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I'm a libertarian and I love the free market and pure capitalism. OTOH, the great depression made a strong case for an intervention by governments at the macro

by guylhem 14y ago

I'm a libertarian and I love the free market and pure capitalism. OTOH, the great depression made a strong case for an intervention by governments at the macroeconomic scale - if only to smooth out bumps that could certainly sort themselves out in the long run, but which could still be uselessly painful for tens of years. Fiscal policy is IMHO wrong, but monetary policy is not that damaging, especially since it doesn't do much damage to real assets (like say gold)

bswap0 14y ago
I agree wholeheartedly. Strong monetary policy is essential to maintaining a strong economy. In the case of deflation, the Federal Reserve expands the money supply to counteract disincentive to invest. Unfortunately, the Fed often overshoots and ends up causing inflation instead since it's very hard to predict exactly how much is necessary. The Fed's job is not to pick winners and losers; it's just to keep the monetary base stable so that individuals can make investments without having to anticipate changes in the value of the currency.
arthurrr 14y ago
Often, people will defer to an "expert", who they assume knows more about a subject than they do. However, in many cases, and especially in economics, the expert thinks he knows something to be true, but it turns out that what he knows completely wrong, but he has invested his entire life building knowledge on top of bad knowledge, so he is not willing change his mind. A person who knows something that is wrong is much more dangerous than a person who knows nothing. Then what happens is that the expert will say something, and people will accept it as truth, because after all, he is an expert. And then it goes viral. All of a sudden, everything thinks something is true, even though it is completely false. Then entire books are written. An entire field called economics is created. Universities teach economics using these books that are based on incorrect assumptions. An entire generation of people build their knowledge on top of these false assumptions. And the cycle repeats, perpetually. I'm convinced that the entire foundation of economic thought is wrong, and that the entire field of economics contributes negatively towards humanity. Regarding the great depression, you can make the argument that government intervention in fact created and prolonged the great depression. You'll never really know, because you can't go back in time and run the experiment again. If you don't understand how something works, it's probably best to leave it alone, rather than try to fix it.
bennesvig 14y ago
The government helped create and prolong the great depression, from my understanding. Great book on the subject: http://www.amazon.com/FDRs-Folly-Roosevelt-Depression-ebook/dp/B000XUBEL6/ http://www.amazon.com/FDRs-Folly-Roosevelt-Depression-ebook/... "As already noted, major factors bringing on the Great Depression were the severe monetary contraction that the Federal Reserve presided over, unit banking laws that made it almost impossible for small-town banks to diversify their portfolios, high-wage policies that made it more expensive for employers to hire people, the 1930 Smoot-Hawley tariff that throttled trade, and the 1932 tax hikes that took money out of people’s pockets."
- sageikosa 14y ago
  Banking, education and healthcare: all too important to be left in the hands of government, if for no other reason than they are too important to each individual to be left to the whims and ignorance of the general electorate and/or their representatives.

by guylhem 14y ago

bswap0 14y ago

I agree wholeheartedly. Strong monetary policy is essential to maintaining a strong economy. In the case of deflation, the Federal Reserve expands the money supply to counteract disincentive to invest. Unfortunately, the Fed often overshoots and ends up causing inflation instead since it's very hard to predict exactly how much is necessary. The Fed's job is not to pick winners and losers; it's just to keep the monetary base stable so that individuals can make investments without having to anticipate changes in the value of the currency.

arthurrr 14y ago

Often, people will defer to an "expert", who they assume knows more about a subject than they do. However, in many cases, and especially in economics, the expert thinks he knows something to be true, but it turns out that what he knows completely wrong, but he has invested his entire life building knowledge on top of bad knowledge, so he is not willing change his mind. A person who knows something that is wrong is much more dangerous than a person who knows nothing. Then what happens is that the expert will say something, and people will accept it as truth, because after all, he is an expert. And then it goes viral. All of a sudden, everything thinks something is true, even though it is completely false. Then entire books are written. An entire field called economics is created. Universities teach economics using these books that are based on incorrect assumptions. An entire generation of people build their knowledge on top of these false assumptions. And the cycle repeats, perpetually. I'm convinced that the entire foundation of economic thought is wrong, and that the entire field of economics contributes negatively towards humanity. Regarding the great depression, you can make the argument that government intervention in fact created and prolonged the great depression. You'll never really know, because you can't go back in time and run the experiment again. If you don't understand how something works, it's probably best to leave it alone, rather than try to fix it.

bennesvig 14y ago

The government helped create and prolong the great depression, from my understanding. Great book on the subject: http://www.amazon.com/FDRs-Folly-Roosevelt-Depression-ebook/dp/B000XUBEL6/ http://www.amazon.com/FDRs-Folly-Roosevelt-Depression-ebook/... "As already noted, major factors bringing on the Great Depression were the severe monetary contraction that the Federal Reserve presided over, unit banking laws that made it almost impossible for small-town banks to diversify their portfolios, high-wage policies that made it more expensive for employers to hire people, the 1930 Smoot-Hawley tariff that throttled trade, and the 1932 tax hikes that took money out of people’s pockets."

sageikosa 14y ago
Banking, education and healthcare: all too important to be left in the hands of government, if for no other reason than they are too important to each individual to be left to the whims and ignorance of the general electorate and/or their representatives.