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Saturday, March 7. 2015
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It was mostly pretty good until he brought up the "beautiful deleveraging". The way he explained it was essentially the Keynesian wet dream. As though the government can borrow and print it's way out of a collapse and bring it all to a soft landing. That isn't what will happen. The borrowing and spending on a massive scale only digs the hole deeper and when it all crashes the crash is inevitably steeper and deeper than it would have been if a more "natural" deleveraging was allowed. We are simply kicking the can down the road and eventually that road leads over a cliff. There is no "soft" landing possible once the government embarks on this path.
BIG gaps -- where are savers in this picture? Soak the rich - redistribution = fewer jobs and less investment in productivity. THis is never mentioned. The three principals enunciated at the end seem to have little or no connection to the 30 minutes that precede them.
Well, I think it's pretty smart about what does happen, not necessarily what should happen.
I'd get rid of the Fed and let markets rule.
When rates are zero, then negative rates? WTF?
Not intending to simply criticize the video I was fine with it until the end. What concerns me is everyone; politicians, investors big and small, economists, the MSM, everyone should be running around with their hair on fire. We are in uncharted territory here. Even the crash of 1929 and the great depression was less scary than what I'm seeing. We are printing trillions, borrowing many more trillions. Interest rates are zero and even negative. Entire first world countries are going bankrupt (happens to third world countries all the time). Unemployment is very high and would be much higher without the FED and the government meddling/propping up. The stock market is in a HUGE bubble. The administration is clueless and worse doing all the wrong things. On the one hand I hope I am still alive to see how this all ends (I'm 71 and this might take awhile). On the other hand I don't kow that I want to go through what's coming. But where are the experts and commentators on all this? Am I so wrong that everyone thinks there will be a beautiful deleveraging and I just don't see it? Or is everyone holding their breath and hoping for the best? I would be willing to bet good money right now that half of the multi-millionaires and most politicians and high placed bureaucrats have got themselves a "hidey hole" somewhere and when the SHTF they are going to catch the last plane out of Washington and never be seen again. Chriss Dodd bought a house in Ireland after he dumped the Dodd-Frank act on us. I think he was afraid it was going to all come crashing down in 2008 and he didn't want to be around when the peasants came looking for him with pitchforks and a rope. I think everyone who has a few bucks and understands what is happening has a bugout plan and until this all comes crumbling down they are just going to ride it out and consolidate their assets. But why the silence? Is no one worried by what they see?
Economists have their Ten Assumptions, all their monetary facilities look like Temples and they have their Denominations. They worship the Almighty Dollar. I thought there was separation of Church and State.
This was a nice fairy tale.
What brought us out of the last Depression was a world war, with tens of millions killed (about 3% of the then world population). That reset the process and people could begin to rebuild. What will happen this time? I don't see a whole lot to be optimistic about, especially since the present government system apparently has decided that it needs to create more and more have nots to maintain its power..
This is a grotesque economic paean to central planning and big government economics, particularly the Keynesian kind.
Whenever somebody says the economy is a simple machine one must assume that they do not know what they are talking about. It is this idea of simplicity (i.e. the Keynesian notion that increased government spending or money creation solves all problems) that leads to terrible policy blunders by our politicians and bureaucrats.
Here's a short article critiquing the video:
Dalio is the manager of the biggest hedge fund in the world (Bridgewater). so it is no wonder that he is obsessed with credit, especially the zero percent kind. He must think that government policy works since it has drastically increased his wealth.
For another take on the dangers of credit and the Federal Reserve itself, this is a excellent way to spend 103 minutes:
Money for Nothing Inside the Federal Reserve -
I agree. The printing money part and "getting it right" are insane. It can never be 'gotten right'.
I think this is a good video for early stage students studying economics, mainly because it's a good first step to see how the system is perceived to work.
I agree with most of the other critiques on here, though.
Bird Dog, I'll agree with your contention that "Nobody can make sense of economists." But mainly because economists themselves typically do themselves a disservice by trying to predict outcomes in multi-variable situations, leading to wildly outlandish real outcomes.
My view of economists, having studied the science (and it is a science, though not like engineering or physics are) is that people misunderstand what it is about.
Moral Philosophy is what Economics is. Adam Smith was a Moral Philosopher - seeking to determine what leads individuals to make the decisions they do to achieve the particular outcomes which benefit them.
His insights, even today, remain far-reaching and fundamental to any understanding of the science he created.
But there is a part to the science which people misunderstand - the moral aspect. Bastiat took up this cause in an unusual way by explaining that having the right to do something doesn't mean everyone must behave the way others, or even larger ill-defined groups like "society" insist they must. We must have the right to make bad decisions.
As Smith pointed out, over the broader population the 'bad' decisions are overwhelmed by the good ones, leading to the eventual positive outcome for most.
Moral outcomes can't be forced via fiat or law, as Bastiat points out, they must be achieved via spontaneous order.
Unfortunately, spontaneous order is messy and confusing and scares people. Oftentimes, people mistake order as something that is imposed on them. A friend of mine once said he has never done anything in a totally anarchic situation. I told him he has walked down a crowded street - which is, realistically, quite anarchic but achieves a remarkable order simply because most people follow 'rules' regarding space and etiquette.
He claimed 'tradition', until I reminded him that he'd done the same thing in Asia, Africa and the Middle East - with the same outcomes. This implies the 'tradition' he referred to is simply human nature and order can come without hard and fast rules.
Ultimately, economists become nonsensical because they want to make their science like other sciences - predictive. They can't, to any large extent. Some rules, like supply and demand, can be scientifically predictive when you control the inputs, as in any other lab experiment. But with so many other variables in real life, it's hard to really see what motivating forces exist.
People make decisions for weird reasons. I have stayed at my current job because my wife does not want me to leave. I have had better offers, but after a few bouts with unemployment, she craves stability. Is that a good decision on my part? Financially, no. But in terms of maintaining family peace and sanity, yes.
Economics is about how to best match limited resources to unlimited wants and needs. Every time we find a way to 'release' more resources to fill a need and we are told that we've reached a new 'level' of wealth, our wants begin to grow again.
Economics is a science because a science seeks to explain why things happen. This video did that. I wouldn't say it did it very well, or without bias, but it did explain the cycle.