Libertarians: You fire fighter lovers sure are good at debate!

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jrodefeld: Sep 22, 2012; by Shine

I thought this article by David Stockman is relevent to this discussion. He explains how the creation of the Fed and our foolhardy decision to get involved in World War 1 (fueled by fiat money creation) set the stage for a century of constant war and the Great Depression of the 1930s.

quote:

One hundred years ago today the world was shook loose of its moorings. Every school boy knows that the assassination of the archduke of Austria at Sarajevo was the trigger that incited the bloody, destructive conflagration of the world�s nations known as the Great War. But this senseless eruption of unprecedented industrial state violence did not end with the armistice four years later.

In fact, 1914 is the fulcrum of modern history. It is the year the Fed opened-up for business just as the carnage in northern France closed-down the prior magnificent half-century era of liberal internationalism and honest gold-backed money. So it was the Great War�s terrible aftermath��a century of drift toward statism, militarism and fiat money�-that was actually triggered by the events at Sarajevo.

Unfortunately, modern historiography wants to keep the Great War sequestered in a four-year span of archival curiosities about battles, mustard gas and monuments to the fallen. But the opposite historiography is more nearly the truth. The assassins at Sarajevo triggered the very warp and woof of the hundred years which followed.

The Great War was self-evidently an epochal calamity, especially for the 20 million combatants and civilians who perished for no reason that is discernible in any fair reading of history, or even unfair one. Yet the far greater calamity is that Europe�s senseless fratricide of 1914-1918 gave birth to all the great evils of the 20th century� the Great Depression, totalitarian genocides, Keynesian economics, permanent warfare states, rampaging central banks and the exceptionalist-rooted follies of America�s global imperialism.
Indeed, in Old Testament fashion, one begat the next and the next and still the next. This chain of calamity originated in the Great War�s destruction of sound money, that is, in the post-war demise of the pound sterling which previously had not experienced a peacetime change in its gold content for nearly two hundred years.

Not unreasonably, the world�s financial system had become anchored on the London money markets where the other currencies traded at fixed exchange rates to the rock steady pound sterling�which, in turn, meant that prices and wages throughout Europe were expressed in common money and tended toward transparency and equilibrium.

This liberal international economic order�that is, honest money, relatively free trade, rising international capital flows and rapidly growing global economic integration�-resulted in a 40-year span between 1870 and 1914 of rising living standards, stable prices, massive capital investment and prolific technological progress that was never equaled�either before or since.

During intervals of war, of course, 19th century governments had usually suspended gold convertibility and open trade in the heat of combat. But when the cannons fell silent, they had also endured the trauma of post-war depression until wartime debts had been liquidated and inflationary currency expedients had been wrung out of the circulation. This was called �resumption� and restoring convertibility at the peacetime parities was the great challenge of post-war normalizations.

The Great War, however, involved a scale of total industrial mobilization and financial mayhem that was unlike any that had gone before. In the case of Great Britain, for example, its national debt increased 14-fold, its price level doubled, its capital stock was depleted, most off-shore investments were liquidated and universal wartime conscription left it with a massive overhang of human and financial liabilities.

Yet England was the least devastated. In France, the price level inflated by 300 percent, its extensive Russian investments were confiscated by the Bolsheviks and its debts in New York and London catapulted to more than 100 percent of GDP.

Among the defeated powers, currencies emerged nearly worthless with the German mark at five cents on the pre-war dollar, while wartime debts�especially after the Carthaginian peace of Versailles��soared to crushing, unrepayable heights.

In short, the bow-wave of debt, currency inflation and financial disorder from the Great War was so immense and unprecedented that the classical project of post-war liquidation and �resumption� of convertibility was destined to fail. In fact, the 1920s were a grinding, sometimes inspired but eventually failed struggle to resume the international gold standard, fixed parities, open world trade and unrestricted international capital flows.
Only in the final demise of these efforts after 1929 did the Great Depression, which had been lurking all along in the post-war shadows, come bounding onto the stage of history.

America�s Needless Intervention In The Great War And The Ensuing Chain of 20th Century Calamities

The Great Depression�s tardy, thoroughly misunderstood and deeply traumatic arrival happened compliments of the United States. In the first place, America�s wholly unwarranted intervention in April 1917 prolonged the slaughter, doubled the financial due bill and generated a cockamamie peace, giving rise to totalitarianism among the defeated powers and Keynesianism among the victors. Choose your poison.

Even conventional historians like Niall Ferguson admit as much. Had Woodrow Wilson not misled America on a messianic crusade, the Great War would have ended in mutual exhaustion in 1917 and both sides would have gone home battered and bankrupt but no danger to the rest of mankind. Indeed, absent Wilson�s crusade there would have been no allied victory, no punitive peace, and no war reparations; nor would there have been a Leninist coup in Petrograd or Stalin�s barbaric regime.

Likewise, Churchill�s starvation blockade would not have devastated post-Armistice Germany, nor would there have been the humiliating signing of the war guilt clause by German officials at Versailles. And the subsequent financial chaos of 1919-1923 would not have happened either�-meaning no �stab in the back� myth, no Hitler, no Nazi dystopia, no Munich, no Sudetenland and Danzig corridor crises, no British war to save Poland, no final solution and holocaust, no global war against Germany and Japan and no incineration of 200,000 civilians at Hiroshima and Nagasaki.

Nor would there have followed a Cold War with the Soviets or CIA sponsored coups and assassinations in Iran, Guatemala, Indonesia, Brazil, Chile and the Congo, to name a few. Surely there would have been no CIA plot to assassinate Castro, or Russian missiles in Cuba or a crisis that took the world to the brink of annihilation. There would have been no Dulles brothers, no domino theory and no Vietnam slaughter, either.

Nor would we have launched Charlie Wilson�s War to arouse the mujahedeen and train the future al Qaeda. Likewise, there would have been no shah and his Savak terror, no Khomeini-led Islamic counter-revolution, no US aid to enable Saddam�s gas attacks on Iranian boy soldiers in the 1980s.

Nor would there have been an American invasion of Arabia in 1991 to stop our erstwhile ally Hussein from looting the equally contemptible Emir of Kuwait�s ill-gotten oil plunder�or, alas, the horrific 9/11 blowback a decade later.

Most surely, the axis-of-evil�-that is, the Washington-based Cheney-Rumsfeld-neocon axis�- would not have arisen, nor would it have foisted a $1 trillion Warfare State budget on 21st century America.

The 1914-1929 Boom Was An Artifact of War And Central Banking

A second crucial point is that the Great War enabled the already rising American economy to boom and bloat in an entirely artificial and unsustainable manner for the better part of 15 years. The exigencies of war finance also transformed the nascent Federal Reserve into an incipient central banking monster in a manner wholly opposite to the intentions of its great legislative architect�the incomparable Carter Glass of Virginia.

During the Great War America became the granary and arsenal to the European Allies�-triggering an eruption of domestic investment and production that transformed the nation into a massive global creditor and powerhouse exporter virtually overnight.

American farm exports quadrupled, farm income surged from $3 billion to $9 billion, land prices soared, country banks proliferated like locusts and the same was true of industry. Steel production, for example, rose from 30 million tons annually to nearly 50 million tons during the war.

Altogether, in six short years $40 billion of money GDP became $92 billion in 1920�a sizzling 15 percent annual rate of gain.

Needless to say, these fantastic figures reflected an inflationary, war-swollen economy�-a phenomena that prudent finance men of the age knew was wholly artificial and destined for a thumping post-war depression. This was especially so because America had loaned the Allies massive amounts of money to purchase grain, pork, wool, steel, munitions and ships. This transfer amounted to nearly 15 percent of GDP or $2 trillion equivalent in today�s economy, but it also amounted to a form of vendor finance that was destined to vanish at war�s end.

Carter Glass� Bankers� Bank: The Antithesis Of Monetary Central Planning

As it happened, the nation did experience a brief but deep recession in 1920, but this did not represent a thorough-going end-of-war �de-tox� of the historical variety. The reason is that America�s newly erected Warfare State had hijacked Carter Glass �banker�s bank� to finance Wilson�s crusade.

Here�s the crucial background: When Congress acted on Christmas Eve 1913, just six months before Archduke Ferdinand�s assassination, it had provided no legal authority whatsoever for the Fed to buy government bonds or undertake so-called �open market operations� to finance the public debt. In part this was due to the fact that there were precious few Federal bonds to buy. The public debt then stood at just $1.5 billion, which is the same figure that had pertained 51 years earlier at the battle of Gettysburg, and amounted to just 4 percent of GDP or $11 per capita.

Thus, in an age of balanced budgets and bipartisan fiscal rectitude, the Fed�s legislative architects had not even considered the possibility of central bank monetization of the public debt, and, in any event, had a totally different mission in mind.

The new Fed system was to operate decentralized �reserve banks� in 12 regions�most of them far from Wall Street in places like San Francisco, Dallas, Kansas City and Cleveland. Their job was to provide a passive �rediscount window� where national banks within each region could bring sound, self-liquidating commercial notes and receivables to post as collateral in return for cash to meet depositor withdrawals or to maintain an approximate 15 percent cash reserve.

Accordingly, the assets of the 12 reserve banks were to consist entirely of short-term commercial paper arising out of the ebb and flow of commerce and trade on the free market, not the debt emissions of Washington. In this context, the humble task of the reserve banks was to don green eyeshades and examine the commercial collateral brought by member banks, not to grandly manage the macro economy through targets for interest rates, money growth or credit expansion�to say nothing of targeting jobs, GDP, housing starts or the Russell 2000, as per today�s fashion.

Even the rediscount rate charged to member banks for cash loans was to float at a penalty spread above money market rates set by supply and demand for funds on the free market.

The big point here is that Carter Glass� �banker�s bank� was an instrument of the market, not an agency of state policy. The so-called economic aggregates of the later Keynesian models�-GDP, employment, consumption and investment�were to remain an unmanaged outcome on the free market, reflecting the interaction of millions of producers, consumers, savers, investors, entrepreneurs and even speculators.

In short, the Fed as �banker�s bank� had no dog in the GDP hunt. Its narrow banking system liquidity mission would not vary whether the aggregates were growing at 3 percent or contracting at 3 percent.

What would vary dramatically, however, was the free market interest rate in response to shifts in the demand for loans or supply of savings. In general this meant that investment booms and speculative bubbles were self-limiting: When the demand for credit sharply out-ran the community�s savings pool, interest rates would soar�thereby rationing demand and inducing higher cash savings out of current income.

This market clearing function of money market interest rates was especially crucial with respect to leveraged financial speculation�such as margin trading in the stock market. Indeed, the panic of 1907 had powerfully demonstrated that when speculative bubbles built up a powerful head of steam the free market had a ready cure.

In that pre-Fed episode, money market rates soared to 20, 30 and even 90 percent at the peak of the bubble. In short order, of course, speculators in copper, real estate, railroads, trust banks and all manner of over-hyped stock were carried out on their shields�-even as JPMorgan�s men, who were gathered as a de facto central bank in his library on Madison Avenue, selectively rescued only the solvent banks with their own money at-risk.

Needless to say, these very same free market interest rates were a mortal enemy of deficit finance because they rationed the supply of savings to the highest bidder. Thus, the ancient republican moral verity of balanced budgets was powerfully reinforced by the visible hand of rising interest rates: deficit spending by the public sector automatically and quickly crowded out borrowing by private households and business.

How The Bankers� Bank Got Hijacked To Fund War Bonds

And this brings us to the Rubicon of modern Warfare State finance. During World War I the US public debt rose from $1.5 billion to $27 billion�an eruption that would have been virtually impossible without wartime amendments which allowed the Fed to own or finance U.S. Treasury debt. These �emergency� amendments�it�s always an emergency in wartime�enabled a fiscal scheme that was ingenious, but turned the Fed�s modus operandi upside down and paved the way for today�s monetary central planning.

As is well known, the Wilson war crusaders conducted massive nationwide campaigns to sell Liberty Bonds to the patriotic masses. What is far less understood is that Uncle Sam�s bond drives were the original case of no savings? No credit? No problem!

What happened was that every national bank in America conducted a land office business advancing loans for virtually 100 percent of the war bond purchase price�with such loans collateralized by Uncle Sam�s guarantee. Accordingly, any patriotic American with enough pulse to sign the loan papers could buy some Liberty Bonds.

And where did the commercial banks obtain the billions they loaned out to patriotic citizens to buy Liberty Bonds? Why the Federal Reserve banks opened their discount loan windows to the now eligible collateral of war bonds.

Additionally, Washington pegged the rates on these loans below the rates on its treasury bonds, thereby providing a no-brainer arbitrage profit to bankers.

Through this backdoor maneuver, the war debt was thus massively monetized. Washington learned that it could unplug the free market interest rate in favor of state administered prices for money, and that credit could be massively expanded without the inconvenience of higher savings out of deferred consumption. Effectively, Washington financed Woodrow Wilson�s crusade with its newly discovered printing press�-turning the innocent �banker�s bank� legislated in 1913 into a dangerously potent new arm of the state.

Bubbles Ben 1.0

It was this wartime transformation of the Fed into an activist central bank that postponed the normal post-war liquidation�-moving the world�s scheduled depression down the road to the 1930s. The Fed�s role in this startling feat is in plain sight in the history books, but its significance has been obfuscated by Keynesian and monetarist doctrinal blinders�that is, the presumption that the state must continuously manage the business cycle and macro-economy.

Having learned during the war that it could arbitrarily peg the price of money, the Fed next discovered it could manage the growth of bank reserves and thereby the expansion of credit and the activity rate of the wider macro-economy. This was accomplished through the conduct of �open market operations� under its new authority to buy and sell government bonds and bills�something which sounds innocuous by today�s lights but was actually the fatal inflection point. It transferred the process of credit creation from the free market to an agency of the state.

As it happened, the patriotic war bond buyers across the land did steadily pay-down their Liberty loans, and, in turn, the banking system liquidated its discount window borrowings�-with a $2.7 billion balance in 1920 plunging 80 percent by 1927. In classic fashion, this should have caused the banking system to shrink drastically as war debts were liquidated and war-time inflation and malinvestments were wrung out of the economy.

But big-time mission creep had already set in. The legendary Benjamin Strong had now taken control of the system and on repeated occasions orchestrated giant open market bond buying campaigns to offset the natural liquidation of war time credit.

Accordingly, treasury bonds and bills owned by the Fed approximately doubled during the same 7-year period. Strong justified his Bernanke-like bond buying campaigns of 1924 and 1927 as helpful actions to off-set �deflation� in the domestic economy and to facilitate the return of England and Europe to convertibility under the gold standard.

But in truth the actions of Bubbles Ben 1.0 were every bit as destructive as those of Bubbles Ben 2.0.

In the first place, deflation was a good thing that was supposed to happen after a great war. Invariably, the rampant expansion of war time debt and paper money caused massive speculations and malinvestments that needed to be liquidated.

The Bank of England�s Perfidy

Likewise, the barrier to normalization globally was that England was unwilling to fully liquidate its vast wartime inflation of wage, prices and debts. Instead, it had come-up with a painless way to achieve �resumption� at the age-old parity of $4.86 per pound; namely, the so-called gold exchange standard that it peddled assiduously through the League of Nations.

The short of it was that the British convinced France, Holland, Sweden and most of Europe to keep their excess holdings of sterling exchange on deposit in the London money markets, rather than convert it to gold as under the classic, pre-war gold standard.

This amounted to a large-scale loan to the faltering British economy, but when Chancellor of the Exchequer Winston Churchill did resume convertibility in April 1925 a huge problem soon emerged. Churchill�s splendid war had so debilitated the British economy that markets did not believe its government had the resolve and financial discipline to maintain the old $4.86 parity. This, in turn, resulted in a considerable outflow of gold from the London exchange markets, putting powerful contractionary pressures on the British banking system and economy.

Real Cause of the Great Depression: Collapse of the Artificial 1914-1929 Boom
In this setting, Bubbles Ben 1.0 (New York Fed Governor Benjamin Strong) stormed in with a rescue plan that will sound familiar to contemporary ears. By means of his bond buying campaigns he sought to drive-down interest rates in New York relative to London, thereby encouraging British creditors to keep their money in higher yielding sterling rather than converting their claims to gold or dollars.

The British economy was thus given an option to keep rolling-over its debts and to continue living beyond its means. For a few years these proto-Keynesian �Lords of Finance� �- principally Ben Strong of the Fed and Montague Norman of the BOE�-managed to kick the can down the road.

But after the Credit Anstalt crisis in spring 1931, when creditors of shaky banks in central Europe demanded gold, England�s precarious mountain of sterling debts came into the cross-hairs. In short order, the money printing scheme of Bubbles Ben 1.0 designed to keep the Brits in cheap interest rates and big debts came violently unwound.

In late September a weak British government defaulted on its gold exchange standard duty to convert sterling to gold, causing the French, Dutch and other central banks to absorb massive overnight losses. The global depression then to took another lurch downward.

Inventing Bubble Finance : The Call Money Market Explosion Before 1929

But central bankers tamper with free market interest rates only at their peril�-so the domestic malinvestments and deformations which flowed from the monetary machinations of Bubbles Ben 1.0 were also monumental.

Owing to the splendid tax-cuts and budgetary surpluses of Secretary Andrew Mellon, the American economy was flush with cash, and due to the gold inflows from Europe the US banking system was extraordinarily liquid. The last thing that was needed in Roaring Twenties America was the cheap interest rates�-at 3 percent and under�that resulted from Strong�s meddling in the money markets.

At length, Strong�s ultra-low interest rates did cause credit growth to explode, but it did not end-up funding new steel mills or auto assembly plants. Instead, the Fed�s cheap debt flooded into the Wall Street call money market where it fueled that greatest margin debt driven stock market bubble the world had ever seen. By 1929, margin debt on Wall Street had soared to 12 percent of GDP or the equivalent of $2 trillion in today�s economy (compared to $450 billion at present).

The Original Sub-Prime: Wall Street�s 1920s Foreign Bond Mania

As is well known, much economic carnage resulted from the Great Crash of 1929. But what is less well understood is that the great stock market bubble also spawned a parallel boom in foreign bonds�-a specie of Wall Street paper that soon proved to be the sub-prime of its day. Indeed, Bubbles Ben 1.0 triggered a veritable cascade of speculative borrowing that soon spread to the far corners of the globe, including places like municipality of Rio de Janeiro, the Kingdom of Denmark and the free city of Danzig, among countless others.

It seems that the margin debt fueled stock market drove equity prices so high that big American corporations with no needs for cash were impelled to sell bundles of new stock anyway in order to feed the insatiable appetites of retail speculators. They then used the proceeds to buy Wall Street�s high yielding �foreign bonds�, thereby goosing their own reported earnings, levitating their stock prices even higher and causing the cycle to be repeated again and again.

As the Nikkei roared to 40,000 in the late 1980s, the Japanese were pleased to call this madness �zaitech�, and it didn�t work any better the second time around. But the 1920s version of zaitech did generate prodigious sums of cash that foreign borrowers cycled right back to exports from America�s farms, mines and factories. Over the eight years ending in 1929, the present day equivalent of $1.5 trillion was raised on Wall Street�s red hot foreign bond market, meaning that the US economy simply doubled-down on the vendor finance driven export boom that had been originally sparked by the massive war loans to the Allies.

In fact, over the period 1914-1929 the U. S. loaned overseas customers�-from the coffee plantations of Brazil to the factories of the Ruhr�-the modern day equivalent of $3.5 trillion to prop-up demand for American exports. The impact was remarkable. In the 15 years before the war American exports had crept up slowly from $1.6 billion to $2.4 billion per year, and totaled $35 billion over the entire period. By contrast, shipments from American farms and factors soared to nearly $11 billion annually by 1919 and totaled $100 billion�three times more�over the 15 years through 1929.

So this was vendor finance on a vast scale��reflecting the exact mercantilist playbook that Mr. Deng chanced upon 60 years later when he opened the export factories of East China, and then ordered the People�s Bank to finance China�s exports of T-shirts, sneakers, plastic extrusions, zinc castings and mini-backhoes via the continuous massive purchases of Uncle Sam�s bonds, bills and guaranteed housing paper.

Our present day Keynesian witch doctors antiseptically label the $3.8 trillion that China has accumulated through this massive currency manipulation and repression as �foreign exchange reserves�, but they are nothing of the kind. If China had honest exchange rates, it reserves would be a tiny sliver of today�s level.

In truth, China�s $3.8 trillion of reserves are a gigantic vendor loan to its customers. This is a financial clone of the $3.5 trillion equivalent that the great American creditor and export powerhouse loaned to the rest of the world between 1914 and 1929.

Needless to say, after the October 1929 crash, the Wall Street foreign bond market went stone cold, with issuance volume dropping by 95 percent within a year or two. Thereupon foreign bond default rates suddenly soared because sub-prime borrowers all over the world had been engaged in a Ponzi�-tapping new money on Wall Street to pay interest on the old loans.

By 1931 foreign bonds were trading at 8 cents on the dollar�-not coincidentally in the same busted zip code where sub-prime mortgage bonds ended up in 2008-2009.

Still, busted bonds always mean a busted economic cycle until the malinvestments they initially fund can be liquidated or repurposed. Thus, the 1929 Wall Street bust generated a devastating crash in US exports as the massive vendor financed foreign demand for American farm and factory goods literally vanished. By 1933 exports had slipped all the way back to the $2.4 billion level of 1914.

1929-1933 Foreign Bond and US Export Bust: True Source of the Great Depression

That�s not all. As US export shipments crashed by 70 percent between 1929 and 1933, there were ricochet effect throughout the domestic economy.

This artificial 15-year export boom had caused the production capacity of American farms and factories to become dramatically oversized, meaning that during this interval there had occurred a domestic capital spending boom of monumental proportions. While estimated GDP grew by a factor of 2.5X during 1914-1929, capital spending by manufacturers rose by 7X. Auto production capacity, for example, increased from 2 million vehicles annually in 1920 to more than 6 million by 1929.

Needless to say, when world export markets collapsed, the US economy was suddenly drowning in excess capacity. In short order, the decade-long capital spending boom came to a screeching halt, with annual outlays for plant and equipment tumbling by 80 percent in the four years after 1929, and shipments of items like machine tools plummeting by 95 percent.

Not surprisingly, in the wake of this drastic downshift in output, American business also found itself drowning in excess inventories. Accordingly, nearly half of all production inventories extant in 1929 were liquidated by 1933, resulting in a shocking 20 percent hit to GDP�a blow that would amount to a $3 trillion drop in today�s economy.

Finally, Bubbles Ben 1.0 had induced vast but temporary �wealth effects� just like his present day successor. Stock prices surged by 150 percent in the final three years of the mania. There was also an explosion of consumer installment loans for durable goods and mortgages for homes. Indeed, mortgage debt soared by nearly 4X during the decade before the crash, while boom-time sales of autos, appliances and radios nearly tripled durable goods sales in the eight years ending in 1929.

All of this debt and wealth effects induced spending came to an abrupt halt when stock prices came tumbling back to earth. Durable goods and housing plummeted by 80 percent during the next four years. In the case of automobiles, where stock market lottery winners had been buying new cars hand over fist, the impact was especially far reaching. After sales peaked at 5.3 million units in 1929, they dropped like a stone to 1.4 million vehicles in 1932, meaning that this 75 percent shrinkage of auto sales cascaded through the entire auto supply chain including metal working equipment, steel, glass, rubber, electricals and foundry products.

Thus, the Great Depression was born in the extraordinary but unsustainable boom of 1914-1929 that was, in turn, an artificial and bloated project of the warfare and central banking branches of the state, not the free market. Nominal GDP, which had been deformed and bloated to $103 billion by 1929, contracted massively, dropping to only $56 billion by 1933.

Crucially, the overwhelming portion of this unprecedented contraction was in exports, inventories, fixed plant and durable goods�the very sectors that had been artificially hyped. These components declined by $33 billion during the four year contraction and accounted for fully 70 percent of the entire drop in nominal GDP.

So there was no mysterious loss of that Keynesian economic ether called �aggregate demand�, but only the inevitable shrinkage of a state induced boom. It was not the depression bottom of 1933 that was too low, but the wartime debt and speculation bloated peak in 1929 that had been unsustainably too high.

# ? Oct 2, 2014 20:54

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# ? May 15, 2024 08:25

Raskolnikov38: Mar 3, 2007; We were somewhere around Manila when the drugs began to take hold

quote:

great evils of the 20th century� the Great Depression, totalitarian genocides, Keynesian economics, permanent warfare states...

Two of these things are not like the others, two of these things just don't belong

# ? Oct 2, 2014 21:03

Rhjamiz: Oct 28, 2007

I'm pretty sure the World War I dragged the US out of an economic recession and was not, in fact, a cause of the Great Depression. Which was, in turn, ended by World War II!

War is Good for Business.

Rhjamiz fucked around with this message at 21:12 on Oct 2, 2014

# ? Oct 2, 2014 21:09

Corvinus: Aug 21, 2006

David Stockman is not a historian, as various errors in that article show. He's also a true believer of trickle-down economics, aka voodoo economics, aka never-proven-to-work-outside-occasional-instances economics.

Boy, you just can't stop namedropping dudes with whackjob political/economic beliefs, eh jrod?

# ? Oct 2, 2014 21:11

Vahakyla: May 3, 2013

Jrodefeld, how could the nomadic tribes and other scattered tribal communities not succeed against the state of Rome and their ways of taxation and laws in terms of warfare?

# ? Oct 2, 2014 21:13

Who What Now: Sep 10, 2006; by Azathoth

Vahakyla posted:

Jrodefeld, how could the nomadic tribes and other scattered tribal communities not succeed against the state of Rome and their ways of taxation and laws in terms of warfare?

They were not true examples of his ideal system, and we can know this because they failed.

Stateless societies cannot fail, they can only be failed.

-EDIT-

Who What Now posted:

As per usual [Jrod] immediately dropped that line of discussion and is pretending that it never existed.

I'd call this prophetic if it wasn't so obvious it was going to happen again.

# ? Oct 2, 2014 21:23

Caros: May 14, 2008

jrodefeld posted:

I thought this article by David Stockman is relevant to this discussion. He explains how the creation of the Fed and our foolhardy decision to get involved in World War 1 (fueled by fiat money creation) set the stage for a century of constant war and the Great Depression of the 1930s.

Hey everyone, lets read this wall of text courtesy of David Stockman. You may remember him from some of his other work:

- He was the head of the Office of Management and Budget under Ronald Reagan. Famously supportive of 'Supply-Side' economics, he was instrumental in getting the 1981 budget passed in hopes of curtailing spending and the 'Welfare Queens'.
- In his attempt to curtail spending, the US public debt just shy of doubled. This is well above the levels that would have been projected had Jimmy Carter's policies remained in place. Turns out that cutting taxes pointlessly creates debt. :iiam:

(For perspective, the debt grew by .8 trillion during his five years in office, when it had only been growing by 76 billion during Carter's term. And this was in a booming economy when that number should shrink, not more than double.)
- After exiting public service he worked in the financial sector before starting his own private equity group in 1999. By 2005 he had driven at least one major acquisition into the ground. I remember this because he was indicted but never brought to trial under the assumption that he had concluded massive fraud regarding said company. He might not have, but it wouldn't surprise me.

So what has he done lately? Well he put out a book recently that 'debunks' these supposed myths. His views in () mine are in []:

- FDR's New Deal ended the Depression (it prolonged it); [False according to every major historian and economist.]
- The Depression signaled a failure of capitalism (no, the Depression resulted from trade protectionism and the late 1920s stock market bubble that temporarily took down the farm and industrial sectors of the economy); [False, though apparently Capitalism cannot fail, it can only be failed.]
- The Reagan military buildup took down the Soviet Union (it was DOA economically by the time Reagan was elected and the vast military bequeathed to Reagan's successors made possible the Iraq and Afghanistan wars without Congressional approval); [I actually don't disagree with this one too much.]
- GM was on the verge of collapse in 2008 (actually, GE CEO Jeff Immelt's bonus was on the verge of collapse and GM would have recovered without government intervention); [Do I need to comment here?]
- And the biggest Big Lie of all, that the world economy was teetering on the edge in 2008 (Paulson and a few other "feckless bailsters" head-faked a compliant, moronic George W. Bush and a terrified Congress into rescuing Wall Street from nearly a trillion dollars of its drunken sailor-style gambling losses). [Seriously, do I need to say anything here? Only an idiot, a liar or an insane person actually thinks this.]

Like most alternate historians posted by Jrodefeld over the years, David Stockman is an amateur with little grasp on the realities of the things he is talking about. He can come off as convincing to an outside observer who lacks any real background or knowledge in the field, but if you talk with actual experts on the eras and issues he talks about you'll find that he is almost universally wrong.

Hey Jrodefeld can you do Thomas DiLorenzo's historical revisionism regarding the civil war next? I have a pre prepared rebuttal for those lies and it would save me some time.

Caros fucked around with this message at 21:27 on Oct 2, 2014

# ? Oct 2, 2014 21:25

Rockopolis: Dec 21, 2012; I MAKE FUN OF QUEER STORYGAMES BECAUSE I HAVE NOTHING BETTER TO DO WITH MY LIFE THAN MAKE OTHER PEOPLE CRY

I can't understand these kinds of games, and not getting it bugs me almost as much as me being weird

^ Whew, my screen's a bit small to handle it at the moment, but it might be fun to pick through when I get home. It's like those weird alt-hist novels.

I don't like Stephan Molyneux because I keep confusing him with Peter Molyneux.

Something that pops up in discussions of Gavelkind succession (bane of Crusader Kings players), the hilarity of the Holy Roman Empire, and other bits of the feudal system was they they really didn't see it as 'government' or a state per say, but more like private property and contractual obligations. Lots and lots of contractual obligations. That's why Gavelkind is a thing; it's not breaking up a country on the death of a king, it's distributing your estate out to your sons, like private property.
Is this libertarian? It's pretty much all a massive (and confusing) web of private contracts.

If so, then are modern states then libertarian, if they're the holders of all fiefs? With an elective system of inheritance, of course. It'd make taxes either rents or vassalage, I think?
Is a constitution a contract?

Like, literally and hilariously the President of France is the co-Prince of Andorra, which paid it's contractual obligations (uh, I think it's socage or frankalmoin) in hams, cheeses and live chickens until 1993.

Rockopolis fucked around with this message at 21:37 on Oct 2, 2014

# ? Oct 2, 2014 21:34

jrodefeld: Sep 22, 2012; by Shine

Corvinus posted:

David Stockman is not a historian, as various errors in that article show. He's also a true believer of trickle-down economics, aka voodoo economics, aka never-proven-to-work-outside-occasional-instances economics.

Boy, you just can't stop namedropping dudes with whackjob political/economic beliefs, eh jrod?

Stockman is NOT a proponent of "trickle down", supply side economics. He had a short stint as budget director for the Reagan Administration but he quickly became disillusioned and left them to their failures before Reagan's first term was up. Supply side economics is a short of Keynesian economic stimulus that is directed towards subsidizing the privileged rather than the poor. Stockman is far closer to Austrian economic, anti-Fed, and pro sound money.

David Stockman is quite well respected even among mainstream journals and publications. His latest book "The Great Deformation" is a tour de force of economic sanity and historical revisionism. It has been very well received by people inside the beltway and out.

# ? Oct 2, 2014 21:40

Caros: May 14, 2008

And since we are just posting big essays from other thinkers, I'm going to link you to a piece by Neil Irwin about Stockman's book

The nihilism of David Stockman posted:

I was probably the only kid in my high school who knew who David Stockman was. I found the former Reagan budget director's memoir to be a fascinating window into the world of economic policy. So that makes it a bit ironic that he and I both have books coming out this week that have completely opposite takes on the most crucial questions of how the U.S. economy ought to work.

Stylistically, our books are very different: "The Great Deformation: The Corruption of Capitalism in America" is a long, spittle-filled diatribe on how the Federal Reserve, Wall Street, FDR, and Richard Nixon ruined America. (Or so I gather � the book only came out today. But here are Stockman�s Sunday New York Times piece and an early review by Marcus Brauchli.) Mine is a reported narrative of the rise of central banking and the response of the leading central bankers to the 2007 to 2012 crisis.

Stockman and I seem to be direct antagonists on this fundamental question: Should government, in particular central banks, endeavor to corral the ups and downs of capitalism to try to steer their nation toward prosperity?

A recurring theme of Stockman�s work is that it is precisely these efforts that have sown the seeds for all that ails the economy. He writes in the Times: �As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another � smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (�clean� energy, biotechnology) and, above all, bailing out Wall Street � they have now succumbed to overload, overreach and outside capture by powerful interests.�

There are some interesting arguments buried in his essay, and, I expect, the book. But pause for a minute to consider how fundamentally nihilistic Stockman�s view of the economy seems to be: that basically anything the state does to try to fix things is undermining some elegant capitalist order and will inevitably lead to chaos.

Consider one of the historical episodes that Stockman views as turning point on the United State�s road to perdition: the Roosevelt administration taking the dollar off the gold standard in 1933. The country was in a dire position at that time: a quarter of the population jobless, desolation rampant, the hopelessness fueling political extremism. A surprising number of people in the United States and Western Europe were starting to consider Communism a more attractive option, and in Germany this despair led directly to the rise of Nazism.

The consensus macroeconomic view, best established by Milton Friedman and Anna Schwartz in their �Monetary History of the United States,� is that the economic collapse was driven by a steep contraction in the money supply. Banks had been allowed to fail by the hundreds, contracting credit, and the commitment to the gold standard meant that the Federal Reserve was unable or unwilling to use other means to pump money into the economy to offset it. Prices were falling; while people were starving in the cities, grain sat in silos in farm country because prices had dropped so low. The gears of capitalism had stopped turning. The result was a catastrophe.

Stockman seems to think that the very practical step that the Roosevelt administration took to unshackle Americans from the gold standard was the beginning of an unmooring of capitalism, an unleashing of violent forces that have ruined our economy. But his alternative is . . . what? Forcing millions of Americans to endure grinding poverty because gold is good.

There is no perfect state-of-nature capitalism from which Richard Nixon and Franklin Roosevelt led us astray. Capitalism can only exist in a framework � monetary and legal � set up by the government. Reasonable people can disagree over what that framework should look like, and how interventionist that government or its monetary authority should be. But just because the specific set of options (should monetary policy be aimed at stabilizing the business cycle or at keeping the price of the dollar fixed versus a shiny metal?) doesn�t mean that one set of choices is a natural and perfect arrangement and that deviating from that policy will inevitably bring chaos.

Is basing the value of currency on a yellow metal that people find in the ground really less arbitrary than having a group of sober-minded economists get in a room eight times a year and try to adjust the supply of money so that prices rise about 2 percent annually? I�d take the group of sober-minded economists every time! They at least have the potential to learn from the mistakes of the past � the hyperinflation of 1920s Germany, the Great Depression of the 1930s, the high inflation of the 1970s and, for the generation ahead, the failure to contain excessive growth in private-sector debt that triggered the housing and mortgage bubbles in the 2000s that popped so calamitously in 2008.

I view each of those historical economic crises as a learning experience for humankind, as we grope toward a better way to create an economy where people can fulfill their potential, earn an income and count on their savings being secure. The best we can ask of our public servants is for them to learn from that history. That�s why I�ve spent the last few years of my life trying to write it.

The bolded sections are mine and I think they speak to a lot of the issues with JRodefeld's imaginary view of the depression as well.

# ? Oct 2, 2014 21:43

Raskolnikov38: Mar 3, 2007; We were somewhere around Manila when the drugs began to take hold

Okay now that I'm not tablet posting lets tear apart the lovely history.

quote:

This chain of calamity originated in the Great War�s destruction of sound money"

No it didn't it originated in the Great War's ravaging of society.

quote:

This liberal international economic order�that is, honest money, relatively free trade, rising international capital flows and rapidly growing global economic integration�-resulted in a 40-year span between 1870 and 1914 of rising living standards, stable prices, massive capital investment and prolific technological progress that was never equaled�either before or since.

Ah yes the wondrous living standards of the gilded age shall never be reached again! Also the idea that since the invention of the computer technological progress hasn't exploded is :laffo:

quote:

Yet England was the least devastated.

Well gee I wonder why the country where no warfare took place and suffered no blockade didn't suffer as much as those that did.

quote:

Among the defeated powers, currencies emerged nearly worthless with the German mark at five cents on the pre-war dollar, while wartime debts�especially after the Carthaginian peace of Versailles��soared to crushing, unrepayable heights.

This was because the Kaiser and Reichstag decided that borrowing money to pay for the entire war was the best way to go and the payments put on Germany by Versailles being absurdly high is an artifact of nazi propaganda. If they were so unrepayable why did the Weimer Republic manage to make the $500mil annual payments because the reparations were no where near as bad as the whining Germany issued about them made them out to be.

quote:

America�s wholly unwarranted intervention in April 1917 prolonged the slaughter, doubled the financial due bill and generated a cockamamie peace

quote:

Had Woodrow Wilson not misled America on a messianic crusade, the Great War would have ended in mutual exhaustion in 1917 and both sides would have gone home battered and bankrupt but no danger to the rest of mankind. Indeed, absent Wilson�s crusade there would have been no allied victory, no punitive peace, and no war reparations; nor would there have been a Leninist coup in Petrograd or Stalin�s barbaric regime

Oh man that would be great proof if the AEF didn't arrive in France until very early 1918.

And then after that point he goes into black gay hitler territory which should have been the tipoff to someone as dense as you that he's full of poo poo.

# ? Oct 2, 2014 21:44

Captain_Maclaine: Sep 30, 2001

Raskolnikov38 posted:

Oh man that would be great proof if the AEF didn't arrive in France until very early 1918.

The Ludendorff Offensives: totally not a thing that happened, due to mutual exhaustion in 1917.

Stockman is such a loving hack.

# ? Oct 2, 2014 21:55

Corvinus: Aug 21, 2006

jrodefeld posted:

Stockman is NOT a proponent of "trickle down", supply side economics. He had a short stint as budget director for the Reagan Administration but he quickly became disillusioned and left them to their failures before Reagan's first term was up. Supply side economics is a short of Keynesian economic stimulus that is directed towards subsidizing the privileged rather than the poor. Stockman is far closer to Austrian economic, anti-Fed, and pro sound money.

Well, got me there. Though being for slashing SS and various welfare programs isn't good either.

jrodefeld posted:

David Stockman is quite well respected even among mainstream journals and publications. His latest book "The Great Deformation" is a tour de force of economic sanity and historical revisionism. It has been very well received by people inside the beltway and out.

Did you copy/paste a book cover quote?

# ? Oct 2, 2014 22:00

Caros: May 14, 2008

jrodefeld posted:

Stockman is NOT a proponent of "trickle down", supply side economics. He had a short stint as budget director for the Reagan Administration but he quickly became disillusioned and left them to their failures before Reagan's first term was up. Supply side economics is a short of Keynesian economic stimulus that is directed towards subsidizing the privileged rather than the poor. Stockman is far closer to Austrian economic, anti-Fed, and pro sound money.

Okay, a couple of things. You are right that he does not currently support trickle down economics. Anymore. In fact he currently supports higher taxes than most Republicans because he isn't a total loving idiot, but then again he also supports massive spending cuts so... yeah.

Second, did you just really say that Supply Side economics is a sort of Keyensian economic stimulus? You are aware that this isn't true in any meaningful sense, that Supply-Side economics was in fact developed in direct opposition to Keynesian economics in the 1970's. That they both share some vague similarities pretty much only has to do with the fact that they are both part of the field of economics.

Third, stockman is a milton friedman era libertarian at best, in that he loves gold, hates government intervention and... yeah that is basically it. The man literally used the quote "Taxes are the price we pay for society." in a recent article as a positive thing, so I don't think you have as much common ground as you'd like.

quote:

David Stockman is quite well respected even among mainstream journals and publications. His latest book "The Great Deformation" is a tour de force of economic sanity and historical revisionism. It has been very well received by people inside the beltway and out.

David Stockman is tolerated because he is rich and still well connected, which is the same reason he didn't go to jail for fraud. His latest book is a depressing rant about how getting rid of gold ruins everything. Apparently the largest period of uninterrupted growth and prosperity, 1946-71 is a symptom of how bad things get when you get rid of gold.

Also I know that you're using historical revisionism in the textbook way, but it considering the negative connotation regarding common usage I find it hilarious that you're admitting how much he tries to rewrite history the way he wants it to be rather than the way it is.

# ? Oct 2, 2014 22:01

Caros: May 14, 2008

Captain_Maclaine posted:

The Ludendorff Offensives: totally not a thing that happened, due to mutual exhaustion in 1917.

Stockman is such a loving hack.

Well yeah! If Woodrow Wilson hadn't decided to foolishly enter the war for like... literally no reason, Germany and France would have just called it quits. But once the US said they were going to get involved? Well then Germany had its rep on the line, so they had to keep going or people would call them a pussy and steal their lunch money for being afraid of the US.

I personally like these ones

quote:

America�s wholly unwarranted intervention in April 1917

Even conventional historians like Niall Ferguson admit as much. Had Woodrow Wilson not misled America on a messianic crusade...

I mean seriously. A cursory look at an encyclopedia (what even are those) would tell you that isn't true. Typing US entry to WWI tells you that isn't true. Germany decided they would engage in unrestricted submarine warfare around britain. The US was told this, and after Germany offered a military alliance to Mexico (a direct threat to the US) and started sinking their loving ships and killing the US citizens, Woodrow Wilson was forced into the war. Germany knew this was going to happen when they made the threat, but they did it anyways because they were gambling that they could win before the US got their poo poo together.

quote:

giving rise to totalitarianism among the defeated powers and Keynesianism among the victors. Choose your poison.

Over a decade later. After a great depression that had nothing to do with it. Yeah. Great historical work there.

Caros fucked around with this message at 22:16 on Oct 2, 2014

# ? Oct 2, 2014 22:12

AlternateAccount: Apr 25, 2005; FYGM

Holy poo poo, catching up on this thread is getting painful. I am just going to pull out the worst bullshit I saw:

Caros posted:

Yes, it is the state's job to look after the poor considering 50% of our elderly would be living in poverty without social security or medicare. Does this somehow surprise you that people don't want their grandmothers to have to, as one poster put it, suck-start a shotgun to prevent them ruining their children's lives?

Page 7: http://www.census.gov/people/wealth/files/Wealth%20distribution%202000%20to%202011.pdf

There's also data on the mean net worth by income. Your average social security age person/household has several whole integer multiples of the net worth of your sub-35ers.

Additionally,

ssa.gov posted:

The median income for units aged 65 or older is $24,857, but there are wide differences within the total group. Approximately 13% have an income of under $10,000, and roughly 23% have an income of $50,000 or more.

That information + the net worth information above would indicate that the vast majority of the elderly would not be immediately running out to buy cans of Fancy Feast.

If you want to work up something a bit more targeted to low-income elderly, maybe that's fine, but consider that at the moment it acts functionally as a transfer payment from working individuals who typically have a lower net worth and not necessarily substantially higher income to the elderly.

# ? Oct 2, 2014 22:32

Talmonis: Jun 24, 2012; The fairy of forgiveness has removed your red text.

AlternateAccount posted:

from working individuals who typically have a lower net worth and not necessarily substantially higher income to the elderly.

You mean those same elderly who worked all their lives putting into that system? Say it isn't so!

# ? Oct 2, 2014 22:35

asdf32: May 15, 2010; I lust for childrens' deaths. Ask me about how I don't care if my kids die.

jrodefeld posted:

I thought this article by David Stockman is relevent to this discussion. He explains how the creation of the Fed and our foolhardy decision to get involved in World War 1 (fueled by fiat money creation) set the stage for a century of constant war and the Great Depression of the 1930s.

Why is fiat currency so important given that government already has the power and willingness to tax directly?

From your perspective especially taxes are already a huge problem. Fiat currency and the ability to print it just represents another avenue for government to do the same old thing: take money from the population and spend it. But taxation already does this same exact thing. A switchover to fiat currency doesn't actually represent a new power structure.

# ? Oct 2, 2014 22:36

AlternateAccount: Apr 25, 2005; FYGM

Talmonis posted:

You mean those same elderly who worked all their lives putting into that system? Say it isn't so!

The average social security recipient receives substantially more, as in six figures more, in payouts than payins.

# ? Oct 2, 2014 22:37

Raskolnikov38: Mar 3, 2007; We were somewhere around Manila when the drugs began to take hold

asdf32 posted:

Why is fiat currency so important

Because fiat money infringes on gold, the driving power of libertarianism.

# ? Oct 2, 2014 22:37

Grand Theft Autobot: Feb 28, 2008; I'm something of a fucking idiot myself

Stockman outs himself as a hack by claiming the Great Crash caused the Great Depression, and the New Deal (the entire thing! Apparently!) prolonged it. The Crash made an increasingly bad situation worse: the US economy was in a major transitional phase in many key sectors, and there would almost certainly have been a major recession regardless of stock market meltdowns.

Obviously, some New Deal policy worked better at fixing Depression issues than others. Unified relief administration took over for the dismal failures of private charity, work programs were helpful in providing relief and public goods, government spending helped out dynamic industries like food processing, chemicals, and building materials; TVA and rural electrification was a huge boon to lots of dynamic consumer industries, not to mention construction and transportation trades.

The NRA was an obvious failure, but lots of the codes ended up helping industry develop. Other New Deal policy was harmful in the short run, but extremely helpful in the long run; SS taxes took money out of workers' pockets at precisely the worst time, Wagner was great for workers in the long run but may have harmed industry in the short run (in my opinion Wagner was nothing but helpful), and AAA was clearly detrimental to the weakest and poorest farmers and benefitted the rich and powerful.

If you want a nuanced, critical, and often negative view of FDR and the New Deal you don't need to read charlatans. You can read real scholars like David M. Kennedy, Robert S. McElvaine, Edward Bernstein, and Arthur M. Schlesinger. Clowns like Stockman, Schlaes, and that Lincoln = Hitler idiot DiLorenzen are universally derided by the profession. They are basically the Conservapedia of history: navel-gazing buffoons, arguing with noone but themselves because nobody else takes them seriously.

Grand Theft Autobot fucked around with this message at 22:43 on Oct 2, 2014

# ? Oct 2, 2014 22:40

Talmonis: Jun 24, 2012; The fairy of forgiveness has removed your red text.

AlternateAccount posted:

The average social security recipient receives substantially more, as in six figures more, in payouts than payins.

Sounds like the average age should be raised. But alas, in the current American Business climate, eliminating anyone over 50 is still a profitable venture. Folks still need an income at least until 65.

Good news though! An easy solution is to eliminate the cap on income payments. It'd be solvent for the forseeable future.

# ? Oct 2, 2014 22:42

Captain_Maclaine: Sep 30, 2001

Grand Theft Autobot posted:

If you want a nuanced, critical, and often negative view of FDR and the New Deal you don't need to read charlatans. You can read real scholars like David M. Kennedy, Robert S. McElvaine, Edward Bernstein, and Arthur M. Schlesinger. Clowns like Stockman, Schlaes, and that Lincoln = Hitler idiot DiLorenzen are universally derided by everyone in the profession. They are basically the Conservapedia of history: navel-gazing bufoons, arguing with noone but themselves because nobody else takes them seriously.

David Stockman:economic history :: David Irving:holocaust history.

# ? Oct 2, 2014 22:43

VitalSigns: Sep 3, 2011

Most interesting fact I learned today:
The arrival of the American Expeditionary Force in Europe in April 1918 was an event of such momentous power that its effects actually rippled back in time and incited the Soviet takeover of the Russian government in Petrograd November 1917. :eng101:

VitalSigns fucked around with this message at 23:04 on Oct 2, 2014

# ? Oct 2, 2014 23:02

Grand Theft Autobot: Feb 28, 2008; I'm something of a fucking idiot myself

Herbert Hoover and the complete failure of Voluntarism (read: Private Charity) in the wake of the Great Crash is particularly instructive for current arguments about dismantling the automatic stabilizers put in place by FDR and others. I can effort post about that later, though I must warn praxeologists that it will involve lots of empirical evidence and factual historical analysis.

# ? Oct 2, 2014 23:06

Raskolnikov38: Mar 3, 2007; We were somewhere around Manila when the drugs began to take hold

VitalSigns posted:

Most interesting fact I learned today:
The arrival of the American Expeditionary Force in Europe in April 1918 was an event of such momentous power that its effects actually rippled back in time and incited the Soviet takeover of the Russian government in Petrograd November 1917.

I would expect no less from violating Washington's farewell speech.

# ? Oct 2, 2014 23:09

Grand Theft Autobot: Feb 28, 2008; I'm something of a fucking idiot myself

Who knew that WW1 was caused by the Dutch all along!

BRB gotta fly my zeppelin to the sky market to buy some children with my gold bars.

# ? Oct 2, 2014 23:18

VitalSigns: Sep 3, 2011

Caros posted:

Reposting this from a few days ago because the minimum wage is a much more interesting topic than DRO's since the latter is really, really difficult to discuss in any meaningful way since it does not can will not ever exist in reality. I also just really want an answer.

What are you talking about? We have, right now, an example of a fully functional DRO formed voluntarily by people defending their homes from State tyranny and it is whipping a decadent parliamentary regime in the field.

ISIS-DRO has done such a masterful job at stopping parliamentary aggression that it's cornered the market on protection services and driven the market share of its less effective competitors in the region to near zero, and it is so popular that whenever its representatives come around villages with invoices, they are promptly paid.

Its success is so great that Obama's evil statist regime has actually declared war upon it, even though that's completely unnecessary because applying logical deduction from fundamental principles, it's clear that ISIS-DRO is engaging in some unprofitable and irrational practices like beheading women for not wearing enough clothes or destroying villages for following the wrong religion. These inefficient expenditures will render it less competitive in the market thus it will inevitably be overtaken by a more rational competitor without Obama having to do any bombings at all. After all, the last thing a fundamentalist Muslim wants to see is the group he is supporting go around forcing women to wear scarves.

There is the somewhat odd result that their seizing of oilfields and selling the oil is somehow bringing in money, when we know that violence is always unprofitable, but this is probably just mistaken media reporting since we can reason from first principles that it is impossible to grow rich through plunder.

VitalSigns fucked around with this message at 23:29 on Oct 2, 2014

# ? Oct 2, 2014 23:23

Polygynous: Dec 13, 2006; welp

I was wondering when someone would bring up ISIS. I wanted to ask jr how fiat currency is responsible for their existence.

# ? Oct 2, 2014 23:36

Who What Now: Sep 10, 2006; by Azathoth

spoon0042 posted:

I was wondering when someone would bring up ISIS. I wanted to ask jr how fiat currency is responsible for their existence.

Something something statist imperialism something fiat currency.

# ? Oct 2, 2014 23:47

Mr Interweb: Aug 25, 2004

Okay three things someone clarify for me:

1) I'm confused by what Jrode is referring to with this paper currency thing. He's someone who believes we should return to the gold standard, right? Didn't we have paper money when we were on it? Is he confusing paper currency with the idea of fiat currency? The latter is what I thought he might be referring to, which is when the government can just print money with nothing physical (like gold) to back it up. Money being made of paper by itself has no bearing on inflation or anything else, I don't think.

2) Does he think that the Gilded Age was in fact an extremely pleasant and wonderful time for those in poverty, and that he thinks all the negative stuff you hear about it is cause of evil liberal history professors?

3) What does he think of Ronald Reagan?

# ? Oct 3, 2014 00:26

Polygynous: Dec 13, 2006; welp

Mr Interweb posted:

2) Does he think that the Gilded Age was in fact an extremely pleasant and wonderful time for those in poverty, and that he thinks all the negative stuff you hear about it is cause of evil liberal history professors?

jr wasn't the one who claimed everyone then was middle class, that was some other nutbar, right?

# ? Oct 3, 2014 00:30

StandardVC10: Feb 6, 2007; This avatar now 50% more dark mode compliant

Mr Interweb posted:

Okay three things someone clarify for me:

1) I'm confused by what Jrode is referring to with this paper currency thing. He's someone who believes we should return to the gold standard, right? Didn't we have paper money when we were on it? Is he confusing paper currency with the idea of fiat currency? The latter is what I thought he might be referring to, which is when the government can just print money with nothing physical (like gold) to back it up. Money being made of paper by itself has no bearing on inflation or anything else, I don't think.

2) Does he think that the Gilded Age was in fact an extremely pleasant and wonderful time for those in poverty, and that he thinks all the negative stuff you hear about it is cause of evil liberal history professors?

3) What does he think of Ronald Reagan?

1 - Paper currency on the gold standard is nominally redeemable for gold. If you issue more currency in paper than you have gold, there's a problem. Someone better informed than me at the moment can probably elucidate.

# ? Oct 3, 2014 00:32

Raskolnikov38: Mar 3, 2007; We were somewhere around Manila when the drugs began to take hold

StandardVC10 posted:

1 - Paper currency on the gold standard is nominally redeemable for gold. If you issue more currency in paper than you have gold, there's a problem. Someone better informed than me at the moment can probably elucidate.

The problem is that you get less gold per dollar and the dreaded ghost of inflation makes a mess of your pots and pans.

# ? Oct 3, 2014 00:34

StandardVC10: Feb 6, 2007; This avatar now 50% more dark mode compliant

Raskolnikov38 posted:

The problem is that you get less gold per dollar and the dreaded ghost of inflation makes a mess of your pots and pans.

Or if you don't do that, you have deflation, which is deeply perilous to a functional economy because suddenly there's no reason to do business now when it'll be so much better to do business tomorrow.

# ? Oct 3, 2014 00:35

Grand Theft Autobot: Feb 28, 2008; I'm something of a fucking idiot myself

International
Statists
Interfering with
Specie

Really makes you think.

# ? Oct 3, 2014 00:43

VitalSigns: Sep 3, 2011

Mr Interweb posted:

2) Does he think that the Gilded Age was in fact an extremely pleasant and wonderful time for those in poverty, and that he thinks all the negative stuff you hear about it is cause of evil liberal history professors?

I posted earlier asking him about the Triangle Shirtwaist Factory disaster, and he replied with the usual boilerplate about how it was the lack of development that was responsible for bad working conditions, because it just wasn't possible to run an industrial economy with modern safety standards.

As usual, he refused to answer any questions about how not-chaining-the-doors-shut would have destroyed the textile manufacturing industry, but luckily for us all, the economy just happened to develop to the exact point necessary to make basic fire safety affordable for businesses at the exact second that starry-eyed progressives signed the law making it mandatory. And a good thing too, if they'd signed that legislation just a month earlier, every industrial concern in the country would have gone bankrupt at once due to the staggering costs of cleaning up scrap fabrics that had piled up everywhere and not locking the doors.

# ? Oct 3, 2014 00:51

Captain_Maclaine: Sep 30, 2001

spoon0042 posted:

jr wasn't the one who claimed everyone then was middle class, that was some other nutbar, right?

That was qalnor, one of our old-school libertarian idiots from the pre-LF days, of whom it was once rightly commented "oh no, it's a person who knows something about anything, how did they know his one weakness?"

# ? Oct 3, 2014 00:53

Vahakyla: May 3, 2013

It is a bit like conservatism but reversed. Kinda like the good old days that are always gone, the libertarian days are almost here.

# ? Oct 3, 2014 00:55

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# ? May 15, 2024 08:25

Who What Now: Sep 10, 2006; by Azathoth

VitalSigns posted:

I posted earlier asking him about the Triangle Shirtwaist Factory disaster, and he replied with the usual boilerplate about how it was the lack of development that was responsible for bad working conditions, because it just wasn't possible to run an industrial economy with modern safety standards.

As usual, he refused to answer any questions about how not-chaining-the-doors-shut would have destroyed the textile manufacturing industry, but luckily for us all, the economy just happened to develop to the exact point necessary to make basic fire safety affordable for businesses at the exact second that starry-eyed progressives signed the law making it mandatory. And a good thing too, if they'd signed that legislation just a month earlier, every industrial concern in the country would have gone bankrupt at once due to the staggering costs of cleaning up scrap fabrics that had piled up everywhere and not locking the doors.

I'm also gonna guess that either some recent book he's read or the Econ 101 class he's taking at the night college mentioned the 'post hoc ergo propter hoc' fallacy because it seems to be his new go-to defense for hand waving away any pesky facts that point to a State succeeding in any way.

# ? Oct 3, 2014 00:57

The Something Awful Forums > Discussion > Debate & Discussion > Libertarians: You fire fighter lovers sure are good at debate!

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