NEWS: Bushonomics 101

OK YAWG, I don't know who Paul Hellyer is. I suspect he's a crank, but that's just a guess.

There are more books written on economics for the general public by pure and utter cranks than by competent economists, so I tend to choose my reading carefully.

But here's what seems dodgy about his argument. It seems to rest on the idea that if the banks didn't lend to corporations (to buy up other companies) that the money would just sit there idly in the bank doing nothing. You keep using phrases like " The money from the loan is dumped into the economy, but because it dosen't come from the economy it dosn't add any value to it" -- I don't even know what you mean by "doesn't come from the economy".

Banks are a financial way station. In the literature, their role and activity is referred to as "financial intermediation" -- they mediate between providers and users of financial capital. They only want our deposits because it gives them money to lend out to SOMEONE. To say this money "doesn't come from the economy" is meaningless -- it's come from depositors who are, essentially, the lenders.

The banks could lend that money to consumers to finance a car purchase or holiday; it can lend to businesses to finance investment expenditure (the creation of new capital assets basically, like a new factory or an innovation in the productin process); or it can lend money to businesses to do what you described -- gamble on takeovers as a means of pumping up its own share price.

The fact is this money "exists" already -- it's simply been channelled by the banks to some borrower or other. Whoever borrows it is going to spend it on something, and that is going to cotribute to upward price pressure pretty much by definition.

Like I say, I don't know Hellyer or his book. Mayb there's some subtle aspect I have missed or misunderstood. But given your description he sounds like a crank, and cranks are best avoided. (Or in the case of our pet crank stockula who can't really be avoided, best taunted.)

It isn't so much that is too complicated. It's more in fear of someone saying something like this:

"It amazes me how people who would never dream of chiming in with their woefully ill informed opinions on a dental extraction or a TIG weld suddenly feel that their ideas are as good as anybody else's in economics."

and then while you're down, assholes like you say things like this:

"What he's saying is, you're speaking well outside your apparent expertise. He has a point, y'know."

But that's just me.

Y'know.

If you have an informed point of view, by all means, share with us.

If you don't, then you don't. Don't blame assholes like me for that. It's called shooting the messenger.

My point of view just isn't your point of view. It's informed enough to where I feel comfortable sharing it in a forum that I know the majority of doesn't agree with. I think it took balls for me to put that up there and hear what anyone had to say about it. I never said anything personal or rude about any of you.

Anyway, I'll give you that you probably know a lot more facts off the top of your head than I do. But I pay attention and care what happens. I read and listen and form MY VIEWS based on my values and the facts as I see them. Because you're consumed by it, doesn't make me any less qualified to talk about it.

And thats all I have to say about that.

OK. I'm not trying to pick a fight with you, let's get that sorted.

The issue is simply this: not all points of view are "valid".

That you've read some facts, and that you hold some views strongly, says nothing about their merit. The issue isn't whether I know more facts or not, the issue is that I have a better grasp of an analytical paradigm that will help me figure out the issues and the consequences of particular actions.

Your views, despite you holding them close to your heart, showed clear misunderstanding of cause-and-effect relationships, of what would happen if your proposed solutions were implemented. Reprobate and I went through some of the problems with your argument in that regard.

Admittedly reprobate is often snarky (welcome to the Current Events board!), but that's not the issue. What it boils down to is, you can either focus on the fact that your feelings got hurt.

Or you can move past that and focus on the fact that your arguments didn't withstand scrutiny, and you could contemplate going back and re-analysing your position with the possibility that you might actually change your mind.

Being able to change your mind when confronted with arguments and evidence is a really liberating experience. If you want to talk any more about this stuff, best to have a chat with bean about joining his debating group.

I don't think they did. That's what I am trying to say. Your fact, my fact, paradigm, whatever.

Debating does (or at least it should) include not deliberately hurting someones feelings. If you don't agree, think I am an idiot, etc. Fine, move on. But why would you say something rude? You don't know that my "arguments didn't withstand scrutiny", because reading that made me shut down. I admit it, I was embarrased. Had you not been an ass, maybe I would have read what you had to say and really thought about it. Instead, I just thought "what an ass". Doubtful I know, but maybe I would have had a viable view to consider.

And yes, my feelings got hurt and you should feel bad for that. If you don't, that's your bed baby.

Facts are facts. Listing a bunch of facts is not an argument. An analytical paradigm helps you interpret facts and put them in an approppriate context to make a point or support a world view. Knowing some facts simply isn't enough.

As for hurt feelings:

My comment, coming after reprobate's, was really quite gentle. I think it felt hurtful because your feelings had already been hurt. I wasn't deliberately trying to humiliate you, you know.

Here's what it says before you enter this particular forum:

You might not like that, and fair enough, but you certainly can't say you weren't warned.

The thing STILL is, when someone attacks you, fairly or not, and says "You don't know what you're talking about", you can do one of two things quite reasonably.

One, you can explain to them that you do know what you're talking about, and why your argument does withstand scrutiny. Two, you can go "Hang on a minute, maybe I didn't really comprehend the big picture. Perhaps I should go away and think about this some more."

The third, less reasonable, thing you can do is to nurse hurt feelings and decide you're probably still right and the other person can be disregarded simply because they hurt your feelings and must be an asshole. Sometimes the assholes are right.

what a fun 3rd page this has been.

thanks TFOK, this thread (most of it) has been quite enlightening.

as for my $300 check, i got it the day after i lost my job. thank you G.W.!

economic stimulus my ass... $300 doesn't cover a months rent in a studio in Ohio.

My main goal in starting threads is to achieve a Fun Third Page.

TFOK:
From the insleeve of the book, and I think it qualifies his opinion somewhat.

"Paul Hellyer was Canada's youngest Member of Parliment when he was first elected in 1949 and the youngest cabinet minister appointed to Louis S.St Laurent's goverment eight years later. After a stint in opposition he subsequently held senior posts in the governments of Lester B.Pearson and Pierre E.Trudeau, who defeated him for the Liberal Party leadership in 1968. The following year, after becoming Deputy Prime Minister, Hellyer resigned from the Trudeau cabinet on a question of principle related to housing."

Maybe not the great economic thinker of our times but a man with enough experience to know what he's talking about.
I think the point he is trying to make, and that I failed to get across is that the money the banks lend isn't there to begin with. I realise now that I have no idea how other countries regulate their banks, I can only talk about Canada.
What used to be required was that a bank had to have 8% cash reserves to cover the loans it made. This meant the money could be lent 12 1/2 times. Nowdays the figure is 0% so the banks are free to keep making loans without having anything to back it up. With individual debt, credit cards and such, it's not a big deal when you compare it to the large sums of money the banks loan to big business. This "money" is counted in the economy but you can figure what happens when the debts are called in. For example, a company may be worth 500 million on paper but it's highly unlikely they have 500 million in a bank account somewhere. The inflation comes from the fact this money, which is built from debt and not produced from growth, is now circulating in the economy by way of paying wages and day to day transactions.
It's a viscious two step between the corporations which demand more money to pay operating costs and banks that'll give it them because it looks good on paper.

How's that?

I looked him up in the meantime.

There may be something to that, but I'll reserve judgement.

(Don't have a lot of time now.)

So, what you're saying is that while you can repeatedly post ignorant, reactionary and xenophobic rants, we cant call them that because we might hurt your feelings?

Sorry, it doesn't work like that. If you post considered reasonable things, you get considered, reasonable responses. if you don't, you don't. Simple.

As for political debate not hurting people's feelings, consider how the founding fathers went about it:

"...the world will be puzzled to decide whether you are an apostate or an impostor, whether you abandoned good principles or whether you ever had any"

Thomas Paine, on the occasion of Washington's retirement from the Presidency. Published, publicly by Benjamin Franklin's grandson

or its rebuttal:

[Paine's remarks] "resembled the futile efforts of a reptile infusing its venom into the Atlantic or ejecting its filthy saliva towards the Sun"

Ibid, author unknown.

This stuff is not for Care Bears.

what did i miss here?

"Everyone is entitled to their own opinion, but not their own facts." - Sen. Daniel Patrick Moynihan

B-b-b-bump

Just think about it, less than 24 years from now we might have a new leader.

That's actually what didn't happen under Reaganomics. The problem is that there is no capital shortage in this country, there hasn't been for over 200 years.

What happened in the Great Depression? The same reason the Bush tax cuts didn't work - underdemand. The factories i.e. capital were there waiting to produce goods - but there was nobody to buy them. Without demand to fuel a return capital is useless - it does sit idlly in the bank. Because unless you can sell to people there's no return on investment - so there's no investment.. So when you give a tax break to spur capital in an already flooded capital market it gets wasted rather than invested - as there is no additional demand to employ that capital. People aren't waiting to buy more - they're trying to keep what they have. So usually, as in the 80's, it gets wasted on conspicous consumption.

After the recession of 2000 there was plenty of capital floating around - because all the real capital had been pulled out of the bubble. The solution to the inevitable recession was to put money in the hands of the middle class and poor, who would increase demand with it. Instead Bush gave himself and his friends a tax break and created artificial stimulus towards captial accumulation. I'm sure it kept their share prices artificially high - but it screwed the economy as a whole.