4 ms·

That said, the banks + federal oversight encourage money to be created out of thin air, which makes it easy to spend money, and makes it impossible to incentivi

That said, the banks + federal oversight encourage money to be created out of thin air, which makes it easy to spend money, and makes it impossible to incentivize deferred consumption. So, everyone spends money, no limits on it, and we all get to ride the waves between economic booms and economic crashes. Honest question -- how does the Austrian school reconcile the slow growth of the US economy during and immediately after QE with enormous corporate warchests such as Apple's cash stockpile? I'll accept that some of this is tax shenanigans to defer US repatriation... but only some of it.

conanbatt 9y ago
I'm sure austrian school purist would tell you that a storm is coming quickly to correct that insanity, if it was one.
- chromatic 9y ago
  Thus Apple hoards cash because it believes the bubble will burst? Is that the Austrian explanation for Apple's behavior? (Still an honest question. I've never understood this about the Austrian school.)
  - conanbatt 9y ago
    Im no expert on Austrian school, but what little I read is that they have an organic view of economics, and that anything that deviates the natural flow will be corrected eventually. If the money is too cheap, it will eventually become really expensive to correct itself, and Apple might be preparing for that. Or it might be causing it. To be fair, Austrian school of economics is more occultism than anything else in the field, while Chicago School Economics (Milton Friedman&co) have more accepted models and economic ideas. The 'neoliberal' model as far as I understand can't really explain corporate cash hoarding. The situation today is very unique: historically cheapness of money could easily provoke inflation, which would promptly push any cash hoarder to spend. If the U.S. had a small spike in inflation the whole thing could change quickly.
rsync 9y ago
"Honest question -- how does the Austrian school reconcile the slow growth of the US economy during and immediately after QE with enormous corporate warchests such as Apple's cash stockpile?" I'm not an Austrian economist but I don't know why it's so far fetched that Apple is simply saving the money for the inevitable fire sale ... Why buy Disney today when you can buy Disney and Ford tomorrow ?
- chromatic 9y ago
  Why buy Disney today when you can buy Disney and Ford tomorrow? As a shareholder, because that money could be put to productive use today, rather than waiting for a future which may not come. To my mind, that's why the pressure for Apple to pay a dividend finally built up to the point that Apple now pays dividends.

conanbatt 9y ago

I'm sure austrian school purist would tell you that a storm is coming quickly to correct that insanity, if it was one.

chromatic 9y ago
Thus Apple hoards cash because it believes the bubble will burst? Is that the Austrian explanation for Apple's behavior? (Still an honest question. I've never understood this about the Austrian school.)
- conanbatt 9y ago
  Im no expert on Austrian school, but what little I read is that they have an organic view of economics, and that anything that deviates the natural flow will be corrected eventually. If the money is too cheap, it will eventually become really expensive to correct itself, and Apple might be preparing for that. Or it might be causing it. To be fair, Austrian school of economics is more occultism than anything else in the field, while Chicago School Economics (Milton Friedman&co) have more accepted models and economic ideas. The 'neoliberal' model as far as I understand can't really explain corporate cash hoarding. The situation today is very unique: historically cheapness of money could easily provoke inflation, which would promptly push any cash hoarder to spend. If the U.S. had a small spike in inflation the whole thing could change quickly.

rsync 9y ago

"Honest question -- how does the Austrian school reconcile the slow growth of the US economy during and immediately after QE with enormous corporate warchests such as Apple's cash stockpile?" I'm not an Austrian economist but I don't know why it's so far fetched that Apple is simply saving the money for the inevitable fire sale ... Why buy Disney today when you can buy Disney and Ford tomorrow ?

chromatic 9y ago
Why buy Disney today when you can buy Disney and Ford tomorrow? As a shareholder, because that money could be put to productive use today, rather than waiting for a future which may not come. To my mind, that's why the pressure for Apple to pay a dividend finally built up to the point that Apple now pays dividends.