JKJ wrote-To put it another way, if Macfarlane was wrong, how would you know? Would you have any way of knowing other than by "quotes" by "reputable experts"?

Isn't every article on economic theory the musings of some expert? Whose theories do you follow. I tend to follow Professors Wray, Mitchell, Black , Hudson and a few others and as I said have read Smith and Keynes etc.

JKJ- I say it is flatly incorrect to blame the GFC on "free markets" for the reason that governments at all times exercised a monopoly on the supply of money, and were manipulating the price of money at all relevant times for decades before, and at all times during the GFC. What do you say to that?

I say that Macfarlane was opining that the governments were not adequately regulating the money markets, (read Hume and Smith).

JKJ- "Do you understand what is happening in the USA with Quantitative Easing" -Yes. The Fed is printing money like it's going outa style, pretending to create benefits for society as a whole, while actually looting A (owner/producer of the wealth stolen by government's inflation of the money supply) to satisfy B (pet political favourite).

No. The Fed and Obama are using QE to resuscitate Wall Street, rather than rescue the victims of CDOs and the deliberately created housing bubble (created by the US major banks), a situation I saw likely to develop in 1998 (and wrote to Costello about). American politics is debauched by the lobbyists and the political contributions of the far right.

"or why Europe is in such trouble with austerity under a common currency?"

Have you not read about the problems being experienced by Portugal, Italy, Greece and Spain etc.? Do you not understand the difference between a country which has its own sovereign currency and a state which shares a common currency in the way all states of Australia share the $A?

rehctub-- the bond rate was about 3.4% a week ago. The government could cease paying interest (upper crust welfare) on the private banks reserves.

BTW did you hear about the economics professor of the Efficient Market Hypothesis walking with a student on campus?
Student: “Hey look! There’s a $50 bill lying on the ground.”
Professor: (without looking down) “Can’t be.”
Student: “Why not?”
Professor: “Because. If it was, someone would’ve picked it up already.”

* * *

“Isn't every article on economic theory the musings of some expert?”

Whether it is or not, it’s the reasoning and evidence that contain the explaining power, not the authority or status of the expert. If the reasoning is based on factual or logical errors, the authority of the speaker can’t save it.

I follow the Austrian school. Mises showed in his “Theory of Money and Credit” that the so-called business cycle theory is the result of inflating the money supply with money substitutes – exactly what central banks do. He also established a basis for economics in logic based on factual axioms, rather than in the pretensions to empirical science that riddle mainstream economics. Mises also demonstrated in the economic calculation debate that socialism – the public ownership of the means of production – is impossible in theory, let alone in practice.

I'd be interested in your comments on this short summary of Austrian Business Cycle Theory by Murray Rothbard: “Economic Depressions: Their Cause and Cure”: http://mises.org/tradcycl/econdepr.asp

The Austrians make a thoroughgoing refutation of Keynes, which the Keynesians never answer, because they can’t.

For example, the orthodox explanation of the GFC (and Great Depression) are that they arose spontaneously from free markets, unregulated capitalism. When an Austrian points out that the factual premise is flatly incorrect, the orthodox replies there wasn’t enough regulation.

But hang on. The radical critique is, how do you know it wasn’t from government manipulating the money supply in the first place?

Secondly, to allege that there wasn’t enough regulation, is to assert that government knows how to perform the essential purpose of financial markets. If this were true, then
a) why wouldn’t it be true of all markets?
b) why not abolish private property

Phew, economics are so complicated! I'm glad I never had to study any of this!

Indeed I have no use for economics when asked such simple questions as:
"why wouldn’t it [regulation] be true of all markets?" or "why not abolish private property?"

All I need to answer those questions is just a small principle, that same principle that allowed Gandhi to defeat the British empire: Non-Violence.

It is simply wrong to restrict others or to take away by force what's theirs - and what's wrong should not be done. You don't need a university degree for that - every boy and girl learns this around the age of 3 when told "It's not nice to hit your friend".

Hooray Yuyutsu!

Foyle
So there is a fundamental inconsistency at the core of orthodox theory, including new economic perspectives so far as I understand it.

On the one hand they allege that economic recessions arise out of unregulated capitalism, without ever examining the obvious possibility that it arises from government’s abuse of its monopoly powers over money and credit; of which the bank’s abuses are downstream phenomena. (But even if they are autonomous abuses by banks, that disproves the basal orthodox assumption that government has the competence to manage the supply of money and credit.)

On the other hand they allege that the solution is more governmental regulation, without squaring their assumption that the necessary governmental competence, if true, would mean that full socialism is both possible and desirable - without ever acknowledging or answer the economic calculation argument.

As soon as they resile from that conclusion, they are at a loss to explain why the arguments against capitalism don’t apply; or why the arguments against socialism don’t apply. They assert the need to “balance” them; but they can never, as a matter of economic science, identify the alleged balancing point by any rational criterion. All we ever get is appeal to arbitrary opinion and alleged experts; or mere arbitrary power.

Furthermore, the methodology of relying on the authority of “experts” is faulty because the Austrians thesis is that the emperor has no clothes. It is no rebuttal to cite the opinion of high officials pronouncing that the emperor’s new clothes are beautiful.

The problem is precisely whether there is a conflict of interest between government on the one hand, and the people on the other. This needs to be examined in order to resolve the question. But underneath all Keynesian argument, and NEP argument, we get this bald assumption that government is some kind of wise benevolent institution, and ipso facto represents the best interests of the people.

When the orthodox wonder what “we” should do, they always mean THE STATE, thus missing the point.

To Austrians, reliance on illogic invalidates Keynesian & NEP theory.

Only because Rechtubs written smirk needs addressing I return.
This thread gives evidence that can not be rebutted, Rechtub does not understand politics.
No way either side would claim other than the truth.
Labor is facing defeat for many things, foremost DILLARD and her nigh crawlers supporting her, not the party.
Abbott ., clearly understanding he dare not move too fast, many, like him in his front bench, never liked or supported work choices.
SOME changes are needed, by both sides.
But this thread displays only Rechtub needs assistance in understanding politics.

Belly, what's to understand about it, we went from having billions in the bank, with confidence sky high, to owing $200 billion, the place in a mess, and the borders are now open slather, IN LESS THAN SIX YEARS, all thanks to the likes of you, who have offered unconditional support for this incompitent mob, even after being repeatedly warned they were incompitent and would cause great harm.

Your stubbiness to acknowledge that labor is not the only way has helped cause this shocking mess, a mess that ALL AUSTRALIANS will be paying for for years, if not decades.

Well done, because if ruining the country was your primary focus, you, your supporters, your unions and your beloved labor party have succeeded.

The ironic part about it all, is that although you criticize Gillard, and so you should, I will almost guarantee you will still vote labor.

Brain washing can be a terrible thing, especially if you are nieve enough to not know it's happening.

BTW, are you ever going to repond to my reply about the past 6 PM's, or have I cornered you.