PeakTrader.com

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PeakTrader:

That reminds me of something I heard on the radio. It’s acceptable, and even expected, that an economics professor drives a very nice car. However, it’s acceptable for an english professor to drive a cheap beat up old wreck (can you imagine an economics professor driving a dumpy car?).

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Well, it seems, an Austrian economist should drive a better car than a NeoClassical or NeoKeynesian economist, because they seem to believe in only free markets, including exploiting as much as possible

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And an Austrian economist will tell you the english professor is overpaid, even if he can’t complete english sentences

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Morganovich, you’re not only in denial, you’re delusional. Let’s start with some basic data:

Before the Fed, per capita real GDP growth averaged 1.36% a year from 1814-1910, and after the Fed, it averaged 2.13% per year from 1914-2010.

And

At the height of the Industrial Revolution, from 1871-1914, per capita real GDP growth was 1.56% a year, and at the height of the Information Revolution, from 1982-07, per capita real GDP growth was 2.22% per year.

Note, per capita real growth was stronger under the Fed, which includes the 1930s and the prevention of another depression in the 1970s, similar to the Long Depression in the 1870s.

However, the U.S. was on the gold standard in the 1930s and the Fed had to tighten the money supply to prevent foreign gold outflows, which worsened the Great Depression.

Anyway, this is just the tip of the iceberg that reflects the enormous added value of Classical and Keynesian economics to the U.S. economy in the 20th century.

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Comparing similar years of per capita real GDP growth in the Industrial and Information Revolutions:

1882-1907: 1.57%
1982-2007: 2.22%

I’m sure, you at least understand the power of compound interest.

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Morganovich, you’re a pre-20th century “stick-in-the-mud,” who believes feasts and famines and heat waves and cold spells are better economic conditions, although the data completely contradict your belief.

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Maybe, Morganovich is having a tough time finding a decent job in this depression.

He doesn’t understand Peak Oil is a constraint on economic growth.

Also, he doesn’t understand Congress created the housing boom, and if Congress began tightening lending standards when the Fed began tightening the money supply, 10 years ago, the recession may have been avoided.

Moreover, he doesn’t understand what was needed in the recession was a $5,000 per worker tax cut to jolt the economy into a virtuous cycle of consumption-employment.

With a stronger recovery, the Fed would be tightening the money supply, to slow the expansion, and government would be collecting more tax revenue, to reduce budget deficits.

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Morganovich, you seem to believe the Fed had nothing to do with smoothing-out business cycles, which moved the economy away from suboptimal growth and towards optimal growth.

I guess, it was just a coincidence the U.S. went from inefficient economic boom/bust cycles to smoother, and faster, economic growth when the Fed was created.

Also, you seem to believe there were no improvements in microeconomics and international trade (trade deficits subtract from GDP) by the same type of economists who improved macroeconomics and monetary policy.

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Maybe, Morganovich is having a tough time finding a decent job in this depression.

He doesn’t understand Peak Oil is a constraint on economic growth.

Also, he doesn’t understand Congress created the housing boom, and if Congress began tightening lending standards when the Fed began tightening the money supply, 10 years ago, the recession may have been avoided.

Moreover, he doesn’t understand what was needed in the recession was a $5,000 per worker tax cut to jolt the economy into a virtuous cycle of consumption-employment.

With a stronger recovery, the Fed would be tightening the money supply, to slow the expansion, and government would be collecting more tax revenue, to reduce budget deficits.

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I guess, you believe the Fed should’ve ordered Congress to change its laws.

Also, the Fed Funds Rate wasn’t 1% in 2005. The Fed raised the Fed Funds Rate from 1% to 5 1/4% from 2004 to 2006, which resulted in a restrictive monetary stance that initially caused the recession in Dec 2007.

The Bush tax cuts in early 2008 gave the Fed time to catch-up easing the money supply. However, when Lehman failed in Sep 2008, the country fell into a deep recession, which eventually required quantitative easing.

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Moreover, asset booms and busts aren’t important. What’s important is sustainable economic growth (of goods & services).

Those asset bubbles reflect a period of greater prosperity, thanks in part to the Fed. Between 1982-07, the U.S. had one moderate recession, in 1990-91, and one mild recession, in 2001 (so mild that per capita real GDP didn’t fall in 2001).

I explained, in detail, many times before how the recession could’ve been milder and the recovery stronger, and we’d be in a sustainable expansion now. It’s ridiculous to blame the Fed for this train wreck.

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Morganovich, perhaps, someday, you’ll understand how the real economy works. The Fed lowered interest rates for households and firms, and created a wealth effect, to facilitate economic growth (there’s a difference between assets and goods & services). I’ve explained all this in detail to you before, and yet you remain in denial.

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RF, if your plan was to be an economist, you need grad econ. Most people who are econ majors aren’t economists. Instead, they typically become successful in everything else they do, and some become very successful.

Also, at the grad level, you’ll do plenty of math, including deriving the models you learned in undergrad econ.

Of course, econ does something students hate – it teaches them how to think beyond their capacity to think, to increase their capacity.

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If your goal was to work as an economist, there are hardly any jobs in that specific field, although more in teaching and government, which typically require a grad degree.

Also, econ is practical too, e.g. making a firm more competitive or improving an individual’s financial position.

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Liberal arts fields, e.g. math and econ, teach you how to think properly, which you can apply to any field.

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http://www.aei-ideas.org/2013/07/faculty-salary-differentials-by-academic-discipline-reflect-the-opportunity-cost-of-non-teaching-career-options/#comments

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PeakTrader:

As the U.S. drills for oil furiously and oil consumption declines, the price of oil remains around $100 a barrel, in this ongoing deep depression.

Charts:

http://ourfiniteworld.com/2013/01/31/why-is-us-oil-consumption-lower-better-gasoline-mileage/

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However, since the U.S. was the first country to reach peak oil production, it’s promising, it’s the first country to begin reversing the production decline, so quickly, although oil prices may remain high, because of depletion in the giant oil fields.

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I doubt the U.S. had the technology to stop the decline in domestic oil production after it peaked in 1970, at any price, including a worse oil embargo.

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http://www.aei-ideas.org/2013/07/energy-fact-of-the-day-eagle-ford-shale-sets-new-oil-output-record-in-may-will-likely-surpass-bakken-shale-next-year/#comments

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