Validuz, I am curious what would have Ron Paul done during the Great Recession 2008?

I'm not a Libertarian, but I hardly see how this thread is a good counter argument to the philosophy. This is like driving your car towards a cliff and then two seconds before flying off (or maybe in this case two seconds after flying off) offering the wheel to the passenger who's always been nagging at you to drive safer. It wasn't a libertarian philosophy that got us into this mess so using this scenario as an attempt to discredit the philosophy is kind of stupid.

The real question should be: Where would libertarian philosophies have brought us if we'd used them for the last few decades? I don't really know the answer to that though...

That and whether TARP or the stimulus or everything else helped us in the short or longterm are opinions that aren't agreed upon by professional economists (who are nowhere near omniscient) so I don't really see the use of making fun of people for different ideas of them here.
 
Ender said:
This isn't about short term thinkers.

What you're describing is the Greenspan 'put', which is when Greenspan lowered the interest rates during the Asian financial crisis, it let people know that Greenspan wasn't going to let the stock market go down, allowing only upside risk.

Yes.. This is a risk. A small one. I wouldn't say that's a reason to get rid of government intervention. Look at this way, many describe what Hamilton did during the crisis in the 1780's much like what Bernanke did today. There wasn't another recession after hamilton "bailed out" the banks until over 30-40 years later and it was for other reasons, so to suggest that just because the fed or government intervenes on a crisis, doesn't mean people are only looking at the upside risk.

I do agree that Greenspan lowered the interest rates too low, that it fueled the housing market, I think we're learning a lot of lessons from this recession. I hope Bernanke starts to raise interest rates more, to prevent another bubble.
Had the Fed done nothing, and let the banks fail, we would be in another great depression. The inter-bank lending was at an all time high for interest rate, meaning banks were scared to lend to eachother, meaning credit wasn't flowing.

Letting the banks fail is funny. Try again.

As far as the auto industry, I didn't think they needed a bail out, nor did the fed. This was purely a congressional and fiscal move.
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I did not mean to imply that all banks would fail. I only meant to say that should one or two big ones fail it would be a valuable wake up call for the other banks to take notice of. All of a persons friends don't have to die from driving drunk for him to quit doing the same, it should only take one death (or even a close call) to make him come to his senses and change. This idea is clearly understood when it comes to all sorts of aspects of life. Saving people from catastrophe over and over again only makes the final inevitable catastrophe worse. Drug addicts, earthquake and hurricane survivors, banks, auto companies, entire nations, children with hot stoves, and a million other ways that people are saved from judgment errors but learn nothing about how to avoid the core problem.

To be fair I don't think it's a "this or that" issue, it's just a bell curve of possible outcomes. Obviously it's stupid to let a child touch a hot stove even if it would be one hell of a good lesson for him to learn, the damage caused is too great. Maybe the banks are the same way, maybe even one massive failure would be too much I don't pretend to know for sure but I suspect that it would be "survivable" in a global context. Government intervention just strikes me as delaying what is sure to come anyway and costing us billions to do so.

Edit: thank you for the clarification with Ford not taking bailout money, kudos to them :)
 
fartiusstinkius said:
I'm not a Libertarian, but I hardly see how this thread is a good counter argument to the philosophy. This is like driving your car towards a cliff and then two seconds before flying off (or maybe in this case two seconds after flying off) offering the wheel to the passenger who's always been nagging at you to drive safer. It wasn't a libertarian philosophy that got us into this mess so using this scenario as an attempt to discredit the philosophy is kind of stupid.

The real question should be: Where would libertarian philosophies have brought us if we'd used them for the last few decades? I don't really know the answer to that though...

That and whether TARP or the stimulus or everything else helped us in the short or longterm are opinions that aren't agreed upon by professional economists (who are nowhere near omniscient) so I don't really see the use of making fun of people for different ideas of them here.
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I was actually thinking about this.

It's unfair to pose the question during the recession when most libertarians would argue, it would never had happened.

However, by all accounts if we used their philosophies, they wouldn't call for regulation, they'd call for unfettered markets. However, that is exactly what led us to this realization today.

Now, some will argue that if there was no regulation and no central bank, then the companies wouldn't have taken on the risk they did. I disagree. The profit to be made from these financial instruments were very high, there is a reason why Fannie and Freddie joined in on the sub prime lending bandwagon, there was a lot of money in it.

They didn't forsee this would happen.

So again, we would be in the same situation, more likely worse without regulation. So how could Libertarians argue for unfettered markets?
 
Ianboo said:
I did not mean to imply that all banks would fail. I only meant to say that should one or two big ones fail it would be a valuable wake up call for the other banks to take notice of. All of a persons friends don't have to die from driving drunk for him to quit doing the same, it should only take one death (or even a close call) to make him come to his senses and change. This idea is clearly understood when it comes to all sorts of aspects of life. Saving people from catastrophe over and over again only makes the final inevitable catastrophe worse. Drug addicts, earthquake and hurricane survivors, banks, auto companies, entire nations, children with hot stoves, and a million other ways that people are saved from judgment errors but learn nothing about how to avoid the core problem.

To be fair I don't think it's a "this or that" issue, it's just a bell curve of possible outcomes. Obviously it's stupid to let a child touch a hot stove even if it would be one hell of a good lesson for him to learn, the damage caused is too great. Maybe the banks are the same way, maybe even one massive failure would be too much I don't pretend to know for sure but I suspect that it would be "survivable" in a global context. Government intervention just strikes me as delaying what is sure to come anyway and costing us billions to do so.

Edit: thank you for the clarification with Ford not taking bailout money, kudos to them :)
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Remember, they did let Lehman brothers fall. A lot of economist [keynesian] believe that was a mistake and letting Lehman brothers fall spurred a contagion effect to the rest of the 4 other banks. Had we saved Lehman, and pushed in when the initial fall was happening, we could have probably saved the markets from total free fall that did take place.

Government intervention is usually always late and/or creates further trouble.
Federal reserve intervention is usually very timely. When looking at small recessions or depressions, a good federal reserve can eliminate it in hours, not months that it takes congress to act.

The TARP I didn't agree with fully primarily for the lack of accountability. Bernanke probably didn't care what Paulson paid out, he only cared about preserving the financial market, by pumping liquidity into a system that was very dry.

Bernanke said it very well to congress, if you don't give us this money within 24 hours, it will be too late. Monetary policy requires fast corrective action.

To be honest though, most of the major banks had already paid the government back for the loans. It worked.
 
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Rev. Zen said:
Ender, please link to the thread you start at these forums. This would be a good read.
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Most of them are idiots.

"central bank is creating money out of thin air!" posts.

Some of them were interesting reads. I'll probably create a thread there.
 
Ender said:
Remember, they did let Lehman brothers fall. A lot of economist [keynesian] believe that was a mistake and letting Lehman brothers fall spurred a contagion effect to the rest of the 4 other banks. Had we saved Lehman, and pushed in when the initial fall was happening, we could have probably saved the markets from total free fall that did take places.
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That takes us back to my thought (well not my thought but the one that I've read about enough to claim it as my own...) that the free fall, the big one that almost happened, might have been survivable and the end result may have been less costly in the long term. I realize that we can't know one way or the other.

The mental picture of a car speeding off a cliff and being given control at the last possible second is a pretty good one. The entire issue should never have happened in the first place so trying to figure out what the fallout of a major bank collapse would have been is silly in the long run. Now it's just a matter of how to salvage the situation as it is. Maybe that's a different thread.
 
Ianboo said:
That takes us back to my thought (well not my thought but the one that I've read about enough to claim it as my own...) that the free fall, the big one that almost happened, might have been survivable and the end result may have been less costly in the long term. I realize that we can't know one way or the other.

The mental picture of a car speeding off a cliff and being given control at the last possible second is a pretty good one. The entire issue should never have happened in the first place so trying to figure out what the fallout of a major bank collapse would have been is silly in the long run. Now it's just a matter of how to salvage the situation as it is. Maybe that's a different thread.
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Ok.

Let's go through this.

Investment banks fall, the stock market dwindles, most americans save in 401k or other investment bundles that is pumped into or related to the stock market. So you're retirement money is wiped out, most Americans are SOL.

Regular commercial banks who tacked on a lot of sub prime mortgages start to fail, again the TARP saved over 300 banks around the nation, but let's let those fall too. This would have started a huge panic, people regardless of the 100,000 guarantee would be rushing the banks demanding their deposits, causing further banks to fall.

Our financial system would be a mess. There would be no liquidity, people would stop consuming, businesses would stop running, they would fire people. It would be a great depression with more than 25% unemployment rate.

That's where it was heading to. Easily. Had the fed and the gov't not intervene, right now we would be sitting with a higher unemployment rate.

As far as the system "fixing" itself over time, sure. It'll come, but at what cost? It would have been a lot greater than the one we're paying now.

How do I know this? Because we have been through this before. Hamilton, FDR, etc. We know the lessons.

My argument for this thread is to make people realize, an unfettered market should be a goal and a struggle to fight for, not a reality.
 
Ender said:
Most of them are idiots.

"central bank is creating money out of thin air!" posts.

Some of them were interesting reads. I'll probably create a thread there.
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So you're saying the Fed doesn't create money out of thin air? I never knew that was in contention.
 
LGBR said:
what would the libertarians done? probably let the banks fail. Who cares? in the long run, smaller banks would have popped up damn near immediately to pick up the slack and make the money (which is, as already stated, what obama is doing right now after realizing he made a bad choice)
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First of all, you can't do anything in the long run near immediately.

Second, there's a difference between a tailspin and a controlled descent.
 
ppl arguing for doing nothing should probably do a little research on the great depression

during the great depression, government intervention came way too late, and while a lot of it was misdirected and made things worse, doing nothing was a catastrophe
 
The Great Depression was 100% caused by the Federal Reserve.

The Federal Reserve slashed interest rates in the mid 1920s, causing a vast expansion in the money supply. This encouraged everyone to load up on debt and mortgage their property to the hilt. The insiders who control the Federal Reserve knew that interest rates were going to be jacked up in 1929. They stopped issuing loans and sold their stock shares a few months before the crash. The bankers cleaned up by issuing loans and stock during the economic boom, and then buying assets cheap after the crash. The bankers issued loans to themselves to buy up property cheap at the bottom of the Depression. When Roosevelt confiscated the gold in 1933, defaulted on the dollar, and devalued the dollar, all those loans could be repaid in devalued dollars. The international banking cartel cleaned up on each leg of the boom, bust, and default on the dollar.

The Great Depression caused banks to confiscate a lot of property that previously belonged to farmers and small business owners. The US was turned from a nation of farmers and small business owners into a nation of wage slaves and welfare recipients. The welfare state was created to compensate for the damage caused by the Federal Reserve.

The idea that the Great Depression was caused by greedy speculators and economic excess is a lie. The Federal Reserve's loose monetary policy in the 1920 encouraged speculation and the use of leverage. The speculators were merely following the rules of a corrupt monetary system. The insiders knew when the rules would change form easy money to tight money, and they cleaned up.
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Ron Paul Forums
 
The US was turned from a nation of farmers and small business owners into a nation of wage slaves and welfare recipients.
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:rofl:

Sounds like this guy doesn't have a fucking clue about the wretched state of labor in the 2nd half of the 19th century.
 
Eggi said:
ppl arguing for doing nothing should probably do a little research on the great depression

during the great depression, government intervention came way too late, and while a lot of it was misdirected and made things worse, doing nothing was a catastrophe
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The banks should have failed and things would have been on their way to growing again. Things have to fail in order to see where the problems are.

The government is just prolonging this shit.

This shit is far from over. We will have a short recovery but we have nothing to pull us out in the long term. After the great depression we had booming industry to get us going.

We have nothing to repair our economy. Wait until the dollar crashes from printing money like fools.

The only reason for the home sales in the last few months has been the first time homes buyers credit, the only reason for car sales was the cash for clunkers. Wait until all these incentives run out.
 
Tantric Rex said:
The banks should have failed and things would have been on their way to growing again. Things have to fail in order to see where the problems are.

The government is just prolonging this shit.

This shit is far from over. We will have a short recovery but we have nothing to pull us out in the long term. After the great depression we had booming industry to get us going.

We have nothing to repair our economy. Wait until the dollar crashes from printing money like fools.

The only reason for the home sales in the last few months has been the first time homes buyers credit, the only reason for car sales was the cash for clunkers. Wait until all these incentives run out.
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ugh..
 
Ender said:
Most of them are idiots.

"central bank is creating money out of thin air!" posts.

Some of them were interesting reads. I'll probably create a thread there.
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as like with all forums, there will always be the uninformed individuals who will posts stuff on topics they read about in an attempt to learn more. i can guarantee that if you were to make a well thought out post on there, you will get the results that will help your argument for the book report... or what ever it was. as well as, the typical... "END THE FED!!" (which, i totally agree with)

even though i am not an Anarcho-Capitalist, i really do believe in a lot of their theoretical socioeconomic ideology; specifically when it comes to the study of value and human action or, inaction and, how the govt can attempt force humans to rethink what they place a value on by manipulating the market.

one of my favorite debates on theoretical economics is the proverbial black eye that Keynesian economics places on the dollar. and as we see our govt continue to get deeper and deeper in Keynesian theory, all we have seen is the value of the dollar getting worse and worse and this is not opinion but fact.

Wowbagger said:
This is my favorite von Mises institute article:
Stateless in Somalia, and Loving It - Yumi Kim - Mises Institute

:lol:
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Statist's will typically try to use Somalia as a "perfect" example of the Libertarian wet dream of Anarchy when in fact, its nothing more than modern day Warlordism.

just by Somalia's warlords running the show, that completely throws out the idea of Anarchy. if there is someone/thing in power, there is no Anarchy.
 
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