[MD]

$this->bbcode_second_pass_quote('nero', '')$this->bbcode_second_pass_quote('max_power29', 'I')t (fractional reserve banking) is actually taught in money and banking classes at universities by professors of economics, at least at the university of oregon in my experience. So the "fallacy" did not originate with Heinberg or PO.com at all. Its common knowledge for people that have been educated in finance in college.

[max_power29]

The meme I was dissing was not the fractional reserve system but the idea that there is a flaw in the debt based monetary system that requires continuous growth or else people will no longer be able to pay the interest on their debt. I don't believe THAT is taught in university, it certainly wasn't in my macroeconomics class and since it isn't true that was a good thing.[/quote]

My macroeconomics class did not even cover the federal reserve system in detail if at all. Did you take any upper division finance/economics?

Our "money" itself is literally debt. It is not an asset. the all-mighty dollar is a debt. It is literally created out of thin air from issuing debt. NO RATIONAL PEOPLE will invest in anything that does not promise a return. Tell me, how in the world can the interest be paid without growth? Think of a Ponzi scheme. Why does it collapse? It is the EXACT same flaw. Ponzi schemes would work if everlasting growth could be sustained.

[max_power29]

"Tell me, how in the world can the interest be paid without growth?"

I'll answer my own question: Hyperinflation is how the interest will be paid. Is hyperinflation not a flaw?

[JoeW]

When I read the subject of this thread, I thought to myself, "Yo Dawg, you heard about this Debt Bubble? This Debt Bubble is the bomb!"

[turner]

My friend is interviewing two academic economists next week about the causes of economic bubbles. She has interviewing skills but does not have an economic background. They have sent her highly technical background docs full of formulas etc. Has anyone got some suggestions on great articles/papers that might help prompt some good questions?

[patience]

It's all pretty simple, really. Bubbles are caused by central banks pumping low interest money into an economy. Result is overconsumption, also called "pulled-forward demand" = people spending for stuff NOW, instead of waiting until they can really afford it.

The bad part is, there is no demand lleft for the future. That's where we are now. Everybody is in hock up to their eyeballs, so they can't spend and the economy tanks. Simple. Academic economists have many BS theories about this that are generally designed to confuse a truly simple situation. The truth is, central banks are the biggest blight on the planet in human history. Thomas Jefferson thought that central banks were more dangerous than standing armies.

Tell her to read the "Ticker" essays at http://WWW.Tickerforum.org/ , and listen to whatever she can find on YouTube by Marc Faber and Peter Schiff. I guarantee that the academics won't like what questions these sources bring up.

Actually, I don't think that academic economists have much of a future where we are going.

[mattduke]

Banks cause bubbles by creating multiple property titles (bank accounts) to the same property (reserves). Borrowers use the new titles to bid on assets they otherwise could not have. The panic occurs when the property title holders attempt to exercise their property title (withdraw) before everyone else. Central banks make it worse by coordinating the banks to expand together, versus a free banking system where competing banks check each other's expansion by demanding payment. Of course, the ultimate solution is to apply property rights laws equally to banks, and treat the creation of multiple property titles to the same property as fraud. The government won't do this though, because they are the banks' largest customer. Must Read: "What Has Government Done To Our Money" by Murray Rothbard. It's available for free online.

[turner]

$this->bbcode_second_pass_quote('patience', 'I')t's all pretty simple, really. Bubbles are caused by central banks pumping low interest money into an economy. Result is overconsumption, also called "pulled-forward demand" = people spending for stuff NOW, instead of waiting until they can really afford it.

The bad part is, there is no demand lleft for the future. That's where we are now. Everybody is in hock up to their eyeballs, so they can't spend and the economy tanks. Simple. Academic economists have many BS theories about this that are generally designed to confuse a truly simple situation. The truth is, central banks are the biggest blight on the planet in human history. Thomas Jefferson thought that central banks were more dangerous than standing armies.

Tell her to read the "Ticker" essays at http://WWW.Tickerforum.org/ , and listen to whatever she can find on YouTube by Marc Faber and Peter Schiff. I guarantee that the academics won't like what questions these sources bring up.

Actually, I don't think that academic economists have much of a future where we are going.

[patience]

Complication is the stock in trade of an economist.

What they said is true about when people sell or buy. What they left out was HOW the prices of assets got that way, which is the only important thing.

Beware an economist with political ties.

[TreeFarmer]

Remember the song "smuggler's blues" by Glen Fry? There is a line in there, "its the lure of easy money, its got a very strong appeal."

That is what happens with a lot of bubbles. The "ITEM" is seen by non-owners as going up in value really quickly so people buy in trying to make "easy money."

The internet bubble and the housing bubble are two recent examples of this.

TF

[deMolay]

Notice how Obama is following Chavez tactics. http://www.prudentbear.com/index.php/cr ... t_id=10257