Tweet
Originally posted by Joel
View Post
Which happens all the time with economic policy.
As far as I can tell, what seems to be wrong with almost the entire academic field of economics is a huge lack of evidence-based focus. The very thing that has made science as successful enterprise is because it studies what works, what doesn't, and why. But a lot of economists in the 20th century appear to me to have, by and large, abandoned the very idea of studying evidence and instead turned to maths and logic and basically engaged in philosophy and ideology to try to determine from first-principles what 'ought' to happen in the economy of a perfect world. This very bizarre non-reality-based method of doing economics seems to have flourished in the US during the 20th century - partially, I suspect, because it was an ideological answer to the threat of communism. (Europe seems to have been less susceptible to non-evidence based economics.) More recently we've seen the invention of 'behavioral economics' that acknowledges that the actions of people are not governed by perfect mathematical models and so instead attempts to study what people actually do, rather than make false assertions about how they mathematically 'ought' to act - although a lot of pure economists still show a lot of resistance to this.
To some extent, previous disinterest in empirical data by economists was excusable do to the fact that there basically just wasn't much data. But these days we've got plenty of data, and it's not hard to draw basic conclusions from it. So I think, increasingly, there ought to be less reasons for people to be majorly wrong about economics than there was historically. Unfortunately there will still be a profit motive present: When you're a politician passing economic policy it is always convenient to be wrong about economics in a way that happens to benefit your rich donors.
The U.S. was without a central bank from 1836 to 1913.
Manipulating the money supply just causes problems.
Massive banking failure = bad thing.
But all banks failing simultaneously / the entire economic system dying = bad.
Bank failures is not necessarily a bad thing. If a bank is insolvent, then they probably should go out of business, and its assets be transferred to more capable hands, thus strengthening the economy. The possibility of going bankrupt places a check on banks.
You just don't want all the banks to explode simultaneously, thus destroying your entire economic system, because that is generally rightly regarded as A Bad Thing. Having a 'bank run' is also bad as a matter of social practice (it's messy and socially disruptive), so you need a smoother system where banks can declare bankruptcy and depositors can know their money is still safe (otherwise you end up with silliness where half the population of your country to have to queue all day at ATMs to get their money out before they lose it).
The idea of a chain reaction of failures destroying the economy is a myth
A bankruptcy doesn't mean all the assets vanish; it just means they are transferred to new owners.
What function of the Fed do you think "reins in" the banks?
See the graph on this page http://seanwmalone.blogspot.com/2013...iot-again.html showing how financial regulatory restrictions increased nearly 20% from 1997 to 2008.
Usually when regulations are getting too complicated, it's an indication that the lobbyists have got their hands on it and have written endless loopholes into it, and while they will subsequently whine about the 'lengthy and onerous regulation' what has actually happened will be that they have watered it down via loopholes to the point where it no longer does what it was intended to do. If I recall rightly, the first version of Dodd-Frank was 3 pages long and clearly spelled out exactly how the banks were going to be prevented from doing the things that they had done to cause the 2008 crisis. The version of the bill that finally passed was (IIRC) 72 pages long by the time the banking lobbyists had finished writing exceptions and exemptions into it to water it down.
I am confused as to why someone like yourself who dislikes the large banks, doesn't want them to be regulated...? It's like saying "I dislike criminals, therefore let's get rid of the police force!" which is not a view that makes sense to me at all.
KG: Colbert wound up his show at the end of last year, ready to take over from Letterman. You don't need cable to watch the Daily Show, as Comedy Central makes the full episodes of their shows available on their website. Last Week Tonight also tends to put about 50% of each show on youtube.
Comment