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>> but the houses of the 1950's were actually UNUSUALLY SMALL.

>In comparison to what exactly? They were larger than the majority of homes people lived in in europe which typically averaged 600~700 sq feet and especially to intercity homes in America, which were roughly the same size.

You are now switching and choosing to compare Apples to Oranges. Doesn't matter what the "typical" size of home was in Europe (and what exactly constitutes "typical" -- average? mean? what about the "Manor Houses" in England? Or are we to ignore those [despite the fact that many of the help lived there as well] and instead are we to use the size of the "worker's shed" in the village?)

>Most historians would say that a 3 bedroom house was unusually large for the era... right until 900+ square feet became the norm. Now most families live in 1500+ square foot homes.

Well, then most "historians" would be wrong. Typical farm homes featured distinct kitchens, several bedrooms, a dining room, sitting room, music room, etc -- and these were quite common, not merely the "wealthy" (who in fact had much larger "mansions").

And as I stated, yes, many immigrants lived in small "workers housing" that was built/owned by the local factory, etc. But equating those to a normal "house" erected by a person on his own is no more relevant than it would be to compare it to the square footage of a college student's dorm room.

>> but we'll never again see the exponential gains that we did by the initial adoption of computers.

>This is likely a false statement. "We will never again see the exponential gains that we did by the adoption of the wheel! the printing press! The steam engine! The internal-combustion engine!, etc"

So sorry that I wasn't pedantic enough for you. What I meant (by context which you didn't comprehend) was that:

"The exponential gains from adoption of computers will NOT happen again by the adoption of additional, faster computers. IOW, the 'economic gains' from computerization are now essentially complete (in the same way that the gains from the advent of steam power are long past, and the gains from IC engines completely integrated into the economy -- gains from further refinements in steam or IC engines are unlikely to me more than minor in influence, and likewise with further advances in computer hardware."

Is that explanatory enough for you?

>Technology has been continously doubling for a while now and there is no reason to see it stopping.

And where (other than Moore's law with circuitry) do you see this phenomenal "doubling" going on? My turn to demand evidence.

>I can guarantee you that once we adopt quantum computing there will be a paradigmn shift.

How? Because accounting transactions will be able to be done 100x faster? Modern computing already happens so fast that for 99% of applications, processor chips are actually sitting "idle" and waiting for input the vast majority of the time. Increasing the speed of the processor itself (much like increasing the storage capacity of hard drives) will no longer gain us much of anything for a further advantage.

>>And my argument wasn't that Moore's law that technology should thank economic process, it was that technology is part of the economic process and cannot be excluded.

And I have sufficiently demonstrated that I not only understand it, but have a much more thorough understanding of it than you do... you simply seem to believe in a Pollyanna fashion that "technology will save us"?

I have no doubt that we will in general continue to innovate technology wise, but we most certainly cannot predict nor "count on" any more "exponential" innovations to save our bacon. (Many of the most important innovations DID indeed come "out of left field" -- in that they were not "centrally planned" and in a few cases, entirely unexpected.) And it will be good that such does continue -- but I would expect most such things to have incremental, evolutionary value, rather than exponential, revolutionary value; indeed I think that the ACTUAL productivity increase from computerization is LESS than commonly believed, if only because it has also become a great time-waster, and a tool for "busywork".

>Making goods cheaper over time is a normal process though? Everything becomes cheaper over time unless it is held up through artifical means; especially like gold which is subject to governments and individuals attempting to horde it for no reason other than it being a shiny metal.

Yes and no. It is commonly TRUE that manufacturers (and farmers) HAVE been continually increasing their productivity and efficiency -- but it is NOT something that happens "automatically" -- it requires significant thought, creativity, effort, and investment, in short it is a LOT of work.

And there are many things (from natural disasters, to epidemic diseases, to wars, to tyranny) that can deflate, disrupt or even "reverse" those innovations.

>You haven't shown this though any sort of data though.

There are plenty of collections of data that DO show this though. (Reinhart & Rogoff have recently assembled 800 years worth of data -- which is doubtless too large to fit into a reddit post, and took them years to assemble.) As far as your demand, I assert you should go and assemble the data to back up your position, assemble it and present it here in full, and THEN I'll consider doing the same on my side. (IOW your "demand" for data is absurd).



>>You see, since the major economic impact of Moore is now over

>This isn't true in any sense. Computing power is still doubling, as is nearly all other forms of technology.
>
>You're like a modern day John Adams at this point. "Men will likely never take the sky! We have reached our limits!"

It's completely true. You've provided zero evidence of this imaginary "doubling" of "nearly all other forms of technology" -- such an expansion of capability exists only in your mind.

And the MAJOR gains from computing are now fully integrated. There is no "magic bullet" from computer chips that is going to "save us all" -- just not there... sorry (and I'm not a technophobe, but rather I am and always have been a technophile, just not a self-delusional one.)

I'd start from reading Economics Help blog. I find it fairly objective and Tevjan writes very clearly. Econlib has very useful library of articles, but overall that website is fairly libertarian in its views. (Not that I'm saying it's bad, but it's useful to know where they are coming from).

As for books, I'd recommend firstly some basic textbooks - you can buy them for cheap used. As for pop science books, I find Naked Economics the best one I've read. It covers the orthodox economics fairly well. As for heterodox Economics and criticism of neoclassical economics, I'd read first Economyths and then How Rich Countries Got Rich and Why Poor Countries Stay Poor. Of course you can read the classical literature of Economics, such as Keynes, Hayek and Friedman, but I wouldn't dwell on them too much as the research has progressed a lot since them. Nobel Prize website has all the nobel prize of economics lectures on their webpage and all of them are worth reading (though some of them are more about finance, than economics) - here are couple of them worth reading.

There are several academic articles (usually working papers) that you can find online easily as well. Best one I can think of currently is Behavioral Economics: Past, Present and Future which summarises the field of Behavioral Economics very well. Joseph Stiglitz keeps a lot of his academic papers on his website for free download as well, so they are worth reading. There is a free e-book online too, that's more so about politics than economics, but still a great read; Dean Baker's Conservative Nanny State.

I'll try add some more resources when I have time.

Edit: P.S. If you are interested, I have a bunch of papers and articles on my computer as well that I can send.
Edit2: IDEAS keeps a list of academic articles on their site, but that will require some effort from your part because you essentially have to use search.

Edit3: If you are into something more specific there are good books about Evolutionary Economics and Complexity Theory, Economics of Knowledge, Economics of Strategy, Economics of Information Age and Economic and Technological History. All of these are excellent books that I recommend and quite beginner-friendly.

> Yet the bankers just keep doing it again and again. They do it with and without central banks.

Fractional reserve should be prosecutable as fraud. Having said that, banks would be much more responsible if they faced a risk of going out of business. The occasional bankruns of the late 19th century, did not significantly impede the surging prosperity of the gilded age. They were a good thing -- just like when a crappy restaurant goes out of business.

> > but your own devotion to Keynesianism fails to live up to the standards by which you judge the Austrian School.

> I fail to see how. Keynesianism doesn't pretend to be deductive logic.

It seems to me that Keynesians are able to put numbers around little things. Unemployment, inflations (both of which are heavily manipulated). They have graphs and charts and look very much like their distant colleagues in the hard sciences. The play empiricism, but all the big things and important decisions are made by pure deduction, just like the Austrians. For example:

We need a central bank.
We need to bailout company/industry X
The economy can be centrally steared by manipulating the reserve rate in a positive way.
We need to force people to use their state's currency.
The liquidity trap occurs when there's a shortage of money circulating.
The free market is inherently unstable.
Crashes are caused by animal spirits / the bursting of asset bubbles.

> > it just restructures production for long-term projects.

> That directly contradicts the concept of "flight to liquidity".

Not a contradiction. A flight to liquidity can mean a flight to savings and checking accounts. That's money ready for lending.

> If savers were making long term investments, we wouldn't have a problem.

Ugh. Right now, you Keynesians think we need long-term investment, and your policies are creating an illusion of savings by lowering the interest rate to zero. In actuality, there are almost no savings. People need to work, busy consumer goods, and save (or not -- it's up to them). Keynesian policies have pushed a lot of land labor and capital into long-term projects at a time when people are thinking about the short term.

Your statement presumes a "correct" way for savers to be investing. The only correct way is one which is in harmony with the level of savings, and the market signal which creates that harmony -- the interest rate -- is centrally controlled and, for the moment, pushed to near-zero, creating an illusion of savings which don't really exist.

> How do you know? [regarding consciousness] . . . There is no evidence that the human brain consists of anything but physical processes

Because physics cannot even entertain (much less provide answers for) simple questions like what do you want to do? When there's meaningful progress on the Turing test, I'll reconsider.

> if you really believe it is such a great thing and will work well in the real world, go find a small country and convince them to adopt pure Austrianism. . . . Honestly, I'd write a letter … to advocate giving you guys an island in the Pacific ocean to test your system.

Liberty is a threat to the gov't. Allowing it would mean exposure of their fraud.

I'd love to, and I think about it often. Small states have many advantages over large ones. There's a theoretical project by Friedman's grandson which involves a nation consisting of floating barges.

> Even the anarcho-capitalist advocates say that there must be private militaries that are hired by insurance companies (which is really all a state is) to protect their customers. Overall, the idea that violence is magically going to disappear is very naive.

No one says violence is going to go away. A state is not a hired insurance company, because the client does not the right to walk away. The service of security is not subject to market pressure. The state unilaterally decides both the nature of security (invading Afghanistan, Iraq, Libya, bombing Somalia and Yemen, TSA, full body scanners), and the cost of security. This is the difference.

> for placing the extreme long term conservation of value for mattress stuffers

It is not just mattress stuffers. Huge quantities of wealth are transferred from people in general to whomever is closest to the place where new money enters the economy. Even Keynes admits this:

"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens."

And I think you're full of shit for trying to muddy the waters on the ethic argument I raised. The dollar is backed by force. Voilence will be used against Americans who attempt to work around the dollar system. Yes, violence has been used before in history. No, this doesn't justify today's.

> gold

You were comparing the dollar's 97% loss in value to the instability of gold. That dog don't hunt.

> As I said, the 1921 recession ended when the fed cut rates.

I'm going to look more deeply into this. It seemed that the 29 crash happened when they stopped their easy money policies. Do you think we can get out of today's easy money without a catastrophe?

>

> Please stop calling an increase in the money supply inflation... just say "an increase in the money supply".

No.

> voluntarily decided it likes fractional reserve banking. In 400 years or so of modern banking, full reserve banking simply hasn't emerged.

Not true. It's contradicted by the video you posted. Government enshrined and protected the fractional reserve system.

> That era was a miserable failure.

Not true at all. Yes, lots of banks went out of business. (It is good when bad companies go out of business). But it was a time of sky-rocketting prosperity.

Your baromoter is laughable. When banks go out of business this is bad. When today's commercial banks survive for a long time, this is good. Dark world. How much wealth has to be taken to give irresponsible banks a long life?

> So which is it? Do you support free banking or gold? A gold standard (at least in the form that the US and most other countries had in its past) is mandated from a central government, by the way.

Free banking gets my vote, though either one would be huge, mind-blowing progress. I'll mention again that fractional reserve banking should be prosecutable as fraud instead of enshrined by law.

> Except it has been done successfully that way for long periods of time. You shouldn't get your ethics confused with your evidence. You might not like central banking, but to say that it can't work is absurd given how successful the US economy was under the periods with central banks.

Typical of your positivist and keynesian approach, whenever you connect two data points you jump for joy. Can we likewise conclude that the Soviet system worked because it brought electrification, had zero unemployment and a growing GDP?

You know, Keynesian economist and Nobel Prize winner Paul Samuelson predicted into the late 1980's that the soviet union, the fucking soviet union!!!!! would outpace the US economically. He asked whether their surging economy didn't make the political oppression (43-62 million killed) worth while. But it's the Austrians who are cruel. Right?

Also, not all the evidence supports you. The biggest depression in American history. The only time there has been wide-spread malnutrition in the US. A 97% drop in purchasing power.

> I believe the burden of proof is on you if you want to make claims about government failure. You haven't done that with the CRA or with any other program.

The long history of bailouts are facts. What proving do they need?

Also:

FACT: In 2008, CRA loans accounted for just 7% of Bank of America's total mortgage lending, but 29% of its losses on home loans. Also, banks with the highest CRA ratings tend to have the lowest safety and soundness ratings.

FICTION: Only 6% of subprime loans were originated by banks subject to the CRA, so the vast majority of risky lending was not tied to the law.

FACT: Among other things, the figure does not count the trillions of dollars in CRA "commitments" that WaMu, BofA, JPMorgan Chase, Citibank, Wells Fargo and other large banks pledged to radical inner-city groups like Acorn, Greenlining and Neighborhood Assistance Corp. of America (NACA) after they used the public comment process to protest bank merger applications on CRA grounds.

[Earlier this week I noted that I had changed my mind on the Community Reinvestment Act. Contrary to my initial conclusion, the evidence is overwhelming that the CRA played a significant role in creating lax lending standards that fueled the housing bubble. Once I realized this, I had to abandon my suspicion that the anti-CRA case was a figment of the rhetoric of Republicans attempting to distract attention from their own role in the mortgage mess.]http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6#ixzz1RTwfW5or)

Prior to 1995, such subprime home loans constituted less than 2% of new home loans, but by 2000 they were over 9% of new home loans, and by 2008 they were 20% of new home loans. To make matters worse, Freddie Mac and Fannie Mae began to buy and/or guarantee more and more of these risky subprime loans.

If you want more opinions supporting my view, look here,
here, here.

I'm curious what utility theory you've read?

Certainly based off what I'd say is the premier graduate text on microeconomic theory, it's quite standard to take preferences as being transitive. That transitivity does then carry over into utility function mapping from there.

I don't mean to be patronizing, but I can't see your argument and to make sure we're not talking past each other, let's rehash the definitions.

Let a person gets utility value from good x equal to U(x).

Transitivity requires that if for a person, U(a) > U(b) and U(b) > U(c), then U(a) > U(c).

So if the guy prefers scotch to gin and gin to wine, then he prefers scotch to wine. Is this always true in every possible collection of choice problems? Eh, maybe not. We can find behaviorists pointing to weird marketing and price packaging phenomena that break this. But does it not seem reasonable for you to believe it's true to most economic situations at large for most people? At the very least it seem to work well for our models and really is required to get utility functions that are even remotely usable. Without it, it'd be pretty much entirely impossible to do any economic modeling. And at the very least, we can probably assume it's true in quantities of money. All other things being equal (that's important here), surely 99.9% of the population would prefer more to less consistently. Therefore, in utility over strictly monetary values, we have transitivity.

While you're right in that we need transitivity to really talk about utility functions (particularly for them to be continuous and monotone), after that it's use really goes away. Transitive preferences certainly don't imply DMU. A counter example would be a utility function where say U($10) = 100, U($20) = 400, U($100) = 10000, i.e U(x) = x^2. That's transitive and has strictly increasing marginal utility. It's just that economists don't generally believe that's how people work. You don't seem to agree with that though - why? Would you really value $100 the same if you were broke on the street vs a billionaire? On one hand it keeps you alive, on the other hand you might be spending more than that for your drinks.

Regardless of your personal assumptions, I'm going to go ahead and say I'm not sure you understand utility theory that well. Or we disagree on what you think utility theory is, in which case you're going to need to explain it for me (or really any traditionally trained economist) to know what you're talking about.


> I do have trouble having economic discussions with people who think utility functions are transitive... "Who do you think gets more utility from a $100 bill, a millionaire or a homeless person?!" In their minds, DMU means the homeless person must get greater utility from that money, but that's a nonsensical application of utility theory.

... where are you getting this claim. I'm willing to talk about to what degree people have transitive preferences, but to say it's nonsensical is absurd. It's the standard economic model and use of utility theory. Do you have a source or an argument that goes deeper?


> The study isn't telling you that you should care about it.

Well then why do they want us to read it? I think you're looking at this wrong. They are trying to speak to an audience by telling them something that interests them. If not, it's just background blither on the internet, a supply of which is as nearly infinite phenomena as they get. We're the consumers, they're the producers. It's getting posted because people want economists and people interested in economics to discuss it. Why else?

And I'm not trying to make it a policy prescription, I'm just wanting to see data that would better inform me about the world. I really don't understand your criticisms with my comment. I'd get it if you find the absolute numbers more interesting, but I don't get how you can't see people thinking other measures might be more interesting. If that doesn't make sense then I don't know if I can help you.

So you want to ... voluntarily pay taxes for your municipal water? Guess what, there would not be any municipal water in your area if it weren't for 'forcing' people to pay taxes to set up that infrastructure. Really, do you realize how different our country would be if people had only had to volunteer to pay taxes? You would have police forces in wealthy areas and rampant crime in poor neighborhoods, with no help in sight.

If you agree that a police force is necessary, then you must agree that using force to tax people against their will for certain things is ok. Right?

As for copyright laws, yes they do redistribute wealth. With zero laws in place, a singer would not be as wealthy as the popular ones are today. Music would be free and musicians would only be able to charge for live shows. So how can you not admit that copyright laws transferred wealth? BECAUSE the laws exist, some wealth is taken from a large group and sent to a few entertainers. Without those laws, people would have more wealth, while the entertainers owuld ahve less. It's that simple.

As for free trade, well sure there is no wealth redistribution due to free trade. Why do you think rich nations want neoliberalism? They have all the wealth, and don't want to see it transferred anywhere. They GOT taht wealth though, through protectionism, and still use protectionism when it suits them. Do you think subsidies don't still exists? How is a subsidy not like a tariff? US companies often are only competitive because subsidies allow them to offer the good or service at lower prices, giving them an edge. Do you think say... airlines in the US would be nearly as large as they are, without subsidies? Is this not a transfer of wealth? My taxes go to help people afford to fly. I don't care to fly, but my taxes are forcefully taken from me and used to help others fly around the country.

Here is a book that really goes into why free trade is just another tool the rich nations are using to protect their wealth.

http://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596913991

All of the rich countries in the world got their wealth through protectionism. I don't remember being asked, really, if I was ok with making a FREE FREE FREE trade agreement with a communist country, do you? And do you think US companies, even if wages were similar to Chinese wages, could compete when China allows factories to pollute and abuse workers, while ours are restricted with OSHA safety laws, environmental laws? Does this sound like how free trade is meant to 'level the playing field'? Hell no, it gave the advantage to the country that abuses its people the most.

>How are you using the term wealth?

I suppose stuff that people want. If you reconfigure matter with your labour to make it more desirable, or perform services with your labour, then your activities increase the overall desirability of the world (neglecting externalities to non-customers) but you can also hoard things that are desirable that people want and then charge them rent for it. This doesn't increase the desirability of the world. Rather it reduces it by putting up a toll on desirable public goods. Ring- fencing desirable things and charging a toll for access can be very profitable. But it isn't productive.

> This is a critique, but it's not constructive criticism. You don't have a better option.

Releasing a modest trickle of new money evenly throughout the population is a better option. It would stop overall debt from increasing exponentially, it would reduce, perhaps halt, the trend towards ever higher wealth concentration in fewer hands and it would stabilize the financial system.

That seems like a better option to me.

It's true that loans have a useful role to play in society - but we should not solely rely on lending to create all money.

> The billionaires today are not the billionaires of yesterday for the most part.

Piketty's argument is that the world wars destroyed alot of capital and caused social upheaval. But inheritance is an increasingly high portion of GDP. Another effect is that self made people are more proud of their wealth and flaunt it more. Rich heirs are often a lot more discrete. We hear a lot more about Bill Gates, Jeff Bezos and Elon Musk then about the Rothchild's. But the Rothchild's are still a phenomenally wealthy family, they and many lords are the billionaires of both yesterday and today - but they keep a much lower profile than Elon Musk, for example.

Also social inequality in the US is a relatively new phenomenon, it was less severe in much of the 19th century than today.

> Far better to help people through the process of becoming a carpenter rather than merely giving them $2k.

But with money you can buy an education. Indeed the Indian basic Income pilot showed definitively that poor people in receipt of basic income tended to send their children off to be educated at higher levels then in the control villages.

https://www.amazon.co.uk/Basic-Income-Transformative-Policy-India/dp/1472583108

> Yes, and that's exactly how it works. AIG isn't backed by the federal government. FDIC is. Here's a wiki article on it. https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation

From the word "reserves" in the article it sounds like the FDIC can be maxed out.

But in any case in our current system private banks create 97% of the money and then if they give bad loans or pay out too large bonuses, the state comes in and bails them out. Because we can't afford to let them fail.

IMHO a much better arrangement would be for the state to directly control the amount of credit that banks have available to loan out in the first place. Rather than letting private banks go wild and then pick up the pieces when it all goes wrong.

> Regardless, how is this "backed" by land if you cannot redeem it for land?

With a land value tax (basically a property tax calibrated to the unimproved rental value of land) you have to pay a fixed amount of national currency to the government to hold your exclusive claim on a piece of real estate. But this amount depends on how much other people bid.

​

In any case, if property taxes can only be paid in a particular currency then there will constantly be a demand for that currency.

> If you reconfigure matter with your labour to make it more desirable, or perform services with your labour

I would call this value. When someone takes out a loan and turns it into a car, they have made value. Then they pay off the loan and keep the profits. However, in your model you have no driver to make profit or value because you have just given away the money. Far better to let that person make money, enjoy the profit, and then when they pass away, collect whats left. This would end the "hoarding" because they'd either need to spend it before they die or die with it.

> It would stop overall debt from increasing exponentially, it would reduce, perhaps halt, the trend towards ever higher wealth concentration in fewer hands and it would stabilize the financial system.

When people say that the debt is growing I feel like they're being very disingenuous. First off, debt is growing because we want inflation. It's a solution to a bigger problem, which is deflation. So to say that debt is this thing we want to avoid is really just to use a trigger word "debt" which is a bad word for most people. You cannot merely point at debt and call it bad. You have tried to link debt with a boom bust cycle. However, in your system debt still exists. In fact, you want the best of both worlds. You'd like the exact same levels of employment with some how lower levels of debt. Well giving individual people money isn't going to keep a business going. Maybe it helps their sales, but in order to produce products, they need capital first, which is generated by debt.

Furthermore a lot of people conflate the government debt with the debt you're talking about, and they'd like their government to stop spending. So people tend to agree if they don't understand the useful roll debt is playing in the economy.

> Piketty's argument is that the world wars destroyed alot of capital and caused social upheaval. But inheritance is an increasingly high portion of GDP. Another effect is that self made people are more proud of their wealth and flaunt it more. Rich heirs are often a lot more discrete. We hear a lot more about Bill Gates, Jeff Bezos and Elon Musk then about the Rothchild's. But the Rothchild's are still a phenomenally wealthy family, they and many lords are the billionaires of both yesterday and today - but they keep a much lower profile than Elon Musk, for example.

Also social inequality in the US is a relatively new phenomenon, it was less severe in much of the 19th century than today.

That's why I've been advocating for my solution, which is to tax people upon their deaths. Furthermore, inequality is a real thing. It just seems unlikely that giving people money would solve their problems. I feel like the universal income tests have been failures so far. Far better to pay for their schools and healthcare. They also need a safety net and the option to live cheaply.

Also, it's fair to point out that there are people who have merely inherited their wealth, but we can't ignore that our system right now produces self made billionaires. Some people see that as a personal goal, and removing that from society is like removing hope. Don't focus there. From a psychological argument alone, that makes little sense. America has a very odd thing about it. Our poor think they're temporarily inconvenienced millionaires. Now, that's changing because people are beginning to stagnate, but that's a good thing. We should want people who are driven to succeed.

> But with money you can buy an education. Indeed the Indian basic Income pilot showed definitively that poor people in receipt of basic income tended to send their children off to be educated at higher levels then in the control villages.

https://www.amazon.co.uk/Basic-Income-Transformative-Policy-India/dp/1472583108

I'll be honest, I think this issue is far too politicized to have honest data. If you search for people who are for it, you get successes, and if you search for the opposite, you get failures. One thing is for sure though, if you put that money into schools, then you will pay for people to go to school. Some people may not be able to go to school or may choose not to go to school. And in those situations I think that would require a deep dive into why that may occur. I personally think young child care might be next on the list social programs that might need to exist.

Furthermore, you need to realize that the world is changing too. Soon there may not be many jobs for people who don't hold some form of education. These people are not going to make it on $2k a year.

> With a land value tax (basically a property tax calibrated to the unimproved rental value of land) you have to pay a fixed amount of national currency to the government to hold your exclusive claim on a piece of real estate. But this amount depends on how much other people bid.


> In any case, if property taxes can only be paid in a particular currency then there will constantly be a demand for that currency.

Not sure what value a second currency necessarily adds. In fact, I'm not sure why you'd want the dollar if only one could pay off a certain thing... while I'm sure the other could pay off anything since it has greater intrinsic value.

>The whole attempt at steering (centrally planning) the economy by playing with interest rates is pure Keynsianism. It explicitly contradicts what Friedman said.

Friedman believed in using the central bank to steer the economy as well. He wanted to maintain small constant inflation. If you read the book I cited at the beginning of this discussion, you will see that he calls the early 30s the "Great Contraction" because the Federal Reserve ran too tight and allowed deflation to happen. If you look at the inflation table in the other post I just made on stagflation, the 30s showed major deflation in the CPI. So nothing about using the central bank really contradicts Friedman.

If anything is "pure Keynesianism", it is the idea that governments should use explicit fiscal policy during recessions. McCulley's point was that this part of Keynes was dead in the water after Reagan was elected.

>Mattress stuff would lower prices for all the people who aren't stuffing their mattresses. Fluctuating prices can absorb changes in spending habits if you let them.

And in the meantime, debtors would be destroyed. Do you think that businesses and workers with some debt but were otherwise well behaved should be destroyed in a recession? This is the primary reason that made the Great Depression so horrible.

>As far as how much more savings savers need before they choose to start investing again? That's up to each individual.

You completely dodged the question. You basically admit that liquidity trap conditions can exist, but you offer absolutely no solution. This is a failure of Austrian economics.

>This is further evidenced by the fact that crashes come, first and hardest, in capital goods instead of in consumer goods.

A much simpler explanation of a drop in capital goods investment is what I gave. Those with savings flight to safety.

>It had nothing to do with letting irresponsible banks fail.

Keep telling yourself that. This is yet another example of you putting your head into the sand and dodging questions for ideological reasons. Bank runs can destroy well managed banks as well as bad banks and made the Great Depression far worse than it should have been.

>Money is just the medium of exchange. It is not the wealth.

This is just more Austrian doublethink. Money is used to acquire wealth.

>If you were right, if crashes were caused by savings, then the crash would begin in consumer goods, right?

You are getting confused. I was talking about a liquidity trap, which happens after a crash (by which I mean the end of a speculative bubble). If you are interested in why crashes happen, read some Hyman Minsky and Robert Shiller, but that is a separate issue. The point is that in a liquidity trap, everyone trying to save makes a recovery difficult.

>They attempt to understand human society in all its complexity but their only tool is a tape measure.

That is simply not true. That is like saying science in general only relies on the tape measure while discounting everything else that is done. Mises's problem is that he did not understand how the scientific method works. Science is a process of making predictions about the world based on models and then using evidence to identify which models work and which do not. Whether Mises wants to admit this or not, this is how all non-trivial knowledge is acquired. And his solution is pure snake oil. If the tools of science can't manage the complexity of human economics (which I already agreed that they cannot fully), then deductive logic certainly cannot.

For example, the claim that "human action is purposeful action" is useable as an axiom is laughable and demonstrates the Mises also does not understand logic. Here is an example of an axiom: A and B implies A. Axioms are incredibly simple. Before we can use Mises's action-axiom, we have to define what it means to be human, what an action is, and what it means for an action to be purposeful. Hence, this is not really an axiom at all, but merely the basis of a pseudo-logic. And yes, I know that Mises defines action as "will put into operation and transformed into an agency". But then you have to start talking about what "will" is, and that gets into deep questions of how the human brain works. None of this is as simple as anything traditionally called an axiom. It makes a bunch of simplifying assumptions and defines things in such a way that a certain conclusion always arises. It is not logic in the way that something like first-order predicate calculus is a logic.

>Show me the empirical evidence of the need for a central bank, of free market fallibility, of the need for public education, bank bailouts, stimulus packages.

Those are enormous questions. I recommend you read books and study history outside of the writings of Mises, Rothbard, and their ideological ilk if you want the answers to those questions. The only short answer I can give is that every first world country goes by these rules and they generally work well, while no first world country has relied on strict Austrian economics because it is merely a non-practical pipe dream just as much as something like pure communism. Austrians believe in spontaneous order, right? Well, the successful countries have all spontaneously ordered themselves in such a way.

>I'm not arguing against data. You need data. But the numbers tell you nothing without a meaningful, deductively sound theory.

This is exactly the basis of empiricism and the scientific method. As I said, I believe you have fallen for doublethink.

>I think we'll live to see a collapse of the dollar. It lost 97% of it's value since the Fed was created a hundred years ago. I think it might lose the next 97% much more quickly.

Losing 97% over 100 years is not that important. The dollar does not need to be a store of value over 100 years. Even gold cannot provide such long term guarantees (especially in the next few hundred years as things like deep ocean mining and asteroid mining possibly become within our technological reach). If someone refuses to spend a dollar in that time rather than doing something useful with it over such a long period of time, I'm really not concerned if they lose the value. As time goes on, past earnings should depreciate in value. If they want to keep the value, there are easy ways to do so (TIPS, real estate, stocks). Most economists agree that given the tradeoffs, small positive inflation is the best option. The world is vastly wealthier now than 100 years ago by any measure even in the face of a declining dollar. In the short and medium term, as long as inflation is kept in check, the dollar is a practical store of value, unit of account, and medium of exchange.

As for hyperinflation specifically (by the definitions we gave above), you are dodging my question. If the federal reserve's actions in the last 3 years really are Armageddon, then we should see something happen soon. Otherwise, you and Peter Schiff should apologize to the world for fearmongering.

>Where in the essay does Rothbard talk about a debt deflation scenario which ended quickly?

You are confused again. He doesn't give an example and that is my point. He says this: "this expectation hastens the fall in wages and other factor prices, hastening the recovery, and permitting normal prosperity to return that much faster." Clearly he believes that if deflation is allowed to happen, the recovery will happen sooner. I'm asking for such a scenario.

>I don't think I can answer your question, because you're asking for something non-Austrian.

You just said that you don't dislike data. You can cite international examples if you want. You can cite pre-Fed examples if you want. I just want Austrians to support their claims with actual evidence.


>The Austrians point to 1921 or 2001 and say, no, the problem is here.

Quick question: how did the Fed go from 1929 to 2001 without having a major speculative bubble pop in the United States? My answer is because we had Fed chairman like William McChesney Martin Jr., who was quoted as saying his job at the Fed is "to take away the punch bowl just as the party gets going". The point is that other than the early days of the Fed and Greenspan, we've had a pretty damned good run at preventing major bubbles, especially compared to the panics of the 1800s that I cited before. So my argument is that lowering rates during a recession is not the problem because the Fed did that for decades without creating bubbles. The problem is that during the good times, the fed needs to be willing to "take away the punch bowl". As I mentioned before, McCulley criticized Greenspan for not using the tools available to him to do so and for being Mr. Magoo on the upswing of the market. And further, given that we've had speculative bubbles even without central banking, it is clear that the cause is more complex. If you have not read it, I encourage you to read this book. It gives a very detailed explanation from a Keynesian point of view of exactly how bubbles can take off. The fed certainly has an influence (especially by raising rates when a bubble is forming), but in the end, it is the private market that actually goes through with all of the malinvestment.

We see articles about the collapse of a higher education bubble quite frequently - I've never understood why people buy into it:

1. A bubble is a term with a specific meaning - people are buying an asset with the expectation that they will be able to sell it for more later. There is no mechanism for which this can work in the education market.
   
2. The last 30 years have been characterized by a huge increase in the college wage premium. In 1979, a college educated worker made 35% more than an HS graduate on average, by 1999, they would be making 80% more. The Race Between Education and Technology is a great overview of this. A college education is still a really good investment. This isn't because of selection effects - see The Caual Effect of Education on Earnings.
   
3. Virtually no one pays market price for a college education. The financial aid process allows universities to practice almost-perfect price discrimination. They can effectively charge a different price for every student, so that the market just follows the demand curve up until their maximum tuition level.
   
4. The is definitely is a sheepskin effect - http://en.wikipedia.org/wiki/Signalling_(economics)#A_basic_job-market_signalling_model - for college diplomas. But this is extremely well understood (Spence shared the economics Nobel with Akerlof for signalling theory). I think that separating bright, talented and hard working 18 year olds from bright, talented and lazy 18 year olds is a non-trivial process.
   
5. Tons of articles imply that you don't need higher education, because you can take classes online. If this was the case, why did the university lecture have survived the invention of the printing press? Books reduced the cost to the diffusion of knowledge far more than the internet did, without ending the university system. This implies that there is something else going on to me.

Haiti, Africa, Latin America. These are capitalist countries. And more free market than most (not that true free markets actually exist anywhere).

Many of the countries that have moved from poverty to prosperity did it with capitalism, but they did it with a highly regulated capitalism with large amounts of government regulation. S Korea, Japan, Great Britain, the United States. What then happens is when a country becomes rich with government intervention they then find it is advantageous to deny government intervention to others. They reach the pinnacle. They then kick away the ladder for potential competitors.

Ha Joon Chang's "Bad Samaritans" is a good primer on this.

Vindicates it to a certain level yes. http://www.amazon.com/Great-Stagnation-Low-Hanging-Eventually-ebook/dp/B004H0M8QS is a great book mostly talking about America's economic decline but also speaks a little to China as well. China has seen impressive growth by the numbers and in some real world cases but that doesn't mean the system is incredibly corrupt and inefficient. A state managed system can work wonders when all you have to do is do the simple things all the other developed countries have done already (build infrastructure, factories with cheap labor, open up borders). This is especially true seeing what China was coming from in the 1970s, there wasn't much room to go but up. Now in the coming decades we will see how well this development approach will work into the future.

Life got busy again and i lost track of what was happening in terms of books. You said you read Ron Paul's book, so i thought i might throw out some of the books i enjoyed.

Henry Dent

George Soros

Tom Wood & Ron Paul

They're outdated, but provided some good economic thought behind what has happened and their forecasts. Tom Wood's and Ron Paul's book was interesting, but i'm not sure how relevant it ever was. At best, it served as a warning. Don't get me wrong, i'm a fan of Ron Paul, but the system will never remove the Federal Reserve. Also looks like there's some updated editions out too.

I'm looking at new books as we speak.

I'm going to go against the grain and say there is no student loan bubble - it doesn't even make sense. A bubble is when "asset prices that exceed an asset's fundamental value because current owners believe they can resell the asset at an even higher price" (source). This is impossible in this context - you can't resell your education and the debt is non-dischargeable (for good or ill).

Instead, it may be accurate to say college is overpriced, since bubble is makes no sense. I don't think this is accurate. Over the last 40ish years the college wage premium has increased. In 1974, an average college grad made 32% more than a high school grad, in 1999, the difference had risen to 80%. You can read more about it in this book. A college degree is still a really good investment. Maybe not as good as 10 years ago, but not negative.

Also, you can't evaluate returns to investment in college by looking at sticker price. Financial aid process lets schools do very precise price discrimination - they can basically just walk up the demand curve. Saying nominal tuition increased by X isn't very meaningful. College is pricey, dropping out is very pricey, but it is still worthwhile. The college premium is not just a selection effect.

I'll grant there is some signaling going on through the college process. But economists have shown pretty clearly that although a portion of college is signaling, not nearly all of it is signalling. And signaling isn't necessarily entirely wasteful, separating smart hard working people from smart lazy ones isn't easily achieved other ways.

This article suggests that online classes can replace college in some respects. Perhaps in some part, but not entirely. Lectures survived books and other recorded media, and learning with both was better than either alone. Plus, working with and around similar peers has real knock-on effects. And so far, the majority of for-profit universities have failed to produce the same graduation rates, quality of education, or lower costs than public and private universities - that could change, but we're not there yet.

Because almost every rich country got rich via mercantilist or neo-mercantilist trade policies (USA circa 1800's to 1940's, Japan, South Korea, Singapore, Most of Europe). Compare that to countries (latin american and african) that adopted IMF policies of open trade, low deficits, high interest rates, privatization of public assets etc., the track record is very poor.

It's only AFTER those rich countries got rich did they open up trade.

Cambridge Economist Ha-Joon Chang has an excellent book on this:

http://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/B001P3OMQY/ref=sr_1_1?ie=UTF8&qid=1302038046&sr=8-1

How could you forget the granddaddy of Micro texts: Mas-Colell. This book is the standard in many first year grad courses, and it covers everything pretty well -- the game theory is a little obtuse, though. It won't help much with economic intuition, but for people like the OP who want to learn the mathematical models, it's encyclopedic and definitive.

Otherwise, you have some very good links.

Edit: Apologies, I just noticed that the OP only wanted online links. I'll still recommend Mas-Colell in the case that the OP wants a good Micro text.

Have you read this book: http://www.amazon.com/gp/product/B005WTR4ZI/ref=kinw_myk_ro_title

It's a pretty good read, but shows some interesting data. I'm far from an economist, and I don't think that it prescribes a total loss of work in the near future, but I do think it makes a pretty good argument for things being a touch different this time around. It also show's that jobs have been steadily decreasing for some time now (more than even most people who peg it around '08).

While I don't know that the Dystopian outlook is the correct one, I'm not sure that I think things are going to be rosy unless we start having conversations (thankfully, much like this one).

Honestly it's a good quick read, and the one that got me to see things in a different light.

The problem is there is no way of knowing what is high enough or too high when it comes to the inflation of the money supply (thru the FED interest rate).

The only interest rate which is always right in a meaningful sense and is self-correcting is the natural interest rate, that which the market determines by individuals exchanging IOUs for future money in exchange for current money (ie. borrowing and lending).

Different people have different time preferences, some are more thrifty and "savers", whereas some would rather borrow to achieve their plans. The mix of savers and borrowers keeps changing, and the result of this supply and demand is the natural rate.

The problem is that with central banks controlling the money supply and the interest rate they provide to other banks, there is no way to know the actual natural interest rate anymore. In a way, the FED by its very existence makes its own task impossible.

The only solution is to end the FED ...

Yes. Building the "bottom up theory of the economy" is the work of generations of theorists in economics.

You mention you have a math background. If you can do math at the level of a first course undergraduate course in real analysis then you can go directly to Microeconomic Theory by Mas-Collell, Whinston, and Green. This has been the standard grad text in North America for over 10 years and for very good reason. It is a masterpiece. Beyond the content, the references and suggestions for further reading are fantastic. While this book is not the last word on micro theory, it certainly the first.

There are also a number of important lessons for macro theorists in the text. Chapter 4 has important lessons for those who want to do any kind of aggregation, and chapters 15-20 build a general equilibrium model from first principles and point out all the holes that macro theorists paper over.

Well you seem like a smart guy and struggled through Friedman and Keynes so please, for the love of god (or flying spaghetti monster if you prefer), read Prices and Production and Other Works. You can buy the hardcover which is nice or read it free thanks to the generosity of mises.org.

I have been studying economics for a long time, took it in college, have read many books, went to conferences, seminars, etc. Read the wall street journal every day. I could have skipped all of that if I had just read what Hayek was writing in the 30s. The thing that sets him far apart from all other economists I have read is he starts with a pure barter model of the economy and works up from there by adding monetary factors showing how money and fractional lending systematically distorts prices and allocation of labor and resources between consumer and producers goods causing regular crises. It's not just a bunch of ranting criticism about the injustices of the system, it's an actual methodical disciplined look inside the beast and exactly how it functions. Most authors just come to the topic with some sort of outrage that clouds their analysis. Hayek takes it apart and puts it back together and explains its flaws and dynamics. Even if someone has chosen to give up and "live with the beast" it makes for very interesting reading.

I think why nobody reads this stuff is it is very tough going. It's a bit like reading computer science algorithm text books except there's no concise non-ambiguous computer code to demonstrate the algorithm. Hayek just has to explain it with words. It also doesn't help that he writes very very long sentences with multiple subordinate clauses. It often requires re-reading things several times to get all the meaning out of it.

BTW, In the introduction of the book the editor eruditely points out how Hayek basically neutered himself after the mid-40s and just wrote about why communism doesn't work (Road to Serfdom, etc) instead of further investigating the underlying mechanics of capitalism.

I'll be wrapping up a B.S. in Economics with a minor in statistics this December.

Books:

• One of the best books that I've found is The Armchair Economist by Stephen Landsburg. It's very low tech. which makes it very accessible with respect to the rest of the subject.
  
• I've heard good things about both Naked Economics: Undressing the Dismal Science and New Ideas from Dead Economists
  
• http://www.amazon.com/The-Armchair-Economist-Economics-Everyday/dp/1451651732/ref=pd_sim_b_2
  
• http://www.amazon.com/Naked-Economics-Undressing-Science-Revised/dp/0393337642/ref=pd_bxgy_b_img_b
  
• http://www.amazon.com/New-Ideas-Dead-Economists-Introduction/dp/0452288444/ref=pd_bxgy_b_img_b
  
• You can get all three of these in a "bundle deal", and this is a great starting point written in laymen's terms.
  
  
  I also highly recommend the Open Course series to develop the fundamental skillset. You can generally get these texts cheap:
  
  
• Intro Micro/Macro: http://ocw.mit.edu/courses/economics/
  
• Money and Banking: http://www.virtualprofessors.com/financial-markets-yale-shiller (Shiller is a very famous financial economist)
  
• As always, the Khan Academy is a great intro resource http://www.khanacademy.org/#microeconomics
  
  
  Blogs are also okay, but be wary of partisan biases. These are what I check daily:
  
  
• Krugman (Left wing biased) - http://krugman.blogs.nytimes.com/
  
• Cowen/Tabarrok (Libertarian biased) - http://marginalrevolution.com/
  
• Scott Sumner (NGDP Targeting biased) - http://www.themoneyillusion.com/ (possibly my favorite)
  
• Greg Mankiw (GOP biased) - http://gregmankiw.blogspot.com/
  
• Karl Smith/Ozimeck (Interesting) - http://blogs.forbes.com/modeledbehavior/
  
• Jodie Beggs (Interesting) - http://www.economistsdoitwithmodels.com/
  
• Becker/Posner (Law and Econ) - http://www.becker-posner-blog.com/
  
• Brad Delong runs a famous blog, and there is never a shortage of highly qualified economists willing to tell you what they think you should believe.
  
  
  
  Ultimately when it comes to econ, there's no perfect substitute for a set of intro micro/macro texts and a university framework. This is contrary to what most pundits/americans seem to believe (seemingly everyone has strong opinions on issues best-explored in an economic framework, no matter how little they've studied it). Also, it's important to note that 98% of what's posted on this subreddit is NOT what economists are talking about. This subreddit is full of news links to stories that promote partisan agendas.
  
  
  
  I'll also warn you that any legitimate study of economics requires a decent handle on math. Through at least half the calc sequence. "Good economists are reborn as physicists, mediocre economists are reborn as psychologists, and bad economists are reborn as sociologists."

Animal Spirits by George Ackerloff and Robert Shiller is a really good one. It sort of expands on Keynes' ideas about human psychology and subsequent unpredictability of the macroeconomy. Pretty interesting read. Pretty easy and non-technical read.

> Actually, I think the trade deficit coupled with an environment of loose credit, which was brought about by deregulation, is what brought down the economy. Nevertheless, fraud in the banking sector played a pivotal role.

Well that's certainly a far cry from what you originally said:

> considering deregulation in that sector led to a plethora of fraudulent lending practices that wrecked the entire economy.

Which implies that the leading cause was fraud. Which is absurd.

> Nevertheless, fraud in the banking sector played a pivotal role. After all, you don't need to take my word for it; this is the conclusion drawn from the FCIC's crisis report.

See pages 40-41. I'm sure there's a lot more.

Also see Meltdown that gives a more macroscopic view of things, and bubbles in general.

> Huh? I'm not following what you're saying at all. My point is that zero regulations will force firms to take more risks to earn higher profits, which will inevitably harm some consumers. Read what I wrote once more if you're confused.

It won't force them to do anything. Some firms could absolutely start selling more risky medications: "Here's something that could work, but has really bad side effects." or "Here's something that could work, but it hasn't been thoroughly tested." That's a benefit.

Your example seemed to imply that consumers would somehow become less safe. You haven't convinced me of that at all. If anything, they'll get more options. Some of them will be more risky, but it's risk that the customer takes on.

> Haha, that's pretty cute. Actually, I never said that some markets don't self regulate. So why on Earth would I rebutt something you wrote that I agree with?

I didn't say you said that. My point was that I've cited several examples that you ignored. And that you're now arguing against free markets because a 10 year study might not detect cancer---which is true whether we have regulations or not.

> OK, here's where I think the fundamental disagreement is coming from. You keep saying that the goal of firms (for-profit firms, hot shot) is to appease consumers. But that's not right. The goal is to earn a profit. Appeasing consumers is a means to earning a profit, but it's not the end. With that in mind, it's easy to see how firms will make decisions that hurt some consumers, especially when the future is uncertain, as is the case in the drug example I've mentioned.

Of course some consumers get hurt. But nothing will ever stop that---not even regulatory bodies. I didn't claim free markets are perfect and everyone is always happy. The point is that they are simply better then some supposed benevolent dictator calling the shots. It is therefore completely dishonest to criticize zero regulations for not making everyone happy.

Different products have different ramifications if they aren't safe. Necessities for life like food, water and medications have high impact if mistakes were made or weren't made as safe as they reasonably could be. If people start dying from a particular firm's goods, all of the other firms immediately reap a competitive advantage and therefore more profits. This is an extremely simple concept, and I don't know why it's beyond you.

Just read this:

http://jim.com/econ/

This is the famous "Economics in One Lesson" by Henry Hazlitt. It is still the best introduction to economics that exists, and it's easy to understand.

If you're interested in more, you can try this:

http://www.amazon.com/Meltdown-Free-Market-Collapsed-Government-Bailouts/dp/1596985879

which is also easy to understand. Or this:

http://mises.org/books/mespm.pdf

which is a more systematic treatise.

How comfortable are you with reading a textbook for the fun of it?

While people will argue about his policy proposals and career history, Greg Mankiw writes one mean introductory text on economics. It's well-written, thorough and pretty easy to read, as far as textbooks go. It's a Macro book though so I would suggest making sure you know your Micro fundamentals, but you would probably be fine without it.

EDIT: If anyone is interested, he's also got a semi-decent blog, if a bit sparse in his postings.

Hi callum_cglp-

Economics, at its heart, is based on calculus. Linear algebra is important mostly for econometrics, although matrix calculus does come up a fair bit. Generally, MA programs are not as rigorous as PhD programs.

I'd suggest having a look at the first 6 chapters of Mas-Colell et al. "Microeconomic Theory" and seeing if you're comfortable with the level of rigor. It's the standard text for microeconomics at almost every PhD program:

http://www.amazon.com/Microeconomic-Theory-Andreu-Mas-Colell/dp/0195073401

Excellent question. I get it. So do these people. And these. And these. And these. And this guy. And this guy. And him. And a bunch of others.

I had the benefit of working on Wall St. for a few years and saw the kind of people running the financial system. The computer scientists were for the most part typical idealistic and/or pragmatic computer scientists. But many of the finance guys were reckless greedy assholes looking to make money by tricking other people out of it, rather than by making or contributing anything of value. For anyone curious, Satyajit Das's book Traders, Guns, and Money provides a good description of who we're bailing out, and why. They're laughing all the way to the bank.

There's a great book called "race against the machine" on amazon for a few bucks:


http://www.amazon.com/Race-Against-Machine-Accelerating-ebook/dp/B005WTR4ZI/ref=sr_1_1?s=books&ie=UTF8&qid=1381504041&sr=1-1&keywords=race+against+the+machine


Well worth the $ and time for anybody interested in the topic.

> If nothing else, would you agree that "taxing the rich" is not at all anywhere close to a viable solution to the depth of America's financial predicament?

"Would you agree that 1 thing out of the 23489178 outlandish things the commentator said is true?" Well, maybe, but his credibility is shot already at that point. I won't trust any of his stats after that.

> By the way, those accounting trick's your talking about help by allowing the company to make more profit off the same capital ratios.

I didn't mean to imply that derivatives are always bad, but there are many types that simply exist to evade taxes and trick lenders into thinking you're a less risky investment than you are. Forgotten subprime mortgages and credit swaps already? If you're unfamiliar with the blatant theft that goes on (like 'fixed income' contracts where all the terms cancel out to make 0 -- I'm not kidding) I'd suggest reading Trader's Guns and Money, written by well known derivatives expert Satyajit Das: http://www.amazon.com/Traders-Guns-Money-unknowns-derivatives/dp/0273704745

Edit, one important and relevant point from the book: It doesn't help make them make more profit. It helps them take what someone tells them is a lower amount of risk according to a complex model that is usually wrong and really results in greater risk.

I'll be buying that since you hold it in such high esteem.

Although I must say my favorite econ book is:

http://www.amazon.com/Worldly-Philosophers-Lives-Economic-Thinkers/dp/068486214X

Yeah go ahead and laugh.

Great story. You can find stuff just like this in "This Time It's Different." Not the most interesting read, but it lays out pretty bare the consequences of unchecked leverage.

http://www.amazon.com/Worldly-Philosophers-Lives-Economic-Thinkers/dp/068486214X -- great intro to the most influential economic thinkers.

If you frame this as a "our free market" vs "their central planning" debate, I have some recommended reading.

Economic planning, done right, can be incredibly beneficial.

Why would we return to a gold standard? Why not a standard based on a basket of precious metals? Gold, silver, platinum, etc..

Read this book and you'll get a good answer to your question.

To put student indebtedness in perspective, some information:

>About 60% of students who earned bachelor’s degrees in 2011-12 from the public and private nonprofit institutions at which they began their studies graduated with debt. They borrowed an average of $26,500.

Image

>In 2012, 40% of borrowers with education debt owed less than $10,000 and another 30% owed between $10,000 and $25,000

Image

Compared to the substantial benefits associated with going to college, it's just not that much debt. For example, in 1974, an average college grad made 32% more than a high school grad; in 1999, the difference had risen to 80%. You can read more about it in this book. A college degree is still a really good investment. (and before the inevitable "correlation is not causation" response, there are literally hundreds of papers studying the returns to education -- it's a very well developed field).

Are there some outliers who incurred large amounts of debt while earning a degree with low labor market payoffs? Sure. But let's not pretend they are representative of the population of students who rely on loans to pay for college. Access to loans opens the door to a college education for millions of students.

Turning to the article:

>And [they] found that while students with ... and without college debt start off at similar levels of income, by the time they're 40 they have less income if they have student debt

Note that this is taken from a blog post that makes a billion assumptions (see methodology) and as far as I can tell doesn't actually use individual-level data to estimate anything.

>If we know that people aren't accumulating assets and that the wealth gap is growing, partially because of student loans

Huge [citation needed] on that one.

>Why should one person go to college, take on all kinds of amounts of debt, and through their work and effort, be one of the better people in their field — and still not be able to earn as much as other people earn because of all this debt?

Did I miss the part where wages shown to be linked to debt?

I highly recommend The Great Stagnation to you. It sheds some optimistic light on the role of the internet while simultaneously stressing that we need gear up America again for the new century.

There's a book called The Worldly Philosophers which has been through many editions and is a favorite among students of economics. Chapter 2 in the book gives a good, although brief, overview of Smith's background and his basic economic philosophies. The whole book is worth a read, if only to get a foundation of where modern economic thought began.

If you agree with that philosophy, you will likely enjoy this book: http://www.amazon.com/Nudge-Improving-Decisions-Health-Happiness/dp/014311526X

Econometrickk and Integralds' lists are great. A few additions:

Wealth of Nations

Money Mischief

and

Nudge

The top two present a one sided view of economics, but are incredibly useful for providing a framework for thinking about it. Nudge gives some behavioral. You're mostly missing Keynesian which is available on the other lists. These are non-technical books.

Check out The Worldly Philosophers by Heilbroner: https://www.amazon.com/The-Worldly-Philosophers-Economic-Thinkers/dp/068486214X

An accessible but really good read, it formed the basis of a History of Economic Thought class during my undergraduate degree.

>A move announced by central bankers on Wednesday to contain the European debt crisis resulted in euphoria in global stock markets, but it also prompted skeptics to wonder: will this time be different?

I would like to direct your attention to this book, which says that the answer is almost assuredly "no."

An excellent book referenced in the first sentence of the article.

http://www.amazon.com/Worldly-Philosophers-Lives-Economic-Thinkers/dp/068486214X/ref=sr_1_1?ie=UTF8&s=books&qid=1254746913&sr=8-1

Read a few pages of the book he's talking about here. I'm sure there are also articles about it like this one.

I think u/tritisan is talking about the google's selfish ledger. They're looking at ways to incentivize you towards better choices and they get the data for how, when, and where to place incentives through the data they collect about you.

Some people are very against this sort of thing, some people look at it as the way of the future. If you'd like to know more about behavioral economics check out Nudge

Dean Baker, one of the most prominent Keynesians writers, correctly identified the housing bubble in 2002 and was the most vocal voice during the bubble build up.

Robert Shiller, another bubble predictor and author of Animal Spirits, co created the Case Shiller Home Price Index, which is the basis of Peter Schiff's and other Austrians prediction of the housing bubble.

I heard good things about Nudge - Thaler and Sunstein

Check out this book buy to Economists from MIT. They effectively outline this exactly problem in all it's details.

http://www.amazon.com/Race-Against-Machine-Accelerating-ebook/dp/B005WTR4ZI/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1323155992&sr=1-1

If anyone is interested in this topic, I recommend Nudge by Richard Thaler.

Nudge

>Not sure what the difference is between those two things?

I should have said "in certain situations." Most people act quite rationally most of the time. They eat when they're hungry, they drink when they're thirsty. The take an aspirin when they have a headache. They look for bargains. To say that they're irrational by nature is a mistake. I believe (and the research would seem to indicate) that people are rational with somewhat predictable lapses into irrationality.

>Anyway, what's the solution to the problem?

Good choice architecture

Default choices are important. A high default price with a discount signals "this is a good deal." It appeals to thrift.

Good information

The email I reference in another comment on this thread in which Uber warned me in advance that prices would be much higher than normal allowed me to make alternative plans for transportation

Good feedback

Making decisions while intoxicated is hard. Using a harsh color scheme or warning prompt to ensure people realize that that the rate is 5x what it normally is might be beneficial, or a prompt letting people know if they wait an hour, the price will drop by 1/3. In novel situations, people need to know where a price or opportunity lie along a spectrum of good value to poor value.

This book really changed the way I think about microeconomic choice.

Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy

Oh. Ok. There are two kinds of developmental sources I would look at: the mathematics and the early ideas. The math I believe comes from mathematician Frank Ramsey in the 1920s.

Some of the early ideas about utility come from J.S. Mill and possibly Jeremy Bentham. One source I would suggest for Mill and other early sources of economics is (yet) another Heilbroner: The Worldly Philosophers.

Yeah a few people have mentioned it, but not in a main thread:

The Worldly Philosophers is just what you're looking for. TRUST ME!

These are not finance books, but popular books on behavioral economics by leading academics

Daniel Kahneman, Thinking Fast And Slow (a classic, I think)
http://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555

Richard Thaler, Cass Sunstein - Nudge
http://www.amazon.com/Nudge-Improving-Decisions-Health-Happiness/dp/014311526X

Dan Ariely - Predictably Irrational
http://www.amazon.com/Predictably-Irrational-Revised-Expanded-Edition/dp/0061353248

If you want a book, read The Worldly Philosophers.

If you want a twitter, follow Beatrice Cherrier (@Undercoverhist).

http://www.amazon.com/Worldly-Philosophers-Lives-Economic-Thinkers/dp/068486214X

>I think this time is fundamentally different.

That's what the financial folk thought about the bubble

http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165

I have two end the fed tshirts.

There is a reason we have lost 95% of our purchasing power since 1913. Guess what was created that year? Guess who caused and admitted to the Great Depression?

The inflation has hurt the purchasing power of every American who has ever saved money.


You do your homework.

I suggest you pre-order his book "End the Fed"

http://www.amazon.com/gp/product/0446549193?ie=UTF8&tag=ronpaufor05-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0446549193

Historically, according to This Time It's Different, it's right. Their book examined financial crises going back centuries and, at one point in the book they make the statement that a financial crisis occurs around 8-10 years after a major deregulation. In our case, it timed it fairly perfectly. I've been thinking about that for a while and I've gotten to wonder if, after deregulation, banking regulators just meander around, sorta confused about what to enforce. In any case, that's what seems to have happened, both in terms of being unsure as well as an Executive Branch position against regulation viewing it as 'red tape'.

The only argument I can make is that much of this has happened before and the world did not end:

http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691142165/ref=wl_it_dp_o?ie=UTF8&coliid=I21KKPZ8CTFWQO&colid=2PAC5SGHKXR27

they are all but dangerous. what a glenn beckish headline.

for a long time, and in their "famous" book and thesis, solely based on past debt ratios and growth, they observed that whenever a country's gross govt debt hits the 90-100% of gdp mark, growth stalls. that's all.

before americuh panics, one should consider that japan (with twice as much debt) and the european union (with same), are at a relatively worse place; and relatively matters a lot.