3 ms·

First off, bubbles are a side effect of the money cycle which is created by central banking -- both the Dotcom and 2008 bubbles were created by the Fed selling

First off, bubbles are a side effect of the money cycle which is created by central banking -- both the Dotcom and 2008 bubbles were created by the Fed selling money below cost, building a massive carry trade in, for instance, houses. Secondly, if there is a crash, the best thing to do is nothing. Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too- crashes that happened before the federal reserve which were much worse than the 1929 crash, but which are forgotten to history because they didn't create Great Depressions because there was no Federal Reserve to "bail out the system") The bailouts of 2008 were the worst thing that came out of that. Government shouldn't be bailing out these businesses, especially after those businesses made billions getting below cost money from that same government. IT's not really economics you're talking about here but the corruption in the system. Bailouts are part of the game-- thats how they scam us. Bailouts don't protect us (that's the con.) For an excellent history of money and the last 100 years of bailouts and how this exact same thing has been done dozens of times already-- check out G Edward Griffens "The Creature from Jekyll Island" -- it's a history book about money, but it's anything but dry.

tim333 9y ago
Hmm... bubbles can also happen without central banking - think the original tulip bubble for example. Also not all bailouts are bad, for example the auto bailout was estimated to have saved ~380k jobs. And it wasn't the auto industry's fault the banking system went wonky. The system may not be perfect but it's not all bad.
- mdpopescu 9y ago
  The tulip bubble is mostly a myth. [1] [2] [1] https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/ https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... [2] https://medium.com/@adam_selene/tulips-and-other-myths-c7f69cf2b59d https://medium.com/@adam_selene/tulips-and-other-myths-c7f69...
samsonradu 9y ago
> First off, bubbles are a side effect of the money cycle which is created by central banking -- both the Dotcom and 2008 bubbles were created by the Fed selling money below cost, building a massive carry trade in, for instance, houses. I agree, though I think at the root it's created by people investing irrationally and the wisdom of crowds that comes with it. Part of that can be mitigated by good regulation. > Secondly, if there is a crash, the best thing to do is nothing. Let the people who invested poorly get wiped out-- it's better for the economy. This is quite a harsh and risky thing to say. It is the fair solution, however sentiment and trust plays a big role in economics. If big(ger) banks had failed back then it would have been much worse for everyone. > Bailouts are part of the game-- thats how they scam us. Bailouts don't protect us (that's the con.) I think the scam actually happens through the years prior to the bailout, when institutions close their eyes to the bubbling up of the economy. Once the crash moment is reached there is not much left to do. Thanks for the book reference, I have a very long flight tomorrow and I was actually looking for some books!
mcguire 9y ago
https://en.wikipedia.org/wiki/Panic_of_1819 https://en.wikipedia.org/wiki/Panic_of_1819 https://en.m.wikipedia.org/wiki/Panic_of_1837 https://en.m.wikipedia.org/wiki/Panic_of_1837 https://en.m.wikipedia.org/wiki/Panic_of_1857 https://en.m.wikipedia.org/wiki/Panic_of_1857 https://en.m.wikipedia.org/wiki/Panic_of_1873 https://en.m.wikipedia.org/wiki/Panic_of_1873 https://en.m.wikipedia.org/wiki/Panic_of_1884 https://en.m.wikipedia.org/wiki/Panic_of_1884 (bonus https://en.m.wikipedia.org/wiki/Depression_of_1882-85 https://en.m.wikipedia.org/wiki/Depression_of_1882-85) https://en.m.wikipedia.org/wiki/Panic_of_1893 https://en.m.wikipedia.org/wiki/Panic_of_1893 https://en.m.wikipedia.org/wiki/Panic_of_1896 https://en.m.wikipedia.org/wiki/Panic_of_1896
- erulabs 9y ago
  From the comment you're replying to: > Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too - crashes that happened before the federal reserve which were much worse than the 1929 crash, but which are forgotten to history because they didn't create Great Depressions Of course there were panics and corrections before the federal system - as rothbardrand mentioned, they didn't create events as bad as the depression. The "bonus" you mentioned lasts 3 years, where as the great depression: "started in 1929 and lasted until 1941" (src: https://en.wikipedia.org/wiki/Great_Depression https://en.wikipedia.org/wiki/Great_Depression). Note: "The Depression of 1882-85 was not inaugurated by financial disaster or mass panic, but was rather an economic downturn that came about through a protracted and gradual process". Compare that to https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 and tell me where the line between "market corrections" / "downturns" and "financial disaster" / "mass panic". But showing evidence is needless: the federal reserve _necessarily_ aggravates the business cycle by promoting mal-investment. This was Murray Rothbard's mentor Ludwig von Mises' great work "Human Action" (https://en.wikipedia.org/wiki/Human_Action https://en.wikipedia.org/wiki/Human_Action), specifically Chapter XX section 8, "The Monetary or Circulation Credit Theory of the Trade Cycle" - (full text is online here: https://mises.org/library/human-action-0/html/pp/818 https://mises.org/library/human-action-0/html/pp/818). One of the key tenants of Austrian economics and in particular the work of von Mises is that it is deductive from pure logic, rather than from experimental or statistical observations. Austrian economics is more akin to biology than psychology.

tim333 9y ago

Hmm... bubbles can also happen without central banking - think the original tulip bubble for example. Also not all bailouts are bad, for example the auto bailout was estimated to have saved ~380k jobs. And it wasn't the auto industry's fault the banking system went wonky. The system may not be perfect but it's not all bad.

mdpopescu 9y ago
The tulip bubble is mostly a myth. [1] [2] [1] https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/ https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... [2] https://medium.com/@adam_selene/tulips-and-other-myths-c7f69cf2b59d https://medium.com/@adam_selene/tulips-and-other-myths-c7f69...

samsonradu 9y ago

> First off, bubbles are a side effect of the money cycle which is created by central banking -- both the Dotcom and 2008 bubbles were created by the Fed selling money below cost, building a massive carry trade in, for instance, houses. I agree, though I think at the root it's created by people investing irrationally and the wisdom of crowds that comes with it. Part of that can be mitigated by good regulation. > Secondly, if there is a crash, the best thing to do is nothing. Let the people who invested poorly get wiped out-- it's better for the economy. This is quite a harsh and risky thing to say. It is the fair solution, however sentiment and trust plays a big role in economics. If big(ger) banks had failed back then it would have been much worse for everyone. > Bailouts are part of the game-- thats how they scam us. Bailouts don't protect us (that's the con.) I think the scam actually happens through the years prior to the bailout, when institutions close their eyes to the bubbling up of the economy. Once the crash moment is reached there is not much left to do. Thanks for the book reference, I have a very long flight tomorrow and I was actually looking for some books!

mcguire 9y ago

https://en.wikipedia.org/wiki/Panic_of_1819 https://en.wikipedia.org/wiki/Panic_of_1819 https://en.m.wikipedia.org/wiki/Panic_of_1837 https://en.m.wikipedia.org/wiki/Panic_of_1837 https://en.m.wikipedia.org/wiki/Panic_of_1857 https://en.m.wikipedia.org/wiki/Panic_of_1857 https://en.m.wikipedia.org/wiki/Panic_of_1873 https://en.m.wikipedia.org/wiki/Panic_of_1873 https://en.m.wikipedia.org/wiki/Panic_of_1884 https://en.m.wikipedia.org/wiki/Panic_of_1884 (bonus https://en.m.wikipedia.org/wiki/Depression_of_1882-85 https://en.m.wikipedia.org/wiki/Depression_of_1882-85) https://en.m.wikipedia.org/wiki/Panic_of_1893 https://en.m.wikipedia.org/wiki/Panic_of_1893 https://en.m.wikipedia.org/wiki/Panic_of_1896 https://en.m.wikipedia.org/wiki/Panic_of_1896

erulabs 9y ago
From the comment you're replying to: > Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too - crashes that happened before the federal reserve which were much worse than the 1929 crash, but which are forgotten to history because they didn't create Great Depressions Of course there were panics and corrections before the federal system - as rothbardrand mentioned, they didn't create events as bad as the depression. The "bonus" you mentioned lasts 3 years, where as the great depression: "started in 1929 and lasted until 1941" (src: https://en.wikipedia.org/wiki/Great_Depression https://en.wikipedia.org/wiki/Great_Depression). Note: "The Depression of 1882-85 was not inaugurated by financial disaster or mass panic, but was rather an economic downturn that came about through a protracted and gradual process". Compare that to https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 and tell me where the line between "market corrections" / "downturns" and "financial disaster" / "mass panic". But showing evidence is needless: the federal reserve _necessarily_ aggravates the business cycle by promoting mal-investment. This was Murray Rothbard's mentor Ludwig von Mises' great work "Human Action" (https://en.wikipedia.org/wiki/Human_Action https://en.wikipedia.org/wiki/Human_Action), specifically Chapter XX section 8, "The Monetary or Circulation Credit Theory of the Trade Cycle" - (full text is online here: https://mises.org/library/human-action-0/html/pp/818 https://mises.org/library/human-action-0/html/pp/818). One of the key tenants of Austrian economics and in particular the work of von Mises is that it is deductive from pure logic, rather than from experimental or statistical observations. Austrian economics is more akin to biology than psychology.