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0 pointsrothbardrand8y ago0 comments

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.

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mcguire8y ago

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_1857

https://en.m.wikipedia.org/wiki/Panic_of_1873

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/Panic_of_1893

https://en.m.wikipedia.org/wiki/Panic_of_1896

erulabs8y 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). 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 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), 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). 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.

mcguire8y ago

The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until 1843---6 years.

The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879 (1897 (!) in Britain)---6 years.

The 1882-1885 depression included a year when "an estimated 5% of all American factories and mines completely shuttered during the 12 months running from July 1, 1884, to July 1, 1885".

The panic of 1893 included a depression that extended to 1897, a couple of years with 12-14% unemployment, with peaks somewhere around 17-19% and 25% in Pennsylvania, 35% in New York, and 43% in Michigan, and included the panic of 1896.

Keep in mind two things: these occurred in the 19th century, when the United States was largely, perhaps almost completely an agrarian country, and that when banks fail (a common occurrence in many of these), you don't get your money back out.

The Great Depression is called that because it was the biggest, but it was hardly a completely new and unique thing.

[Now, as to Austrian economics, if "it is deductive from pure logic, rather than from experimental or statistical observations", I would think it had more in common with mathematics than either biology or psychology. Or perhaps alchemy.]

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tim3338y 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.

mdpopescu8y ago

The tulip bubble is mostly a myth. [1] [2]

[1] https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... [2] https://medium.com/@adam_selene/tulips-and-other-myths-c7f69...

samsonradu8y 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!

j / k navigate · click thread line to collapse

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mcguire8y ago

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_1857

https://en.m.wikipedia.org/wiki/Panic_of_1873

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/Panic_of_1893

https://en.m.wikipedia.org/wiki/Panic_of_1896

erulabs8y ago

From the comment you're replying to:

Of course there were panics and corrections before the federal system - as rothbardrand mentioned, they didn't create events as bad as the depression.

Compare that to 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".

mcguire8y ago

The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until 1843---6 years.

The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879 (1897 (!) in Britain)---6 years.

The 1882-1885 depression included a year when "an estimated 5% of all American factories and mines completely shuttered during the 12 months running from July 1, 1884, to July 1, 1885".

The Great Depression is called that because it was the biggest, but it was hardly a completely new and unique thing.

1 more reply

tim3338y ago

mdpopescu8y ago

The tulip bubble is mostly a myth. [1] [2]

[1] https://stratechery.com/2017/tulips-myths-and-cryptocurrenci... [2] https://medium.com/@adam_selene/tulips-and-other-myths-c7f69...

samsonradu8y ago

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.

> Bailouts are part of the game-- thats how they scam us. Bailouts don't protect us (that's the con.)

Thanks for the book reference, I have a very long flight tomorrow and I was actually looking for some books!

j / k navigate · click thread line to collapse