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I would argue that so called 'mainstream economists' are doing great damage by spreading misinformation on the topic of economics, probably because such a huge number of them actually don't understand it themselves at all. I think they are causing more damage than an earthquake. At least with the scientists in this situation it was not deliberate, in case of 'mainstream economists' I think large problem is that they are political beasts first of all and are there to push certain propaganda that the governments want to be pushed.

For example most 'main stream economists' agree that inflation is what is needed in the economy and that without at least 2% inflation the economy will be in trouble (a magic number pulled out of ass of-course).

Few people that talk about the reality of the situation are considered 'fringe'.

Very few laymen can understand the real nature of what is happening in the economy and the so called 'economists' are to blame for this and the damage that is done in this case is many orders of magnitude greater than that of an earthquake to the entire human race. How about suing the people who are doing this type of damage deliberately?

Peter Schiff wrote a very eloquent piece explaining why minimim wage hurts the economy, job growth, and especially the young, unskilled and minorities. Here is part of it:

Low-skilled workers must compete for employers’ dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskilled workers can do for $6.50 per hour each, then it makes economic sense for the employer to go with the unskilled labor. Increase the minimum wage to $7.25 per hour and the unskilled workers are priced out of their jobs. This dynamic is precisely why labor unions are such big supporters of minimum wage laws. Even though none of their members earn the minimum wage, the law helps protect their members from having to compete with lower-skilled workers.

Employers also have the choice of whether to employ people or machines. For example, an employer can hire a receptionist or invest in an automated answering system. The next time you are screaming obscenities into the phone as you try to have a conversation with a computer, you know what to blame for your frustration.

There are numerous other examples of employers substituting capital for labor simply because the minimum wage has made low-skilled workers uncompetitive. For example, handcarts have replaced skycaps at airports. The main reason fast-food restaurants use paper plates and plastic utensils is to avoid having to hire dishwashers.

As a result, many low-skilled jobs that used to be the first rung on the employment ladder have been priced out of the market. Can you remember the last time an usher showed you to your seat in a dark movie theater? When was the last time someone other than the cashier not only bagged your groceries, but also loaded them into your car? By the way, it won’t be long before the cashiers themselves are priced out of the market, replaced by automated scanners, leaving you to bag your purchases with no help whatsoever.

The disappearance of these jobs has broader economic and societal consequences. First jobs are a means to improve skills so that low skilled workers can offer greater productivity to current or future employers. As their skills grow, so does their ability to earn higher wages. However, remove the bottom rung from the employment ladder and many never have a chance to climb it.

So the next time you are pumping your own gas in the rain, do not just think about the teenager who could have been pumping it for you, think about the auto mechanic he could have become – had the minimum wage not denied him a job. Many auto mechanics used to learn their trade while working as pump jockeys. Between fill-ups, checking tire pressure, and washing windows, they would spend a lot of time helping – and learning from – the mechanics.

You can read the entire thing here:
http://www.europac.net/comment...

The video is of one Peter Schiff, the guy who only predicted and bet against the dot com bubble when everybody was buying into it, the guy who predicted and bet against the housing bubble, when everybody was buying into it, and the guy who is betting against the dollar and bond bubble, and everybody is buying these right now as well. He is an author of multiple books and the founder of a number of companies, which he started alone after working as an investment broker for a large firm for 5 or 6 years after college.

He runs his own online radio show, which is the next step after his decade long first show, called 'unspun'. He employs 150 people in his investment company, now has a bank, has a couple foreign companies because of regulatory environment, especially the Patriot Act preventing him from doing business the way he wants to with foreign customers.

He testified in front of Congress on a number of occasions (so did his father, who is a political prisoner in USA, who testified back in 1968 or 69 in front of Congress, being the only voice against going off the gold standard, predicting that prices of gold would skyrocket and so would inflation, nobody cared).

So when it comes who is 'moron' here, it's not him, it's you, I doubt you have achieved even a tiny fraction of what he has, but in today's Internet world everybody is an on-line hero, isn't that so, pnutjam?

I think anyone who knows what the term "fiat money" means, is more informed on economics than average.

Historically, fiat currencies work great and boost economic output; for a decade or so. Then hyperinflation hits and they fall apart. The stronger the economy, and more dependent the rest of the world is on it, the longer it lasts; but no fiat currency has ever avoided inflation. http://www.europac.net/voices/experience_teacher_fools

That said, there are some great opportunities in times of inflation or hyperinflation. Like if you have a lot of debt to pay off (i.e. a recent home purchase), or can provide a basic service like transportation, lodging, or food production; that will inevitably cost a LOT more. Those who are worried about inflation or god forbid hyper inflation would be smart to keep their mouths shut and invest in the things that will hold their value in that kind of market. Those who think the good times aren't over should continue to spend spend spend on fancy cars and vacations to Europe. Only time will tell whether or not your confidence in the current system is overly optimistic.

http://www.europac.net/commentaries/minimum_wage_maximum_stupidity

ALL Financial services are a ruse, because they are predicated on "investing wisely" -- which is always a pitch of "getting back more than you put in." For every wise investment to do better than just the average of stocks, SOMEONE has to lose.

- not true at all. The large firms that are protected and propped up by the government, the large firms that use FINRA to make sure that no small firm can enter the market and become a competitor, yes, those are mostly about gambling nowadays, and that's because government has provided a gambling environment.

The counterfeiting of currency by the federal reserve, the 0% interest rates (price on money), that is set by gov't instead of the market, the gov't rules that create incentives to gamble (ease the requirements for loans, provide government guarantees, FDIC itself) - yes, those are a problem specifically because they are all government related.

The current financial system is borked but there are small firms out there that are investing into businesses. They actually help average people to invest into businesses, to hide from inflation in things like gold/silver/foreign currencies, to get revenue from sharing success of a company by buying dividend paying company stock.

There are firms that do that like this. FINRA exists to prevent firms like this from ever becoming big or even from coming into existence nowadays.

Of-course FINRA is a "private" organization, but the government rules require that investment advisers are members of FINRA and have various irrelevant certifications and pay fees (separate fees for every State by the way) per investor in the firm. Patriot act turns financial firms into spies and at this point an American can't even open an account with a foreign bank, nobody wants to deal with American customers, so bad the government rules are today.

Financial firms do have purpose - the original purpose of a bank is basically to keep the gold in a secure vault. That's as basic as it gets, and there is a storage fee obviously.

Then a bank can (with the agreement of account holder) loan out part of the money to income stream generating businesses. This may get rid of the storage fees and can generate a few percentage points of interest income, which the revenue generating business is supposed to be paying for the loan.

All these government guaranteed loans for consumer items (and for education, medical care), these are all wrong of-course, because they don't generate income, and so they can't actually bear interest. People should be paying for consumables with savings - cash, not with debt. That's how people get into trouble - by financing their consumption with debt rather than production.

Financial industry has a purpose, otherwise it wouldn't even have been created in the free market (as free as markets used to be without gov't interference).

Today the large financial firms are basically the real government, because the government is there to steal power and to sell it and financial dealers made sure that they can have access to free money legally, and that's how the Federal reserve was created, that's how IRS and income taxes were created, that's how all business regulations start, because they don't start to protect anybody but a business that pays the politician.

begin* in 1933,

- was confiscation of private property (gold) part of the 'beginning of recovery'?

You probably think that Civilian Conservation Corps (CCC), Civil Works Administration (CWA) was recovery? That started in 33.

You probably think that FHA, FSA, HOLC, NRA (National Recovery Act,) PWA, SSA, TVA and WPA were recovery?

You think public projects are equivalent of an actual economy? If so, how come the USSR was bankrupt even it was all only public projects?

This recovery was eventually completed by the forced employment (aka the wartime draft)

- aha, that and the fact that women had to go to work to the weapons factories is wonderful, 100% employment. Just like USSR had - 100% employment.

Too bad that government 100% employment produces nothing that economy actually needs. No, don't get me wrong, it surely is one way to fight a war and must be done somehow, but to say that war time draft and weapons manufacturing causing 100% (well, probably a bit below that, but not much) employment is actually a real economic activity that helped to alleviate the ills of Depression?

That's just silly. What is the use of those resources - that's the question. Of-course the Krugmans of the world will tell you that it is irrelevant what the employment that gov't provides is, as long as people are employed. That's of-course horse crap. Anybody would do anything rather than having to go to war and work building bombs that are immediately destroyed and don't do anything for the market except killing potential customers and producers.

Again, during an even such as war, normal economy stops, but that does not mean that war helps the normal economy to get better. The only way in which war helps is that it allows some to steal a bunch of stuff from some others, but again, that's not a sustainable economic model.

Deflation is great for the creditor.

- that's not the point. The point for the consumers is that deflation is great for them.

Government on the other hand, they have a huge problem with deflation, as they get fewer tax dollars, though the dollars they get buy more, but they get fewer of them, so they see it as a problem. Their other and more important problem is that government owes money.

If government lived within its means deflation wouldn't have hurt it, but government does not want to do that. Who wants to do that? Why would you go to government to live within your means, isn't that's just silly?

The FDIC was created to fight crises of confidence---just like the one that took out Lehman Brothers and started the broader financial crisis

- no, FDIC was created to fight an imaginary problem because the problem it was created to fight only hit 2% of deposits. If you create an agency, which introduces systematic moral hazard into an existing market structure, then you are fighting an imaginary problem by doing the worst thing possible.

It was an imaginary problem, because while 2% of deposits were lost, the rest of the deposits (98%, just to make sure you understand that little mathematical point) were not lost, in deflationary environment those 98% of deposits gained much more value than the 2% of the lost deposits wiped out.

Assuming that the US *government* owned the British debt during the 1920s (I'll need a source)

- who's "I"? You don't even exist, AC.

Friedman's video or something to
read.

> this only applies to loans, not to trade

You don't just cut off the world's reserve currency in one fell swoop. You walk away in little baby steps. Back in November, Russia and China ditched the USD for bilateral trade. Now the BRICS as a whole are moving away as a group.

They're backing away from the giant bubble that is the US Dollar. When it bursts, millions of people who are well-off now, will not be any more. Personally, I have planned for just this eventuality. There's probably still time to save yourself, too, if your wealth is in Dollar-denominated assets (like US corporate shares & bonds). It's not too late... they're still walking slowly toward the exit. But make no mistake: the Dollar bubble will burst, and soon.

Oh god, you're insane.

- the number of logical fallacies you have displayed in these threads leads me to believe you are not very good at providing factual argumentation, you do not back up your conclusions with any actual evidence, but you like to jump to them.

Money only has value to the extent that people are prepared to accept particular amounts.

- you didn't pay attention to the data, did you? US dollar has been losing value steadily, and since the Fed was created in 1913 it lost 98% of it (more than that now.) Pay attention to the data, otherwise you'll look foolish.

"Counterfeit" money is some instrument which you claim to have particular features but which does not have those features.

- counterfeit. Money that's not genuine. Imitation of money.

US dollars that are passed around by the Fed have such exact features. Every new dollar printed is worth less than any dollar in existence, so every new dollar is NOT like any previous dollar. It is not genuine.

A dollar from 1950 is not the same as dollar from 1918. It is also different from dollar in 2011. The difference between them is staggering. With 2011 dollars you can buy 1/20th of what you could buy for the same amount in 1912 when we talk about commodities: wheat, cotton, rice, pork, coffee etc., and yes, gold. If you are interested to see what real money looks like, here are some pictures. for $20.67 you could have about 2.41 troy oz of gold.

There are many reasons why gold is real money and why in most languages the world for money is actually 'gold' or some form of it. You can't change the facts, you see.

Money which is not backed by a gold standard is not "counterfeit".

- money that is not backed by ANYTHING is counterfeit. For example Chinese currency is 'backed' by their reserves of US dollars/debt. Their problem is that US dollars/debt is backed by nothing, so they chose a wrong backing, but their money is not counterfeit in itself. Of-course if they continue on path of printing as much as they get of the US dollars flowing into their vaults, then it's not really any better than being backed by nothing. In case of Chinese, they are a producer nation and as such they immediately suffer the consequence of higher prices for the levels of inflation they are responsible for. It looks like they may have a revolt on their hands if they don't stop printing and causing massive price hikes. They will have to stop printing and will have to re-evaluate their currency in amount of gold they have. This is going to happen sometime soon.

Use of emotive language doesn't prove anything.

- I don't see where is 'emotive language' used by me at all, but I wonder when is it that you are going to present any proof of anything at all in any of your comments?

What backing does gold have? You've just changed the problem from one of the government being able to print more money - responsibly or irresponsibly - to inflation created by the mining of gold or deflation created by a growing economy lacking gold.

- deflation is a good thing for an economy, as people gain purchasing power. It's only bad for governments, as they have to give their debts back, and they don't like to do that in real money while they do like to live beyond their means.

I provided a link on top, where you can go to learn at least something from this thread, something about gold and its value. Of-course you are ready to dismiss it, after all, it's only history of the evolution of human economy. What you do not realize is that the fiat system without backing by a recognizable, unchangeable, accessible, moderately

Well, since you are asking the questions on /. and not on his blog, I'll answer for him, though you may want to call his show and directly challenge him, wouldn't that make much more sense?

Where is the price of gold now Peter?

- http://www.kitco.com/ says:1373 in US dollars.

Gold is in a 10 year bull market, or more precisely the US dollar is falling and falling, charts are here. US dollar is being printed out of existence, other currencies are misguidedly following this, of-course US dollar is the reserve, so many feel they have to. They really don't.

But what exactly is your question? Is gold NOT going up, did it NOT go up and up and up for the last 10 years at least? All the other commodities: sugar, cotton, pork, wheat, rice, oil, metals, etc.

When you call the guy who correctly predicted the Internet and the Housing bubbles and traded on that correctly to be 'fringe', while you consider others to be 'mainstream', then you are doing one thing: you are displaying that mainstream is ridiculous, stupid and most importantly: wrong.

How come most of your clients lost 40%-70% of their worth in 2008,

- I got out of commodities just before that particular event, it was a hunch. However the people with Schiff have been making money for 10 years prior to that and ever since the end of 2008 and they have recovered and made another 50% on top.

Now, can you point out a 'mainstream' economist who has been as right as Schiff for as long as Schiff? They don't exist. There is Jim Rogers, but he is on the same side Peter is on. There is Marc Faber, he certainly tries to make predictions that are a bit more specific in terms of timing.

Schiff is not interested in specifics of timing - that's what separates his advice from advice of speculators. He is an investment adviser.

Do you know the difference, or should I explain further?

Seriously, don't listen to this guy or anyone who tells you to listen to him, they are attempting to engage in class war against you and redistribute your hard earned wealth to themselves

- I am not sure if you are giving this 'advice' to me, but if you are, then keep it. How much of your purchasing power have you lost over the past 15 years? Want to compare to how much I gained? Don't do it, you'll lose. And I am not what you call 'rich'.

Could it be said that you don't favor *any* entity having influence over the direction of society, and the attendant economic impacts?

- correct.

I clearly understand and lament the problem with power vacuum, it is what it is, that's why I am not an anarchist. Gov't has a role. But that role must not be in dictating economic or social outcomes for entities or people. The US under the US Constitution was doing just fine for a while there, very well actually, right until the moment the Fed was created and income taxes as well. Then it went downhill. The Fed destroyed the currency and grew the gov't to impossible size and allowed ti to wage wars and take over economy. The income taxes destroyed ability of private individuals to save enough money to start enough of their own businesses to offset the damage gov't intervention was causing.

Today even if the income taxes are set to 0 (and I include payroll taxes into this as well) the gov't will not stop. It will simply print and borrow until the dollar collapses.

My wife and I are wondering whether our lifetime of savings will be stolen by the plutocrats who have grabbed the power when we will most need those resources as our competitive strength wanes through the natural effects of our aging.

- you probably would be better off moving to South America at this point, but that's just a general type of feeling, everybody decides on their own.

For worse or better, we're no longer "Dagny Taggart" or "John Galt". Sometime in the next 10-30 years, we will need to depend on the services of others, paid for by our savings. And the way things seems to be headed, just when we won't have the strength to fight back, we won't even be able to fall back on the resources that we've saved. My wife and I have never saved less than 40% of our incomes as an engineer (me) and clinical psychologist (her), and the last few years have been *brutal* for people who don't have government support (meaning, for example, the favorable tax treatment given to people who don't make a goddamned thing).

- I'd be surprised if US economy lasts past the next presidential election without the collapse of US bond market.

If you have investments in US equity/pension funds, you may want to think how to save your money from being inflated into nothingness. You may want to contact these people for a real financial advice.

I'm not sure if you're coming from the same angle, but Peter Schiff (who is a "real" economist) agrees with you. He writes on his site http://www.europac.net/ He doesn't distinguish between consumers and corporations --- his argument is simply that taxing income makes no sense (since we WANT people to be productive), so all taxation should be on consumption, whether you are a corporation or an individual.