skilled, or educated.

My opponent lastly states
“Insinuating that their personal experiences dictated their positions in economics is an ad homenim attack. “

This is absurd. An ad hom is when one infers that an argument is invalid due to some insult [3]. I did not such thing. I simply observed the obvious fact that their personal experiences had shaped their views. This does not entail anything about the truth value of those views.

Sources:

  1. http://mises.org...

  2. http://wiki.mises.org...

  3. http://en.wikipedia.org...

LokiLoks

Pro

LokiLoks forfeited this round.
Debate Round No. 3
Spawktalk

Con

My opponents has responded in the comments with a post that vastly exceeds the character limit. Because I will not break the rules in a similar manner my opponent has given himself an unfair advantage. This should be noted when it comes time to vote.

Pro first states that
“I wrote nothing about how a bank determines rates. “ implying that I strawmanned him. He follows that with the sentences “ I wrote the term "arbitrary" meaning not determined through the price system, but instead determined by the bank/banker using any method other than what the market dictates.” These two sentences contradict each other. As he admits he did in fact write about how a banks determine rates.

He then states that consumers can know that a banks interest rates are artificial because they will differ from the interest rates of all the other banks. However, this assumes that all the other banks will be using the “natural rate”. He assumes what he is trying to prove.

He then writes that a non natural interest rate is arbitrary because it is undetermined. This is false. It is determined by the supply and demand for loans . He claims that this is the same as the market determining it. The difference is that the supply for loans is not limited by voluntary savings due to artificial expansions of credit.

He then states that he did not mention anything about fractional reserve banking. However, FRB is relevant because it allows loans to extend beyond savings creating an unnatural rate of interest.

He then attempts to discredit my claim that panics are important to the ATBC. He starts by saying of my mises source “ Yes, I completely accept that Mises did write that. It was one paragraph out of so many I can't count them all.” Firstly, there were 17 paragraphs in the essay. It is not a tome. He then states that other expositions of the theory fail to mention the fear of hyper inflation. Firstly, this is false. There are numerous articles were it is mentioned and defended [1] [2] [3]. It has also, contrary to his other claim, been used by economists attacking the theory [4]. There can be no doubt, I hope, that Mises, the man who created the theory, and economists such as Gordon Tullock and Murray Rothbard understand the theory better than my opponent. Again, the fear of hyperinflation caused by public flight to real goods is the supposed reason why the inflation can not continue forever. This is one of the several arguments I made that were never adequately addressed.

In my post I asked why consumers could not use artificial credit to purchase the products that artificial credit caused to investors to produce. Pro responds by saying “When the population consumes more, i.e. credit cards, they are not saving and that sends an accurate signal to manufacturers that they should make stuff to sell right then and there instead of borrowing for long term production increases. “ This does not respond to my question.

Pro then states that firms miscalculate demand because the cost of investment has been artificially lowered. This is a non answer tot he question of why they miscalculate. He must explain WHY this would cause a miscalculation.

Pro then states that the fact that savings, at some point, get spent justifies the idea that an increase in savings tells firms that there will be an increase in demand later leading to excess production. This is flawed both because an increase in general savings tells a particular firm nothing about future demand for its particular product and because firms are surely aware of the fact that interest rates do not reflect savings. Pro then responds to my stating that firms would have to be foolish to miscalculate demand due to thinking that a low interest rate signals increased savings by stating “ If money is cheap for a business to borrow, it reduces the risk of taking out a loan. Failure to take the risk, even knowing that savings didn't cause the reduced interest rate, is a net loss. Yes, some companies will fail because they didn't predict demand correctly, but many will succeed at least to the point where the investors get their money back and a little bit of profit before they go out of business. “ This does nothing to answer my objection.

Pro then states that keynesian models have been proven wrong and that every time a politician has used them they have messed the economy up. He makes no citation or argument for this claim but uses it to brush off my falsifying his claim that all models assume liquidity away. This is uncompelling.

Pro then writes “Spawktalk writes, "Since you did not respond to my argument." Let's see, you wrote, "it assumes the economy is at equilibrium" to which I replied with a quote from Mises himself indicating that the economy will never be at equilibrium. That, to me, appears that I addressed your argument. “ This seems to me to be extremely dishonest. The full qoute from my original post is this: “Secondly, it assumes the economy is at equilibrium. The reason that this theory requires full employment is because if the economy is in disequilibrium such that some resources are underemployed then there can be an increased purchasing of those goods with out a raise in prices.“ He has obviously not addressed this argument and has in fact attempted to pretend it does not exist. He engages in the same form of quote mining with regards to my argument about the ATBC assuming the credit goes into production.

Pro writes “Spawktalk writes, "my opponent has conflated the proposition ‘raising interest rates cause recessions' with the proposition ‘conditions in which interest rates would rise if not for the government cause recessions'" which is a mischaracterization of my position. Please re-read what I wrote and explain how I indicated this. “ You indicated this because you explained away the lack of rising interest rates by government intervention.

Pro also states that his claim that profits will be reduced assumes all els to be equal. He then accepts that demand for inputs will fall. This means that the price of inputs will fall and all els will not be equal in exactly the way I specified.

Pro then states that Hayek and Mises are seen as intellectually honest, educated, and skilled because hayek got a shared nobel prize in 1972. This is a non sequitor.

Finally, pro writes “Spawktalk writes, "I simply observed the obvious fact that their personal experiences had shaped their views. This does not entail anything about the truth value of those views." Let's see, does, "There is no doubt that Mises and Hayek believes this because of their own personal experience with the matter. But the proposition is easily revealed as false" entail something about the truth value of those views? Yes, the term FALSE kinda has something a little to do with truth. “ More dishonesty. He makes it seem as if their deriving their theory from personal experience was the premise from which I inferred that it is false. However, once again, my argument is contained in the sentence following the one that pro quoted.

  1. http://mises.org...

  2. http://wiki.mises.org...

  3. http://books.google.com... (1019)

  4. http://mises.org...

LokiLoks

Pro

I will address the questions reviewers will be asked in voting.
1.Who did you agree with before the debate? Please vote accurately.
2.Who did you agree with after the debate? The validity of the argument and sources alone should determine your final position. Con's poor spelling and Pro's lack of following the format are irrelevant here.
3.Who had better conduct? I posted one of my arguments in the comments area due to a technical issue. Yes, it was longer than the allotted characters. I had a version that was <8k chars sent to the help line (requiring <8k chars). Spawktalk was asked to restart the debate so that the appropriate response could be posted. He declined to do so, preventing my <8k response from being evaluated. Either could have stopped this issue.
In the comments soon after my deadline ended and more than 36 hours prior to Spawktalk's submission time, 16kadams, said I could have done some sort of force quit and reposted and that Spawktalk could re-start the debate. It was too late for me to repost. Choosing to have the debate remain in error is poorer conduct than inadvertently doing so.
I encourage you to vote Pro because of this.
4.Who had better spelling and grammar?
Here's a small collection of errors from Spawktalk:
"paradise wont last" should have an apostrophe;
"will set in in the form" has a duplicated ‘in';
"always at at, or" has a duplicated ‘at';
"united states" should be capitalized;
"mises's" should be capitalized and twice he did this, perhaps in an effort to undermine Mises' credibility? Also, there shouldn't be an ‘s' after the apostrophe;
"opponents has" should be ‘opponent has.'
This was a small sample of Con's large number of spelling and grammar errors, far more exist, whilst you would be hard pressed to find any within the Pro's arguments. This requires a vote for Pro.
5.Who made more convincing arguments?
Here's the argument in brief:
Pro's P1 - ABCT states that a bust is because "panic will set in"
This was proven false using sources [1, 2, 3, 4] that show no reference whatsoever to any sort of panic countered by overlapping references with only 1 reference to panic.
Pro's P2 - ABCT assumes "liquidity preferences must be in good condition"
I did address this. See below.
Pro's P3 - ABCT assumes "[added] credit will primarily be spent on production goods"
This was clearly addressed by me, please see my first response.
Pro's C1 – "this theory has limited applications"
Considering that all Con's propositions have been negated, the conclusion cannot be supported, therefore, vote Pro.
6.Who used the most reliable sources?
Please count the resources used, striking circular references and duplicates and marking down for references to Wikipedia a consistently unreliable source. I supplied 2x as many reliable resources. Vote Pro.
Con writes, "These two sentences contradict each other" about, "using any method other than what the market dictates" and "I wrote nothing about how" which are not contradictory. The method could be throwing darts, picking a number, or personal. The HOW is irrelevant, it is only that the rate is not the market rate.

Con writes, "[it is false that] a non natural interest rate is arbitrary because it is undetermined," in response to what I wrote which was, "anything other than the natural supply and demand determined rate is arbitrary" and Con follows with, "It is determined by the supply and demand for loans," which is almost exactly what I wrote! He doesn't disagree here; he simply misunderstands what I said.

Con writes, "He then states that he did not mention anything about fractional reserve banking. However, FRB is relevant because it allows loans to extend beyond savings creating an unnatural rate of interest." This does not bolster his earlier response which brought up FRB as a counterpoint when FRB was never used as a point by me. Yes, it is relevant, but he falsely suggested that I brought up the concept.
Con suggests that his sources indicate that fear of hyperinflation is a crucial element to the ABCT. #1 is a discussion of #4, and cannot be considered a separate unique source. #2 is a wiki that references the other source that Con previously cited. #3 discusses a panic after prefacing, "with the establishment of fiat money... [causing] the phenomenon of runaway inflation." Addressing arbitrary manipulations is how the ABCT plays out, not a crucial part of the theory. None of the sources provided suggest that a panic is a key part of the theory.
Con writes, "...there were 17 paragraphs in the essay" in response to my statement, "It was one paragraph out of... many." The last paragraph of the essay says, "...I have given only a brief and necessarily insufficient sketch of the monetary theory… find more in the various publications I have mentioned." Including Mises' referenced articles, the paragraph in question IS one amongst VERY many; and none of the others mention a panic. [5]
Con needles, "...Mises... Gordon Tullock and Murray Rothbard understand the theory better than my opponent," yet 1 paragraph of his sources posit the position he asserts and all of mine express the theory without. I have proven that Con is incorrect in suggesting that a panic is a key component of the ABCT.
People's saving habits do decrease with higher inflation. Davidson and MacKinnon discuss it as an understood fact, "the observed positive relationship between inflation rates and savings rates in Canada and the United States." [6] See page 12 of their paper for sources which support the known relationship. Inter-Relationship between Economic Growth, Savings and Inflation in Asia finds, "The relationship between savings rate and growth has been found to be bi-directional and positive." [7]
Con writes that I didn't answer him, "Why can not consumers [use] the same cheap credit expansion in order to consume? (IE credit cards)." By placing this question with several others, it confused the matter so I responded as if it were related. I already addressed it in the previous post when I wrote, "additional credit to offer will accommodate higher risks and/or longer terms," meaning, yes, they will. His question doesn't argue the point; it makes it so I appropriately pointed out that buying means not saving.
Con writes, "increase in general savings tells... nothing about future demand for [one] product," which is a poor understanding of demand. Other factors equal, more money for buying things means demand for a product will increase. Rising TV views likely means more views of all shows.
Con says "I must explain WHY [artificially low rates] cause a miscalculation [of demand]." Low interest rates are (if not artificial) a sign of high amounts of deferred consumption (a high supply of savings available to be borrowed). If the rates are artificial the signal is wrong and the calculation is wrong.

Con stated ABCT doesn't account for LP, that they "must be in good condition," "for credit to be loaned out." The fact is, that Con didn't specify what he means by "liquidity preferences." It appears that he's talking about whether a bank is amenable to lending or not, similar to Con's previous point about arbitrary interest rates. I addressed this previously; the ABCT doesn't assume that the "Government [would void] contract law... forcibly [confiscate] property" and more. The ABCT does, predict the result of such manipulation showing that artificially high interest rates will lead to increased savings, which is what the bank is doing, saving money.
1.http://mises.org...
2.http://blog.mises.org...
3.
4.http://econfaculty.gmu.edu...
5.http://mises.org...
6.http://www.tandfonline.com...
7.http://papers.ssrn.com...;
Debate Round No. 4
28 comments have been posted on this debate. Showing 1 through 10 records.
Posted by 16kadams 2 years ago
16kadams
Lol to late...
Posted by LokiLoks 2 years ago
LokiLoks
Again with the tie for spelling and grammar adams? Seriously? I cited multiple errors from the Pro position. I sincerely don't understand how you could honestly vote that way.
Posted by LokiLoks 2 years ago
LokiLoks
Again with the tie for spelling and grammar adams? Seriously? I cited multiple errors from the Pro position. I sincerely don't understand how you could honestly vote that way.
Posted by 16kadams 2 years ago
16kadams
Con, the debate can be reset then you to can copy paste arguments over - a FF, as he had a good reason. Ask innomen to reset it, or just say vote tie then re-challenge him. A clean plate.
Posted by 16kadams 2 years ago
16kadams
Ok
Posted by LokiLoks 2 years ago
LokiLoks
I sent it to the help people, hopefully they can get it fixed.
Posted by 16kadams 2 years ago
16kadams
Just... You needed to copy paste it, force quit what you are on, go back paste it on. I did that today.
Posted by 16kadams 2 years ago
16kadams
Con false ad hom definition http://m.dictionary.com...
Posted by LokiLoks 2 years ago
LokiLoks
"say sorry cannot post there's a glitch. Von days extend arguments, then you go."

Von days? I don't understand, is there a way for me to get my response posted into the debate?
Posted by 16kadams 2 years ago
16kadams
Lol still comments =\= debate say sorry cannot post there's a glitch. Von days extend arguments, then you go.
3 votes have been placed for this debate. Showing 1 through 3 records.
Vote Placed by Reasoning 2 years ago
Reasoning
SpawktalkLokiLoksTied
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Total points awarded:00 
Reasons for voting decision: nv
Vote Placed by overmind25 2 years ago
overmind25
SpawktalkLokiLoksTied
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Total points awarded:40 
Reasons for voting decision: Pro misrepresented Con's arguments, lied, and cheated with the limit.
Vote Placed by 16kadams 2 years ago
16kadams
SpawktalkLokiLoksTied
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Reasons for voting decision: Args great tie there. Conduct for FF. Sources for 2 reasons: 1. Had more 2. They where accurate and more diverse. Had more: Pros slight edge. Diversity: He sourced from more sites I belive Accuracy: Both had great sources. But more + diverse accurate sources > fewer les diverse accurate sources. Great debate.