Woods (This guy Rocks)

[Mega]

http://www.youtube.com/watch?v=541ba...eature=related
Up there with EJ/Marc Farber/Rogers & "Crusty"

Mike
*Note to Metalman:- "PS" will be know as "Crusty" till my A/C is back in profit

[tombat1913]

Re: Woods (This guy Rocks)

Thomas Woods is great, the Mises Institute puts out some quality work.

Anybody interested in more Thomas Woods go to www.LewRockwell.com , he has a large archive there.

[ThePythonicCow]

Re: Woods (This guy Rocks)

I think that the Austrians (such as Woods) are missing something.

In the days of old, all the essential inputs to production, including labor, machinery, buildings, transportation, raw materials, capital, ... were more often than not limited to the locality of the consumers of the resulting products. Eventually a steady state can be achieved in which labor, in particular, can be reimbursed sufficiently to purchase their own productive capacity.

For example, Henry Ford made it a point to pay the workers on his Model T assembly lines enough ($5/hour, I believe) so that they could afford to buy a Model T.

For another example, labor was always a scarce commodity when I was a child on a farm in a classic rural agriculture community. The food we ate depended on my helping out on the fields, even when I was a young child.

Now the essential inputs to production (listed above) are fungible world wide. The cheapest labor (in China or Bangladesh, say) can produce more than the wealthiest can consume, leaving the wealthy (e.g., us Americans) with no known sustainable, ethical, justification to claim such wealth. The few remaining limits to unlimited bounty for all humans are examined in dread with great intensity, as if those limits were guiding us to a necessary and desirable future of broad spectrum reduction in human economic capacity.

The global corptocracy, in particular their financial divisions and institutions, have "done their best" to remedy this problem by extending credit to putative consumers that they might purchase this great bounty. The bulk of GM's and GE's profits these last couple decades came from their financing divisions, not from their manufacturing divisions. The most profitable corporations (JPMorgan Chase, etc) were purely financial. But that cannot be sustained. The debt balloons and collapses.

The Austrians are correct that the projection of the world wide economic structure downward onto any particular nation or region these last few decades is Keynesian and is a disaster. However the world is no longer a collection of relatively separate regions and nations, and the extrapolation upward of the Austrian model to a global economy is unexamined, at present unrealizable, and depending on how accomplished equally likely to be a disaster.

Human civilization lacks a world wide economic model that would work if it were done, or that could be brought into being if it would work.

[LargoWinch]

Re: Woods (This guy Rocks)

Now the essential inputs to production (listed above) are fungible world wide. The cheapest labor (in China or Bangladesh, say) can produce more than the wealthiest can consume, leaving the wealthy (e.g., us Americans) with no known sustainable, ethical, justification to claim such wealth.

TPC, wouldn't the gold standard act to prevent exactly the situation you outline above?


Side note: I have a 2010 resolution to investigate serious alternative to a gold standard. Rajiv was kind enough to mention the work of Ellen Brown amongst others, but suggestions are certainly welcomed.

[ThePythonicCow]

Re: Woods (This guy Rocks)

TPC, wouldn't the gold standard act to prevent exactly the situation you outline above?

A gold standard would prevent alot, yes. It would prevent a thriving world economy for one thing :eek:.

The speed, liquidity, flexibility and adaptability of world-wide instant electronic settlement is a vital element of a thriving world economy.

Unfortunately we haven't a clue how to organize such an economy in a sustainable manner that allows reasonable opportunities and freedoms for those would behave responsibly.

[LargoWinch]

Re: Woods (This guy Rocks)

A gold standard would prevent alot, yes. It would prevent a thriving world economy for one thing :eek:.

The speed, liquidity, flexibility and adaptability of world-wide instant electronic settlement is a vital element of a thriving world economy.

TPC, are you saying that a gold standard would not keep up with the "speed, liquidity, flexibility and adaptability of world-wide instant electronic settlement"?

Then, what about electronic money redeemable in gold?


(BTW, one of Rajiv's main counter-argument against a gold standard is that gold can be hoarded; something which I am still pondering...)

[ThePythonicCow]

Re: Woods (This guy Rocks)

Then, what about electronic money redeemable in gold?

That has tempted my thinking, yes.

But I think not.

Would a weber carb:


be of any use getting the engine in the following tractor to run like a Ferrari:


The enormous imbalances and instabilities in our current world economy would face one of two possible resolutions if faced with a gold standard, even one underlying some high-tech whiz-bang electronic settlement mechanism:

1. The gold gets blown out, as Nixon encountered when he closed the gold window, or
2. The world economy gets mostly shut down, sending our world population in a sharp and ugly reverse :eek:.

[medved]

Re: Woods (This guy Rocks)

The enormous imbalances and instabilities in our current world economy would face one of two possible resolutions if faced with a gold standard, even one underlying some high-tech whiz-bang electronic settlement mechanism:

1. The gold gets blown out, as Nixon encountered when he closed the gold window, or
2. The world economy gets mostly shut down, sending our world population in a sharp and ugly reverse :eek:.

I could not disagree more.

The Nixon blowout was an advanced warning provided by gold. It was ignored. The result is, the current situation is much worse than the one Nixon faced. The Western society still puts too much faith in gov't and is being punished for this. The world economy gets shut down because of monstrous bubbles and imbalances created by the current fiat "regulation" regime.

Regarding Austrians missing something I agree. They created their theories long ago, and things have changed quite a bit. There are too many social/political differences between market participants these days. Uncontrolled economic/financial relationship between them is a recipe for disaster, but this control cannot be provided by their govt's exclusively. Gold standard (at least, in its Bretton-Woods reincarnation) is an example of "good" regulation. Hopefully, the current situation may force the market participants to return to something that looks like Bretton - Woods.

[ThePythonicCow]

Re: Woods (This guy Rocks)

I could not disagree more.

I'm honored.

The Nixon blowout was an advanced warning provided by gold.

Yes.

It was ignored.

Yes.

The result is, the current situation is much worse than the one Nixon faced.

Well, worse or not is unclear. Different for sure. The prosperity that has lifted the standard of living of many people around the world, including in the U.S., would not have happened, in my view.

Granted, it has been a deeply flawed prosperity, with some internal conflicts from which we are now suffering.

The Western society still puts too much faith in gov't and is being punished for this. The world economy gets shut down because of monstrous bubbles and imbalances created by the current fiat "regulation" regime.

Ah - here's the essential place that we differ.

The difference is this. You pose this (from what I read here) as a choice, a dichotomy, for our monetary base between (1) a solid metric such as gold and (2) government fiat.

I entirely agree with you that government fiat is corrupt. Perhaps I don't yet appreciate just how corrupt as well as you might with your Russian awareness, but the U.S. is fast catching up in that dubious distinction.

Where I disagree is in the following. I say it is not an either or, but a third way that is needed. Unfortunately I haven't much of a clue as to what that third way is, and so far as I can tell, no other living human does either.

Too often discussions such as these deteriorate into:

• We must go left because there's a hard place to the right.
• No we must go right because there's a rock to the left.

[medved]

Re: Woods (This guy Rocks)

The difference is this. You pose this (from what I read here) as a choice, a dichotomy, for our monetary base between (1) a solid metric such as gold and (2) government fiat.
[... deleted ...]
Where I disagree is in the following. I say it is not an either or, but a third way that is needed.

This is precisely what Bretton Woods was. It was not "pure" gold standard. $US was officially recognized as the reserve currency, and nobody required US gov't to account for the $US/gold ratio every day. There was still fiat currency with some freedom of monetary policy. OTOH gold was supposed to be some limit switch for this system.

Unfortunately, US gov't was unable to live within its means and its counterparts were too weak to enforce some limits to the insane US monetary policy, but it may change.

[Mashuri]

Re: Woods (This guy Rocks)

While many (not all) Austrians favor a gold standard, the true Austrian stance is for a free market in currency.

[ThePythonicCow]

Re: Woods (This guy Rocks)

This is precisely what Bretton Woods was. It was not "pure" gold standard.

Well, just because it was a third way doesn't mean it was a good third way .

Unfortunately, US gov't was unable to live within its means and its counterparts were too weak to enforce some limits to the insane US monetary policy, but it may change.

Therein lies an example of the difficulty we face, the reason a gold basis for currency seems so attractive, and the reason why not even a gold currency suffices.

Any institution or mechanism sufficiently powerful to provide in perpetuity an honest currency to human civilization is sufficiently powerful to enslave us all, in perpetuity.

Gold itself, as a physical material, may well be beyond the powers of mankind to create in much more great abundance than we already have been doing for centuries. But the human agreements to base a currency on gold are quite fallible. As we've seen, even in the example you note, monetary systems ostensibly based on gold are not immune from the forces of human corruption.

Either a gold currency really is honored faithfully, or (as seems far more likely throughout history so far) even it's use as a monetary base is eventually corrupted. If honored faithfully, it is too inelastic to support the dynamic economic changes and rapid increases in prosperity we've seen of late. Well, that's only a hypothetical conjecture which neither you nor I will ever see disproved, because we will never see human civilization adapt a world-wide honest gold currency in our lifetimes.

My inclinations are toward a separation of powers on a world level, with a world monetary system that is not founded on debt issuance by banks and that is separated as much as possible from other world-wide political forces. This can only be at best a temporary measure. But I suspect that all sufficiently powerful human organizations suffer from the inevitable rot of corruption and influence peddling, so, like our individual human bodies, can be at best only temporary measures.

[SamAdams]

Re: Woods (This guy Rocks)

A gold standard would prevent alot, yes. It would prevent a thriving world economy for one thing :eek:.

The speed, liquidity, flexibility and adaptability of world-wide instant electronic settlement is a vital element of a thriving world economy.

Unfortunately we haven't a clue how to organize such an economy in a sustainable manner that allows reasonable opportunities and freedoms for those would behave responsibly.

I agree with Mashuri here - for many Austrians (not all) its the free market that provides the organization. I agree with you about 99% of the the time, TPC but not here. Not sure if you should be honored or not .

However when you say we "haven't a clue how to organize" I think you are falling into a statist trap. Granted some problems cannot be solved, but more often than not there is a solution. The argument between a statist and a free market proponent typically goes something like this.
Statist - Well how do YOU solve problem X in a free market?
Free Marketer - Well I'm not sure myself.
Statist - Aha, yes you see the free market is a failure!
Free Marketer runs home to momma weeping.

This is also a good argument for a dictator state, since whoever has the "good idea" for how to use the coercive violence of government most effectively for the betterment of the economy, could be installed as head of state to the relief of we economy participants ;).

Instead of thinking like a dictator we should be thinking like entrepreneurs. Each of whom acting in concert could develop institutions and systems beyond our imagination and current understanding. The free market would come up with all kinds of potential solutions to the problem of a more stable currency that is also highly liquid and able to be transacted quickly in our internet age. Many would fail. A few would work, at least better than the one-size-fits all approach that government would try and implement.

Our minds & ideas are currently very limited by what they can conceive of in the current system. Just like the Federal Reserve oligarchy restricts and distorts new ideas of capital raising (like Chris Coles' Spillway Trust or I think there were some other proponents of Social Capital here on iTulip) our current government system is distorting the ways in which the free market would change to improve speed, liquidity, flexibility and adaptability.

A good analogy is to pretend we are living in communist USSR and being confronted by a statist challenging our ability to create a simple pencil.
USSR Statist - And how prey tell do you propose to build a pencil? You will need wood, lacquer, the printed labeling, graphite lead, a bit of metal, and an eraser. Those bits come from all over the earth. Each would require skilled labor to harness the raw materials and transform those materials into useful form. Then you would need to organize a method of transaction to get all the goods into one place and assemble them. Then we would need to devise how to get them to the necessary pencil users. How do YOU plan to go about organizing that activity?
Pencil Entrepreneur - Well I'm not sure myself.
USSR Statist - Aha, yes you see, it's impossible!
Pencil Entrepreneur returns to his forced factory labor.

http://www.econlib.org/library/Essays/rdPncl1.html

The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society's legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.

The free market, left to its devices would develop more effective currency systems than our economic experts would ever come up with themselves.

[LargoWinch]

Re: Woods (This guy Rocks)

The free market, left to its devices would develop more effective currency systems than our economic experts would ever come up with themselves.

abexman, I believe that your main point is: "lets the free market decide, the interest rates". (?)

The question remains however, who would be in charge of controlling the supply of money? i.e. who prints it?

[SamAdams]

Re: Woods (This guy Rocks)

abexman, I believe that your main point is: "lets the free market decide, the interest rates". (?)

The question remains however, who would be in charge of controlling the supply of money? i.e. who prints it?

Yes, but further than interest rates why not the supply of money itself? I think that is what many Austrians propose.

There have been entrepreneurs who have tried to start eGold or the Liberty Dollar and I am sure dozens of other currencies/mediums of exchange I have not heard of. Printed or otherwise. Is not Paypal one of these entrepreneurs creating a medium of exchange? Many of these institutions receive a lot of interference from the current government enforced system to the point of some of them being shut down. Paypal could probably become more vertically integrated if the rules allowed....

Didn't paper printed money largely originate with private banks issuing receipts for deposits of precious metals? Why couldn't private banks continue to do that under private contract? People could choose to transact in the currencies most suitable to their needs. All of these ideas are made much more difficult to implement with the interference by government economic czars and their pseudo government central banks.