The most profound idea I have read in a very long time was Ludwig Von Mises thoughts on Qualitative and Quantitative economics". Two books by Mises, one about socialism and the other about economics, I have just started absorbing recently, but really haven't given them the attention that they deserve.
Let me interject something here. It has always been my philosophy that no individual is perfect, but there are thoughts and ideas that are perfect, but with the person relaying those ideas may come some things that we don't necessarily believe are agree with. I believe we can learn something from every person, whether Christian or not, but we have to have the discernment to distinguish truth from fiction. There are laws of the universe that have to be reckoned with just like there are "distractions" and a lot of reckless ideas that can lead us all astray. Long story short, if you throw away the intelligence of a gifted individual just because you don't see eye to eye with them on other subjects, then you could be missing out on something very important.
Quantitative Economics:
I have an uncle who was the VP of a bank for over 30 years. He told me on different occasions during my youth that governments make money round because it is made to roll, but Mises seems to differ with this, and to a certain large extent, I agree also. One thing that comes to mind is gambling casinos. There is a great quantity of money that goes into this system, and yes, it could create jobs, but is it good for our economy? I believe definitely not. It's no more good for our economy that the quantitative economics of selling drugs. Yes, we can sugar coat it, and say it's for education, but what are we really doing? The real question here is "are casinos productive"? My answer is no. Are we making a sustainable product? No. Are we selling a sustainable product? No. Is the money that casinos make helping our economy? Maybe a little, but it's causing more damage than good.
Another item that comes to mind is our stock market. More than ever before in history people are "blindly" giving their money to companies and investing in the stock market. I say blindly because retirement brokers have really been promoting mutual fund retirement accounts over the last 15 or so years. People get advice from the brokers and $100 or even $500 or more a month automatically goes into those funds, and those brokers and fund managers get a 2 to 5% cut off the top no matter whether the fund does good or not. There have been "several" occasions through the years where the government has passed laws making it easier for small businesses to allow employees to contribute to these funds, through traditional or roth iras. All of a sudden people started plugging a whole bunch of money into the system. What happened? CEO's flying jets and driving expensive cars and getting enormous bonuses? Companies like Enron and others "cook the books" and market their companies so that people and brokers may take notice and turn their 15$ stock into 40$ stock in a matter of weeks. What does that mean to us? Well, if it was a responsible company, they would take the money and re-invest and grow, but what if there was no growth for the company? What if there was not enough market? Well, then we have an excess. We have corporate splurges, and big bonuses. We get a company who may turn their heads away from quality and growth and make some bad decisions.
What goes up in a hot air balloon might come down with a big crash when that bubble is popped or when it runs out of gas.
Qualitative Economics:
When we think of qualitative economics we think of quality don't we? How about good stewardship and work ethics? How about wisely reinvesting in our companies and protecting it from all dangers. Production? Making money, but not being cocky and arrogant about it? How about quality and ethical employees with integrity and purpose? How about building up the quality of our nation and it's citizens and balance imports so that if you have a U.S. made product on a shelf and a China made product on the shelf you see comparable quality for the same price? Why you ask? Because through ignorance and bad form, the people in charge of imports and exports in this county have been destroying our American businesses for years now by allowing slave labor imports to infiltrate our society. Don't blame it on Americans not buying american because the big picture for those of us who know better is that those in charge know people automatically go for the cheaper price. Free trade? We are cutting our own throats. Our government states that we buy Chinese products and they buy ours, but if you use your brains, and just a little common sense, you realize that labor is ridiculously cheap over there and labor is higher here, so what is an average Chinese worker going to buy from us? How many American ductile iron companies are in existence today? Do you research. Most ductile iron is imported from China at such a reduced rate that almost every single American ductile iron manufacturer is out of business now. It's no wonder that what federal politicians used to call the evil empire, modern day politicians call "our partner", and it's no wonder they do because the communist country China owns almost 25% of our 14 trillion dollar deficit. This sort of backs us in the corner doesn't it? How did the powers that be in this country allow this to happen? That's another subject for another day.
When I think of quantitative and qualitative economics it makes me think of the parables in the bible that speak of building on the sand (quantitative economics) and building on the rock (quantitative economics). Also, another analogy is the story of the three pigs building a house of brick (rock - qualitative economics) or a house of sticks (quantitative economics) or a house of straw (poor quality quantitative). When the big bad wolf came, we all remember which house was still standing, and it's my hopes that before that day, this country wakes up and begins a long term plan to build american small businesses back up using qualitative approach instead of the quantitative approach that we seem to be subscribing to.
Gold and silver hasn't backed up our currency in a very long time, only faith in a house built on straw. I don't know how or who, but I do know we need to start building with bricks again.
Subscribe to:
Post Comments (Atom)
The big bad wolf is inhaling as we speak.
ReplyDeleteWhen we allow a quasi-governmental entity the power to create and manipulate our currency instead of basing it on something with intrinsic value, we've given our economic freedom to that entity. That entity has robbed us of our wealth and replaced it with IOUs.
There was a time when Americans wouldn't have allowed stores to stock their shelves with cheaply made imported goods. The blame doesn't lie at the feet of Americans, nor at the feet of those who advocate free trade, but, instead, with the entity who has devalued our currency to the point where we can't afford to buy anything BUT the cheap Chinese, Vietnamese, 3rd world slave-wage produced goods.
I'm talking about Federal Reserve. The "FED" can generate our currency at will and send untold amounts of it overseas without the fear of an audit or accountability. The inflation of the quantity of currency (the M number) directly results in the deflation of its value, and an apparent inflation of the price of goods and services. The decrease in the value of the dollar is a tax on the wealth of everyone who holds US Dollars.
There was NO inflation prior to 1913. Prices only fluctuated according to the laws of supply and demand. Compared to price of gold, prices have held steady, and, in some cases, dropped. There was no 'Great Depression' before Federal Reserve came along, only the regular dips in the business cycle.
The time is soon coming when our hyper-inflated currency won't be able to buy even the cheapest of Chinese goods. All of the gold bricks in our brick house will be gone... replaced with worthless paper. That's when the Wolf will have no problem blowing our house to bits.
Serious inflation will be here in the next 5 to 10 years.
ReplyDeleteOur economy is in a "serious fault". It has been "temporarily" shored up by Obama by printing more money, stimulus packages, and by decreasing social security tax by 2%. All very temporary, not the answer, not based on a solid foundation....
Something else that's going to blow this balloon to Oz:
The baby boomers are beginning to collect social security, while simultaneously retiring and not paying taxes. Our generation have less children that will pay taxes and unemployement is up, so again, less people paying taxes. Obama cut social security by 2%, so there's another 2% less going into the system.
so
Baby boomers taking money out.
Equal number of baby boomers not putting any money in.
As they retire, there's not enough people paying taxes to replace the ones retiring and not paying taxes.
On top of all that, the ones that are left are now paying 2% less into the system.
When I say the "system", I mean the greatest ponzi scheme in the history of mankind, the social security system.
Keep in mind that all Ponzi systems fail eventually. A ponzi scheme is where people pay their money in with guaranteed returns, but you have to keep getting new people to pay into the system in order for it to work. The money in actuality is not there. There is no trust. The one running the ponzi scheme is spending the money. In other words, the workers money is deducted from their checks and instead of going into a safe trust fund, it is going straight into the pockets of those that are retired.
There was only one bad wolf in the story, but in this story there are multiple Wolves that are all about to start blowing simultaneously.
I'm really not looking forward to this.
Social Security really does make Bernie Madoff's little debacle look insignificant. Future generations will never see that money. People must be allowed to opt out. It's a real travesty.
ReplyDeleteBut, looking at the big picture, it's just a symptom of a greater illness, a greater ponzi scheme.
The foreign aid, social security, entitlements, billions and trillions of dollars spinning into a black hole of spending... none of it would have been possible without a seemingly bottomless money bag. Central banking has been tried and failed a couple of times in our country before. It never works. Runaway inflation might not be far away. It's important to note that there was no inflation before 1913, the year FED came into being. All fiat currencies will eventually hyperinflate.
Don't forget it was Bush that 'printed' the first few trillion in bailouts. Of course, Congress approved it, in spite of our very vocal opposition. Legislators were actually warned that martial law might be required to restore order if they didn't vote for the stimulus bill. They were told it was some miracle cure for recession. Then, after it was passed, the stock market immediately plummeted, as many of us warned, I might add.
Bush had a GOP congress for a large part of his administration. Nothing was done to significantly reduce the huge burden of debt. We had congress back in the 90s, too. The spending still grew.
Both parties are servants to special interests.
It's really amazing how much media influences public opinion. It's scary, really. They treat us like children. If you want a child to not choose something, you give him only a couple of options, and don't include what he really wants.
I really feel like we're headed down an Orwellian path where facts change from day to day. Buzzwords come and go... 'newspeak' I think Orwell called it.
Moved away a little bit from Mises, but it all has to be addressed before a solution can be found. I ain't looking forward to it, either, but I'm REALLY not looking forward to the total collapse of our economy, which is what many economists believe will happen if we don't act, soon.
Those who are close to me know my thoughts on George W. The picture of him with all the world leaders when the economy crashed affecting billions worldwide and he was the only leader in the room with a smug smile on his face said it all to me.
ReplyDeleteBush was in my mind partisan just as Obama is partisan. Don't get me started on either of them. I am not happy at all with our last and current presidents. It's almost like they both thought "who cares about the deficit, we're way beyond fixing it, so I might as well spend as much as I can and get it while the gettings good."
Like I said, there are multiple bad wolfs here that are inhaling as I type:
The federal reserve
the baby boomers retiring
bigger and very inefficient government and high government salaries
failing public school systems
out of control welfare and outdated policies
unhinged and floating currency (no base)
unions
unbalanced world trade
wars and terrorists
a very biased OPEC (high gas prices)
worldwide hatred of the U.S. (despite our help)
powerful countries looking to "drop the dollar" and revive Bretton woods international currency which will destroy us politically worldwide.
Oh yes, and prayer in our public schools and not pledging allegiance to our flag which reminds me.... what people once thought was the strength of our "melting pot" has now become the "tower of babel" for confusion... immigration, no pledge of allegiance in our schools, no national language law (english) has divided this country.
yes, and you mentioned a few other "wolves".. entitlements etc. (did you say liberals?)
Soon, may not be soon enough.
p.s. kindle's are awesome... btw, if you like economic prophecy you might check out Ludwig von Mises "socialism: An Economic and Sociological Analysis" and also check out his "the causes of the Economic crisis: and other Essays Before and After the Great Depression", both downloadable on your Kindle.
ReplyDeleteMises was almost by himself when he predicted the great depression and also the fall of the german economy...
Snap!!! I just did a little "digging". Coincidence? I don't think so. Ron Paul was influenced by Ludwig von Mises. So am I. Another coincidence? Ludwig Von Mises institute (the real one) is located in Auburn Alabama. Little would I guess my interest in studying socialism would lead me to Ludwig Von Mises who totally stomped on Oscar Wilde's pro-socialism stance.
ReplyDeletewikipedia: "While still a medical resident in the 1960s, [Ron] Paul was influenced by Friedrich Hayek’s The Road to Serfdom, which led him to read many works of Ayn Rand and Ludwig von Mises. He came to know economists Hans Sennholz and Murray Rothbard well, and credits to them his interest in the study of economics. He came to believe that what the Austrian school economists wrote was coming true on August 15, 1971, when President Richard Nixon closed the "gold window" by implementing the U.S. dollar's complete departure from the gold standard.[7] That same day, the young physician decided to enter politics, saying later, "After that day, all money would be political money rather than money of real value. I was astounded."
Have you hit the online Mises repository, yet? Von Mises institute online has lots of out of print goodies for your Kindle! I read 'Causes of Economic Crisis' online there a few years ago... they have Hayek's 'Road to Serfdom' and many others for absolutely free. :-D I usually recommend it to everyone that comes to our meetups. http://mises.org/literature.aspx (You'll notice the first one is about the FED, by Rothbard.)
ReplyDeleteAll of it boils down to the battle between tyranny and liberty. I'm probably not telling you anything you don't already know, but I think it's worth repeating. The philosophy of natural, God-given rights is what this country was founded upon. A crime is simply a violation of those rights.
Bastiat rightly noted that "Life, faculties, production — in other words, individuality, liberty, property — this is man. And in spite of the cunning of artful political leaders, these three gifts from God precede all human legislation, and are superior to it. Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place."
Our Declaration of Independence made it known that this country came to be because of tyrants who would inact laws which were criminal.
We have ignored that and written our own laws that are, in fact, criminal acts. Any law that violates an individual's life, liberty or property, among other unalienable rights, is not a valid law, but is instead an act of tyranny.
Off the soapbox, now. If you haven't already, check out the Ron Paul reading list: http://www.campaignforliberty.com/edu/reading-list.php
Part of it is what he assigned to John McCain after one of the debates in 2008. McCain was clueless about economics and foreign policy. I believe most of them are available at Von Mises, except some of the newer stuff, like Tom Woods' books.
I took a look briefly a couple of days back at their online resources an for a few minutes yesterday. To tell you the truth I stumbled upon Mises while researching socialism a few weeks back... I had downloaded a couple of books supporting it, then read about Mises and downloaded his book on socialism and then his essays on economics predicting the fall of the german mark and the fall of the u.s. economy. There's no doubt.. I've read a lot of books, but Mises was a genius for not only his time, but our time as well.
ReplyDeleteGovernment is getting larger and back to the subject would government jobs be classified as quantitative or qualitative jobs? Quantitative for the most part. In my mind they are not creating a product, but are another drain on the system. In other words, as unemployment, welfare, ssi and social security benefits grow which drain the system, there has to be jobs to manage those things so considering many of those jobs are at a higher pay, without seeing actual statistics, one could still surmise that these things are practically double draining the system.
We need roads, we need defense, we need police, cia, fbi, smaller government for basic stability and necessity, but the rest of the jobs should be producing something and the people should be buying something [american].
Government is much larger than it was 50 years ago and the average government job salary has now passed civilian job salaries and the sheer number of those jobs have increased and civilian jobs decreased over the years. The difference is that sustainable businesses produce a product and that product pays for itself and the employee’s salaries. Government jobs are paid by the national deficit and the tax payer. So again, we are double dipping. Some could argue we are not double dipping because people with government jobs have to pay taxes to, but keep in mind that most government jobs have a nice retirement plan, some of which after only 20 years. I'm not criticizing those getting that money. We all would want a great retirement. My point is that government jobs are not sustainable. Even if you work making fighter jets or guns for the military, unless we're winning something in the war that's sustainable, the war does not pay for itself and neither does the jobs or the materials going into defense spending. More realistically we keep no spoils from war, gas prices actually have went up, we've not conquered any land in our wars and to make it worse, we always seem to spend even more money on rebuilding those countries. Long story short, war is a not for profit business and so is big government.
I'll keep in mind the books. I want to give Mises the proper attention he deserves and there are a couple of other books I am reading currently simultaneously.
I agree. I might would go farther with government jobs and say the FBI and especially the CIA could stand to be downsized, too. Your point is well made, IMHO.
ReplyDeleteI'm do not know the statistics on how many people are employed with the CIA or the FBI so it's hard for me to make a determination.
ReplyDeletehowever, many government jobs are ineffeciant unless the leadership cracks the whip. many people are just not self motivated and especially if there are tv's, internet access and social networks allowed in these business, then much taxpayery money is gone down the drain. Correction. Taxes are not paying for the budget now, so we need to say "not only are we spending all the tax revenue, but we are contributing to the 14 trillion dollar (and rising) national deficit.