Galbraith: "By affirming solemnly that prosperity will continue, it is believed, one can help insure that prosperity will i fact continue. Especially among businessmen the faith in the efficiency of such incantation is very great."
― a 'catch-all', almost humorous, 'Jeez' quality (Alfred, Lord Sotosyn), Wednesday, 17 August 2011 17:30 (twelve years ago) link
and perversely, the riskier the loan the more money could be obtained by trading it! investment banks started heaping enormous pressure on their staff to find better "yields" on assets they traded - risky loans offered just that. the banks thought they could contain the risk with a lot of fancy footwork, and they had computer models that reassured them, and besides, the housing market was just steamrollering through everything and had been for years...
ok i don't understand this post. what is an "asset" in this context?
really have to leave house now and haven't taken in anything after that but when i was in the shower it also occurred to me, what is this talk of quantifying and measuring risk? you can't do that. it's like confidence. it's unpredictable. measuring it seems like a fool's game.
― lex pretend, Wednesday, 17 August 2011 17:30 (twelve years ago) link
interest rates. i don't understand those either. i remember trying to learn about them at university but my brain is just going BUHHHH?
― lex pretend, Wednesday, 17 August 2011 17:31 (twelve years ago) link
you guys need to spend more time explaining the basic concepts - until he gets what 'money'/'gdp'/etc really means you're gonna be talking over him
― iatee, Wednesday, 17 August 2011 17:34 (twelve years ago) link
what is this talk of quantifying and measuring risk? you can't do that. it's like confidence. it's unpredictable. measuring it seems like a fool's game.
haha risk is super calculable! its like the basis of financial economics! its just calculating probabilities! i dont know why im so exclamatory about this!
― Monstrous TumTum (Lamp), Wednesday, 17 August 2011 17:34 (twelve years ago) link
i'm not comfortable with how every post in this thread ends with "but it might not be true, in face someone else argues the opposite". how are we meant to work out which is right.
― lex pretend, Wednesday, 17 August 2011 17:34 (twelve years ago) link
i am not gonna forget that i owe you a fist in the face
― lex pretend, Wednesday, 17 August 2011 17:35 (twelve years ago) link
quantifying risk = predicting the future????
― lex pretend, Wednesday, 17 August 2011 17:36 (twelve years ago) link
i dunno if this is what lamp is getting at, but the different schools of thought regarding macroeconomic analysis are really just as much about competing political agendas and beliefs. Keynesianism in its various forms takes the view that strong fiscal policy ... and by extension, a more "activist" government at least in terms of taxing and spending ... is the key to recovery from economic downturns. Monetarism and the various forms of neoclassical economics largely eschews "activist" fiscal policy and instead espouses the more "passive" approach of manipulating interest rates and money supply (which appeals to the folks who either on principle don't like a more activist government or who would be negatively affected by robust fiscal policy).
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:36 (twelve years ago) link
Re: quantifying risk. It can be done in the same way that an actuary can set rates for your life insurance without knowing when or how you'll die. It comes down to statistics and finding meaningful correlations. Since there are endless variables to play around with, everyone is looking for a better set of correlations that nobody's considered yet, just like gamblers looking for a system to beat the house.
― Aimless, Wednesday, 17 August 2011 17:37 (twelve years ago) link
essentially yes. and this is what insurance companies are in the business of doing (and have been doing for centuries now).
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:37 (twelve years ago) link
of course, insurance companies can get it wrong too ... which is why you have reinsurance companies (the insurance company's insurance company, to oversimplify things).
lex that was not meant to be an insult I am pretty sure that you don't know what 'money' refers to in the sense people are using it here
― iatee, Wednesday, 17 August 2011 17:38 (twelve years ago) link
(the large majority of people don't / it's not common sense)
― iatee, Wednesday, 17 August 2011 17:40 (twelve years ago) link
this is true - the question before "economics?" should be "what is money?"!
― post, Wednesday, 17 August 2011 17:41 (twelve years ago) link
Also this is why the thing about "paying back the debt" is a fiction because paying debt removes money from an economy - less money to spend, less goods, less jobs - that saving and paying down debt which is so good on an individual level is not good on a national level - this is why things like stimuli happen - people dont have the confidence to spend and save instead, so govt does some spending for them
― post, Wednesday, 17 August 2011 17:43 (twelve years ago) link
fewer, not less. sorry everyone!
― post, Wednesday, 17 August 2011 17:44 (twelve years ago) link
two workable definitions of the concept of "velocity of money," which may be useful in understanding fiscal and monetary policy.
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:46 (twelve years ago) link
which goes back to the criticism of "spending what we haven't earned" - which is a ludicrous criticism, thats the way money works! Its borrowed into existence, you have to spend it before you earn it by definition
― post, Wednesday, 17 August 2011 17:46 (twelve years ago) link
http://ecx.images-amazon.com/images/I/51pqEtjrgtL._SL500_AA300_.jpg
the other book i recommended -- by sebastian nokes -- spends the first chapter explaining what an asset is: and also explaining why other definitions you will find used are SILLY RUBBISH spouted by MADMEN AND THIEVES (he doesn't quite put it like that) (sadly)
― mark s, Wednesday, 17 August 2011 17:48 (twelve years ago) link
that's also why it is so hard for folks inclined to Keynesianism and strong fiscal policy have such a hard time convincing the lay public about the advantages of their proposed programs. on its face, it flies against "common sense" -- i.e., that in bad times one does not waste money, pays down debts and saves more. this is where all of this talk about "the government needs to balance its checkbook!" comes from and from which such rhetoric derives its strength. the GOP has made much political hay (and caused much economic damage) by using this misleading analysis (it is misleading because the government isn't a "household," and even in bad times households do take on increased debt [to pay for education or economically-productive products like computer software]).
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:51 (twelve years ago) link
overall we need an economy thats not based on everyone buying big screen tvs every month
― I love obscure members of the Athrotheiria mammal genus and... (Latham Green), Wednesday, 17 August 2011 17:51 (twelve years ago) link
if we're going to peddle cliches here, then a good one to think about is the cliche "you have to spend money to make money."
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:52 (twelve years ago) link
I think better to say "you have to take money to make money"
― I love obscure members of the Athrotheiria mammal genus and... (Latham Green), Wednesday, 17 August 2011 17:53 (twelve years ago) link
latham green weirdly otm
― iatee, Wednesday, 17 August 2011 17:53 (twelve years ago) link
and if we're NOT going to peddle cliches, i recommend my claim about teleportation, which i suggest is a first here or anywhere else
― mark s, Wednesday, 17 August 2011 17:53 (twelve years ago) link
w/ the tv comment only
― iatee, Wednesday, 17 August 2011 17:54 (twelve years ago) link
think about it, everyone buys a hosue that is way over-valued in 2006, mortgage brokers sell the mortgages and make money - banks end up with a loss when reality comes back to the houseing market and so do many homeowners, but the mortgage brokers keep their money! They pretty much just took it from the other two
― I love obscure members of the Athrotheiria mammal genus and... (Latham Green), Wednesday, 17 August 2011 17:55 (twelve years ago) link
i think we'd be in better shape if we made TVs in the USA instead of relying on TVs made in China ... but that's another (though related) argument.
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:56 (twelve years ago) link
physically, for sure
― iatee, Wednesday, 17 August 2011 17:57 (twelve years ago) link
well, there is such a thing as a "class action lawsuit" ... and if we had a Supreme Court and state attorneys general that haven't done as much as it can to limit the effectiveness of class action suits then litigants could more easily claw back this money.
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 17:57 (twelve years ago) link
This is a blog that I like to read to get some idea of how macro-economists think:
http://www.themoneyillusion.com/
Caveat emptor: I think the author is kind of a libertarian - but at least not a boring, doctrinaire one.
― o. nate, Wednesday, 17 August 2011 18:01 (twelve years ago) link
how are we meant to work out which is right.
― lex pretend, Wednesday, August 17, 2011 5:34 PM (20 minutes ago) Bookmark
competing ideologically motivated interpretations of the same periods of history don't help either
― BIG HOOS aka the steendriver, Wednesday, 17 August 2011 18:02 (twelve years ago) link
haha i think my first undergrad econ course actually had like a chapter 1 segment on 'what is money' that also probably featured the term 'fiat money' lol
also is galbraith really widely read in england weird to see him rec'd here so much
― Monstrous TumTum (Lamp), Wednesday, 17 August 2011 18:04 (twelve years ago) link
thats not gonna set lex in the right path
― iatee, Wednesday, 17 August 2011 18:06 (twelve years ago) link
galbraith got penguined i think
― thomp, Wednesday, 17 August 2011 18:07 (twelve years ago) link
NO! JKG is not widely enough read he us VERY FUNNY unlike every other economist ever (except marx obv) (and veblen, who's a sociologist really).
Also this arose bcz Lex was o_O at a piece by jamie g.
― mark s, Wednesday, 17 August 2011 18:08 (twelve years ago) link
"fiat money" is a real term and a real thing (and a pretty good thing IMHO). it's the people who rant about the "evils" of fiat money (almost always goldbugs or other fringe wackos) that gives discussions about it its particular repute.
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 18:08 (twelve years ago) link
Yeah i don't quite understand this antipathy to the usage of the term - just because some people rant about it. Doesn't mean the term is incorrect
― post, Wednesday, 17 August 2011 18:12 (twelve years ago) link
one of the weird things about the current political landscape is watching conservative politicians rail against the fed + monetary policy since a) monetary policy solutions are in my mind the purview of neoclassical economics/the right and b) it seems based on a tremendous misunderstanding of the economics of money (although not, weirdly, the semiotics of money!)
wellllll
― Monstrous TumTum (Lamp), Wednesday, 17 August 2011 18:13 (twelve years ago) link
(apart from certain branches of cultural theory but at some point i realised those were total bollocks anyway and stopped beating myself up over it.)
same is true of much economics, no?
basically came here to say this
― that mellow wash of meh (Shakey Mo Collier), Wednesday, 17 August 2011 18:14 (twelve years ago) link
IIRC, the term "fiat money" is a reference to the latin Vulgate Bible, where God, in Genesis says, "Fiat lux" (meaning fairly literally "I command light" or as the KJV has it, "Let there be light"). At which point in the creaton of the universe, light came into existance, where before there was no light. Pretty clever allusion, if you ask me.
― Aimless, Wednesday, 17 August 2011 18:15 (twelve years ago) link
its weird to think as someone pointed out to me the other day all money really is today is numbers in a database
― I love obscure members of the Athrotheiria mammal genus and... (Latham Green), Wednesday, 17 August 2011 18:20 (twelve years ago) link
But modern US "conservatism" has inherited lot of Andrew Jackson's anti-centralism, hasn't it? The issue of greenbacks and the Fed, are both actually Republican creations: but they're not at all conservative in the strict sense -- they were innovations -- and in the anti-centralist Jacksonian sense.
God knows US politics is a baffling switchback ride: pirates vs accountants is the underlying dynamic, but both exist on all wings of politics.
― mark s, Wednesday, 17 August 2011 18:20 (twelve years ago) link
Yes, but they are very heavily scrutinized and controlled numbers.
― Aimless, Wednesday, 17 August 2011 18:21 (twelve years ago) link
fiat money is currency that is backed by the full faith and credit of a government, and not (explicitly) by the government's reserves of a commodity (such as gold or silver). this is overall a good thing b/c it doesn't artificially retard economic growth and planning by pegging currency values on the value or availability of a given commodity. its drawback is that, yes, a government in a bind can turn on its printing press and spew out money like there's no tomorrow (like Weimar Germany). i think that the pluses outweigh the minuses, but some folks don't agree. such folks have lots bats in the belfry IMHO, one of them an overriding fear of "big government." by constricting the supply of money, they constrict the growth of government.
― Friedrich das Wunderhahn hat den traurigen Clownporn sehr gern (Eisbaer), Wednesday, 17 August 2011 18:23 (twelve years ago) link
human history is pretty well littered with examples of why tying money to a commodity is a bad idea
― that mellow wash of meh (Shakey Mo Collier), Wednesday, 17 August 2011 18:25 (twelve years ago) link
certainly it's very hard to exchange a commodity for money if the money is tied to the commodity
― mark s, Wednesday, 17 August 2011 18:26 (twelve years ago) link
That's one reason why gold was such a good choice in the dim ages past. Not only is it a stable element that can't oxidize, but it's pretty damn useless for anything but looking pretty, so making it awkward as a useful commodity was no sacrifice.
― Aimless, Wednesday, 17 August 2011 18:29 (twelve years ago) link
you all forget BITCOINS!!!!!
― I love obscure members of the Athrotheiria mammal genus and... (Latham Green), Wednesday, 17 August 2011 18:31 (twelve years ago) link