I got my Econ degree in the 70's. Funny that Hazlitt, Von Mises, et al were never mentioned. I didn't have a realistic understanding of Economics until I read Hazlitt, Von Mises, Bastiat, et al, much later... The Common Sense of a Von Mises is understandable to the average person because it is simple truth. In my 56 years I've discovered that a LOT of people dislike the truth.
***** Well I am sorry but your comment that it is only because of the Koch brothers is wrong. have you actually read anything by some of these Austrian economists? If you look at their work it does make sense and is accurate. Also Ron Paul is a big supporter of theirs because he believes in liberty and rights.
***** Yet were to begin? First off it wasn't the Koch brothers promotion that brought out Austrian Economics. That is just theory not fact. As for Ron Paul maybe all that is true about Gary North or Chuck Baldwin but it isn't true about Ron Paul not believing in liberty and rights. You just don't understand what liberty and rights are since you most likely have had been brainwashed by the government in to thinking that if it doesn't come from government it doesn't count. Maybe you should read some of Ron Paul's work and look into what he has done. Of course look up what liberty and rights are.
***** Maybe you should read Liberty Defined. You sir are the one messed up. I mean do you support George W. Bush or Barrack Obama? How about Ralph Nader or a few others I can name? You should see what their ideas and agenda is. No Ron Paul does support liberty and People's rights. I don't believe that Ron Paul agrees with several things that either of those two guys you mention support but then go ask him yourself.
Amazingly enough, I had the same experience majoring at the liberal bastion of UVM in the early 80s. Never did my professors ever mention Mises. Sad. Thank god for the Internet!
Another great speech for a beginner like me of Austrian economics. I took one year of economics in high school, and really the whole reason Austrian economics is so appealing is because it's logical. Everything makes sense to me. The government has been wrong time and time again about what effect their policies will have on the market, and it makes complete sense to say that because of that, they should really have a more minimalist approach to lawmaking.
To me that is the beauty of the gold standard. It prevents the government from using inflation to tax and fund wars whether they are necessary or not. Let the people decide if they want to be a part of a war with their own dollar, not bureaucrats using force on their own people to fund or fight a war. Cheers.
Econometrics are limited, and you need to be keenly aware of their limitations. It is possible to show that average earnings have gone down, despite each individual earning 20% more on the whole, because the population growth of the lower earning bracket was more than the higher earning bracket. The GDP deflator does not take into account changes in quality over time, does not represent technological progress, and skews toward more inflation in prices than would be expected. It doesn’t seem like much, but there are many other examples. Like any other statistics, your baseline assumptions have to be solid before you make a hypothesis to test, and statistics/mathematics can only get you so far. Before the Stagflation of the 1970’s, it was assumed that it was impossible for both high inflation and high unemployment happen simultaneously.
@@AtlasFullsun It is that mathematics cannot be accurate or logically sound in the presence of uncertainty which is the human condition and the way people interact with the world around them. Here is a simple way to put it. Let's say you have an equation with a lot of variables, all of these variables so far are static, and you want to be able to solve that equation in order to be able to make sound prediction for the future based off that previous data, well that equation will be sound because nothing changes the end result but if you include human beings as a variable into that equation then all of the data you will receive is going to change either in large or small amounts each time you solve it, kind of like snapshots in time, because like it or not human beings are autonomous and there are a fuck ton of human beings so any mathematical prediction will inherently be logically unsound when accounting for decisions made by human beings.
Anyone with a modicum of common sense can see that what Mark is saying is true. The reason that so many people dislike or disagree with his and the Austrian School's philosophy is because to follow his advice means people, banks, failing businesses and, in the case of the EU, even governments will have to stop relying upon the state (i.e. the tax-payer) to bale them out, cover their debts and subsidise them, thus encouraging them to repeat the same mistakes. It seems to me that many people would rather carry on, getting deeper into debt (which must one day be repaid) in the hope that if they keep doing the same thing after each financial crisis, everything will one day, magically right itself. More truth might be found in the writings of the brothers Grimm!
I think the reason that most people are unwilling to accept Austrian economics is that it shoves the unpleasant truth in your face. What I mean is that markets change, consumer preferences change, people lose jobs, businesses shut down, and people have to find new lines of work. This is unpleasant for the people who lose their jobs, but they fail to look at the bigger picture and see that if they put out some initiative, they will get a new job and be even more prosperous than before. This is just hard to swallow for a lot of people. Then, the Keynesians come and whisper in their ear that they've devised some wonderful system where you can just print money forever and nobody will ever have to lose their job again. Or, socialists will tell them that they can simply be supported in idleness at the expense of those evil rich people. Basically, Austrian economics is bitter medicine that ultimately leads a society to prosperity, whereas Keynesianism and socialism are snake oil that leaves it sicker than before. It's just that many people choose the snake oil.
@qtutoringhelps Austrian economics has the somewhat unique problem of advocating less power. By definition, economic policies are enacted by those in power. Many people do not want to lose the power they currently have, and often want to obtain more, so they will be reluctant to enact policies which by design limit and remove their power. That is one reason why we do not see Austrian economics being very mainstream.
What's fascinating about Austrian economics is that everything they say seems to agree with mainstream microeconomics. I got a microeconomics book at the thrift store next to a university (published around 2006), and it's one hell of an interesting book. It says stuff about lower prices increasing demand, it has graphs explaining the logic behind this, it explains "dead weight loss" caused by government rules or by monopolies. It says how minimum wage causes unemployment but benefits the people who keep their jobs. I just find it mind boggling that an introductory book to microeconomics explicitly says that lower prices increase demand. Economists on TV always say the opposite. According to Bernanke or Yellen, people buy more stuff when prices are rising, which is counter-intuitive and something most people have seen experienced.
I do not think that mainstream economists that people consumer more with rising prices. If any say that, they are being political., at the behest of some appointing politician. Economics and politics are different areas of study. Check the economists for instaance in business or even the Congressional Budget Office. Economists in the CBO by very strict law can not favor one political party. However, in hte Office of Management and Budget (OMB) economists tend to be more political since they work for one jackass politician and whomever that jackass is, those economists are influenced by him. The Fed has a mixture of partisan and non-partisan people. Some of the Fed's economists actually have integrity.
They don’t mean that lower prices increase demand, which is a rightward shift in the demand curve, they mean that lower prices increase quantity demanded, which is a movement along the demand curve. All first year economics textbooks explain this difference and will always say that people buy more at a lower price than a higher price. This is not just economics, it’s common sense.
I think what Bernanke and Yellen were referring to were hard long-term assets. They look to things like new home purchases as economic driving forces. I've often heard about new home starts on economic reports in the news. Housing prices going up, they believe, incentives more people to buy them because they'll make more selling them down the road. Overlooking consumer spending like soft goods is also foolish because that's where people spend their money day to day. When the Covid lovkdowns began, what was the first thing people went for - toilet paper and other paper goods. This was because people were anticipating disruptions in the usual supply of them.
As defined by the Austrian well known economist Robert Murphy: Market / Market economy: Can be a synonym for capitalism. It also refers to the collection of voluntary exchanges that occur in a capitalist system. Free enterprise: A system in which individuals can choose their own occupations and are free to start whatever business they wish. They don't need special permission from anyone to enter an industry.
@@gloriousrevolutionary2306 I regret that you don't understand this. Go get a PhD in economics and that will help. Have a great day. If you do not like math you will not be able to study economics at the graduate PhD level. But there are certainly other fields you can go into that do not require high math skills. I have faith in you to find to find the right career for yourself. Just hang in there. Keep your chin up and you will succeed.
@@newaddress456 Stupid comment! You can't even give one specific example of why Austrians are wrong, not even the generic "Austrians predict a new recession every day!" talking point that gets spewed. I'd have thought a man holding a PHD in Economics like yourself would have an answer 😉
@@gloriousrevolutionary2306 Again, I am sorry you lack the intellect to do high level calculus, quadratic programming dynamic programming and econometrics which Austrians themselves can not do either. Mainstream economists can do all those types of work. I think you should be a political commentator or a go into some kind f marketing job. Again, I have faith in you. YOU can do it. There is no reason to get down on yourself. There are far more lucrative careers in marketing. You are ready made for that. Keep your chin up and you will succeed.
FED is a monopoly - agree - created and enforced by government writ - agree. - T-Bills is NOT revenue, nor is it counted as revenue by the government. The government calls it a debt - which it is. - How is FED money supposed to pay off debt? - Again, agree - printing of money creates inflation and has consequences, such as erosion of savings and capital.
What Mark says is true. People who have savings are being punished by 0 interest rates or maybe negative interest rates soon. And they do not want to invest either because they know the economy is just getting worse. Just like in Japan. No growth for 25 years because of stimulus and 0/negative interest rates. In the meantime fiat currency is loosing it's value by more printing and credit creation. Thanks to the Fed and the Big Banks.
If that is your quest, then nothing will change. It does not matter whether the government chooses paper or gold - the problem is not the commodity but who does the choosing. Let the market choose its money - and it will - and will do so quickly and gently. No stirring required.
And to those who say that Austrians are correct in their predictions only because they predict doom at all times, how come Austrians predicted that the end of WWII would build up huge economic growth while Keynesians believed the loss of "employment" by the soldiers would be bad for economy.
@underdogg20 no, predicting behavior isn´t Keynesian, (exact calculations are though). Austrians use Mises' praxeology to predict outcomes. Certainty of rescue will screw with risk assessments and thus eventually with behavior, the result of which we see all the time. If, however, a rescue is voluntary (charity), there are no guarantees. So that wouldn't screw with incentives, hence a better system.
New Keynesians do not say that and New Keynesians are ubiquitous. They know Keynes was wrong on some points. Some well known New Keynesians are Prof. Robert Gordon (Northwestern) Gordon and Greg Mankiw (Harvard). The old Keynesians are literally dead. New Keynesians know that the long run matters; whereas old Keynesians did not. New Keynesians became prevalent in the 1970s.
Nassim N. Taleb "The failure of mathematicall models in the social"sciences" shd be and can be debunked mathematically. " This included economics, itierney. Do not pretend "stats" in economics provides anything more than a picture of "what happened" and never "what will happen"
Economics is trying to model things that are vastly complex. Which is the reason it usually fails. You cannot compare it to physics, which we can us to make accurate predictions. The amount of disagreement among economists shows this!
Very good. Mr. Thornton. Deflation R' US... if only... Question: Why is the oldest school of Economic thought so ignored? What happened? With Mises and Heyek and Rothbard so clearly RIGHT... How did it ever get so wrong? Is Socialism to blame?
You do not understand. . It is not a matter of theft - theft is NOT a free market for there is no longer the voluntary component. Free Market is "voluntary trade" and any action which degrades the voluntary trade degrades the market. . Theft does such a degrading. . No, in fact they do lend 'saved' capital. They do create loans based on their capital, assets AND their deposits. Banks DO NOT create money. That manufacturing occurs at the Central Bank, in the case of the US, at the Federal Reserve
It is absolutely an explanation, and a complete one. Again, it is IRRELEVANT on how this may occur. Whether a printing press makes green paper or a computer keyboard enters a number, the fact of money does not change.
There are only two economic theories - the 'right' one and the 'wrong' one.. . If you do not advocate for Free market - that is, men in voluntary action - you can only advocate for violence - that is, forcing men to act in non-voluntary action. . There is no "half-voluntary, half-force". There is no third way.
That is the challenge of economics - even IF you found evidence, such evidence provides NO PROOF. Your evidence could be as easily brushed aside as an anomaly. This is the whole case Mises raised in "Human Action". Economics is a science completely based on logic and reason -"Praxelogical" argument- not demonstration.
We cannot predict behavior in aggregate either by using stats of some measure of some past behavior. For example, what stat of history would you use to predict ww2? The thing with Democrats, is different. It is not a stat, but a policy statement. They have consistently professed such a policy, and their reasons. But even then, tomorrow, they may change their minds. No stat will tell you this.
Can someone tell me what are the models or basic models in Austrian Economics? I'm very interesting in this school of thought. I'm very tired and disappointed of mainstream economics, even though knowing them are helpfull in some level.... and what do u think about monetarism???
"We, just like everybody who shops at Walmart, enjoy lower prices." It's been so serious and dry up to this point then all of a sudden he drops this joke, I nearly spit out my drink lol
YT really isnt the format for in depth chat, mate. I'd think of things sectorally tho and remember that government deficits are part of the net national deficit which = current account deficit. The eurozone is in effect a gold standard system from the perspective of national governments who are forced to keep strict currency convertibility with their neighbours & we see the inherent limitations of it in a crisis, caused by structural account imbalances. Pegged currencies are fragile/limiting
DEFINITIONS FOR THIS LECTURE: STAGFLATION: 1. an economic situation in which prices rise continuously, unemployment is high, and many businesses are not making money. 2. a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation) BUBBLE: 1. A price level that is much higher than warranted by the fundamentals. Bubbles occur when prices continue to rise simply because enough investors believe investments bought at the current price can subsequently be sold at even higher prices. They can occur in virtually any commodity including stocks, real estate, and even tulips. 2. A situation in which prices for securities, especially stocks, rise far above their actual value. This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline. REGULATIONS: 1. Regulations are rules made by a government or other authority in order to control the way something is done or the way people behave. 2. the act of controlling or directing according to rule ("Fiscal regulations are in the hands of politicians. 3. an authoritative rule FREE MARKET ECONONOMY / MARKET ECONOMY A social and economic system in which prices are fixed by the law of supply and demand rather than by a government or other body. In its pure form, a market economy is an economy absent of government subsidies, incentives, or regulations. A market economy contrasts with both a planned economy and a mixed economy. No economy is a complete market economy: most countries claiming to have market economies in fact have a market economy combined with greater or lesser government regulation, sometimes called a social market. Proponents of a market economy argue that it is more efficient than any alternatives, promotes fair competition between its participants, and rewards skill and hard work. Critics allege that a market economy perpetuates class differences and rewards ruthlessness over actual labor. Milton Friedman, Friedrich Hayek, and Ludwig von Mises were three major 20th-century proponents of the market economy. See also: Capitalism, socialism, John Maynard Keynes.
Not "all" - that is your fundamental fallacy; that ALL poor people do not deserve their poverty. A man is poor because: 1) - he acts poorly, thus his consequences is poverty 2) - he is subjected to violent force. 3) - an act of God (he was born to it) . But why should I pay for his poverty? I am not the violent actor, nor am I God who made him poor, nor should I suffer the consequence of his poor choices. . It is condition, not mine - it is his duty to change, not mine.
Mark must undestand this: Austrian economists must develop a model to predict economic forecast. Supercomputers can show how austrian economics are very good model to create prosperity. Not out of thin air, but hard work...
Most Austrian economists cannot do even simple math. This is not true only in regard to economics but any kind of math on anything. Thornton's lumping all the different mainstream economists is nonsense. He uses strawman arguments and misrepresents other schools of thought.
Regression and corolation is math, but do not show causation. What i mean by modelling is forming a partial differential equation models for time and space effects of investment, spending and their effectiveness. Modern standart macro theory do not have a effective spending. Spend everything and economy flourishes. Then mortgage crisis happens. It is better not to have absurd correlations, that give a correlation coefficient, assuming partial corrolation effects( everything except corrolated variable is assumed to be constant). You cannot model a huge socioeconomic effect with 2+2 math. R^2 value for random variable can be manipulated to over 99% or p value less than 0.05. Academically "significant" results cannot predict .com or mortgage crisis.
@@murat9268 Hey scholar, you are willing to do the hard work and I admire that. It is easy for superficial people be glib and give fast-food politics type answers. Keep up the effort Murat !.
@@newaddress456 what is your hard work? I work in engineering and computational fluid dynamics using ANSYS Fluent and CFX. Conservation laws are PDE's that model fluids and solids. Also, I know what i am talking and I see an coffee-table economist.
@@murat9268 Well Murat, I sure like you ! When I have taught economics, engineering majors always did well. My father was an engineer. It is all helpful. Take care.
When I hold a 5 dollar bill and American debt is purchased with newly created money, the value of that 5 dollars instantaneously goes down. We have a monetary policy that intentionally fools purchasers of bonds, and when the world catches on (47%) that they are never going to see those debts paid back they will stop accepting it. Paper is ultimately worthless if it isn't backed by honesty. The American consumer will ultimately suffer as their savings dissolve and they bite the austerity bullet
Voluntary - accept or decline the trade. You need to work to live. You need to do "something" to feed yourself, or you will starve. Do you believe you are a tree?
Gotta love the raging Liberals, Socialists and plain good ol Communists yelling bloody murder against Austrian Economics, which they never tried, whilst praising the democidal Keynesian 'economics'. But then again, Communists invented Democide so how could they not love Keynesian economics? Unfortunately, the economy is not going to get any better as long as Americans are afraid of freedom and a true free market, i.e Austrian Economics and a true Laissez-faire society and culture, the very factors that harbored the entrepreneurial spirit that made America such a prosperous country in the past. We are part of nature and as such, a natural balance will always be reached if things are allowed to be. But as long as governments keep trying to control a natural system, they will only create disastrous effects as the present perfectly portraits and proves. Deregualte the market, except for rational, sensible safety measures, stop requiring licensing except for specialist practices, lower taxes and promote the entrepreneurial spirit that made America once so great, sit back, relax and watch the economy blossom. Problem solved, enjoy. Or keep up the Keynesian socialist nightmare and watch it burn until nature will eventually take its course and reach the previously mentioned balance through less pleasant means. We have 2 options to chose from, 3 really if you count in maintaining the status quo by differing our problems hoping they would magically disappear, but inadvertently, we will be forced to chose between: 1. Adopt the free market model and suffer a little in doing so, but then enjoy unprecedented economic growth and accumulation of wealth. Or 2. Suffer a ferocious economic collapse which will leave no alternative but the adoption of a free market which again, will be inevitably followed by unprecedented economic growth and accumulation of wealth. The difference between 1 and 2 is obviously, the amount of suffering we chose to endure and subject ourselves to before we adopt the free market model. We can make it easy on ourselves and adopt it early or we can oppose the inevitable change and be swiped off our feet by the tsunami of economic collapse. What mathematically cannot continue, will not continue.
AlexanderHL "Which they've never tried." What a ridiculously simplistic assessment. No "pure" form of anything has ever or could ever be tried. And that includes pure socialism, pure communism, pure capitalism, a "purely free market", "a purely central planned market," or "pure Keynesian economics" or "pure Austrian economics." They are all theoretical ideals, not practical recipes. Real world scenarios combine many of these in various ways, in some cases attempting to combine the best characteristics of several of them, in other cases combining the worst. And in fact, the exact definitions of these theoretical ideals is elusive as well, so getting two people to agree on what constitutes the "pure" form is not terribly likely.. Has there EVER existed a "pure" form of any of these things? Of course not, it's just not possible. Grow up and widen your horizons a bit, you're an unrealistic extremist.
The FED manufactures money, it's the only place in the country that can. Special privilege. They own about 15% of US treasuries which is US debt. When you use treasuries a primary source of revenue because of lack of real production, you can fool yourself with what really happens. FED money is supposed to be used to pay off debt, it hasn't. It's given the power to fuel political promises. When the FED prints money, everyone is indebted with inflation tax. It erodes savings and its incentives
Sadly, you're missing the point of this. As production gets more efficient and supply increases, deflation is inevitable as products get better and cheaper. By the same inflationary logic, the electronics and computer industries would have been long done. They aren't. Basically, deflation punishes those who are stupid and reckless enough to waste their money and rewards those who spend, save and invest wisely. Isn't that what we need to fix the world economy?
im a conservative. i believe in Austrian economics. i despise Keynesianism. but man, this is hard to watch without falling asleep. this is why we loseeeeee
.3 That is the fundamental issue -utter economic illiteracy- you pretend that you can take from some part of the market justified by your notion of importance or critical without understanding that you are - in fact - destroying that part of the market and the people in it. You do not care because you do not see. You are so ego centric with your world view, that you take no notice of the destruction you wreck, let alone the destruction of society morals in championing the violence to do so. .4
I am Austrian all the way, but I wouldn't like my argument to be "crisis makes people more enterpreneurial, because they have to eat". This has too many comebacks.
Nonsense. Human action does not require government law, thus, your posit that government is necessary for action is nonsense. The base from all human action is the individual. All human action is ultimately individual, and it is from there that economics begins its theories.
Nonsense. Black Market is not gang controlled. The participants join the market voluntarily. . You have not studied the rise of Black Markets or "Grey" markets within economic academia. . Drug markets are Black markets and their rise follows economic theory - avoidance of Government edict.
I have a quick question to anyone that knows Austrian economics. On the top of falling prices. The price of labor would that also be a price that would fall under a free market system? How would the world look when pretty much all of us sell our labor in the market? Who wants to work for a penny? Any takers?
I got into an argument a while back with a follower of the Walrasian method of mathematical calculation. He said that money isn't an item of supply and demand because money is the medium of exchange. I pointed out that there is a supply of and a demand for money. He acknowledged that, but then proceeded to show his intelligence with this; "Sure there's a supply of money, but because money is the medium of exchange, money can't exist in the realm of supply." Logic escapes him, apparently.
I've always taken a more balanced approach. I like to tell my students that the government does not have a magic wand. They can't magically make problems go away all they can really do is shift the problem to another person in society. But at the same time good policy leads to economic growth. Trade for example, from the beginning of Economics as an academic discipline, has been a foundation of economic growth. The government's job should be to encourage trade, both imports and exports. Sometimes that means getting out of the way so that the free market can work. Sometimes that means engaging with other nations and negotiating with them so that they will get out of the way and let free markets work. This process will still shift a problem to somebody else. But, at the same time it causes economic growth that we all get to participate in. This framework puts Austrian economics directly in the mainstream, where it belongs.
But the government should ensure that all citizens are educated so that they can contribute to society and that puts Austrian economics back on side stream.
@Distortion0 Just so you know Praxeology was developed by Ludwig Von Mises and (some say) is best represented by Rothbard (man, state and the economy). reading Menger will give you some of the basis (as he started the subjectivity revolution) but not the whole vision. Kind of like reading the forward but not chapter 1 of a book. I would highly recommend Human Action and Man, State and the Economy if you really want an understanding of what Praxeology is.
Printing money, which is actually manufacturing money, does not create debt. Your statement is conceptually incoherent. Money is manufactured. It is used to pay off debt. Paying off debt does not create debt. Debt is an obligation on 'someone' to do 'something'. Holding a $5 bill in your hand, please tell me what obligation is owed to you and by who?
Can anyone explain or lead me to material that discusses how a 100% gold standard could possibly work today and why going on such a standard could effectively represent future economic growth which far outpaces increased gold production which would represent this new wealth? Would deflation cause an economic downturn. It doesn't make much sense to me. Thanks
That's exactly what would happen, and actually what did happen in the US for the entire 19th century. A slow, natural deflation is generally good for the economy. It increases the purchasing power of those who save their money.
I just started reading von Mises, but I still have questions about the gold standard. I'm a second year econ undergrad, I've learned about the Keynesian and New Classical schools of thought but little about austrians (and I go to a mostly austrian school, George Mason). I understand how a the gold standard helps savers, but isn't monetary policy still effective and needed at times (at the very least to avoid a liquidity trap)? Could you still conduct monetary policy under the gold standard?
My point is that you are wrong. It is not a matter of "my preferences" but a matter of how human nature manifests in reality. For your understanding, you have to refute the law of human incentives. My version of the Free Market is exactly what the free market "is" - voluntary trade. What others may append to it does not change this - what it does is MOVE the free market to be something else. Labor always has alternatives - which is "do it yourself".
another aspect to the question of war is that it is essentially obsolete now. we dont generally need to fund large ground forces to wage war on national armies. we have missiles and jets and boats that can reduce an army to ash in a week. also there is the threat of mutually assured destruction with nukes. this ofcourse is a moral peril, but a reality at the moment. we now fund ground war that are essentially battling entrenched, indigenous, guerilla fighters that arent even armies.
Going back to a gold standard overnight would be tricky and nobody can say with certainty what that would look like, but we could start by freezing the current money supply and not allowing the Fed to print any more. Interest rates would naturally rises as cash becomes a scare good. Markets would start to dictate interest rates, unlike these artificial rates of interest we have set be the Fed.
wow.. i wouldn't be here if it wasn't for Ron Paul.. I wouldn't even be into politics if it wasn't for him.. the man changed my life.. now its time for him to change all our lives... vote... DR. RONALD ERNEST PAUL 2012 PRESIDENT OF THE UNITED STATES OF AMERICA
i realize the limit for comments, i was referring to messages.... there is no characters remaining counter there, so i assume that there is no such restriction.. i have sent several long messages and never once had any problem sending any of them
There was lots of deflation during the Great Depression. The money supply was cut greatly and we had over 25 % unemployment. What works is a very low, predictable inflation rate of 1 or less percent. I am surprised you do not like math. With a name like Wong, you should . I mean that in a good way. Thornton is a politician and not an economist. He does know simple math, He knows nothing about other economics schools. There are two economics groups who hates math - Marxists and Libertarians.. Mark hates math and so he only could go to one of those 2 schools. They are very much alike, very superficial. Thornton makes up stuff because he is a politician. What a big liar Mark is. Everyone knows it and he knows it especially. Mainstream economists dig much deeper than Mark does . He is liar., a politician.
And if you click on the link the to page for the disambiguation it says "The Fed is the informal name of the Federal Reserve System, the central bank of the United States." The Fed. And on the page for the Federal Reserve System it says this "The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed)". The Fed. And no where else on the page is the Fed spelled with all caps.
It doesn't weaken the substance of your argument but it does limit its persuasiveness. It's like writing a book on American history and then misspelling America.
1. Of course. Money is only a MEDIUM of exchange. As long as the medium is divisible it is fine. Remember, it is PRODUCTIVITY that supports a war (if you ever need one). Money only helps someone BUY the productivity (e.g. hire someone to build fighters instead of commercial planes). So, saying "will there be enough money to fund a war" is nonsense. The right question should be, "do we have the productivity to fight a war".
But because you do not know who manufactures money, you make an error in your assumption. The US Treasury does not manufacture money. The FED manufactures money. They are not the same entity - one is government, the other a privately owned bank.
I just looked up Bastiat on wikipedia and it says he was born in June 1801. But they trace their roots back to 1730? Is Mark talking about the Scottish enlightenment?
@TheNarcMan 1. The united states was able to fund ww2 on the gold standard and when Eisenhower was president Americas revenue was greater than its expenses. so its not impossible for us to fund a war on the gold standard like so many people say. 2. Before 1913, Americas government didn't need all of the money it does now because it didn't have all the departments, regulations, and programs that it does now hope my answers satisfied your questions
"There was a general failure to recognize that the whole intellectual construction was inconsistent with a structure that allows for independent choice behavior of many participants in the economic nexus. " -- on Statistics in Economics
Market "failures" are not the norm. They are the consequences of other men - such as yourself - you believe market manipulation is the norm. The market CORRECTS your error. It is not "failing" - it is setting it back to straight. If you profited from the crookedness - the corrections will hurt. And that is not the market failing either, that is the market teaching you to stop manipulating.
i distinguish very well. please tell me how Keynesian eco predicts anything? im here to learn. If you are so well informed then summarize it. then also either defend and differentiate what you isolate as "policy recommendations". do you understand that the entire system its built around is rooted in planning and policy recommendation? have you listened to this video? what are your logical and reasonable refutations or problems with what is said here?
No. The debt has not been relieved. You merely have transferred its obligation to another party. The obligation remains. From Menger on Money: " is the good in question accepted as the final means of payment for transactions? If so, it is money" "
Gary Morrison, Economists study the production, allocation, and consumption of goods and services. Statistics makes a stronger case for capitalism than any economist ever could.
I am not calling him out for insulting someone. I am calling him out for insulting everyone in the exact same way. Everyone who disagrees with him knows nothing about economics etc etc. I am making a very specific and appropriate comment.
WillhelmDrake, I think you should read "Robinson Crusoe" to understand economic principles apply even when there's just an only individual. And labor isn't the same as slavery. That's a really awful misconception marxist have. Labor: The contribution to production flowing from a person's body. And Slavery is the legal ownership of someone else, in an free market there can't be any slavery as there's no law that says you can own somebody else.
When an economic good is in oversupply, the price of that good goes down. Law of Supply and Demand. This applies to money as it is an economic good. The price of money goes down in terms of other goods. In other words, you need more money to trade for the same amount of goods. This is inflation. I agree - one day, the market will cease buying government debt. The central bank probably will then make it up by buying more. Money is not dependent on honesty. It is dependent on economic laws.
Just curious, if Austrian Economic policy were to completely kill inflation, wouldn't globalization be impossible for the country practicing those policies? The value of their currency would be far greater than any fiat currency which would drive the cost of exports up exponentially. No country would want to trade. I mean, some countries right now are having a hard time with the US dollar because it has increased in value recently.
Eventually countries will see the wisdom of this economic philosophy out of necessity. The BRICS nations are a start. Keynesian economics enrichens the 1% but eventually destroys a nation-its just so incremental that its difficult to notice unless its studied. Most economic powers are printing like mad to keep up. A "reboot" is inevitable & the current situation seems to have been exacerbated the past decade. I trust the Austrian philosophy as their representatives have been somewhat prophetic thus far (2008 Housing B&B). I would hate to be a young person as their future is going to be tough to say the least.
Sawyer Smith this is where technologies like bitcoin(bitcoin.org) go in, allowing a global currency that any failling fiat currency can switch to in case it's losing its price.
I don't think it would be that simple. You'd have to get every single country completely united. We can barely work out trade agreements. That just doesn't seem realistic to me. Plus every country's monetary policy needs to be somewhat flexible or else you end up with something similar to Greece.
There is disagreement between physicists, so physics fails - to you, right?. . You do not know what economics "is" . Economics is the study of human action. It attempts to explain the consequences of such action - it does not predict any action. . "If you raise the price, demand will fall". This does not infer you will raise the price, nor lower it, nor do anything with it. It merely states a Law - law of supply and demand.
The question of who profits from money manufacture is the entity that is the closest to such manufacturing - it is ALWAYS the government. . It spends the new money at its full value, and after that expenditure, the ALL money begins to lose its value as the supply of money has increased - thus, lowering the price of the totality of money in the marketplace. Governments control the manufacturing of money for this reason - for their own profit.
That is what "trade" means. They have what they do not want - Apple IPhones. They want something else. SO they trade what they do not want for what they do want. The concept of "buyer" and "seller" is temporary. In fact, both sides are "traders" of an economic good.
Are you saying that it is correct to abbreviate the Federal Reserve System as FED? In what sense? It isn't an acronym or an initialism - if it were it would be FRS or FRB. If you go and read articles in any newspaper or any economic journal you will not see anybody writing "Fed" in block capitals.
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I got my Econ degree in the 70's. Funny that Hazlitt, Von Mises, et al were never mentioned. I didn't have a realistic understanding of Economics until I read Hazlitt, Von Mises, Bastiat, et al, much later...
The Common Sense of a Von Mises is understandable to the average person because it is simple truth. In my 56 years I've discovered that a LOT of people dislike the truth.
***** Well I am sorry but your comment that it is only because of the Koch brothers is wrong.
have you actually read anything by some of these Austrian economists? If you look at their work it does make sense and is accurate.
Also Ron Paul is a big supporter of theirs because he believes in liberty and rights.
***** Yet were to begin? First off it wasn't the Koch brothers promotion that brought out Austrian Economics. That is just theory not fact.
As for Ron Paul maybe all that is true about Gary North or Chuck Baldwin but it isn't true about Ron Paul not believing in liberty and rights.
You just don't understand what liberty and rights are since you most likely have had been brainwashed by the government in to thinking that if it doesn't come from government it doesn't count.
Maybe you should read some of Ron Paul's work and look into what he has done. Of course look up what liberty and rights are.
***** Maybe you should read Liberty Defined.
You sir are the one messed up. I mean do you support George W. Bush or Barrack Obama? How about Ralph Nader or a few others I can name? You should see what their ideas and agenda is.
No Ron Paul does support liberty and People's rights. I don't believe that Ron Paul agrees with several things that either of those two guys you mention support but then go ask him yourself.
Amazingly enough, I had the same experience majoring at the liberal bastion of UVM in the early 80s. Never did my professors ever mention Mises. Sad. Thank god for the Internet!
randy109 all good reads. I just finished "the republic" by Plato audiobooks lol thanks TH-cam
Another great speech for a beginner like me of Austrian economics. I took one year of economics in high school, and really the whole reason Austrian economics is so appealing is because it's logical. Everything makes sense to me. The government has been wrong time and time again about what effect their policies will have on the market, and it makes complete sense to say that because of that, they should really have a more minimalist approach to lawmaking.
To me that is the beauty of the gold standard. It prevents the government from using inflation to tax and fund wars whether they are necessary or not. Let the people decide if they want to be a part of a war with their own dollar, not bureaucrats using force on their own people to fund or fight a war. Cheers.
40 People like financial wizardry and voodoo of the Keynsians....
Or they like maths or they wanna keep or get a job.
There are much better uses of mathematics than trying to predict and manage economy. Mathematics has its own limitations.
Econometrics are limited, and you need to be keenly aware of their limitations. It is possible to show that average earnings have gone down, despite each individual earning 20% more on the whole, because the population growth of the lower earning bracket was more than the higher earning bracket. The GDP deflator does not take into account changes in quality over time, does not represent technological progress, and skews toward more inflation in prices than would be expected. It doesn’t seem like much, but there are many other examples. Like any other statistics, your baseline assumptions have to be solid before you make a hypothesis to test, and statistics/mathematics can only get you so far. Before the Stagflation of the 1970’s, it was assumed that it was impossible for both high inflation and high unemployment happen simultaneously.
@@AtlasFullsun It is that mathematics cannot be accurate or logically sound in the presence of uncertainty which is the human condition and the way people interact with the world around them. Here is a simple way to put it. Let's say you have an equation with a lot of variables, all of these variables so far are static, and you want to be able to solve that equation in order to be able to make sound prediction for the future based off that previous data, well that equation will be sound because nothing changes the end result but if you include human beings as a variable into that equation then all of the data you will receive is going to change either in large or small amounts each time you solve it, kind of like snapshots in time, because like it or not human beings are autonomous and there are a fuck ton of human beings so any mathematical prediction will inherently be logically unsound when accounting for decisions made by human beings.
Anyone with a modicum of common sense can see that what Mark is saying is true. The reason that so many people dislike or disagree with his and the Austrian School's philosophy is because to follow his advice means people, banks, failing businesses and, in the case of the EU, even governments will have to stop relying upon the state (i.e. the tax-payer) to bale them out, cover their debts and subsidise them, thus encouraging them to repeat the same mistakes. It seems to me that many people would rather carry on, getting deeper into debt (which must one day be repaid) in the hope that if they keep doing the same thing after each financial crisis, everything will one day, magically right itself. More truth might be found in the writings of the brothers Grimm!
I think the reason that most people are unwilling to accept Austrian economics is that it shoves the unpleasant truth in your face. What I mean is that markets change, consumer preferences change, people lose jobs, businesses shut down, and people have to find new lines of work. This is unpleasant for the people who lose their jobs, but they fail to look at the bigger picture and see that if they put out some initiative, they will get a new job and be even more prosperous than before. This is just hard to swallow for a lot of people. Then, the Keynesians come and whisper in their ear that they've devised some wonderful system where you can just print money forever and nobody will ever have to lose their job again. Or, socialists will tell them that they can simply be supported in idleness at the expense of those evil rich people.
Basically, Austrian economics is bitter medicine that ultimately leads a society to prosperity, whereas Keynesianism and socialism are snake oil that leaves it sicker than before. It's just that many people choose the snake oil.
Well said akirak!
@@akirak1871Absolutely based.
@qtutoringhelps Austrian economics has the somewhat unique problem of advocating less power. By definition, economic policies are enacted by those in power. Many people do not want to lose the power they currently have, and often want to obtain more, so they will be reluctant to enact policies which by design limit and remove their power. That is one reason why we do not see Austrian economics being very mainstream.
What's fascinating about Austrian economics is that everything they say seems to agree with mainstream microeconomics. I got a microeconomics book at the thrift store next to a university (published around 2006), and it's one hell of an interesting book. It says stuff about lower prices increasing demand, it has graphs explaining the logic behind this, it explains "dead weight loss" caused by government rules or by monopolies. It says how minimum wage causes unemployment but benefits the people who keep their jobs. I just find it mind boggling that an introductory book to microeconomics explicitly says that lower prices increase demand. Economists on TV always say the opposite. According to Bernanke or Yellen, people buy more stuff when prices are rising, which is counter-intuitive and something most people have seen experienced.
I do not think that mainstream economists that people consumer more with rising prices. If any say that, they are being political., at the behest of some appointing politician. Economics and politics are different areas of study. Check the economists for instaance in business or even the Congressional Budget Office. Economists in the CBO by very strict law can not favor one political party. However, in hte Office of Management and Budget (OMB) economists tend to be more political since they work for one jackass politician and whomever that jackass is, those economists are influenced by him. The Fed has a mixture of partisan and non-partisan people. Some of the Fed's economists actually have integrity.
They don’t mean that lower prices increase demand, which is a rightward shift in the demand curve, they mean that lower prices increase quantity demanded, which is a movement along the demand curve. All first year economics textbooks explain this difference and will always say that people buy more at a lower price than a higher price. This is not just economics, it’s common sense.
I think what Bernanke and Yellen were referring to were hard long-term assets. They look to things like new home purchases as economic driving forces. I've often heard about new home starts on economic reports in the news. Housing prices going up, they believe, incentives more people to buy them because they'll make more selling them down the road.
Overlooking consumer spending like soft goods is also foolish because that's where people spend their money day to day. When the Covid lovkdowns began, what was the first thing people went for - toilet paper and other paper goods. This was because people were anticipating disruptions in the usual supply of them.
5 years of college(in Peru), and I've never heard about Austrian Economics.
As defined by the Austrian well known economist Robert Murphy: Market / Market economy: Can be a synonym for capitalism. It also refers to the collection of voluntary exchanges that occur in a capitalist system. Free enterprise: A system in which individuals can choose their own occupations and are free to start whatever business they wish. They don't need special permission from anyone to enter an industry.
And they say Austrian has no empiracle evidence.
Austrian= History at its most prosperous.
Keyenesian= Fail fail fail fail!
Austrians have no math skills and so they attack what they do not understand.
@@newaddress456 What specifically don't they understand?
@@gloriousrevolutionary2306 I regret that you don't understand this. Go get a PhD in economics and that will help. Have a great day. If you do not like math you will not be able to study economics at the graduate PhD level. But there are certainly other fields you can go into that do not require high math skills. I have faith in you to find to find the right career for yourself. Just hang in there. Keep your chin up and you will succeed.
@@newaddress456 Stupid comment! You can't even give one specific example of why Austrians are wrong, not even the generic "Austrians predict a new recession every day!" talking point that gets spewed. I'd have thought a man holding a PHD in Economics like yourself would have an answer 😉
@@gloriousrevolutionary2306 Again, I am sorry you lack the intellect to do high level calculus, quadratic programming dynamic programming and econometrics which Austrians themselves can not do either. Mainstream economists can do all those types of work. I think you should be a political commentator or a go into some kind f marketing job. Again, I have faith in you. YOU can do it. There is no reason to get down on yourself. There are far more lucrative careers in marketing. You are ready made for that. Keep your chin up and you will succeed.
It is "everywhere", and that is but one example - which tosses aside your assertion that "you will not see anybody..."
QED
FED is a monopoly - agree - created and enforced by government writ - agree.
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T-Bills is NOT revenue, nor is it counted as revenue by the government. The government calls it a debt - which it is.
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How is FED money supposed to pay off debt?
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Again, agree - printing of money creates inflation and has consequences, such as erosion of savings and capital.
What Mark says is true. People who have savings are being punished by 0 interest rates or maybe negative interest rates soon. And they do not want to invest either because they know the economy is just getting worse. Just like in Japan. No growth for 25 years because of stimulus and 0/negative interest rates. In the meantime fiat currency is loosing it's value by more printing and credit creation. Thanks to the Fed and the Big Banks.
Absolutely.
You have but two methods of obtaining those resources:
1) Theft - the government's method
2) Earn - free market's method
If that is your quest, then nothing will change.
It does not matter whether the government chooses paper or gold - the problem is not the commodity but who does the choosing.
Let the market choose its money - and it will - and will do so quickly and gently. No stirring required.
And to those who say that Austrians are correct in their predictions only because they predict doom at all times, how come Austrians predicted that the end of WWII would build up huge economic growth while Keynesians believed the loss of "employment" by the soldiers would be bad for economy.
@underdogg20 no, predicting behavior isn´t Keynesian, (exact calculations are though). Austrians use Mises' praxeology to predict outcomes. Certainty of rescue will screw with risk assessments and thus eventually with behavior, the result of which we see all the time. If, however, a rescue is voluntary (charity), there are no guarantees. So that wouldn't screw with incentives, hence a better system.
Logic AND common sense, not just logic. No one lives on LOGIC alone in this world.
I love talking to keynesians when they say housing only appreciates as if it's some kind of axiom lol
New Keynesians do not say that and New Keynesians are ubiquitous. They know Keynes was wrong on some points. Some well known New Keynesians are Prof. Robert Gordon (Northwestern) Gordon and Greg Mankiw (Harvard). The old Keynesians are literally dead. New Keynesians know that the long run matters; whereas old Keynesians did not. New Keynesians became prevalent in the 1970s.
Talking about shaky axioms while defending an economic theory based in praxeology is pretty damn funny. Thanks.
Nassim N. Taleb
"The failure of mathematicall models in the social"sciences" shd be and can be debunked mathematically. "
This included economics, itierney.
Do not pretend "stats" in economics provides anything more than a picture of "what happened" and never "what will happen"
Economics is trying to model things that are vastly complex. Which is the reason it usually fails. You cannot compare it to physics, which we can us to make accurate predictions. The amount of disagreement among economists shows this!
Very good. Mr. Thornton. Deflation R' US... if only...
Question: Why is the oldest school of Economic thought so ignored?
What happened?
With Mises and Heyek and Rothbard so clearly RIGHT...
How did it ever get so wrong?
Is Socialism to blame?
You do not understand.
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It is not a matter of theft - theft is NOT a free market for there is no longer the voluntary component. Free Market is "voluntary trade" and any action which degrades the voluntary trade degrades the market.
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Theft does such a degrading.
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No, in fact they do lend 'saved' capital. They do create loans based on their capital, assets AND their deposits. Banks DO NOT create money. That manufacturing occurs at the Central Bank, in the case of the US, at the Federal Reserve
It is absolutely an explanation, and a complete one.
Again, it is IRRELEVANT on how this may occur. Whether a printing press makes green paper or a computer keyboard enters a number, the fact of money does not change.
There are only two economic theories - the 'right' one and the 'wrong' one..
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If you do not advocate for Free market - that is, men in voluntary action - you can only advocate for violence - that is, forcing men to act in non-voluntary action.
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There is no "half-voluntary, half-force". There is no third way.
That is the challenge of economics - even IF you found evidence, such evidence provides NO PROOF. Your evidence could be as easily brushed aside as an anomaly.
This is the whole case Mises raised in "Human Action". Economics is a science completely based on logic and reason -"Praxelogical" argument- not demonstration.
We cannot predict behavior in aggregate either by using stats of some measure of some past behavior.
For example, what stat of history would you use to predict ww2?
The thing with Democrats, is different. It is not a stat, but a policy statement. They have consistently professed such a policy, and their reasons. But even then, tomorrow, they may change their minds. No stat will tell you this.
Can someone tell me what are the models or basic models in Austrian Economics? I'm very interesting in this school of thought. I'm very tired and disappointed of mainstream economics, even though knowing them are helpfull in some level.... and what do u think about monetarism???
Very insightful overview between Austian Economic and Mainstream Economics.
"We, just like everybody who shops at Walmart, enjoy lower prices." It's been so serious and dry up to this point then all of a sudden he drops this joke, I nearly spit out my drink lol
YT really isnt the format for in depth chat, mate. I'd think of things sectorally tho and remember that government deficits are part of the net national deficit which = current account deficit. The eurozone is in effect a gold standard system from the perspective of national governments who are forced to keep strict currency convertibility with their neighbours & we see the inherent limitations of it in a crisis, caused by structural account imbalances. Pegged currencies are fragile/limiting
DEFINITIONS FOR THIS LECTURE:
STAGFLATION: 1. an economic situation in which prices rise continuously, unemployment is high, and many businesses are not making money.
2. a period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
BUBBLE: 1. A price level that is much higher than warranted by the fundamentals. Bubbles occur when prices continue to rise simply because enough investors believe investments bought at the current price can subsequently be sold at even higher prices. They can occur in virtually any commodity including stocks, real estate, and even tulips.
2. A situation in which prices for securities, especially stocks, rise far above their actual value. This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline.
REGULATIONS: 1. Regulations are rules made by a government or other authority in order to control the way something is done or the way people behave. 2. the act of controlling or directing according to rule ("Fiscal regulations are in the hands of politicians. 3. an authoritative rule
FREE MARKET ECONONOMY / MARKET ECONOMY
A social and economic system in which prices are fixed by the law of supply and demand rather than by a government or other body. In its pure form, a market economy is an economy absent of government subsidies, incentives, or regulations. A market economy contrasts with both a planned economy and a mixed economy. No economy is a complete market economy: most countries claiming to have market economies in fact have a market economy combined with greater or lesser government regulation, sometimes called a social market. Proponents of a market economy argue that it is more efficient than any alternatives, promotes fair competition between its participants, and rewards skill and hard work. Critics allege that a market economy perpetuates class differences and rewards ruthlessness over actual labor. Milton Friedman, Friedrich Hayek, and Ludwig von Mises were three major 20th-century proponents of the market economy. See also: Capitalism, socialism, John Maynard Keynes.
Not "all" - that is your fundamental fallacy; that ALL poor people do not deserve their poverty.
A man is poor because:
1) - he acts poorly, thus his consequences is poverty
2) - he is subjected to violent force.
3) - an act of God (he was born to it)
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But why should I pay for his poverty? I am not the violent actor, nor am I God who made him poor, nor should I suffer the consequence of his poor choices.
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It is condition, not mine - it is his duty to change, not mine.
This would be a great introduction to Austrian economics for a newcomer.
Wonderful speech.
It is good as a political speech and misrepresents any other school of economic thought. .
This model is the most efficient in the long run, combined with some econometrics and economic history.
Mark must undestand this: Austrian economists must develop a model to predict economic forecast. Supercomputers can show how austrian economics are very good model to create prosperity. Not out of thin air, but hard work...
Most Austrian economists cannot do even simple math. This is not true only in regard to economics but any kind of math on anything. Thornton's lumping all the different mainstream economists is nonsense. He uses strawman arguments and misrepresents other schools of thought.
Regression and corolation is math, but do not show causation. What i mean by modelling is forming a partial differential equation models for time and space effects of investment, spending and their effectiveness. Modern standart macro theory do not have a effective spending. Spend everything and economy flourishes. Then mortgage crisis happens.
It is better not to have absurd correlations, that give a correlation coefficient, assuming partial corrolation effects( everything except corrolated variable is assumed to be constant). You cannot model a huge socioeconomic effect with 2+2 math. R^2 value for random variable can be manipulated to over 99% or p value less than 0.05. Academically "significant" results cannot predict .com or mortgage crisis.
@@murat9268 Hey scholar, you are willing to do the hard work and I admire that. It is easy for superficial people be glib and give fast-food politics type answers. Keep up the effort Murat !.
@@newaddress456 what is your hard work? I work in engineering and computational fluid dynamics using ANSYS Fluent and CFX. Conservation laws are PDE's that model fluids and solids. Also, I know what i am talking and I see an coffee-table economist.
@@murat9268 Well Murat, I sure like you ! When I have taught economics, engineering majors always did well. My father was an engineer. It is all helpful. Take care.
When I hold a 5 dollar bill and American debt is purchased with newly created money, the value of that 5 dollars instantaneously goes down.
We have a monetary policy that intentionally fools purchasers of bonds, and when the world catches on (47%) that they are never going to see those debts paid back they will stop accepting it. Paper is ultimately worthless if it isn't backed by honesty. The American consumer will ultimately suffer as their savings dissolve and they bite the austerity bullet
Voluntary - accept or decline the trade.
You need to work to live. You need to do "something" to feed yourself, or you will starve. Do you believe you are a tree?
Gotta love the raging Liberals, Socialists and plain good ol Communists yelling bloody murder against Austrian Economics, which they never tried, whilst praising the democidal Keynesian 'economics'. But then again, Communists invented Democide so how could they not love Keynesian economics?
Unfortunately, the economy is not going to get any better as long as Americans are afraid of freedom and a true free market, i.e Austrian Economics and a true Laissez-faire society and culture, the very factors that harbored the entrepreneurial spirit that made America such a prosperous country in the past.
We are part of nature and as such, a natural balance will always be reached if things are allowed to be. But as long as governments keep trying to control a natural system, they will only create disastrous effects as the present perfectly portraits and proves.
Deregualte the market, except for rational, sensible safety measures, stop requiring licensing except for specialist practices, lower taxes and promote the entrepreneurial spirit that made America once so great, sit back, relax and watch the economy blossom. Problem solved, enjoy. Or keep up the Keynesian socialist nightmare and watch it burn until nature will eventually take its course and reach the previously mentioned balance through less pleasant means.
We have 2 options to chose from, 3 really if you count in maintaining the status quo by differing our problems hoping they would magically disappear, but inadvertently, we will be forced to chose between:
1. Adopt the free market model and suffer a little in doing so, but then enjoy unprecedented economic growth and accumulation of wealth. Or
2. Suffer a ferocious economic collapse which will leave no alternative but the adoption of a free market which again, will be inevitably followed by unprecedented economic growth and accumulation of wealth.
The difference between 1 and 2 is obviously, the amount of suffering we chose to endure and subject ourselves to before we adopt the free market model. We can make it easy on ourselves and adopt it early or we can oppose the inevitable change and be swiped off our feet by the tsunami of economic collapse.
What mathematically cannot continue, will not continue.
AlexanderHL "Which they've never tried." What a ridiculously simplistic assessment. No "pure" form of anything has ever or could ever be tried. And that includes pure socialism, pure communism, pure capitalism, a "purely free market", "a purely central planned market," or "pure Keynesian economics" or "pure Austrian economics." They are all theoretical ideals, not practical recipes. Real world scenarios combine many of these in various ways, in some cases attempting to combine the best characteristics of several of them, in other cases combining the worst. And in fact, the exact definitions of these theoretical ideals is elusive as well, so getting two people to agree on what constitutes the "pure" form is not terribly likely.. Has there EVER existed a "pure" form of any of these things? Of course not, it's just not possible. Grow up and widen your horizons a bit, you're an unrealistic extremist.
I don’t think it’s a partisan left or right matter but an economic matter.
Austrian Economics
Watching this as a Canadian in 2024. It looks like the Austrians were correct on this. Cheap rates and debts have destroyed our economy.
Excellent summary of the contrast between the Austrians and Keynesians.
The FED manufactures money, it's the only place in the country that can. Special privilege. They own about 15% of US treasuries which is US debt. When you use treasuries a primary source of revenue because of lack of real production, you can fool yourself with what really happens.
FED money is supposed to be used to pay off debt, it hasn't. It's given the power to fuel political promises. When the FED prints money, everyone is indebted with inflation tax. It erodes savings and its incentives
Sadly, you're missing the point of this. As production gets more efficient and supply increases, deflation is inevitable as products get better and cheaper. By the same inflationary logic, the electronics and computer industries would have been long done.
They aren't.
Basically, deflation punishes those who are stupid and reckless enough to waste their money and rewards those who spend, save and invest wisely. Isn't that what we need to fix the world economy?
im a conservative. i believe in Austrian economics. i despise Keynesianism. but man, this is hard to watch without falling asleep. this is why we loseeeeee
I found it exciting. lol
I think exactly the opposite. To me, it's actually one of the few impecable explanations of the topic out there
.3
That is the fundamental issue -utter economic illiteracy- you pretend that you can take from some part of the market justified by your notion of importance or critical without understanding that you are - in fact - destroying that part of the market and the people in it.
You do not care because you do not see. You are so ego centric with your world view, that you take no notice of the destruction you wreck, let alone the destruction of society morals in championing the violence to do so.
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My yardstick is 21 million long.. And that's the standard! ☣️
How can study there? Or online?
I am Austrian all the way, but I wouldn't like my argument to be "crisis makes people more enterpreneurial, because they have to eat". This has too many comebacks.
And we were told by mainstream economists how our economy was sound and everything has been and is still fine and dandy.
Nonsense.
Human action does not require government law, thus, your posit that government is necessary for action is nonsense.
The base from all human action is the individual.
All human action is ultimately individual, and it is from there that economics begins its theories.
BlackFlag2012a as an ancap, I can approve that.
Nonsense.
Black Market is not gang controlled. The participants join the market voluntarily.
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You have not studied the rise of Black Markets or "Grey" markets within economic academia.
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Drug markets are Black markets and their rise follows economic theory - avoidance of Government edict.
I have a quick question to anyone that knows Austrian economics. On the top of falling prices. The price of labor would that also be a price that would fall under a free market system? How would the world look when pretty much all of us sell our labor in the market? Who wants to work for a penny? Any takers?
due to deflation (the supply of money growing slowlier than the total output of goods & services)-purchasing power would increase
FED notes are not a fancy IOU.
What obligation can I demand upon 'who' whilst holding a $5 bill?
I got into an argument a while back with a follower of the Walrasian method of mathematical calculation. He said that money isn't an item of supply and demand because money is the medium of exchange. I pointed out that there is a supply of and a demand for money. He acknowledged that, but then proceeded to show his intelligence with this; "Sure there's a supply of money, but because money is the medium of exchange, money can't exist in the realm of supply."
Logic escapes him, apparently.
Great talk, Dr. Mark. Thanks!!
I've always taken a more balanced approach. I like to tell my students that the government does not have a magic wand. They can't magically make problems go away all they can really do is shift the problem to another person in society. But at the same time good policy leads to economic growth. Trade for example, from the beginning of Economics as an academic discipline, has been a foundation of economic growth. The government's job should be to encourage trade, both imports and exports. Sometimes that means getting out of the way so that the free market can work. Sometimes that means engaging with other nations and negotiating with them so that they will get out of the way and let free markets work. This process will still shift a problem to somebody else. But, at the same time it causes economic growth that we all get to participate in.
This framework puts Austrian economics directly in the mainstream, where it belongs.
But the government should ensure that all citizens are educated so that they can contribute to society and that puts Austrian economics back on side stream.
Please refer to Wiki
"FRB" and "FED" redirect here. For other uses, see FRB (disambiguation) and FED (disambiguation).
@Distortion0 Just so you know Praxeology was developed by Ludwig Von Mises and (some say) is best represented by Rothbard (man, state and the economy). reading Menger will give you some of the basis (as he started the subjectivity revolution) but not the whole vision. Kind of like reading the forward but not chapter 1 of a book. I would highly recommend Human Action and Man, State and the Economy if you really want an understanding of what Praxeology is.
Printing money, which is actually manufacturing money, does not create debt.
Your statement is conceptually incoherent.
Money is manufactured.
It is used to pay off debt.
Paying off debt does not create debt.
Debt is an obligation on 'someone' to do 'something'.
Holding a $5 bill in your hand, please tell me what obligation is owed to you and by who?
Can anyone explain or lead me to material that discusses how a 100% gold standard could possibly work today and why going on such a standard could effectively represent future economic growth which far outpaces increased gold production which would represent this new wealth? Would deflation cause an economic downturn. It doesn't make much sense to me. Thanks
That's exactly what would happen, and actually what did happen in the US for the entire 19th century. A slow, natural deflation is generally good for the economy. It increases the purchasing power of those who save their money.
I am harsh to fools.
I just started reading von Mises, but I still have questions about the gold standard. I'm a second year econ undergrad, I've learned about the Keynesian and New Classical schools of thought but little about austrians (and I go to a mostly austrian school, George Mason). I understand how a the gold standard helps savers, but isn't monetary policy still effective and needed at times (at the very least to avoid a liquidity trap)? Could you still conduct monetary policy under the gold standard?
My point is that you are wrong. It is not a matter of "my preferences" but a matter of how human nature manifests in reality.
For your understanding, you have to refute the law of human incentives.
My version of the Free Market is exactly what the free market "is" - voluntary trade. What others may append to it does not change this - what it does is MOVE the free market to be something else.
Labor always has alternatives - which is "do it yourself".
another aspect to the question of war is that it is essentially obsolete now. we dont generally need to fund large ground forces to wage war on national armies. we have missiles and jets and boats that can reduce an army to ash in a week. also there is the threat of mutually assured destruction with nukes. this ofcourse is a moral peril, but a reality at the moment. we now fund ground war that are essentially battling entrenched, indigenous, guerilla fighters that arent even armies.
Going back to a gold standard overnight would be tricky and nobody can say with certainty what that would look like, but we could start by freezing the current money supply and not allowing the Fed to print any more. Interest rates would naturally rises as cash becomes a scare good. Markets would start to dictate interest rates, unlike these artificial rates of interest we have set be the Fed.
Ron Paul brought me here
Great fundamental teachings. Thanks Mark Thornton!
wow.. i wouldn't be here if it wasn't for Ron Paul.. I wouldn't even be into politics if it wasn't for him.. the man changed my life.. now its time for him to change all our lives... vote...
DR. RONALD ERNEST PAUL 2012 PRESIDENT OF THE UNITED STATES OF AMERICA
i realize the limit for comments, i was referring to messages.... there is no characters remaining counter there, so i assume that there is no such restriction.. i have sent several long messages and never once had any problem sending any of them
Very well explained on how we should perceive deflation as a good thing!
There was lots of deflation during the Great Depression. The money supply was cut greatly and we had over 25 % unemployment. What works is a very low, predictable inflation rate of 1 or less percent. I am surprised you do not like math. With a name like Wong, you should . I mean that in a good way. Thornton is a politician and not an economist. He does know simple math, He knows nothing about other economics schools. There are two economics groups who hates math - Marxists and Libertarians.. Mark hates math and so he only could go to one of those 2 schools. They are very much alike, very superficial. Thornton makes up stuff because he is a politician. What a big liar Mark is. Everyone knows it and he knows it especially. Mainstream economists dig much deeper than Mark does . He is liar., a politician.
@@newaddress456Fed spotted
Go cry in your CIA break room or something.
And if you click on the link the to page for the disambiguation it says "The Fed is the informal name of the Federal Reserve System, the central bank of the United States." The Fed. And on the page for the Federal Reserve System it says this "The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed)". The Fed. And no where else on the page is the Fed spelled with all caps.
Any idea what unrealistic model he's talking about to predict human behaviour at like 2:07?
that someone can predict/dictate what someone do in someone life
+ivan date That's just unpredictable.
It doesn't weaken the substance of your argument but it does limit its persuasiveness. It's like writing a book on American history and then misspelling America.
1. Of course. Money is only a MEDIUM of exchange. As long as the medium is divisible it is fine. Remember, it is PRODUCTIVITY that supports a war (if you ever need one). Money only helps someone BUY the productivity (e.g. hire someone to build fighters instead of commercial planes). So, saying "will there be enough money to fund a war" is nonsense. The right question should be, "do we have the productivity to fight a war".
But because you do not know who manufactures money, you make an error in your assumption.
The US Treasury does not manufacture money.
The FED manufactures money.
They are not the same entity - one is government, the other a privately owned bank.
I just looked up Bastiat on wikipedia and it says he was born in June 1801. But they trace their roots back to 1730? Is Mark talking about the Scottish enlightenment?
@TheNarcMan 1. The united states was able to fund ww2 on the gold standard and when Eisenhower was president Americas revenue was greater than its expenses. so its not impossible for us to fund a war on the gold standard like so many people say.
2. Before 1913, Americas government didn't need all of the money it does now because it didn't have all the departments, regulations, and programs that it does now
hope my answers satisfied your questions
@underdogg20 do you recognize the detrimental effects of an institutionalized safety net on incentives?
Makes good sense.
De-monopolize money - let the market chose, and let the market chose the price of money and its supply.
2. The US government had different ways to raise money. Tax on products like alcohol, tariffs, corporate tax, sales of land, etc.
"There was a general failure to recognize that the whole intellectual construction was inconsistent with a structure that allows for independent choice behavior of many participants in the economic nexus. "
-- on Statistics in Economics
Market "failures" are not the norm.
They are the consequences of other men - such as yourself - you believe market manipulation is the norm.
The market CORRECTS your error. It is not "failing" - it is setting it back to straight.
If you profited from the crookedness - the corrections will hurt. And that is not the market failing either, that is the market teaching you to stop manipulating.
FED stands for federal reserve, it's just much easier than using other government acronyms
during the fastest growth period in US-history there was steady deflation, there is nothing wrong with falling prices.
i distinguish very well. please tell me how Keynesian eco predicts anything? im here to learn. If you are so well informed then summarize it. then also either defend and differentiate what you isolate as "policy recommendations". do you understand that the entire system its built around is rooted in planning and policy recommendation? have you listened to this video? what are your logical and reasonable refutations or problems with what is said here?
No. The debt has not been relieved.
You merely have transferred its obligation to another party.
The obligation remains.
From Menger on Money:
" is the good in question accepted as the final means of payment for transactions? If so, it is money"
"
So how can I invest my money in a system of finance that uses this Austrian economics
Buy bitcoin.
Huh? I think you’re confusing economics with finance.. each of them look at the market for very different purposes
Gary Morrison, Economists study the production, allocation, and consumption of goods and services. Statistics makes a stronger case for capitalism than any economist ever could.
I am not calling him out for insulting someone. I am calling him out for insulting everyone in the exact same way. Everyone who disagrees with him knows nothing about economics etc etc. I am making a very specific and appropriate comment.
Lower prices do not necessarily mean more capital flow.
WillhelmDrake, I think you should read "Robinson Crusoe" to understand economic principles apply even when there's just an only individual. And labor isn't the same as slavery. That's a really awful misconception marxist have. Labor: The contribution to production flowing from a person's body. And Slavery is the legal ownership of someone else, in an free market there can't be any slavery as there's no law that says you can own somebody else.
When an economic good is in oversupply, the price of that good goes down. Law of Supply and Demand. This applies to money as it is an economic good.
The price of money goes down in terms of other goods. In other words, you need more money to trade for the same amount of goods. This is inflation.
I agree - one day, the market will cease buying government debt. The central bank probably will then make it up by buying more.
Money is not dependent on honesty. It is dependent on economic laws.
Just curious, if Austrian Economic policy were to completely kill inflation, wouldn't globalization be impossible for the country practicing those policies? The value of their currency would be far greater than any fiat currency which would drive the cost of exports up exponentially. No country would want to trade. I mean, some countries right now are having a hard time with the US dollar because it has increased in value recently.
Eventually countries will see the wisdom of this economic philosophy out of necessity. The BRICS nations are a start. Keynesian economics enrichens the 1% but eventually destroys a nation-its just so incremental that its difficult to notice unless its studied. Most economic powers are printing like mad to keep up. A "reboot" is inevitable & the current situation seems to have been exacerbated the past decade. I trust the Austrian philosophy as their representatives have been somewhat prophetic thus far (2008 Housing B&B). I would hate to be a young person as their future is going to be tough to say the least.
Honestly, I think that's impossible. The Austrian model is a nice sentiment, but I think we need something different.
Sawyer Smith Agreed.
Sawyer Smith this is where technologies like bitcoin(bitcoin.org) go in, allowing a global currency that any failling fiat currency can switch to in case it's losing its price.
I don't think it would be that simple. You'd have to get every single country completely united. We can barely work out trade agreements. That just doesn't seem realistic to me. Plus every country's monetary policy needs to be somewhat flexible or else you end up with something similar to Greece.
There is disagreement between physicists, so physics fails - to you, right?.
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You do not know what economics "is"
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Economics is the study of human action. It attempts to explain the consequences of such action - it does not predict any action.
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"If you raise the price, demand will fall". This does not infer you will raise the price, nor lower it, nor do anything with it. It merely states a Law - law of supply and demand.
The question of who profits from money manufacture is the entity that is the closest to such manufacturing - it is ALWAYS the government.
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It spends the new money at its full value, and after that expenditure, the ALL money begins to lose its value as the supply of money has increased - thus, lowering the price of the totality of money in the marketplace.
Governments control the manufacturing of money for this reason - for their own profit.
That is what "trade" means.
They have what they do not want - Apple IPhones.
They want something else.
SO they trade what they do not want for what they do want.
The concept of "buyer" and "seller" is temporary. In fact, both sides are "traders" of an economic good.
Are you saying that it is correct to abbreviate the Federal Reserve System as FED? In what sense? It isn't an acronym or an initialism - if it were it would be FRS or FRB. If you go and read articles in any newspaper or any economic journal you will not see anybody writing "Fed" in block capitals.