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If economists didn't exist....

darkkermit
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5/20/2013 7:47:26 PM
Posted: 3 years ago
Do you think that the economy would be on net-worse as a whole. In other words, larger business cycles, greater levels of unemployment in the long run, and a reduction in GDP.

I'm curious what people's thoughts are on how important economists really are in the world and how much of the economy is just based on "natural" forces (in other words, with no guidance from economists). I'm inclined to believe that economists really don't matter that much, and that social forces, both on how people vote based on their gut and actions they choose to make the world more productive, matter much more. I think that there would probably be more economic cycles, but not a change in long-run GDP, since the US has had long-run GDP growth since the industrial revolution and economics was just in its infancy as a science. Yet, the GDP growth during the dawn of the industrial revolution is the same as the modern day. I also believe that modern day policy doesn't take economist opinions too seriously anyhow.
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jimtimmy2
Posts: 403
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5/20/2013 10:22:14 PM
Posted: 3 years ago
Rothbard used to argue that in a truly free society (free of state control), there would be little need for economists.

I agree. The state is too blame for most economic problems and without these many problems the need would be greatly reduced.

But, as to the OP, some economists help (those that argue for a smaller state) while others hurt (those that argue for a larger state).

Mises and Hayek did a lot of good for society. Krugman and Keynes have done a lot of harm.
sadashivan
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5/22/2013 8:20:00 AM
Posted: 3 years ago
Economics is a system to manage resources so always existed since migration of human race from Africa (95000 to 100000 years)
lewis20
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5/22/2013 12:51:37 PM
Posted: 3 years ago
Ya economics as a science is just the study of economics, it'd be like asking if history didn't exist.
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
twocupcakes
Posts: 2,750
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5/22/2013 1:08:51 PM
Posted: 3 years ago
It seems economics is responsible for the central bank and banking system. I think most people see value in a strong banking system. After Canada's banks weathered the crisis well, and was consistently ranked the top banking system in the world, the UK paid a lot to recruit Canada's top central banker to the Bank of England. So, I would say that there is value for having capable economists and bankers.
flaskblob
Posts: 68
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5/22/2013 7:33:14 PM
Posted: 3 years ago
Economics is just a soft science used to justify government's excesses
Of course I'm using those fallacies; they're the only logical ones." - f3ffy
16kadams
Posts: 10,497
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5/23/2013 12:31:02 AM
Posted: 3 years ago
At 5/22/2013 1:08:51 PM, twocupcakes wrote:
It seems economics is responsible for the central bank and banking system. I think most people see value in a strong banking system. After Canada's banks weathered the crisis well, and was consistently ranked the top banking system in the world, the UK paid a lot to recruit Canada's top central banker to the Bank of England. So, I would say that there is value for having capable economists and bankers.

Here is a paper on that: http://www.nber.org...
https://www.youtube.com...
https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
suttichart.denpruektham
Posts: 1,115
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5/23/2013 2:47:44 AM
Posted: 3 years ago
At 5/20/2013 7:47:26 PM, darkkermit wrote:
Do you think that the economy would be on net-worse as a whole. In other words, larger business cycles, greater levels of unemployment in the long run, and a reduction in GDP.

I'm curious what people's thoughts are on how important economists really are in the world and how much of the economy is just based on "natural" forces (in other words, with no guidance from economists). I'm inclined to believe that economists really don't matter that much, and that social forces, both on how people vote based on their gut and actions they choose to make the world more productive, matter much more. I think that there would probably be more economic cycles, but not a change in long-run GDP, since the US has had long-run GDP growth since the industrial revolution and economics was just in its infancy as a science. Yet, the GDP growth during the dawn of the industrial revolution is the same as the modern day. I also believe that modern day policy doesn't take economist opinions too seriously anyhow.

Meaning? Are you referring the lack of those who are in the economic-related profession (Banker, Broker, Civil Servant in Treasury Department etc.) or hose who study economic?
DanT
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5/23/2013 8:37:47 PM
Posted: 3 years ago
At 5/22/2013 12:51:37 PM, lewis20 wrote:
Ya economics as a science is just the study of economics, it'd be like asking if history didn't exist.

technically it would be like asking if historians didn't exist.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
sadashivan
Posts: 2
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5/24/2013 8:26:30 AM
Posted: 3 years ago
At 5/20/2013 7:47:26 PM, darkkermit wrote:
Do you think that the economy would be on net-worse as a whole. In other words, larger business cycles, greater levels of unemployment in the long run, and a reduction in GDP.

Economics was based on natural forces but transformed when politicians entered the world "In the name of democracy" So now it has new name "Politicio-conomics" means politicians promise citizens but don't honour, rather can not honour as they are committed to capitalists as got funds from them for election.

Rather the political leaders are representatives of capitalists who have only one thing in mind make profits as much as possible and cut cost of production even by axing labour force.

All over the world socialism or capitalism have already collapsed now it is time of capitalism as loosing ground and collapsing step by step. New system "Socio-Capitalism" is mixed but role of Government limits to regulations and Capitalist's role to invest and get reward. Major role remains with community and its people.
http://www.sadashivan.com...
lewis20
Posts: 5,093
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5/24/2013 8:43:58 AM
Posted: 3 years ago
At 5/23/2013 8:37:47 PM, DanT wrote:
At 5/22/2013 12:51:37 PM, lewis20 wrote:
Ya economics as a science is just the study of economics, it'd be like asking if history didn't exist.

technically it would be like asking if historians didn't exist.

Ah I can't read.
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
darkkermit
Posts: 11,204
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5/24/2013 9:25:13 AM
Posted: 3 years ago
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.
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Cermank
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5/24/2013 10:16:22 AM
Posted: 3 years ago
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.
darkkermit
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5/24/2013 10:26:02 AM
Posted: 3 years ago
At 5/24/2013 10:16:22 AM, Cermank wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.

Yes, I understand the error in the reasoning. However, that's why I'm posing it as a question rather than giving an absolute answer. There's a basic rule of thumb known as the 10,000 rule in which economic growth is easy to obtain when gdp per capita is less than $10,000,but after that some nations slow down. Before bank centralization, the US was below the $10,000 threehold.

However, the gold standard is pretty stable in the long-run, in terms of keeping a currency that doesn't inflate or deflate that much (although there's large fluctuation in the short-run).

I'd also say that in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).
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Cermank
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5/24/2013 10:40:04 AM
Posted: 3 years ago
At 5/24/2013 10:26:02 AM, darkkermit wrote:
At 5/24/2013 10:16:22 AM, Cermank wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.

Yes, I understand the error in the reasoning. However, that's why I'm posing it as a question rather than giving an absolute answer. There's a basic rule of thumb known as the 10,000 rule in which economic growth is easy to obtain when gdp per capita is less than $10,000,but after that some nations slow down. Before bank centralization, the US was below the $10,000 threehold.

However, the gold standard is pretty stable in the long-run, in terms of keeping a currency that doesn't inflate or deflate that much (although there's large fluctuation in the short-run).
say hat in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).

Gold standard is stable foe a country with per capita below $10000? I feel this has a lot of solow model reasoning behind it, it totally depends on the productive investments. How much of the investments went to waste alhas a huge impact on the economic growth. One could argue that the amount of productive investments are more in the post CB society, because of government regulations, but there are too many exogenous factors to come to a conclusion. Technoogy, foe one, is better now, so there's a higher probability of productive investment. But then even the availablity of loans is easier, so that progress might be offset. It would be interesting to get some numbers on it.
DanT
Posts: 5,693
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5/24/2013 10:44:11 AM
Posted: 3 years ago
At 5/20/2013 7:47:26 PM, darkkermit wrote:
Do you think that the economy would be on net-worse as a whole. In other words, larger business cycles, greater levels of unemployment in the long run, and a reduction in GDP.

I'm curious what people's thoughts are on how important economists really are in the world and how much of the economy is just based on "natural" forces (in other words, with no guidance from economists). I'm inclined to believe that economists really don't matter that much, and that social forces, both on how people vote based on their gut and actions they choose to make the world more productive, matter much more. I think that there would probably be more economic cycles, but not a change in long-run GDP, since the US has had long-run GDP growth since the industrial revolution and economics was just in its infancy as a science. Yet, the GDP growth during the dawn of the industrial revolution is the same as the modern day. I also believe that modern day policy doesn't take economist opinions too seriously anyhow.

Economics is a social science, that studies the choices of individuals and organizations regarding the allocation of resources. The comparison between the economy and history has already been made. So let me ask this; would history be better or worse off, if historians did not record history? A better question would be; would physics be better or worse off, if physicists did not study physics?
Like with historians and physicists, economists are responsible for our understanding of the economy. Without economists we would have little to no understanding on how or why the economy reacts.

The question that is really being asked is; would economic policies be better or worse if we were ignorant about economics? The answer is almost certainly worse.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
twocupcakes
Posts: 2,750
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5/24/2013 11:06:36 AM
Posted: 3 years ago
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Wouldn't you say that long recessions depressions hurt long term economic growth? If people become unemployed for a long time, they are less employable in the long run, which increases the long run unemployment level. Employers will not hire people who were unemployed for a long time, and unemployed people do not get on the job training they need do get a job. So, wouldn't long periods of high unemployment, lead do a greater long run unemployment level, and less long term growth?
twocupcakes
Posts: 2,750
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5/24/2013 11:15:31 AM
Posted: 3 years ago

I'd also say that in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).

I think businesses definitely take economic activity into account. Studies show that businesses in more cyclical businesses hold more cash and spend less, then companies in stable businesses. So, companies in cyclical industries invest less.

Recessions often push really cyclical industries like automakers into bankruptcy. And, customers will not but from companies that may be under the threat of bankruptcy because their purchases will not have customer service if the company goes down.

Businesses pay a premium to insure against foreign exchange risk, or commodity price risk. So, I think it is safe to say businesses to take economic activity into account and prefer and invest more in a stable business cycle.
darkkermit
Posts: 11,204
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5/24/2013 11:23:26 AM
Posted: 3 years ago
At 5/24/2013 11:06:36 AM, twocupcakes wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Wouldn't you say that long recessions depressions hurt long term economic growth? If people become unemployed for a long time, they are less employable in the long run, which increases the long run unemployment level. Employers will not hire people who were unemployed for a long time, and unemployed people do not get on the job training they need do get a job. So, wouldn't long periods of high unemployment, lead do a greater long run unemployment level, and less long term growth?

Yes, this is true. However, often the remedies for fixing economic cycles cause negative effects on economic booms. For example, if the government engages in deficit spending, this means higher taxes during prosperity. Alternative a policy of loose monetary policy leads to a contraction of the monetary in the future, leading to higher interest rates.
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darkkermit
Posts: 11,204
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5/24/2013 11:28:38 AM
Posted: 3 years ago
At 5/24/2013 10:40:04 AM, Cermank wrote:
At 5/24/2013 10:26:02 AM, darkkermit wrote:
At 5/24/2013 10:16:22 AM, Cermank wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.

Yes, I understand the error in the reasoning. However, that's why I'm posing it as a question rather than giving an absolute answer. There's a basic rule of thumb known as the 10,000 rule in which economic growth is easy to obtain when gdp per capita is less than $10,000,but after that some nations slow down. Before bank centralization, the US was below the $10,000 threehold.

However, the gold standard is pretty stable in the long-run, in terms of keeping a currency that doesn't inflate or deflate that much (although there's large fluctuation in the short-run).
say hat in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).

Gold standard is stable foe a country with per capita below $10000?

Well, no country in the world uses the gold standard, and to be honest I have no idea why. However, there are nations that don't have a centralized banks due to either weak government or not a large enough economy to create such an institution. However, these countries use foreign currency, usually the US dollar instead.

I feel this has a lot of solow model reasoning behind it, it totally depends on the productive investments. How much of the investments went to waste alhas a huge impact on the economic growth. One could argue that the amount of productive investments are more in the post CB society

post CB society?

;, because of government regulations, but there are too many exogenous factors to come to a conclusion. Technoogy, foe one, is better now, so there's a higher probability of productive investment. But then even the availablity of loans is easier, so that progress might be offset. It would be interesting to get some numbers on it.
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Cermank
Posts: 3,773
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5/24/2013 11:36:14 AM
Posted: 3 years ago
At 5/24/2013 11:28:38 AM, darkkermit wrote:
At 5/24/2013 10:40:04 AM, Cermank wrote:
At 5/24/2013 10:26:02 AM, darkkermit wrote:
At 5/24/2013 10:16:22 AM, Cermank wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.

Yes, I understand the error in the reasoning. However, that's why I'm posing it as a question rather than giving an absolute answer. There's a basic rule of thumb known as the 10,000 rule in which economic growth is easy to obtain when gdp per capita is less than $10,000,but after that some nations slow down. Before bank centralization, the US was below the $10,000 threehold.

However, the gold standard is pretty stable in the long-run, in terms of keeping a currency that doesn't inflate or deflate that much (although there's large fluctuation in the short-run).
say hat in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).

Gold standard is stable foe a country with per capita below $10000?

Well, no country in the world uses the gold standard, and to be honest I have no idea why. However, there are nations that don't have a centralized banks due to either weak government or not a large enough economy to create such an institution. However, these countries use foreign currency, usually the US dollar instead.

Gold currency has a tendency to act as a deflationary agent. Plus, the supply of gold is pretty unstable, so the control of government on the economy decreases considerably. And the available government tools to impact the economy too. I thought this was the reason you were opposed to bitcoins?

I feel this has a lot of solow model reasoning behind it, it totally depends on the productive investments. How much of the investments went to waste alhas a huge impact on the economic growth. One could argue that the amount of productive investments are more in the post CB society

post CB society?

Post Central Banking society. Bad habit :-/

;, because of government regulations, but there are too many exogenous factors to come to a conclusion. Technoogy, foe one, is better now, so there's a higher probability of productive investment. But then even the availablity of loans is easier, so that progress might be offset. It would be interesting to get some numbers on it.
darkkermit
Posts: 11,204
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5/24/2013 11:58:47 AM
Posted: 3 years ago
At 5/24/2013 11:36:14 AM, Cermank wrote:
At 5/24/2013 11:28:38 AM, darkkermit wrote:
At 5/24/2013 10:40:04 AM, Cermank wrote:
At 5/24/2013 10:26:02 AM, darkkermit wrote:
At 5/24/2013 10:16:22 AM, Cermank wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.

Yes, I understand the error in the reasoning. However, that's why I'm posing it as a question rather than giving an absolute answer. There's a basic rule of thumb known as the 10,000 rule in which economic growth is easy to obtain when gdp per capita is less than $10,000,but after that some nations slow down. Before bank centralization, the US was below the $10,000 threehold.

However, the gold standard is pretty stable in the long-run, in terms of keeping a currency that doesn't inflate or deflate that much (although there's large fluctuation in the short-run).
say hat in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).

Gold standard is stable foe a country with per capita below $10000?

Well, no country in the world uses the gold standard, and to be honest I have no idea why. However, there are nations that don't have a centralized banks due to either weak government or not a large enough economy to create such an institution. However, these countries use foreign currency, usually the US dollar instead.

Gold currency has a tendency to act as a deflationary agent. Plus, the supply of gold is pretty unstable, so the control of government on the economy decreases considerably. And the available government tools to impact the economy too. I thought this was the reason you were opposed to bitcoins?

I understand this, however in a lot of countries, the nation doesn't have any opportunity to engage in any form of centralized banking system. However, the default currency is the US dollar instead of something else like gold. Although, perhaps in some parts of the region, gold is trading as a form of the "bartering economy". And I suppose that the US dollar converges as a valuable exchange since one an always use it to buy US or foreign goods.

The gold standard is somewhat deflationary, but one can always mine for gold. The problem does occur when the supply of gold does dwindle and the costs of obtaining gold become way too high. I don't think we've reached the point of peak gold though. Even still, other non-fiat forms of currency could develop (other metals, oil).

I'm referencing non-fiat money and countries where the government doesn't have enough power to control the economy or currency.

Also bitcoin has an algorithim for increasing the money supply. The gold standard has no algorithim. My complaint is that the algorithim of bitcoin sucks. Not that the creator really was an economist and tried to make a perfect algorithim for a functioning economy anyhow.

I feel this has a lot of solow model reasoning behind it, it totally depends on the productive investments. How much of the investments went to waste alhas a huge impact on the economic growth. One could argue that the amount of productive investments are more in the post CB society

post CB society?

Post Central Banking society. Bad habit :-/

What do you mean by a post-CB society? You mean like if something like bitcoin took over. Or a society in which government lost power over currency creation and sort-of colllapsed?


because of government regulations, but there are too many exogenous factors to come to a conclusion. Technoogy, foe one, is better now, so there's a higher probability of productive investment. But then even the availablity of loans is easier, so that progress might be offset. It would be interesting to get some numbers on it.
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Cermank
Posts: 3,773
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5/24/2013 10:53:37 PM
Posted: 3 years ago
At 5/24/2013 11:58:47 AM, darkkermit wrote:
At 5/24/2013 11:36:14 AM, Cermank wrote:
At 5/24/2013 11:28:38 AM, darkkermit wrote:
At 5/24/2013 10:40:04 AM, Cermank wrote:
At 5/24/2013 10:26:02 AM, darkkermit wrote:
At 5/24/2013 10:16:22 AM, Cermank wrote:
At 5/24/2013 9:25:13 AM, darkkermit wrote:
At 5/22/2013 11:23:09 AM, Cermank wrote:
I am not sure if you arguing for no central bank interventionist policy or no economic stance of the government.

However, the US didn't have a central banking system until 1913 and it was on the same trajectory of economic growth previously. I'd say that a central banking reduces business cycles, but not too much in terms of economic growth.

Extrapolation judgements are often prone to fallacies and errors. It does make an interesting case, but I think we'd need more data, from other countries specifically. The data is insufficient to come to a conclusion. But that's a really interesting observation.

Yes, I understand the error in the reasoning. However, that's why I'm posing it as a question rather than giving an absolute answer. There's a basic rule of thumb known as the 10,000 rule in which economic growth is easy to obtain when gdp per capita is less than $10,000,but after that some nations slow down. Before bank centralization, the US was below the $10,000 threehold.

However, the gold standard is pretty stable in the long-run, in terms of keeping a currency that doesn't inflate or deflate that much (although there's large fluctuation in the short-run).
say hat in a lot of economic activity, businesses don't really consider too much the effects of economic conditions or certain policies. Take for example Google. It's innovative ability is pretty much automatic and will continue to be innovative unless the government does something really stupid (like try to cease it or regulate it to death).

Gold standard is stable foe a country with per capita below $10000?

Well, no country in the world uses the gold standard, and to be honest I have no idea why. However, there are nations that don't have a centralized banks due to either weak government or not a large enough economy to create such an institution. However, these countries use foreign currency, usually the US dollar instead.

Gold currency has a tendency to act as a deflationary agent. Plus, the supply of gold is pretty unstable, so the control of government on the economy decreases considerably. And the available government tools to impact the economy too. I thought this was the reason you were opposed to bitcoins?

I understand this, however in a lot of countries, the nation doesn't have any opportunity to engage in any form of centralized banking system. However, the default currency is the US dollar instead of something else like gold. Although, perhaps in some parts of the region, gold is trading as a form of the "bartering economy". And I suppose that the US dollar converges as a valuable exchange since one an always use it to buy US or foreign goods.

Yeah, that's true.

The gold standard is somewhat deflationary, but one can always mine for gold. The problem does occur when the supply of gold does dwindle and the costs of obtaining gold become way too high. I don't think we've reached the point of peak gold though. Even still, other non-fiat forms of currency could develop (other metals, oil).

I'm referencing non-fiat money and countries where the government doesn't have enough power to control the economy or currency.

Are you arguing that non fiat money like gold has an important stabilising impact on the economy of a country, something that is maintained once a country adopts central banking? Cyprus is actually a great example of this. Once the governmmet lost hold ever the economy, after the crisis, people started investing in gold, and turning to bitcoins. Non fiat currencies.

Also itcoin has an algorithim for increasing the money supply. The gold standard has no algorithim. My complaint is that the algorithim of bitcoin sucks. Not that the creator really was an economist and tried to make a perfect algorithim for a functioning economy anyhow.

Yeah, I had reservations about the whole purpose of the currency. It was very weak as a medium of exchange, since its value was so unstable.
I feel this has a lot of solow model reasoning behind it, it totally depends on the productive investments. How much of the investments went to waste alhas a huge impact on the economic growth. One could argue that the amount of productive investments are more in the post CB society

post CB society?

Post Central Banking society. Bad habit :-/

What do you mean by a post-CB society? You mean like if something like bitcoin took over. Or a society in which government lost power over currency creation and sort-of colllapsed?

fak. I meant a society after the central bank was set up. We are trying to find out the impact of Central Bank on an economy, so it was only fair to have this dichotomy of time period.

because of government regulations, but there are too many exogenous factors to come to a conclusion. Technoogy, foe one, is better now, so there's a higher probability of productive investment. But then even the availablity of loans is easier, so that progress might be offset. It would be interesting to get some numbers on it.
darkkermit
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5/24/2013 11:09:57 PM
Posted: 3 years ago
At 5/24/2013 10:53:37 PM, Cermank wrote:
The gold standard is somewhat deflationary, but one can always mine for gold. The problem does occur when the supply of gold does dwindle and the costs of obtaining gold become way too high. I don't think we've reached the point of peak gold though. Even still, other non-fiat forms of currency could develop (other metals, oil).

I'm referencing non-fiat money and countries where the government doesn't have enough power to control the economy or currency.

Are you arguing that non fiat money like gold has an important stabilising impact on the economy of a country, something that is maintained once a country adopts central banking? Cyprus is actually a great example of this. Once the governmmet lost hold ever the economy, after the crisis, people started investing in gold, and turning to bitcoins. Non fiat currencies.

I don't think gold has a stablizing effect of the economy of a country after adopted via the central bank. Investing in gold has an obvious negative effect on the economy since one is investing in an asset that provides no productive capacity to the economy. Although it could possibly be used as a medium of exchange in a situation like Cyprus, although its more likely that a foreign reserve currency like the US currency would be adopted, which acts as a pseudo-non fiat currency for them.

I also believe that the gold standard doesn't deflate or inflate largely in the long-run (decades), but it does in the short-run (year to year). However, this assumes that the cost of extracting gold is relatively low and stable.

fak. I meant a society after the central bank was set up. We are trying to find out the impact of Central Bank on an economy, so it was only fair to have this dichotomy of time period.

Well, there have been less business cycles during the post-central banking area. Of course the question becomes "what constitutes a central bank". Are we including only banks that can set up a floating-currency or banks that act as a lender of last resort. Centralized banking didn't save the world from the great depression. However, the development of keynesian economics and monetarism has reduced business cycles, yet you don't need to have these two fields in order to have central banking.
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darkkermit
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5/24/2013 11:32:18 PM
Posted: 3 years ago
Hmmm, appears I underestimated how many nations don't have centralized banking. Apparently only 3 nations in the whole world don't have centralized banking, 1 of them is the vatican city. The other two have populations only in the tens of thousands (Monaco and Andorra). Even Somalia has a centralized banking. Some nations share a centralized banking system in the region though (ex: European Union).
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Cermank
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5/24/2013 11:33:06 PM
Posted: 3 years ago
At 5/24/2013 11:09:57 PM, darkkermit wrote:
At 5/24/2013 10:53:37 PM, Cermank wrote:
The gold standard is somewhat deflationary, but one can always mine for gold. The problem does occur when the supply of gold does dwindle and the costs of obtaining gold become way too high. I don't think we've reached the point of peak gold though. Even still, other non-fiat forms of currency could develop (other metals, oil).

I'm referencing non-fiat money and countries where the government doesn't have enough power to control the economy or currency.

Are you arguing that non fiat money like gold has an important stabilising impact on the economy of a country, something that is maintained once a country adopts central banking? Cyprus is actually a great example of this. Once the governmmet lost hold ever the economy, after the crisis, people started investing in gold, and turning to bitcoins. Non fiat currencies.

I don't think gold has a stablizing effect of the economy of a country after adopted via the central bank. Investing in gold has an obvious negative effect on the economy since one is investing in an asset that provides no productive capacity to the economy. Although it could possibly be used as a medium of exchange in a situation like Cyprus, although its more likely that a foreign reserve currency like the US currency would be adopted, which acts as a pseudo-non fiat currency for them.

Yeah obviously. Gold is basically an investment vis a vis the government. In India, for example, it is kind of a very important asset. The investment in it increases the larger the economy falters. Investment on gold can be important signal of the economic health. I don't know if the US currency did end up being accepted in Cyprus, but there is a very good reason for it to be.

I also believe that the gold standard doesn't deflate or inflate largely in the long-run (decades), but it does in the short-run (year to year). However, this assumes that the cost of extracting gold is relatively low and stable.

And that the gold reserves are fixed in numbers.

fak. I meant a society after the central bank was set up. We are trying to find out the impact of Central Bank on an economy, so it was only fair to have this dichotomy of time period.

Well, there have been less business cycles during the post-central banking area. Of course the question becomes "what constitutes a central bank". Are we including only banks that can set up a floating-currency or banks that act as a lender of last resort. Centralized banking didn't save the world from the great depression. However, the development of keynesian economics and monetarism has reduced business cycles, yet you don't need to have these two fields in order to have central banking.

I have always linked Central banking performing both of these functions. Keynesianism is government intervention to jncreae the demand, Id say its kind of difficult without a Central bank. How are you supposed to incentivise borrowing and spending without a central lending entity? CB adopts actions in response to the market conditions, as an effort to alleviate them. Market cannot guide them.
darkkermit
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5/24/2013 11:43:51 PM
Posted: 3 years ago
At 5/24/2013 11:33:06 PM, Cermank wrote:

Yeah obviously. Gold is basically an investment vis a vis the government. In India, for example, it is kind of a very important asset. The investment in it increases the larger the economy falters. Investment on gold can be important signal of the economic health. I don't know if the US currency did end up being accepted in Cyprus, but there is a very good reason for it to be.

Yes, this is true. I don't see how Cyprus can stop US currency from being accepted. What, is there literally a law that says that all businesses must accept the Euro instead of the dollar? I understand that courts require that the recognized currency must be accepted as a form of debt, but needed in any exchange? Even still, you can't stop it from occurring in the black market.



I also believe that the gold standard doesn't deflate or inflate largely in the long-run (decades), but it does in the short-run (year to year). However, this assumes that the cost of extracting gold is relatively low and stable.

And that the gold reserves are fixed in numbers.

Well that's sort of what I meant. Known reserves =/= actual reserves and some reserves are just to expensive to extract to be counted as real reserves.


fak. I meant a society after the central bank was set up. We are trying to find out the impact of Central Bank on an economy, so it was only fair to have this dichotomy of time period.

Well, there have been less business cycles during the post-central banking area. Of course the question becomes "what constitutes a central bank". Are we including only banks that can set up a floating-currency or banks that act as a lender of last resort. Centralized banking didn't save the world from the great depression. However, the development of keynesian economics and monetarism has reduced business cycles, yet you don't need to have these two fields in order to have central banking.

I have always linked Central banking performing both of these functions. Keynesianism is government intervention to jncreae the demand, Id say its kind of difficult without a Central bank. How are you supposed to incentivise borrowing and spending without a central lending entity? CB adopts actions in response to the market conditions, as an effort to alleviate them. Market cannot guide them.

Well Central banking has existed before Keynesian economics. Also, I can see Keynesian economics being used w/out centralized banking since its essentially a government fiscal policy of deficit spending during recessions and surpluses during booms.
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Cermank
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5/25/2013 12:09:35 AM
Posted: 3 years ago
At 5/24/2013 11:43:51 PM, darkkermit wrote:
At 5/24/2013 11:33:06 PM, Cermank wrote:

Yeah obviously. Gold is basically an investment vis a vis the government. In India, for example, it is kind of a very important asset. The investment in it increases the larger the economy falters. Investment on gold can be important signal of the economic health. I don't know if the US currency did end up being accepted in Cyprus, but there is a very good reason for it to be.

Yes, this is true. I don't see how Cyprus can stop US currency from being accepted. What, is there literally a law that says that all businesses must accept the Euro instead of the dollar? I understand that courts require that the recognized currency must be accepted as a form of debt, but needed in any exchange? Even still, you can't stop it from occurring in the black market.

True true. Bitcoins are outright illegal by their definition, and THAT prevailed, so dollars would definitely do. Obvious repercussion.



I also believe that the gold standard doesn't deflate or inflate largely in the long-run (decades), but it does in the short-run (year to year). However, this assumes that the cost of extracting gold is relatively low and stable.

And that the gold reserves are fixed in numbers.

Well that's sort of what I meant. Known reserves =/= actual reserves and some reserves are just to expensive to extract to be counted as real reserves.


fak. I meant a society after the central bank was set up. We are trying to find out the impact of Central Bank on an economy, so it was only fair to have this dichotomy of time period.

Well, there have been less business cycles during the post-central banking area. Of course the question becomes "what constitutes a central bank". Are we including only banks that can set up a floating-currency or banks that act as a lender of last resort. Centralized banking didn't save the world from the great depression. However, the development of keynesian economics and monetarism has reduced business cycles, yet you don't need to have these two fields in order to have central banking.

I have always linked Central banking performing both of these functions. Keynesianism is government intervention to jncreae the demand, Id say its kind of difficult without a Central bank. How are you supposed to incentivise borrowing and spending without a central lending entity? CB adopts actions in response to the market conditions, as an effort to alleviate them. Market cannot guide them.

Well Central banking has existed before Keynesian economics. Also, I can see Keynesian economics being used w/out centralized banking since its essentially a government fiscal policy of deficit spending during recessions and surpluses during booms.

Central banking is so engrossed in our financial system, that it is positively difficult to envision a system without it :P

Let's try to form a chain. Fiscal policy, expansionary fiscal policy, let's say. Increasing government expenditure or reducing taxes is what we'd require. Right now, we print more money to finance the deficit. Without a CB, we'd just increase our gold extraction efforts, or import gold? Importing would have a negative externality with the current account into a deficit. Would it lead to a higher demand? If we get more gold through extraction, yes. But importing gold wont really have that much of an impact, as the negative externality would show up through prices.

Keynesianism without a CB would be a very difficult proposition.
RyuuKyuzo
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5/25/2013 12:18:18 AM
Posted: 3 years ago
At 5/20/2013 7:47:26 PM, darkkermit wrote:
Do you think that the economy would be on net-worse as a whole. In other words, larger business cycles, greater levels of unemployment in the long run, and a reduction in GDP.

I'm curious what people's thoughts are on how important economists really are in the world and how much of the economy is just based on "natural" forces (in other words, with no guidance from economists). I'm inclined to believe that economists really don't matter that much, and that social forces, both on how people vote based on their gut and actions they choose to make the world more productive, matter much more. I think that there would probably be more economic cycles, but not a change in long-run GDP, since the US has had long-run GDP growth since the industrial revolution and economics was just in its infancy as a science. Yet, the GDP growth during the dawn of the industrial revolution is the same as the modern day. I also believe that modern day policy doesn't take economist opinions too seriously anyhow.
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