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I don't see how you can be a libertarian these days while addressing the current financial crisis without presenting some kind of rebuttal to the commonly held

by jderick 18y ago

I don't see how you can be a libertarian these days while addressing the current financial crisis without presenting some kind of rebuttal to the commonly held view that it was the do nothing (aka libertarian) government that was responsible for prolonging the Great Depression. Also, the lack of regulation coming into the current crisis allowed banks to take on much more risk then they should have. Overall, it is not clear what solution this article is proposing.

kingkongrevenge 18y ago
I guess it's hard for those literate on the subject of the depression to realize anybody out there still fails to understand it was a direct product of Hoover and FDR's economic interventionism. Hoover's strong policy reaction to the crash and then the New Deal caused the Depression. It ended after the war because the government was forced to roll back much of the New Deal in order to win the war. Countries that did not much intervene after the initial financial crash recovered in the space of a few years. The decade long depression was more of an American phenomenon caused by FDR.
davidw 18y ago
> what solution this article is proposing. If it's on reason.com, you don't even have to look at the article. The answer will always be "less government, more free market". They're boringly and religiously predictable, just like some people on the left always call for "the government" to step in and (magically?) fix everything. I think neither one is particularly intellectually stimulating and the ensuing debates have been acted out a million times on the internet.
- pg 18y ago
  Are they mistaken in this case?
  - davidw 18y ago
    Anyone who says they know exactly what went wrong with the current crisis and exactly how it should have been done is full of it, IMO. I think it will be years before all the facts have been digested enough to get a good idea of what really happened. The best thing I've seen so far is this: http://www.marginalrevolution.com/marginalrevolution/2008/10/my-views-on-the.html http://www.marginalrevolution.com/marginalrevolution/2008/10... One inconvenient discussion the article leaves out is anything related to this: "8. The critical deregulatory mistake was allowing excess leverage. Many deregulations get blamed but in fact contributed little to the problem." They mention it with fannie and freddy, but don't mention it at all with regards to the big investment banks, which got an ok from the SEC to increase their leverage. I don't doubt that bad regulations played a role in the problems, but attributing all the problems to the government strikes me as being simplistic, and an argument based more on faith than facts. Which was my original point about reason.com.
    - kingkongrevenge 18y ago
      > Anyone who says they know exactly what went wrong with the current crisis The primary cause boils down to monetary policy. Financial panics are not new. There have been many, and they were all caused by credit bubbles. Regulatory details and the exact nature of the scams run during the bubble are quite secondary.
      - byrneseyeview 18y ago
        I have heard this a lot, and I'd like the other side to chime in: have there been any bubbles that happened while interest rates and the money supply were generally decreasing? Lots of people dismiss your view, but such a bubble would be strong evidence that they're actually right.
    - ckinnan 18y ago
      >>which got an ok from the SEC to increase their leverage. Agreed. But it isn't "deregulation" to give only the 5 largest investment banks (which were systemically important) an exemption to leverage rules governing all other banks -- that's regulatory corruption. Also, the private i-banks levered up to 30-1, but fannie and freddie went to 130-1 (they may be actually be more leveraged now that they are under government control). And the Federal Reserve is levered over 55-1 today.
Prrometheus 18y ago
The case has been made, many times, by many economists of a variety of political leanings. Don't forget that the longest and deepest depression in US history was accompanied by the largest expansion of government power in US history, which was ineffective. FDR greeted a collapse in the money supply with measures designed to keep the price of labor and food high. Unsurprisingly, shortages in jobs and food lasted a long time. In my experience, most people that think FDR "saved us" from the Great Depression got a history education from government schools and never studied Economics. The "do-nothing" Hoover administration was also very activist, to boot.

by jderick 18y ago

kingkongrevenge 18y ago

I guess it's hard for those literate on the subject of the depression to realize anybody out there still fails to understand it was a direct product of Hoover and FDR's economic interventionism. Hoover's strong policy reaction to the crash and then the New Deal caused the Depression. It ended after the war because the government was forced to roll back much of the New Deal in order to win the war. Countries that did not much intervene after the initial financial crash recovered in the space of a few years. The decade long depression was more of an American phenomenon caused by FDR.

davidw 18y ago

> what solution this article is proposing. If it's on reason.com, you don't even have to look at the article. The answer will always be "less government, more free market". They're boringly and religiously predictable, just like some people on the left always call for "the government" to step in and (magically?) fix everything. I think neither one is particularly intellectually stimulating and the ensuing debates have been acted out a million times on the internet.

pg 18y ago
Are they mistaken in this case?
- davidw 18y ago
  Anyone who says they know exactly what went wrong with the current crisis and exactly how it should have been done is full of it, IMO. I think it will be years before all the facts have been digested enough to get a good idea of what really happened. The best thing I've seen so far is this: http://www.marginalrevolution.com/marginalrevolution/2008/10/my-views-on-the.html http://www.marginalrevolution.com/marginalrevolution/2008/10... One inconvenient discussion the article leaves out is anything related to this: "8. The critical deregulatory mistake was allowing excess leverage. Many deregulations get blamed but in fact contributed little to the problem." They mention it with fannie and freddy, but don't mention it at all with regards to the big investment banks, which got an ok from the SEC to increase their leverage. I don't doubt that bad regulations played a role in the problems, but attributing all the problems to the government strikes me as being simplistic, and an argument based more on faith than facts. Which was my original point about reason.com.
  - kingkongrevenge 18y ago
    > Anyone who says they know exactly what went wrong with the current crisis The primary cause boils down to monetary policy. Financial panics are not new. There have been many, and they were all caused by credit bubbles. Regulatory details and the exact nature of the scams run during the bubble are quite secondary.
    - byrneseyeview 18y ago
      I have heard this a lot, and I'd like the other side to chime in: have there been any bubbles that happened while interest rates and the money supply were generally decreasing? Lots of people dismiss your view, but such a bubble would be strong evidence that they're actually right.
  - ckinnan 18y ago
    >>which got an ok from the SEC to increase their leverage. Agreed. But it isn't "deregulation" to give only the 5 largest investment banks (which were systemically important) an exemption to leverage rules governing all other banks -- that's regulatory corruption. Also, the private i-banks levered up to 30-1, but fannie and freddie went to 130-1 (they may be actually be more leveraged now that they are under government control). And the Federal Reserve is levered over 55-1 today.

Prrometheus 18y ago

The case has been made, many times, by many economists of a variety of political leanings. Don't forget that the longest and deepest depression in US history was accompanied by the largest expansion of government power in US history, which was ineffective. FDR greeted a collapse in the money supply with measures designed to keep the price of labor and food high. Unsurprisingly, shortages in jobs and food lasted a long time. In my experience, most people that think FDR "saved us" from the Great Depression got a history education from government schools and never studied Economics. The "do-nothing" Hoover administration was also very activist, to boot.