Comments on: What does Mises say about trying to stimulate the economy out of recession http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html Sat, 21 Nov 2009 08:48:41 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: What is quantitative easing? | ForexZillion.com http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1473 What is quantitative easing? | ForexZillion.com Mon, 22 Dec 2008 05:46:08 +0000 http://www.creditwritedowns.com/?p=2118#comment-1473 [...] What does Mises say about trying to stimulate the economy out of … [...] [...] What does Mises say about trying to stimulate the economy out of … [...]

]]> By: dmfdmf http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1314 dmfdmf Sun, 14 Dec 2008 16:54:23 +0000 http://www.creditwritedowns.com/?p=2118#comment-1314 here's a comment I made on reddit http://tinyurl.com/6rdx4t here’s a comment I made on reddit
http://tinyurl.com/6rdx4t

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1291 Edward Harrison Fri, 12 Dec 2008 18:30:54 +0000 http://www.creditwritedowns.com/?p=2118#comment-1291 @pej, That link didn't work for me. Would you re-post? @pej,
That link didn’t work for me. Would you re-post?

]]> By: pej http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1290 pej Fri, 12 Dec 2008 17:10:24 +0000 http://www.creditwritedowns.com/?p=2118#comment-1290 Great post. I would also recommend this post (on my blog): <a href="//realitylenses.blogspot.com/2008/12/inflation-or-deflation-2.html\" rel="nofollow">inflation or deflation - 2</a> about what Murray Rothbard's writing about inflation/deflation during recessions. Great post. I would also recommend this post (on my blog): inflation or deflation – 2 about what Murray Rothbard’s writing about inflation/deflation during recessions.

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1288 Edward Harrison Fri, 12 Dec 2008 15:09:27 +0000 http://www.creditwritedowns.com/?p=2118#comment-1288 @MikeN: That is the problem - having gov't mucking about. Look, there are no magic bullets here. We are facing a very severe downturn. In my view it will be much worse if we just sit around doing nothing. Good companies go down for lack of liquidity and lack of credit. Worthy projects get tossed by the wayside because no one has the money. This is a deadweight loss to society. What's more is people's lives are involved. For some, this recession can be crushing and we need to be cognizant of that. This is why I cannot support the Austrian solution. It doesn't seem particularly effective at dealing with these externalities. Granted there will be wasteful spending, pork barrel politics, but, on the whole, we are likely to see a quicker recovery and avoid worst-case outcomes through stimulus. I've been having a back channel conversation with a Keynesian friend of mine who read my post and thought it dismissed Keynesian stimulus. In truth, I think stimulus does lead to a quicker recovery and that's a good thing. As far as losing control, I would agree about the banking industry. They are a special interest that has had a great degree of influence. However, that influence is about to be severely curtailed and they will be regulated as they should be. Again, this is a good thing. @MikeN:
That is the problem – having gov’t mucking about. Look, there are no magic bullets here. We are facing a very severe downturn. In my view it will be much worse if we just sit around doing nothing. Good companies go down for lack of liquidity and lack of credit. Worthy projects get tossed by the wayside because no one has the money. This is a deadweight loss to society. What’s more is people’s lives are involved. For some, this recession can be crushing and we need to be cognizant of that.

This is why I cannot support the Austrian solution. It doesn’t seem particularly effective at dealing with these externalities. Granted there will be wasteful spending, pork barrel politics, but, on the whole, we are likely to see a quicker recovery and avoid worst-case outcomes through stimulus.

I’ve been having a back channel conversation with a Keynesian friend of mine who read my post and thought it dismissed Keynesian stimulus. In truth, I think stimulus does lead to a quicker recovery and that’s a good thing.

As far as losing control, I would agree about the banking industry. They are a special interest that has had a great degree of influence. However, that influence is about to be severely curtailed and they will be regulated as they should be. Again, this is a good thing.

]]> By: MikeN http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1287 MikeN Fri, 12 Dec 2008 14:03:10 +0000 http://www.creditwritedowns.com/?p=2118#comment-1287 The problem i see with the reasoning of "cushioning" is that it is provided and controlled by mere mortals who possess no crystal ball. It's like attempting to land some spacecraft by applying counter-thrusters by the seat of your pants and not even a slide rule for help. Too little thrust, hard landing. Too much thrust, you bounce back into orbit. Now imagine there's a hundred pilots sharing the fire button and each speaking a different language. Nah, the gov't officials and banksters are afraid of just one thing: losing control, becoming irrelevant to the governed. They need to keep the charade up or the whole illusion of stability will come crashing down for us to see the puppet-masters behind the curtain. The problem i see with the reasoning of “cushioning” is that it is provided and controlled by mere mortals who possess no crystal ball.

It’s like attempting to land some spacecraft by applying counter-thrusters by the seat of your pants and not even a slide rule for help.
Too little thrust, hard landing.
Too much thrust, you bounce back into orbit.
Now imagine there’s a hundred pilots sharing the fire button and each speaking a different language.

Nah, the gov’t officials and banksters are afraid of just one thing: losing control, becoming irrelevant to the governed. They need to keep the charade up or the whole illusion of stability will come crashing down for us to see the puppet-masters behind the curtain.

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1286 Edward Harrison Fri, 12 Dec 2008 12:45:14 +0000 http://www.creditwritedowns.com/?p=2118#comment-1286 @Stevie b: I wish I were prescient enough to know where this is all headed. Thanks for the kind words. I can understand how the last sentence worries you. It worries me! The fact that the money multiplier is plummeting suggests that the deflationary forces set in once Lehman went bankrupt. I said three months ago that this was the pivotal mistake in the chain of events. But what's done is done. @Stevie b:
I wish I were prescient enough to know where this is all headed. Thanks for the kind words. I can understand how the last sentence worries you. It worries me! The fact that the money multiplier is plummeting suggests that the deflationary forces set in once Lehman went bankrupt. I said three months ago that this was the pivotal mistake in the chain of events. But what’s done is done.

]]> By: Stevie b. http://www.creditwritedowns.com/2008/12/what-does-mises-say-about-trying-to-stimulate-the-economy-out-of-recession.html/comment-page-1#comment-1284 Stevie b. Fri, 12 Dec 2008 07:32:53 +0000 http://www.creditwritedowns.com/?p=2118#comment-1284 Ed - really helpful post to aid understanding of this particular school of economic thought. When Mises cuts to the chase and says "even though it [stimulus] might overcome the difficulties of the moment, it will certainly produce a worse situation in a not too distant future", he was surely referring to "local" conditions. Would his advice be the same in the context of global, decade-long, mega-multi bubbles I wonder? Perhaps another reason to part from him is that in the present global situation, the "worse situation" he talks about above may no longer be the case, at least not in the relatively near future as he claims. Your last sentence is the one that worries me. It's now the billion dollar question - can depression just be postponed or avoided altogether ? I can't see how we can really know the answer yet, so I'll keep reading in the hope and belief that you can give us the answer first! Ed – really helpful post to aid understanding of this particular school of economic thought.

When Mises cuts to the chase and says “even though it [stimulus] might overcome the difficulties of the moment, it will certainly produce a worse situation in a not too distant future”, he was surely referring to “local” conditions. Would his advice be the same in the context of global, decade-long, mega-multi bubbles I wonder? Perhaps another reason to part from him is that in the present global situation, the “worse situation” he talks about above may no longer be the case, at least not in the relatively near future as he claims.

Your last sentence is the one that worries me. It’s now the billion dollar question – can depression just be postponed or avoided altogether ? I can’t see how we can really know the answer yet, so I’ll keep reading in the hope and belief that you can give us the answer first!

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