Failcascade

Endgame ahead

Archive for the ‘it’s funny laugh!’ tag

Deck the Halls with Macro Follies

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Just in time for Christmas, EconStories has done it again…

THE ECONSTORY:
Each year, our attention turns to the holidays… and to holiday consumer spending! We’re told repeatedly that, because consumer spending is 70 percent of measured GDP, such spending is vital to economic growth and job creation. This must mean that savings, the opposite of consumption, is bad for growth.

This view of macroeconomics was first popularly asserted by Thomas Malthus in 1820, nearly 200 years ago. Malthus believed recessions where caused by “underconsumption” because there was a “general glut” of goods unsold. To recover from a recession and grow, we needed to stop all the saving and spend more to buy up all the goods on store shelves. Savers are like the miserly Ebenezer Scrooge. If you want a happy holiday, you’ve got to clear those shelves and give people a reason to produce more and create jobs. Or so Malthus thought.

John Maynard Keynes resurrected this approach and built on it with his influential “General Theory”, which now underpins much of our government policy and public discussion of spending and economic growth. Keynesians believe aggregate spending drives the economy and savings is a “leak” out of the flow of spending. Indeed, this economic philosophy underpins many people’s widespread obsession with retail sales each holiday season. Keynesian Macro Santa’s sack is filled with spending.

But there is another view on recessions, recoveries and growth.

Classical and Austrian economists such as Adam Smith, Jean-Baptiste Say and Friedrich Hayek viewed savings as the vital lifeblood of economic growth and production as the means by which we live better and consume more in the long term. Our savings aren’t simply taken out of the economic system, but become the source of capital that entrepreneurs use to create new goods and increase productivity. These economists believe this increased productivity is the key to a wealthier world. Before we consume, we must effectively produce what others value — at prices that cover the costs. This fundamental idea, that our demand for goods is enabled and constituted by our supply of other goods came to be known as the “Law of Markets” and later “Say’s Law”. For classical and Austrian economics, recessions happen when producers make mistakes. They create goods that can’t be sold at a profit. These malinvestments tend to cluster in a recession as a result of systematic problems, such as disruptions in the financial system that cause monetary “disequilibrium”, often as the result of government interventions in the economy since they can be system-wide.

Recovery and growth in the classical and Austrian view is driven by restructuring production so that entrepreneurs discover again the best — i.e. the most valuable and sustainable — ways to serve customers. That process is lead by new entrepreneurs and driven by savers who make capital available to fund new investments and new ventures. Sustainable saving and investment means creating more value for others while using fewer resources. This process lies at the core of healthy economic growth, including better job opportunities and a rising standard of living. If there are problems in the financial system such that our savings aren’t effectively being invested but sitting idle in bank vaults, or people are hoarding cash under their mattress in distress, a classical approach seeks to get the root of that problem and resolve the monetary problems with monetary solutions such as increasing the money supply to meet demand and other approaches. Using up more real resources through additional consumption in such a case is a applying the wrong medicine to the disease.

Consuming is our end goal, but producing value must be the means to that end. That is to say, Macro Santa’s sack is filled with saving.

So which approach do you think is right? We favor the Smith-Say-Hayek approach to economic growth. Share your thoughts!

Written by mo

December 5th, 2012 at 7:23 pm

The End of Everything

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Putting an end to everything, from a scientific point of view…

Hank gives us an inclusive overview of how everything in the universe is thought to have begun, and how cosmologists predict it will all come to an end. Now get happy!

Written by mo

December 3rd, 2012 at 10:38 pm

Posted in Global Events

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SØKKØMB: Ikea style Guillotine

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Unpack, put up, chop off – DIY instant justice with Sokkomb, the Ikea-style Guillotine (* some assembly may be required).

Sokkomb is a new low-cost product designed specifically for all those citizens who are so interested in Do-It-Yourself Justice. Are you full of energy? Have you lots of things to do and too little time to do them? Are you increasingly annoyed by all those criminals, immigrants and petty people who should just be got rid of? Your dynamic, active rhythm demands quick, summary justice and you are the person to do it, but too often you just don’t have the time and your family is increasingly in danger. Then you are the person we thought of when we designed “Sokkomb”, an easily-assembled guillotine for the whole family, the practical solution, quick and clean, perfect for all your security needs. By assembling Sokkomb in the comfort of your own living room, you can relax safe in the knowledge that the punishment will fit the crime. So you can finally be your own boss in your own house. Sokkomb is made from the best solid pine and comes equipped with a sturdy blade in stainless steel. It is light and versatile and is guaranteed effective for up to 100 executions a day.”

(Thanks to rebel:Art and Gizmondo)

Written by mo

October 11th, 2011 at 12:43 pm

Michael Lewis on the situation in Europe

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On todays Daily Show, Michael Lewis discussed his travels as a financial disaster tourist. Nothing new if you’ve been following the news during the last couple years, but probably quite interesting if you haven’t:

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Some highlights from Pt. 2:

About Greece:
It’s a society in total moral collapse. It’s already there, not collapsing. […] I took two tax collectors out for drinks, and the tax collectors both explained to me, that the way you got promoted in the tax collection business, was not to collect the taxes. You got fired if you were good at collecting taxes. Nobody wanted a good Greek tax collector. Now Germans are in Greece, trying to collect taxes. And it’s not a pleasant exchange.

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Written by mo

October 5th, 2011 at 4:10 pm

Net worth

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Let’s begin this blog with a comic…

Written by mo

September 27th, 2011 at 8:26 pm

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