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Author Topic: Why are you not at Wall Street?  (Read 7441 times)
netrin
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October 31, 2011, 05:22:39 PM
 #101

Not entirely on topic, much like the last few pages, but I would like to hear a ranting reply. The bitcoin adventure has tested and forced me to reconsider many 'truths' I previously held.

Is it possible that a managed economy, when properly administered, perhaps automatically as M. Friedman suggested based on CPI targets, could help stabilize prices and growth? One of Keynes' tenets was that during a recession, the economy will contract in a feedback loop (people do not spend because they fear further contraction and that fear creates more cause to fear). Only a central 'spender of last resort' could revitalize or neutralize deflation, perhaps not to re-inflate the economy, but to prevent an undershoot. The monetary temptation has always been abused, but could a central authority in theory smooth out the economy?

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Vanderbleek
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October 31, 2011, 05:32:53 PM
 #102

Not entirely on topic, much like the last few pages, but I would like to hear a ranting reply. The bitcoin adventure has tested and forced me to reconsider many 'truths' I previously held.

Is it possible that a managed economy, when properly administered, perhaps automatically as M. Friedman suggested based on CPI targets, could help stabilize prices and growth? One of Keynes' tenets was that during a recession, the economy will contract in a feedback loop (people do not spend because they fear further contraction and that fear creates more cause to fear). Only a central 'spender of last resort' could revitalize or neutralize deflation, perhaps not to re-inflate the economy, but to prevent an undershoot. The monetary temptation has always been abused, but could a central authority in theory smooth out the economy?

I'd argue that yes, a centralized power CAN do that, using the USA from 1929 into the 50s as an example. WWII ended the depression -- massive central spending fueled factories, at least temporarily. Immediately after WWII though, it looked like we might lapse back -- it was only through continued infrastructure projects and the GI Bill that we pushed through, helped my our drive to be the "first on the block with a new x." Current "stimulus" is dumb -- central spending requires massive central projects (HUGE wars, redoing the interstates, etc).

Side not: I'm hugely against Keynes, (more accurately people who think they're following his advice), but that's what I've gotten from studying that period.

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November 02, 2011, 07:38:10 PM
 #103

The cost of higher electricity is not necessarily a bad thing.
Take gasoline for example. In US it is HEAVILY subsidized. In part directly, in part indirectly through our military paying for protection of oil fields. Thus, a gallon of gas costs about $3.50, when it really should be around $6. There are other alternative technologies out there. Ethanol and natural gas are a bit more expensive, electric is even more expensive when you take the cost of batteries into account, super-capacitors may be cheaper, but they are very expensive to research, and investors are reluctant to dump money into them, and hydrogen fuel cells are the most expensive, at close to $6 a gallon equivalent. The benefit of gas subsidies is we can all drive around on cheap gas. The benefit of NOT having these subsidies is that all of those alternative "green" technologies everyone keeps talking about will actually become competitive, and there will be a HUGE incentive to develop and implement them, which in turn will make them cheaper due to mass adoption/production. Subsidizing roads, such as adding more highway lanes using tax payer dollars, also keeps public transportation like trains from being competitive. Benefit is slightly less traffic, downside is lack of the excellent transportation infrastructure like the one in Europe and Japan.
With electricity it's pretty much the same thing. Sure, low electric costs are nice, but the upside to letting prices go up is that investors will suddenly see alternatives as viable, and will dump money into it. There are plenty of technologies waiting on the sidelines. Besides the well known wind and solar, there is a personal nuclear reactor being developed in Japan, which is the size of a small buss, is fully automatic, can be buried underground, and provides enough power to support a small community, meaning the costs can be split among many people. It is cheaper than current electricity prices, but still very expensive to develop. My university is also developing a generator that will be about the size of a refrigerator, which will gassify combustible materials and burn the gas to generate power. So, your house can be powered by anything flammable, like your bills, junk mail, lawn cuttings, leaves and twigs, and food leftovers. Again, this can easily compete with electricity you get today, but still needs investor capital, and won't be able to compete effectively until there is mass adoption, which won't be easy with cheap subsidized electric power.

You've pretty much stumbled on my stance for why I'm against drilling in Alaska, and it certainly has nothing to do with being green directly, and everything to do with developing other forms of alternative energy. 

But the government can choose what they subsidize.  Slowly dialing down the subsidies of gasoline, while increasing the subsidies of things like flex fuel, or funding the development of better fuel technology, goes a long way.

Energy is bit harder.  Increasing the cost of electricity can potentially mean poor people dying because of extreme heat and cold.  So if the government wants to make a difference, they need to subsidize the energy producers to use and produce alternative energy, whether its the big companies like ComEd to set up large alternative energy plants, farmers setting up windmills in their fields, or housing complexes putting solar panels on their roofs. 
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