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At 9/27/08 11:38 PM, MortifiedPenguins wrote:

At 9/27/08 02:26 PM, Der-Lowe wrote:

At 9/27/08 11:42 AM, MortifiedPenguins wrote:

But the "invisible hand" does not work in the financial system, ergo, the Fed.

And didn't the fed screw up in now and in past history.

Yes, but in two times out of dozens; in times previous to the Fed bank crisis were systemic, leading to a sharp expansions and contractions of the money supply, which affected the real economy, and created exponentially wider business cycles. This is the flaw of Capitalism that institutions like the Fed helped to solve.

I like the idea of the FDIC, it's a good way to keep the money supply appear stable and it's especially good for inspiring confidence in the people.

But the interest rate is something that should float naturally, and as we have seen in this occasion and in past occasions can be kept unaturally deflated.

Greenspan screwed things up once during his whole term, give him a break.

At 10/1/08 07:42 PM, Der-Lowe wrote:

At 9/27/08 11:38 PM, MortifiedPenguins wrote:

At 9/27/08 02:26 PM, Der-Lowe wrote:

At 9/27/08 11:42 AM, MortifiedPenguins wrote:

Yes, but in two times out of dozens; in times previous to the Fed bank crisis were systemic, leading to a sharp expansions and contractions of the money supply, which affected the real economy, and created exponentially wider business cycles. This is the flaw of Capitalism that institutions like the Fed helped to solve.

Capitalism's flaws are what make it what it is.
Yes I know the business cycle can be a bitch and (unfortunatelly I hate saying this) but I'm not completely against the Fed. I like the idea of a centralized, as was in the first and secon Bank of the United States. I even like the idea of the FDIC. I just don't like the idea of artificially controlling the interest rate.

Greenspan screwed things up once during his whole term, give him a break.

I give him credit where credit is due. If he wants to talk about the wonders of free markets and the strenths of unregulated capitalism, then he shouldn't force the interest rate down to help keep up a housing boom that ran past it's natural course.

I mean, if a boom continues (as we saw) and people begin to build around it(as we saw), when the time comes for it to crash, it will be even more painfull.

New England (my local region) went through this before in the Savings and Loan crisis of the late 80's and it took to the late 90's for the region and the housing market to really recover. From what I'm seeing now, and with the sharp drop in housing rates around both Massachusetts and New England as a whole, it will be some time before they come back to stabilization.

It's on now,were already in trouble in jersey!!!

At 10/1/08 08:58 PM, MortifiedPenguins wrote:

At 10/1/08 07:42 PM, Der-Lowe wrote:

At 9/27/08 11:38 PM, MortifiedPenguins wrote:

At 9/27/08 02:26 PM, Der-Lowe wrote:

At 9/27/08 11:42 AM, MortifiedPenguins wrote:

Yes, but in two times out of dozens; in times previous to the Fed bank crisis were systemic, leading to a sharp expansions and contractions of the money supply, which affected the real economy, and created exponentially wider business cycles. This is the flaw of Capitalism that institutions like the Fed helped to solve.

Capitalism's flaws are what make it what it is.

During Introduction to Economics we had to write an essay on Economic History. It was an excellent opportuinity to deepen my knowledge in the trends that were obscure to me; ie Economics prior to Smith, the French schools, and Marxism.
Although many marxist views are known to be incorrect (as with Smith's) I discovered a quite interesting view, that flaws of capitalism. I have been meaning to make a thread about it, to counter the poor discussion on alternative economic systems that usually takes place here, in the form of "if u lieks it so muchz, move to cuba, commie!"

A first flaw is the historical contradiction between a social production system, and a private distribution one. I believe this has had a subtle solution: through increased taxing levels, ranging up to 60%, and through the publicly-available stock market (which in itself brings complications, due to failures in information), which make the most controversial payment to inputs, profits, to be more generally distributed.
The other flaw, which is the one that I wanted to talk about, is the excess supply the system creates, which has no demand to respond to. This creates recurring crisis, which in turn create social unrest, and as capitalism develops, the crisis get stronger, until one day a crisis will be reached that it'll be so severe that capitalism will end.
This trend was indeed correct until the development of economic policy's tools, which pointed to softening the business cycle.

Greenspan screwed things up once during his whole term, give him a break.

I give him credit where credit is due. If he wants to talk about the wonders of free markets and the strenths of unregulated capitalism, then he shouldn't force the interest rate down to help keep up a housing boom that ran past it's natural course.

I believe he made a gross, but understandable mistake, he was facing the WTC attack.
Although I sympathize with your region. I would also like to mention that you write very well making your posts are quite enjoyable.