United States Heading towards a Depression?

Banging this out quick...

1) Macro economics today, is largely Keynesian. I reject Keynesian economics, as it has largely been discredited, and yet we continue to teach and practice it.

2) It relies heavily on (what i consider silly) mathematical models to understand what the economy as a whole is doing, when that is not necessarily relevant to individual market actors... which brings me to...

3) It is a study of, and propaganda tool for, political economics. The lack of granularity found in microeconomics allows irrational economics to hide out within the largely propagated figures like CPI, GDP, Unemployment etc.

4) Macro business cycle theory doesn't account for or include the ABC Theory, which I am pretty big on, as I consider it the most rational model of human action within the marketplace.

5) Macroeconomics is anti-hard money and doesn't support but rather tries to undermine Say's Law.

The only thing Macroeconomics has going for it, is that it is taught everywhere, and yet it rarely has to answer for being largely abstract and irrational. Which is why, someone like Mia will lecture me on 9th grade economics using Macro as his foundation, when (no insult to Mia) he probably doesn't even understand the laws, aims and assumptions under the information he is quoting.

I've debated with GTech and Mia about economics. GTech has an instinctual Keynesian view of economics. Mia has an instinctual classical view of economics. Mia and I, likely agree on many basic premises, but his only means of expressing his opinions is through the macro education he's received, and likewise, if I cite anything coming near Ron Paul, regardless of Paul and Mia sharing almost identical economic values, it will be dismissed.

Now removing Ron Paul from the equation, Mia truly is an old school capitalist, who would probably find Say's Law to be quite reasonable, and the fundamental premise of Keynesian economics irrational. But again, we come to education and language.

When Mia is bullish on the economy, that's actually a counter argument to GDP. Whatever sector he is in now, is either going well, or he is optimistic that it will get better. Even if the economy as a whole suffers, housing, stock markets, rising unemployment, he might be in a growth sector. Regardless of what is happening with the macro, all that really matters to him, all that he can interpret, outside arbitrary and irrational cooked government figured, is the micro.

WT, what do you think about macro? Will you use GDP and CPI to determine your business decisions? Do you use projection math to determine growth patterns for your company?

As an entrepreneur, do you act on instinct and empirical feedback, or on theoretical modeling?

Tell me what you think.

 

You're right that economics is a social science. It's about how we make choices, what choices we make, what the effects of those choices are etc.

It's a large focus of the Austrian school.

http://en.wikipedia.org/wiki/Praxeology

Some of the key idea Mises came up with I've probably mentioned before.

That decisions are ordinal, not cardinal.

And the theory of voluntary exchange. Meaning that if I buy something from you, say a chicken for $10, I value the chicken more than the $10, and likewise you value the $10 more than the chicken. If we each did not feel that we were getting more than we were giving up, then we wouldn't make the trade.​

 

Federal regulators close Arkansas bank ANB Financial
Friday May 9, 8:45 pm ET
ANB Financial banks closed by federal regulators over 'unsafe and unsound' practices
http://biz.yahoo.com/ap/080509/bank_closed.html?.v=4

BENTONVILLE, Ark. (AP) -- Federal regulators says they've closed ANB Financial National Association banks after discovering "unsafe and unsound" business practices there.

David Barr, a spokesman for the Federal Deposit Insurance Corp. says many customers served by the bank's nine locations had accounts under $100,000, which will be fully insured by the government. Barr says customers can continue to write checks and draw money from ATMs through the weekend.​

Only bailouts for Bear Stearns! Kill the small banks! All Hail the Cocaine Cartel!

PS, FDIC insurance is a joke. They just print more money!

 

Have you read Capital by Karl Marx? It is good foundation to compare every economic theory against the principal that is discussed in that book.

Part of the problem is everybody has forgotten how the wealth is produced and instead is concentrating on money and GDP.

 

I'll admit, I am no expert on Marx. But I am familiar with some of his work, and on work that contrasts his theories.

Stuff like the labor theory of value turns me off.

And Marx's theories on class warfare, the Bourgeoisie and how we need a "socialist man" to fill in the blanks and make his ideas workable.

I will put Capital on my reading list. Thanks.

 

I prefer the "How much does it cost me to buy crap" economic index model.

 

LOL, how true right?

 

The economy is still unwinding and has a long ways to go before hitting bottom.

"Even if the capital markets crisis resolves, it does not mean that this country will not go into a bad recession," said CEO James Dimon, whose bank saw its first-quarter profit fall by half due to the recent collapse of the U.S. mortgage market. "The recession just started."

"We don't know if it's going to be mild or severe," he continued, speaking at a conference in New York hosted by Swiss bank UBS AG. "We're thinking there's a third of a chance that it's going to be pretty bad ... closer to the 1982 recession than the very mild recessions we had in 2001 and 1990."​

http://news.yahoo.com/s/ap/20080512/ap_on_bi_ge/jpmorgan_chase_ceo;_ylt=AlQZQjmUNb.3IVWEFptaO_SyBhIF

MBIA Inc the world's largest bond insurer reported a first-quarter loss of $13.03 per share and charges announced Monday wiped out 40 percent of MBIA's net worth.​

http://news.yahoo.com/s/nm/20080512/bs_nm/mbia_dc;_ylt=AsGrOnxVWMauyb.euhB4TLmyBhIF

 

The problem is that these losses are actually good, something needs to come along and wipe a lot of the credit out of the system. Further compounding the problem is that for every dollar the exits, the FED is likely to come back in and replace.

 

Wonder if we'd ever hit Absolute Zero.

 

Zero what? Credit?

 

Hmmm. I doubt it. Zero would stall out the economy completely, and it would be game over.

 

I think he means where the U.S. is worthless, but we do have tangible assets like CDO's, SIV's, and shit.

 

rotflmao. You really need your own blog.

 

I mean economic flatline. Dow 0. Interest 0. Value of the dollar 0. Total absolute zero across the entire landscape.

 

Totally possible.

When people 0.