First: To label any government monopoly as "non-profit" is misleading; it only means that they aren't incorporated, really, and have no investors to grovel to. Most government-run monopolies are behemoths that only passably serve customers if all profits are channeled into large parasitic private interests - most of which wouldn't exist if the government hadn't bloated them to gross extremes. Example: the military-industrial complex, the pharmaceutical industry, education, agriculture, energy, telecommunications, etc. etc.
Second: you seem to largely believe that I'm a "Bug". Let me clear the record: I'm not a gold bug. Tying any currency to a single commodity is disastrous, and the reason for a lot of our problems in the late 19th century. The silver act I was talking about? It put us on a de facto gold standard, and that is what ruined us. Multiple commodities - and I mean 50+ strong, stable commodities (think energy, or agricultural staples, or heavy metals - or all of the above) - would tie currency into the very web that it is supposed to represent, preventing shocks and fluctuations without apocalyptic economic conditions (in which case, we'd all have bigger problems to worry about anyway).
Third: I'd like to dispel some misconceptions: Glass-Steagall wasn't completely repealed, and those parts of it that were hadabsolutelynothingtodowith the financial crisis.
Hoarding does one thing: it allows prices to rise. This only becomes a problem when suddenly someone is dumping things back into the market. However, this isn't a problem if you have a currency based on multiple, stable commodities. Hoarding would only cause a rise in a particular market (and a loss to the hoarders), while providing an advantage to competitors that use the rise of demand to elbow into the market. Hoarding doesn't make sense to any businessman. Anywhere.
Debt-to-asset ratios are nothing to the Fed. The expansion of their books? That's like writing a ton of zeroes at the end of their listed bonds, and for some reason they don't think this will create wild changes when those bonds spread around... sigh...
Systems only wipe out everyone in interdependent webs of finance. If you have your own backed currency with controls based on contracts with private interests, your currency is essentially tied to its own micro-economy, and truly earth-shattering effects would have to be felt across the board in order to shake it.
The period most liberals point to when defending the institution of the Fed is the middle-to-end of the 19th century
Wanting centralized banking with some regulation != wanting said centralized banking to be run by the biggest banks themselves.
Centralized banking IS banking run by the biggest banks themselves. One big private bank whose actions are confidential, yet has complete control over the currency and securitizes the entire banking system. Since when did you think that anything tied to government was not run by the biggest private interests they influenced?
First, the government passed the Sherman Silver Purchase Act, in which they agreed to purchase wild amounts of silver in return for fiat currency - which backfired, due to the fact that anyone selling silver would take the silver tickets and immediately exchange them for their equivalent value in gold, completely depleting the government's gold supply. Suddenly, silver's value goes up and gold plummets; the government ends up on the wrong end of the scale.
That's an argument against Gold Bugging, not having regulated banking.
No, it's an argument against the government involving itself in even the most absurdly simple economic situations. If the government had not forced themselves by law to trade a certain ratio of silver for a certain ratio of gold (and vice versa), they wouldn't have gotten themselves into the horrific situations they did. The true value of any commodity backed currency would have been much more stable on a group of inter-dependent commodities. Instead, it was falsely stable and enforced by law to be tied to two expensive and relatively nonpractical metals whose fluctuating value crashed small banks. That's the kind of regulation I'm talking about.
A common retort: well, what about the years of wildcat banking before the National Bank Act? During this period, state regulations usually created situations in which fractional reserve banking was rather risky, and bank reserves were dropping before the the biggest panic of 1837; why? Because Western land could only be purchased with gold and silver, thus depriving many large East coast banks of their reserves. Banks were also required to hold a certain amount of bonds in addition to their reserves as securitization. (Ironically, state bonds were probably much of the reason these banks' currencies wouldn't keep their value.) Add this into a declining export cotton market, and suddenly there are runs on banks and the Panic of 1837.
No, not really; the real solution would have been to allow banks to issue their own private currencies.
LOL! Because everyone wants their life savings to go down the toilet when BOA or Citi fail. Because merchants would love having to deal with 5,234,987 different domestic currencies rather than just one. Whatever it is you're smoking here, did you bring enough for everyone?
Local banks would be far more stable and would probably be based off a franchise system with networked multiple-commodity-based currency systems. A very few currency systems would come out on top; their value would be determined by their stability.
The period most liberals point to when defending the institution of the Fed is the middle-to-end of the 19th century; i.e., the period in time around the railroad boom and the Long Depression. This was a time when the government was heavily financing big railroad companies such as the First Transcontinental Railroad; it was also a time when the government guaranteed a fixed exchange rate between gold and silver - utterly preposterous.
Two groups of events collided at the same time to form the worst economic depression the US had seen up until that point:
First, the government passed the Sherman Silver Purchase Act, in which they agreed to purchase wild amounts of silver in return for fiat currency - which backfired, due to the fact that anyone selling silver would take the silver tickets and immediately exchange them for their equivalent value in gold, completely depleting the government's gold supply. Suddenly, silver's value goes up and gold plummets; the government ends up on the wrong end of the scale.
Second, private railroad companies start wiping the floor with government subsidized railroads, and investors who sided on the government subsidization side of things go bankrupt. Banks are no longer able to receive aid due to missing gold and, with failing investments, go for broke.
Solution? Why, put more financial power into the hands of the government via a private bank monopoly, of course! No, not really; the real solution would have been to allow banks to issue their own private currencies. Government run currency is a racket.
Your "logical necessity" is taking place in an economic vacuum; that is, in the realm in which the owner of said property switching human labor for automation is the only existing party. The reality runs a little more like this:
Bob, a manufacturing guru in the widgets market, finds that if he invests around $60,000 for the research and resources and work to build a new machine, he can replace a couple hundred workers with a monster of a machine that will do their work for twice as long and twice as fast at half price. What does this mean? This means that Bob's capital has risen and the rate at which his company is now capable of creating widgets has risen considerably, while also meaning that he has to pay fewer workers to tend the machine and he can now lower prices for his widgets to account for his expanding supply. Cheaper goods are now entering the market, and more are able to afford Bob's goods while saving more money in the process.
"Saving" money in the market in general allows one of two things to happen: 1) the saver can now buy things he was not able to before, meaning that more demand is created and therefore more labor is used, or 2) the money is saved, placing more money on the positive side in bank's balance sheets, meaning more investment and more spending of money - more labor, in other words.
Meanwhile, Steve, a laborer laid off by Bob, is finding that he is in an increasingly large group of individuals in the unskilled labor field, bummed out in unemployment and waiting to find work. He finds an ad in the paper advertised by Frank. Frank has decided that he would absolutely love to take advantage of the high supply of cheap labor, and starts a business making fine widgets to compete with Bob. Now that the widget market has expanded, Frank can now find a niche and a customer base without relying on nonexistent demand - demand now created by the lowering of prices on the market. Steve decides that it wouldn't be overly ironic for him to purchase a widget from Bob's company with money paid by Frank.
See, in your system, you want someone to help pay to enforce your rights, and you want to opt out of paying to help anybody else. Which means as long as you get what you feel you're entitled to, everyone else is on their own. Why should my taxes pay to preserve the rights of the rich?
There's a significant difference between supporting a system that involves paying for services you profit by (i.e., protection of private property by local police forces) and paying for services by which you do not profit (i.e., for education for other people's children when you are, yourself, without children). This is especially the case when even the parents can safely assume that their tax money isn't going to a good home, since the system it feeds is so bloated and inefficient that more money translates into little to no to negative improvement for their children's education.
The real crime is that parents cannot choose not to pay for these services in favor of spending said tax money on alternative, privately run schools (whose green-to-grade ratio is far higher); they are forced to pay for public school AND private school were they to choose to do so. The perfect system would involve an opt-out option, and opt-in eligibility would either be by choice or by the parents of children sending kids to said public school. Tighter budgets - controlled by demand, in turn based on productivity, in a competitive environment - would give schools the motivation to actually produce instead of throwing more money at useless programs.
I meant that someone from that time period would be shocked that paper was not representative of or exchangeable for either gold or silver, as was the case back then. Bimetallism was what kept us going through the industrial revolution. Violent currency instability occurred when the government instated the Coinage Act of 1873, which demonetized silver (and put us on one currency that had no competition). When the government later issued the Sherman Silver Purchase Act - requiring the government to buy silver at monthly quotas for double the market price - the currency market was warped even more (since the government was required by this act to buy silver, those selling silver to the government took the tickets they were given in return and traded them for gold - the circus that ensued caused the Panic of 1893). Ultimately, even though the ratio of value was set by the government between the two metals, the availability of both options allowed currency instability to cause less of a volatile environment, and recovery tended to be quick.
MFW Ghana, Eritrea are amongst the fastest growing real GDPs in the world. "Quit fighting"? "Join the modern world"? Most of the stunted growth everyone is referring to here is due to an overabundance of liquid assets - food, money, medication - being reappropriated by force and placed into the hands of oppressors; the individuals stuck in these sustained power vacuums can't help but face the problems of the here and now. Their only thought is to see the next sunrise. While in that state, they have no luxury to educate themselves or produce goods to compete, let alone innovate. Trade the subsidies and all forms of monetary aid for micro-loaning schemes meant to support individuals and individual small businesses, and you will give locals an alternative to the force-driven monopoly that is sustainable and promotes growth. Starve the cancerous militia and the people will have the motivation and the inspiration to provide alternatives.
This is false. You cannot have gang or mafia rule without either 1) government regulation creating a prohibition environment (in which a healthy black market thrives, supporting those who aren't afraid to use force) or 2) "foreign aid" (and systems similar to it), in which extremely liquid resources are appropriated and used as a crutch to keep the powerful powerful and keep everyone else on a leash. Otherwise, independent individuals on a microeconomic level will have the chance to enter into the market and create enough prosperity to join forces and pay for their own personal protection. Take the example of the yam farmer who cannot afford to begin farming because too many of his customers rely on freely available food either distributed by "aid" agencies or controlled by gangs as soon as it makes it to the continent. This video describes a lot of the problems and solutions that exis: http://www.youtube.com/watch?v=BFABdPOpr2A&feature=player_embedded#!
I love how people uphold Somalia as the ultimate example of an anarchist society ruled by cruel force, when the reality is far different: yes, there is violence due to the conflicts between the Transitional Federal Government and the Islamist factions; yes, there is death, civilian casualties, and unrest; however, this does not account for their 2.7% economic growth rate over the past 15 years (despite large-scale emigration to find asylum, massive government and local infrastructure failure, and persistent and pervasive violence). And still we send aid over there, and not military aid or economic aid - we send aid to their TFG, directly, to "support infrastructure" (http://www.so.undp.org/index.php/Somalia-Stories/Employment-Generation-for-Early-Recovery.html), provide "jobs" (read: government dependencies), and restore civilian reliance. Sigh...
I think you're attacking a straw man here. Let me clue you in on what the anti-government folks actually mean when they promote the private sector:
First, your example presents quite an interesting little morsel for me to masticate for you: the difference in philosophy and approach between government and commercial grants. You must realize that the government doesn't mind funding science projects - it gets to list those little donations on its budget, and taxpayers generally aren't against our countries' funding of scientific advancement (as long as it's clean; hence, the ethical accountability - you've got to keep a clean paper trail). However, the anti-government types naturally rail against the government's purpose and mindset towards investment: to divert a steady, forced flow of taxpayer money towards projects that "look reasonable" and don't disturb the general flow. Why does a government official want anything else? Keep their citizen base happy - or at least tolerant - and they will resign to being sapped of a portion of their lifesblood.
Now, compare this philosophy to that of the corporation. Of course they're greedy. Of course they're profit-seeking. Of course they're only in this business for themselves. However, in order to feed these needs, they rely on the willing and voluntary cooperation of a large customer base (as opposed to the entire population of tolerant taxpayers), and they need to maintain standards to keep that customer base happy enough to keep buying. Innovation and investment - even in fringe, "no-profit" ventures - can be advertised as the "corporation helping out the little guy scientist," etc. for commercial gain, but they will also want to find as much profitable edge as they can.
It's this needed edge - the need to keep a customer base pleased, to beat out competition, and win over a skeptical populace - that spurs a private corporation on. And the only way to spur itself on, as khallow mentions, is allowing the private industry a part in these innovations and using its influence to drive the productivity and practicality of these ventures to new heights. "Jumping the gap" is what spurs growth.
Many, at this point, will shake their heads and grumble: "What about those fields of knowledge that are not profitable to the private industry?" Well, profitability takes many forms. Increasing a concentration on the worth of new knowledge and research - through the education system, through non-profit programs devoted to the study of these topics, through transmission of the viral need for more knowledge - would allow there to be programs people would be able to donate to if they wished to spur on research in these topics. These in turn could contribute to the complementary departments in respected universities to inspire research and deeper exploration in healthy environments.
Government involvement is only decried because of the unsustainable waste of money essentially robbed from the general populace, becoming a giant money-flushing machine that refuses to stop taking and spending on arbitrary, policy-driven programs. In the end, it takes a lot more than indiscriminately throwing money at something to cause growth.
"No, I'm saying frequently people don't quit their crappy jobs to try and find something better because they can't - either in reality or perception."
Because they do not have the capability of quitting their jobs? Or "can't" in the hypothetical sense, akin to "would not consider it, despite wishing they could"?
"Blackmail is not always an act (or threat) of _physical_ violence, which brings us back to the actual question: do you agree "force" can be more than just physical violence ?"
No, blackmail is a threat of violence to one's reputation, not one's person... and I just came to the conclusion that it really shouldn't be illegal. As to the question this all seems to revolve around, I would have to say that I do not believe that it can be more, but with qualifications: I include physical restraint of one's person as the use of physical violence, the destruction of property, the act of trespassing, and pollution as physical violence.
"Uh, what ? Reality is millions of people living paycheque to paycheque. They have no bargaining power with their employer (current or future), cannot risk the loss of income from quitting and lack the financial resources to relocate."
While I was working there, Buffalo, NY seemed to be a city filled with the labor worker/minimum wage earner that seems to suffer the most from this situation. I knew this because I was one of them, and worked as an office janitor for a year. Frequently, people underestimate the ease with which many people slide from job to part-time job when they don't meet the reasonably high work standards of their employers.
"No, he can choose to HOPE those things might be possible. Frequently they are not, either explicitly or in perception."
I just want to make certain that you're making the claim you're making, here: frequently there are people that quit their jobs that are incapable of performing any other job, in areas where jobs they are capable of performing do not exist, and where they have no friends or family to network with them to help find a job and/or provide meager support until they can.
"The word itself is a minor semantic issue. The problem is your fundamental attitude that a crime can't be considered to have occurred until physical violence has taken place. Not only because of behaviour like murder plots, but also things like blackmail and ponzi schemes."
I never claimed that physical violence has to take place in order for ANYTHING to be considered a crime; the threat of physical violence would suffice; what I was arguing about is the means by which the police obtain knowledge about such crimes. And I am aware that physical violence is not the only means by which crimes may be committed; blackmail is an act of force, and ponzi schemes are fraud.
"Er, right. So if someone is acting like the villain in a comedy film, then the police are ok to take action, but if he's acting in a way more connected to reality - say, asking the cousin of the woman he's having an affair with if he knows anyone who's a "problem solver" at the local bikie bar - then they can't do anything."
No, this is adequate evidence. The question is how they go about obtaining this information. Having connections in these networks - through informants and undercover police - would make the most sense, but I do believe that there are illegitimate means by which this information may be obtained (unless the act of obtaining this information was targeted, substantiated with evidence, and backed by a court). And I think that last part is optional... it all depends on the risk factor; i.e. balancing threat of breaching another's privacy and exposing themselves to litigation or exposing a potential murder. The stronger the evidence, the more justified the intrusion, but only in individual circumstances.
"It is for the person who has the choice of doing it or starving."
That is a hypothetical situation that has no connection with reality. In the real world, a man can choose to work for 12 hours a day for a company, choose to look for other companies to work for that do not require such long hours, choose to ask for help of his community to find another job or gain support in the interim, or any number of other things before he begins to starve. This is not force; what you're talking about is a lack of active will that you claim requires force to make unnecessary.
"Evidence ?"
Right. However, when deciding the methods by which this evidence is obtained, the power given to any individual within the police organization - as well as the method's potential for misuse - must be taken into account. Sacrificing one's privacy and freedoms for security makes no sense; especially when this sacrifice opens up the field for manipulative and corrupt individuals to use the system for their nefarious schemes.
"This is a straw man."
Not precisely. It wasn't an attack, but a generalizing question. Since you have made no claim or suggestion concerning that topic, I over-exaggerated. And it's not an attack either, which straw man arguments are...
"Right. So the Police have to wait from an invitation before they can do anything. I'm sure that will work out just great."
Yes, I used the word "invite." That's no reason to bash me over the head with it. I meant pre-crime investigation; say, the spouse would like the police to help her investigate her husband's strange behavior: flippant remarks about death, can't stop laughing when she mentions her future plans, and/or recent purchase of several new collections of cutlery when he never even enters the kitchen. They would then be allowed to remote into the couple's home computer and check things out, since (as a spouse) there is co-ownership involved. If he's been searching for the locations of major arteries, been downloading gore pictures and videos, and/or researching murder with sharp implements, then the police can safely say that she should get the heck out of Dodge. And then they could send a patrol car down to have a chat with the guy. Maybe send him to a special hospital.
So when you get "an offer you can't refuse" - say, to work 12 hour days or end up unemployed and starving - do you want laws to protect against this, or not ?
Do you accept "force" can take forms other than simple physical violence (or the threat thereof) ?
I never said that the government should be given the resources to predict, surveil, or intrude; it should have the resources to adequately defend individual rights when the emergency is at hand, but never at the expense of individual privacy.
So the Police couldn't arrest a husband for conspiring to kill his wife, but would have to wait until the murder was actually committed ?
Your first example is not representative of a situation in which force is being used. An employer has the right (or should have the right) to request what he wants of his workers; what he risks is that his workers will no longer work for him, as it is the workers' choice whether or not to be employed by them. Also, there is a difference between quitting a job and becoming permanently unemployed; either way, it is still the choice of the worker.
As to your second question, I assume you have an example or counterexample ready at hand? I don't think I can answer unless I know which specific situation you hypothesize is taking place.
Finally: how would police prove that a husband was "conspiring" to kill his wife? Should the police have the power to watch over every second of everyone's lives to prevent this occurrence? No. Murder does happen - albeit rarely - and it is horrific when it does. However, preventing such horrific events is dependent on a healthy codependent relationship between citizens and their police force. Citizens should be able to invite investigation into their own lives, but legislation should not be passed that would allow involuntary intrusion. These laws would provide the police with authorization that in turn would validate a spirit of conspiracy, suspicion, and distrust of the common citizenry. This is unhealthy and promotes corruption and attracts corruptible individuals.
No, what? I never said that the government should be given the resources to predict, surveil, or intrude; it should have the resources to adequately defend individual rights when the emergency is at hand, but never at the expense of individual privacy.
They do, but they exist as violations of individual rights; government's role is to protect its citizenry against these violations (through a police force, the courts, a prison system, the military, etc.).
No, they aren't. In communism, one takes from people according to their ability, and distributes according to their need. The only way to accomplish this is through violence.
No, they aren't. In capitalism, one takes from people according to their ability, and hoard according to his need. The only way to accomplish this is through violence. And we recently seen good example of this enforced through police violence.
Taking implies force. In a free market, free entities choose to buy products or services according to their own free will. It is also ridiculous to suggest that these monies are "taken" according to individuals' "ability," unless you mean to imply a correlation between productivity and spending power (which is accurate). Hoarding is symptomatic of productivity and accumulation without need, because money is representative and not substantial. Those who believe otherwise usually don't get a chance to accumulate it due to an inability to understand simple concepts (like this one!). Finally, the police do not force anyone to take money or hoard it. While police brutality exists and is a crime, I don't think it's an economic problem; rather, it is a bureaucratic problem that leads to a misplaced superiority complex rather than the protective ideology it ought to lead to.
"THIS is not the solution, it's the problem. It's trading the idea of capital as a medium of exchange for the idea capital as symbolic work. Just as the derivatives were the illusion of paid loans. You are trading the territory for the map. And you can't live in a map."
I didn't necessarily mean that the loan is something you gain interest on due to deflation; I meant that the loan acts as a medium between your work and what that work buys according to the value judgment you as the consumer balances: in other words, if I worked five hours at a minimum wage job and have around $30, I can take those dollars and spend them in a way that balances the worth of work for the worth of the product or service I trade it for.
You state the dollar is a "medium of exchange" as if that is an unshakeable and fundamentally understandable figure, when the medium of exchange has inherent worth and is a product in and of itself in a consistently changing market. It is proof of work or effort, given by the witness of that effort. The amount of dollars on the market can only represent as much work as exists on the market. There can only be a certain amount of actual currency on the market - hence why we have organizations to monitor the cycle of need and expenditure in our market. However, when the organizations bet on markets, there exists the risk of market crashes due to its involvement. Sometimes it inspires growth, but growth is up to chance investments in the FREE market, and the market makes up the gap the inflationary spending causes. Then it is justified, but only if there is room for growth. It requires free market presence without regulation and intervention.
Most people declare the evils of the free market because of fears concerning rampant profiteering or what amounts to slave labor in working conditions; fair enough. These practices are possible. However, involving the government in the market - especially on such a large scale - is not the answer. You end up having organizational nightmares because there's no incentive for efficiency or sustainability or any virtues a businessman would bring to it. Example: the Pentagon and its involvement in the market for military assets: more expenditure with involuntarily taken taxes to pay for inflated prices, JUST BECAUSE THEY CAN.
You might scoff at this statement and its example, but hear me out: when businesses are held accountable for their products and for the treatment of their employees - when the government does its job of policing and holding people accountable - then businesses will compete against one another to provide the highest quality services at lowest cost. Raising costs increases the margins and allows for competition. Low quality services allows for competitors to steal customers away. Corruption and snake-oil salesman are taken to court for false advertising and violation of individual's rights and are eradicated. In an economy where the flow of information is free and competition is hot, where work can be done by the geniuses that know how to do it well, the government only acts as a stumbling block in the sectors it interferes in and destroys the natural order of the free market. This is by nature of the very use of money, the improper distribution of money at the highest levels, and the extreme damage this money does when it is redirected into the private sector.
"The housing crash was entirely predictable on many grounds, though. Prices were too high and rising only because banks could rationalize lending to risky buyers by using derivatives - where known risky investments were sold as if they had paid off. People bought based on the fantasy that only a few loans would not pay off because the value of property would just continue to rise. IOW, just like buying on margin. All it took was a cough and a short slide to bring the whole fictional house of cards down. (Yeah I know, I pretty much repeated you - I just wanted to emphasize the similarity to buying on margin). It was totally safe as long as prices rose.
And - there can NEVER be "enough cash for people to take and hide under their beds", as most of it is supposed to be out on loan. Bank runs are always a possibility."
I know everyone trashes the Austrian Business Cycle. I'm currently studying as much as I can to see why, but I haven't been able to find an adequate reason outside of "no one has written down any hard math behind it". I find this claim to be paradoxical since, if you define it the way Austrian economists do, economics utilizing a free market and free individuals involves MASS psychology and sociology - the softest of sciences. The Keynesian model - which most of our monetary policy and government involvement policy is based in - just doesn't work, and the theories in the Austrian school have plenty of answers as to why this is. Hence my studies.
Anyway, the Austrian business cycle theory (as I've studied it) is predicated on a few things: the relative value by the dollar balanced by the value of work as defined by the market - i.e., by supply and demand and the way prices have adjusted themselves for things to stay within their relative margins. The dollar represents a semi-morphic representation of loaning in a market where the theoretical payback of that loan depends on how much general productivity exists to counterbalance the amount of dollars in the market. Interest rates are supposed to be a natural reflection of the state of the market - when people save, they invest in future consumption, allowing banks to lend to businesses more to invest in future expenditure by growing and expanding. When people do not save, the cost of lending rises.
The problem occurs when you have the actual controls for the worth of the dollar - the Fed - behind the lending institutions, allowing people to assume that interest rates are low because people are saving and there is extra incentive for business futures. Loans are taken out, the price of the market in which they invest rises due to increased demand without the supply - meeting the theoretical counterforces of the entire Fed backing the loans - and when the financial institutions have to cut back due to the fact that they cannot sustain the loans, the market crashes. The theory behind this erratic expenditure on the part of the Fed supports the idea that some loans will play out. But if inproductive markets are bolstered, there is no chance of return on those loans and throwing more printed money at it will not help the crisis.
The theory breaks down to this: for every new dollar printed, be it in the form of a loan or actual cash, you must have that dollar counteracted with increased productivity and increased expenditure in the free market, or else the balance between dollar and what the dollar pays for is mismatched and causes inflation. Inflation then lowers the worth of the dollar and we've gotten nowhere.
Now, you mentioned prices rising: prices weren't rising due to profitability or productivity in the market; in fact, they rose to counteract the notion that there was. This is based in free market economics: you raise the prices to curb demand. However, when there are government issued loans backing the investors, there's no reason for them to invest less just because the prices are higher. So, the market is artificially affected. Not free market economics.
I'm currently watching a great lecture that completely backs
"Wow THAT was reaching. Essentially you said: "Since the Fed invested, all bad things are the Fed's fault". Interesting since, in fact, currency was backed by gold then, and therefore was a currency that had it's worth established by market forces, and the practice of buying on margin itself was unregulated at the time."
I think you mistook my reference to the housing market bubble and our current financial crisis for a reference to the stock market crash of '29, but I can cite why both can be attributed to the Fed's intervention (at least partially)
Peter Schiff has been the doomsday prophet Austrian economist for our current crisis for years now:
Artificially low interest rates combined with inflated average housing market prices were both caused by a combination of two factors: financial institutions being backed by the Fed brought interest rates down artificially due to the support they had by the government (which never should occur if market prices are to naturally balance), and speculative buyers bought into these bad mortgages due to the low interest rates, despite high housing prices. I'm sure you're familiar with the rest of what happened: the bubble bursts, financial institutions raise interest rates, the housing market crashes, as do the worth of all the artificially inflated prices of houses throughout the country. All due to government intervention artificially affecting the market.
Deflation was the first cause of crisis in the Great Depression - back when we were backed by gold - and productivity counterbalanced the actual supply of gold. (I personally disagree with hard currency advocates; I think our monetaristic policy should be more strict, but trusting the currency to a specific commodity such as gold is asking too much). When stock market prices dwindled at their plateau, deflation forced prices down - making it look like a crash in the market - and the Fed withheld reserve notes, there was a run on the bank due to the panic, and there wasn't enough cash for people to take and hide under their beds because of poor banking policies. It didn't help that the tariffs were raised and exports were trashed because of it, but there it is.
Slashdot Mirror
First: To label any government monopoly as "non-profit" is misleading; it only means that they aren't incorporated, really, and have no investors to grovel to. Most government-run monopolies are behemoths that only passably serve customers if all profits are channeled into large parasitic private interests - most of which wouldn't exist if the government hadn't bloated them to gross extremes. Example: the military-industrial complex, the pharmaceutical industry, education, agriculture, energy, telecommunications, etc. etc.
Second: you seem to largely believe that I'm a "Bug". Let me clear the record: I'm not a gold bug. Tying any currency to a single commodity is disastrous, and the reason for a lot of our problems in the late 19th century. The silver act I was talking about? It put us on a de facto gold standard, and that is what ruined us. Multiple commodities - and I mean 50+ strong, stable commodities (think energy, or agricultural staples, or heavy metals - or all of the above) - would tie currency into the very web that it is supposed to represent, preventing shocks and fluctuations without apocalyptic economic conditions (in which case, we'd all have bigger problems to worry about anyway).
Third: I'd like to dispel some misconceptions: Glass-Steagall wasn't completely repealed, and those parts of it that were had absolutely nothing to do with the financial crisis.
Hoarding does one thing: it allows prices to rise. This only becomes a problem when suddenly someone is dumping things back into the market. However, this isn't a problem if you have a currency based on multiple, stable commodities. Hoarding would only cause a rise in a particular market (and a loss to the hoarders), while providing an advantage to competitors that use the rise of demand to elbow into the market. Hoarding doesn't make sense to any businessman. Anywhere.
Debt-to-asset ratios are nothing to the Fed. The expansion of their books? That's like writing a ton of zeroes at the end of their listed bonds, and for some reason they don't think this will create wild changes when those bonds spread around... sigh...
Systems only wipe out everyone in interdependent webs of finance. If you have your own backed currency with controls based on contracts with private interests, your currency is essentially tied to its own micro-economy, and truly earth-shattering effects would have to be felt across the board in order to shake it.
Wanting centralized banking with some regulation != wanting said centralized banking to be run by the biggest banks themselves.
Centralized banking IS banking run by the biggest banks themselves. One big private bank whose actions are confidential, yet has complete control over the currency and securitizes the entire banking system. Since when did you think that anything tied to government was not run by the biggest private interests they influenced?
That's an argument against Gold Bugging, not having regulated banking.
No, it's an argument against the government involving itself in even the most absurdly simple economic situations. If the government had not forced themselves by law to trade a certain ratio of silver for a certain ratio of gold (and vice versa), they wouldn't have gotten themselves into the horrific situations they did. The true value of any commodity backed currency would have been much more stable on a group of inter-dependent commodities. Instead, it was falsely stable and enforced by law to be tied to two expensive and relatively nonpractical metals whose fluctuating value crashed small banks. That's the kind of regulation I'm talking about.
A common retort: well, what about the years of wildcat banking before the National Bank Act? During this period, state regulations usually created situations in which fractional reserve banking was rather risky, and bank reserves were dropping before the the biggest panic of 1837; why? Because Western land could only be purchased with gold and silver, thus depriving many large East coast banks of their reserves. Banks were also required to hold a certain amount of bonds in addition to their reserves as securitization. (Ironically, state bonds were probably much of the reason these banks' currencies wouldn't keep their value.) Add this into a declining export cotton market, and suddenly there are runs on banks and the Panic of 1837.
No, not really; the real solution would have been to allow banks to issue their own private currencies.
LOL! Because everyone wants their life savings to go down the toilet when BOA or Citi fail. Because merchants would love having to deal with 5,234,987 different domestic currencies rather than just one. Whatever it is you're smoking here, did you bring enough for everyone?
Local banks would be far more stable and would probably be based off a franchise system with networked multiple-commodity-based currency systems. A very few currency systems would come out on top; their value would be determined by their stability.
The period most liberals point to when defending the institution of the Fed is the middle-to-end of the 19th century; i.e., the period in time around the railroad boom and the Long Depression. This was a time when the government was heavily financing big railroad companies such as the First Transcontinental Railroad; it was also a time when the government guaranteed a fixed exchange rate between gold and silver - utterly preposterous.
Two groups of events collided at the same time to form the worst economic depression the US had seen up until that point:
First, the government passed the Sherman Silver Purchase Act, in which they agreed to purchase wild amounts of silver in return for fiat currency - which backfired, due to the fact that anyone selling silver would take the silver tickets and immediately exchange them for their equivalent value in gold, completely depleting the government's gold supply. Suddenly, silver's value goes up and gold plummets; the government ends up on the wrong end of the scale.
Second, private railroad companies start wiping the floor with government subsidized railroads, and investors who sided on the government subsidization side of things go bankrupt. Banks are no longer able to receive aid due to missing gold and, with failing investments, go for broke.
Solution? Why, put more financial power into the hands of the government via a private bank monopoly, of course! No, not really; the real solution would have been to allow banks to issue their own private currencies. Government run currency is a racket.
Your "logical necessity" is taking place in an economic vacuum; that is, in the realm in which the owner of said property switching human labor for automation is the only existing party. The reality runs a little more like this:
Bob, a manufacturing guru in the widgets market, finds that if he invests around $60,000 for the research and resources and work to build a new machine, he can replace a couple hundred workers with a monster of a machine that will do their work for twice as long and twice as fast at half price. What does this mean? This means that Bob's capital has risen and the rate at which his company is now capable of creating widgets has risen considerably, while also meaning that he has to pay fewer workers to tend the machine and he can now lower prices for his widgets to account for his expanding supply. Cheaper goods are now entering the market, and more are able to afford Bob's goods while saving more money in the process.
"Saving" money in the market in general allows one of two things to happen: 1) the saver can now buy things he was not able to before, meaning that more demand is created and therefore more labor is used, or 2) the money is saved, placing more money on the positive side in bank's balance sheets, meaning more investment and more spending of money - more labor, in other words.
Meanwhile, Steve, a laborer laid off by Bob, is finding that he is in an increasingly large group of individuals in the unskilled labor field, bummed out in unemployment and waiting to find work. He finds an ad in the paper advertised by Frank. Frank has decided that he would absolutely love to take advantage of the high supply of cheap labor, and starts a business making fine widgets to compete with Bob. Now that the widget market has expanded, Frank can now find a niche and a customer base without relying on nonexistent demand - demand now created by the lowering of prices on the market. Steve decides that it wouldn't be overly ironic for him to purchase a widget from Bob's company with money paid by Frank.
The world turns.
See, in your system, you want someone to help pay to enforce your rights, and you want to opt out of paying to help anybody else. Which means as long as you get what you feel you're entitled to, everyone else is on their own. Why should my taxes pay to preserve the rights of the rich?
There's a significant difference between supporting a system that involves paying for services you profit by (i.e., protection of private property by local police forces) and paying for services by which you do not profit (i.e., for education for other people's children when you are, yourself, without children). This is especially the case when even the parents can safely assume that their tax money isn't going to a good home, since the system it feeds is so bloated and inefficient that more money translates into little to no to negative improvement for their children's education.
The real crime is that parents cannot choose not to pay for these services in favor of spending said tax money on alternative, privately run schools (whose green-to-grade ratio is far higher); they are forced to pay for public school AND private school were they to choose to do so. The perfect system would involve an opt-out option, and opt-in eligibility would either be by choice or by the parents of children sending kids to said public school. Tighter budgets - controlled by demand, in turn based on productivity, in a competitive environment - would give schools the motivation to actually produce instead of throwing more money at useless programs.
I meant that someone from that time period would be shocked that paper was not representative of or exchangeable for either gold or silver, as was the case back then. Bimetallism was what kept us going through the industrial revolution. Violent currency instability occurred when the government instated the Coinage Act of 1873, which demonetized silver (and put us on one currency that had no competition). When the government later issued the Sherman Silver Purchase Act - requiring the government to buy silver at monthly quotas for double the market price - the currency market was warped even more (since the government was required by this act to buy silver, those selling silver to the government took the tickets they were given in return and traded them for gold - the circus that ensued caused the Panic of 1893). Ultimately, even though the ratio of value was set by the government between the two metals, the availability of both options allowed currency instability to cause less of a volatile environment, and recovery tended to be quick.
"... a disproportionate income tax? By the Federal government?! What'll they have next? A forced monopoly on currency?"
MFW Ghana, Eritrea are amongst the fastest growing real GDPs in the world. "Quit fighting"? "Join the modern world"? Most of the stunted growth everyone is referring to here is due to an overabundance of liquid assets - food, money, medication - being reappropriated by force and placed into the hands of oppressors; the individuals stuck in these sustained power vacuums can't help but face the problems of the here and now. Their only thought is to see the next sunrise. While in that state, they have no luxury to educate themselves or produce goods to compete, let alone innovate. Trade the subsidies and all forms of monetary aid for micro-loaning schemes meant to support individuals and individual small businesses, and you will give locals an alternative to the force-driven monopoly that is sustainable and promotes growth. Starve the cancerous militia and the people will have the motivation and the inspiration to provide alternatives.
It sounds like the inspector just wanted a turkey sandwich.
I can do something with my dinner-smuggled hoard of kale and okra.
... are thoughts concerning the possible destruction of the universe were I to pirate the Pirate Party's book on Pirate Politics.
This is false. You cannot have gang or mafia rule without either 1) government regulation creating a prohibition environment (in which a healthy black market thrives, supporting those who aren't afraid to use force) or 2) "foreign aid" (and systems similar to it), in which extremely liquid resources are appropriated and used as a crutch to keep the powerful powerful and keep everyone else on a leash. Otherwise, independent individuals on a microeconomic level will have the chance to enter into the market and create enough prosperity to join forces and pay for their own personal protection. Take the example of the yam farmer who cannot afford to begin farming because too many of his customers rely on freely available food either distributed by "aid" agencies or controlled by gangs as soon as it makes it to the continent. This video describes a lot of the problems and solutions that exis: http://www.youtube.com/watch?v=BFABdPOpr2A&feature=player_embedded#!
I love how people uphold Somalia as the ultimate example of an anarchist society ruled by cruel force, when the reality is far different: yes, there is violence due to the conflicts between the Transitional Federal Government and the Islamist factions; yes, there is death, civilian casualties, and unrest; however, this does not account for their 2.7% economic growth rate over the past 15 years (despite large-scale emigration to find asylum, massive government and local infrastructure failure, and persistent and pervasive violence). And still we send aid over there, and not military aid or economic aid - we send aid to their TFG, directly, to "support infrastructure" (http://www.so.undp.org/index.php/Somalia-Stories/Employment-Generation-for-Early-Recovery.html), provide "jobs" (read: government dependencies), and restore civilian reliance. Sigh...
I think you're attacking a straw man here. Let me clue you in on what the anti-government folks actually mean when they promote the private sector:
First, your example presents quite an interesting little morsel for me to masticate for you: the difference in philosophy and approach between government and commercial grants. You must realize that the government doesn't mind funding science projects - it gets to list those little donations on its budget, and taxpayers generally aren't against our countries' funding of scientific advancement (as long as it's clean; hence, the ethical accountability - you've got to keep a clean paper trail). However, the anti-government types naturally rail against the government's purpose and mindset towards investment: to divert a steady, forced flow of taxpayer money towards projects that "look reasonable" and don't disturb the general flow. Why does a government official want anything else? Keep their citizen base happy - or at least tolerant - and they will resign to being sapped of a portion of their lifesblood.
Now, compare this philosophy to that of the corporation. Of course they're greedy. Of course they're profit-seeking. Of course they're only in this business for themselves. However, in order to feed these needs, they rely on the willing and voluntary cooperation of a large customer base (as opposed to the entire population of tolerant taxpayers), and they need to maintain standards to keep that customer base happy enough to keep buying. Innovation and investment - even in fringe, "no-profit" ventures - can be advertised as the "corporation helping out the little guy scientist," etc. for commercial gain, but they will also want to find as much profitable edge as they can.
It's this needed edge - the need to keep a customer base pleased, to beat out competition, and win over a skeptical populace - that spurs a private corporation on. And the only way to spur itself on, as khallow mentions, is allowing the private industry a part in these innovations and using its influence to drive the productivity and practicality of these ventures to new heights. "Jumping the gap" is what spurs growth.
Many, at this point, will shake their heads and grumble: "What about those fields of knowledge that are not profitable to the private industry?" Well, profitability takes many forms. Increasing a concentration on the worth of new knowledge and research - through the education system, through non-profit programs devoted to the study of these topics, through transmission of the viral need for more knowledge - would allow there to be programs people would be able to donate to if they wished to spur on research in these topics. These in turn could contribute to the complementary departments in respected universities to inspire research and deeper exploration in healthy environments.
Government involvement is only decried because of the unsustainable waste of money essentially robbed from the general populace, becoming a giant money-flushing machine that refuses to stop taking and spending on arbitrary, policy-driven programs. In the end, it takes a lot more than indiscriminately throwing money at something to cause growth.
Suspicion breeds confidence.
"No, I'm saying frequently people don't quit their crappy jobs to try and find something better because they can't - either in reality or perception."
Because they do not have the capability of quitting their jobs? Or "can't" in the hypothetical sense, akin to "would not consider it, despite wishing they could"?
"Blackmail is not always an act (or threat) of _physical_ violence, which brings us back to the actual question: do you agree "force" can be more than just physical violence ?"
No, blackmail is a threat of violence to one's reputation, not one's person... and I just came to the conclusion that it really shouldn't be illegal. As to the question this all seems to revolve around, I would have to say that I do not believe that it can be more, but with qualifications: I include physical restraint of one's person as the use of physical violence, the destruction of property, the act of trespassing, and pollution as physical violence.
"Uh, what ? Reality is millions of people living paycheque to paycheque. They have no bargaining power with their employer (current or future), cannot risk the loss of income from quitting and lack the financial resources to relocate."
While I was working there, Buffalo, NY seemed to be a city filled with the labor worker/minimum wage earner that seems to suffer the most from this situation. I knew this because I was one of them, and worked as an office janitor for a year. Frequently, people underestimate the ease with which many people slide from job to part-time job when they don't meet the reasonably high work standards of their employers.
"No, he can choose to HOPE those things might be possible. Frequently they are not, either explicitly or in perception."
I just want to make certain that you're making the claim you're making, here: frequently there are people that quit their jobs that are incapable of performing any other job, in areas where jobs they are capable of performing do not exist, and where they have no friends or family to network with them to help find a job and/or provide meager support until they can.
"The word itself is a minor semantic issue. The problem is your fundamental attitude that a crime can't be considered to have occurred until physical violence has taken place. Not only because of behaviour like murder plots, but also things like blackmail and ponzi schemes."
I never claimed that physical violence has to take place in order for ANYTHING to be considered a crime; the threat of physical violence would suffice; what I was arguing about is the means by which the police obtain knowledge about such crimes. And I am aware that physical violence is not the only means by which crimes may be committed; blackmail is an act of force, and ponzi schemes are fraud.
"Er, right. So if someone is acting like the villain in a comedy film, then the police are ok to take action, but if he's acting in a way more connected to reality - say, asking the cousin of the woman he's having an affair with if he knows anyone who's a "problem solver" at the local bikie bar - then they can't do anything."
No, this is adequate evidence. The question is how they go about obtaining this information. Having connections in these networks - through informants and undercover police - would make the most sense, but I do believe that there are illegitimate means by which this information may be obtained (unless the act of obtaining this information was targeted, substantiated with evidence, and backed by a court). And I think that last part is optional... it all depends on the risk factor; i.e. balancing threat of breaching another's privacy and exposing themselves to litigation or exposing a potential murder. The stronger the evidence, the more justified the intrusion, but only in individual circumstances.
"It is for the person who has the choice of doing it or starving."
That is a hypothetical situation that has no connection with reality. In the real world, a man can choose to work for 12 hours a day for a company, choose to look for other companies to work for that do not require such long hours, choose to ask for help of his community to find another job or gain support in the interim, or any number of other things before he begins to starve. This is not force; what you're talking about is a lack of active will that you claim requires force to make unnecessary.
"Evidence ?"
Right. However, when deciding the methods by which this evidence is obtained, the power given to any individual within the police organization - as well as the method's potential for misuse - must be taken into account. Sacrificing one's privacy and freedoms for security makes no sense; especially when this sacrifice opens up the field for manipulative and corrupt individuals to use the system for their nefarious schemes.
"This is a straw man."
Not precisely. It wasn't an attack, but a generalizing question. Since you have made no claim or suggestion concerning that topic, I over-exaggerated. And it's not an attack either, which straw man arguments are...
"Right. So the Police have to wait from an invitation before they can do anything. I'm sure that will work out just great."
Yes, I used the word "invite." That's no reason to bash me over the head with it. I meant pre-crime investigation; say, the spouse would like the police to help her investigate her husband's strange behavior: flippant remarks about death, can't stop laughing when she mentions her future plans, and/or recent purchase of several new collections of cutlery when he never even enters the kitchen. They would then be allowed to remote into the couple's home computer and check things out, since (as a spouse) there is co-ownership involved. If he's been searching for the locations of major arteries, been downloading gore pictures and videos, and/or researching murder with sharp implements, then the police can safely say that she should get the heck out of Dodge. And then they could send a patrol car down to have a chat with the guy. Maybe send him to a special hospital.
So when you get "an offer you can't refuse" - say, to work 12 hour days or end up unemployed and starving - do you want laws to protect against this, or not ?
Do you accept "force" can take forms other than simple physical violence (or the threat thereof) ?
So the Police couldn't arrest a husband for conspiring to kill his wife, but would have to wait until the murder was actually committed ?
Your first example is not representative of a situation in which force is being used. An employer has the right (or should have the right) to request what he wants of his workers; what he risks is that his workers will no longer work for him, as it is the workers' choice whether or not to be employed by them. Also, there is a difference between quitting a job and becoming permanently unemployed; either way, it is still the choice of the worker.
As to your second question, I assume you have an example or counterexample ready at hand? I don't think I can answer unless I know which specific situation you hypothesize is taking place.
Finally: how would police prove that a husband was "conspiring" to kill his wife? Should the police have the power to watch over every second of everyone's lives to prevent this occurrence? No. Murder does happen - albeit rarely - and it is horrific when it does. However, preventing such horrific events is dependent on a healthy codependent relationship between citizens and their police force. Citizens should be able to invite investigation into their own lives, but legislation should not be passed that would allow involuntary intrusion. These laws would provide the police with authorization that in turn would validate a spirit of conspiracy, suspicion, and distrust of the common citizenry. This is unhealthy and promotes corruption and attracts corruptible individuals.
No, what? I never said that the government should be given the resources to predict, surveil, or intrude; it should have the resources to adequately defend individual rights when the emergency is at hand, but never at the expense of individual privacy.
They do, but they exist as violations of individual rights; government's role is to protect its citizenry against these violations (through a police force, the courts, a prison system, the military, etc.).
No, they aren't. In communism, one takes from people according to their ability, and distributes according to their need. The only way to accomplish this is through violence.
No, they aren't. In capitalism, one takes from people according to their ability, and hoard according to his need. The only way to accomplish this is through violence. And we recently seen good example of this enforced through police violence.
Taking implies force. In a free market, free entities choose to buy products or services according to their own free will. It is also ridiculous to suggest that these monies are "taken" according to individuals' "ability," unless you mean to imply a correlation between productivity and spending power (which is accurate). Hoarding is symptomatic of productivity and accumulation without need, because money is representative and not substantial. Those who believe otherwise usually don't get a chance to accumulate it due to an inability to understand simple concepts (like this one!). Finally, the police do not force anyone to take money or hoard it. While police brutality exists and is a crime, I don't think it's an economic problem; rather, it is a bureaucratic problem that leads to a misplaced superiority complex rather than the protective ideology it ought to lead to.
Security guard: "Mornin', Mr. Freeman! Looks like you're running late!"
"THIS is not the solution, it's the problem. It's trading the idea of capital as a medium of exchange for the idea capital as symbolic work. Just as the derivatives were the illusion of paid loans. You are trading the territory for the map. And you can't live in a map."
I didn't necessarily mean that the loan is something you gain interest on due to deflation; I meant that the loan acts as a medium between your work and what that work buys according to the value judgment you as the consumer balances: in other words, if I worked five hours at a minimum wage job and have around $30, I can take those dollars and spend them in a way that balances the worth of work for the worth of the product or service I trade it for.
You state the dollar is a "medium of exchange" as if that is an unshakeable and fundamentally understandable figure, when the medium of exchange has inherent worth and is a product in and of itself in a consistently changing market. It is proof of work or effort, given by the witness of that effort. The amount of dollars on the market can only represent as much work as exists on the market. There can only be a certain amount of actual currency on the market - hence why we have organizations to monitor the cycle of need and expenditure in our market. However, when the organizations bet on markets, there exists the risk of market crashes due to its involvement. Sometimes it inspires growth, but growth is up to chance investments in the FREE market, and the market makes up the gap the inflationary spending causes. Then it is justified, but only if there is room for growth. It requires free market presence without regulation and intervention.
Most people declare the evils of the free market because of fears concerning rampant profiteering or what amounts to slave labor in working conditions; fair enough. These practices are possible. However, involving the government in the market - especially on such a large scale - is not the answer. You end up having organizational nightmares because there's no incentive for efficiency or sustainability or any virtues a businessman would bring to it. Example: the Pentagon and its involvement in the market for military assets: more expenditure with involuntarily taken taxes to pay for inflated prices, JUST BECAUSE THEY CAN.
You might scoff at this statement and its example, but hear me out: when businesses are held accountable for their products and for the treatment of their employees - when the government does its job of policing and holding people accountable - then businesses will compete against one another to provide the highest quality services at lowest cost. Raising costs increases the margins and allows for competition. Low quality services allows for competitors to steal customers away. Corruption and snake-oil salesman are taken to court for false advertising and violation of individual's rights and are eradicated. In an economy where the flow of information is free and competition is hot, where work can be done by the geniuses that know how to do it well, the government only acts as a stumbling block in the sectors it interferes in and destroys the natural order of the free market. This is by nature of the very use of money, the improper distribution of money at the highest levels, and the extreme damage this money does when it is redirected into the private sector.
"The housing crash was entirely predictable on many grounds, though. Prices were too high and rising only because banks could rationalize lending to risky buyers by using derivatives - where known risky investments were sold as if they had paid off. People bought based on the fantasy that only a few loans would not pay off because the value of property would just continue to rise. IOW, just like buying on margin. All it took was a cough and a short slide to bring the whole fictional house of cards down. (Yeah I know, I pretty much repeated you - I just wanted to emphasize the similarity to buying on margin). It was totally safe as long as prices rose.
And - there can NEVER be "enough cash for people to take and hide under their beds", as most of it is supposed to be out on loan. Bank runs are always a possibility."
I know everyone trashes the Austrian Business Cycle. I'm currently studying as much as I can to see why, but I haven't been able to find an adequate reason outside of "no one has written down any hard math behind it". I find this claim to be paradoxical since, if you define it the way Austrian economists do, economics utilizing a free market and free individuals involves MASS psychology and sociology - the softest of sciences. The Keynesian model - which most of our monetary policy and government involvement policy is based in - just doesn't work, and the theories in the Austrian school have plenty of answers as to why this is. Hence my studies.
Anyway, the Austrian business cycle theory (as I've studied it) is predicated on a few things: the relative value by the dollar balanced by the value of work as defined by the market - i.e., by supply and demand and the way prices have adjusted themselves for things to stay within their relative margins. The dollar represents a semi-morphic representation of loaning in a market where the theoretical payback of that loan depends on how much general productivity exists to counterbalance the amount of dollars in the market. Interest rates are supposed to be a natural reflection of the state of the market - when people save, they invest in future consumption, allowing banks to lend to businesses more to invest in future expenditure by growing and expanding. When people do not save, the cost of lending rises.
The problem occurs when you have the actual controls for the worth of the dollar - the Fed - behind the lending institutions, allowing people to assume that interest rates are low because people are saving and there is extra incentive for business futures. Loans are taken out, the price of the market in which they invest rises due to increased demand without the supply - meeting the theoretical counterforces of the entire Fed backing the loans - and when the financial institutions have to cut back due to the fact that they cannot sustain the loans, the market crashes. The theory behind this erratic expenditure on the part of the Fed supports the idea that some loans will play out. But if inproductive markets are bolstered, there is no chance of return on those loans and throwing more printed money at it will not help the crisis.
The theory breaks down to this: for every new dollar printed, be it in the form of a loan or actual cash, you must have that dollar counteracted with increased productivity and increased expenditure in the free market, or else the balance between dollar and what the dollar pays for is mismatched and causes inflation. Inflation then lowers the worth of the dollar and we've gotten nowhere.
Now, you mentioned prices rising: prices weren't rising due to profitability or productivity in the market; in fact, they rose to counteract the notion that there was. This is based in free market economics: you raise the prices to curb demand. However, when there are government issued loans backing the investors, there's no reason for them to invest less just because the prices are higher. So, the market is artificially affected. Not free market economics.
I'm currently watching a great lecture that completely backs
"Wow THAT was reaching. Essentially you said: "Since the Fed invested, all bad things are the Fed's fault". Interesting since, in fact, currency was backed by gold then, and therefore was a currency that had it's worth established by market forces, and the practice of buying on margin itself was unregulated at the time."
I think you mistook my reference to the housing market bubble and our current financial crisis for a reference to the stock market crash of '29, but I can cite why both can be attributed to the Fed's intervention (at least partially)
Peter Schiff has been the doomsday prophet Austrian economist for our current crisis for years now:
http://www.youtube.com/watch?v=MnekzRuu8wo
Artificially low interest rates combined with inflated average housing market prices were both caused by a combination of two factors: financial institutions being backed by the Fed brought interest rates down artificially due to the support they had by the government (which never should occur if market prices are to naturally balance), and speculative buyers bought into these bad mortgages due to the low interest rates, despite high housing prices. I'm sure you're familiar with the rest of what happened: the bubble bursts, financial institutions raise interest rates, the housing market crashes, as do the worth of all the artificially inflated prices of houses throughout the country. All due to government intervention artificially affecting the market.
Deflation was the first cause of crisis in the Great Depression - back when we were backed by gold - and productivity counterbalanced the actual supply of gold. (I personally disagree with hard currency advocates; I think our monetaristic policy should be more strict, but trusting the currency to a specific commodity such as gold is asking too much). When stock market prices dwindled at their plateau, deflation forced prices down - making it look like a crash in the market - and the Fed withheld reserve notes, there was a run on the bank due to the panic, and there wasn't enough cash for people to take and hide under their beds because of poor banking policies. It didn't help that the tariffs were raised and exports were trashed because of it, but there it is.