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Friends don't let friends get into finance

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Re: Friends don't let friends get into finance

#41

Post by med555i »

rbarooah wrote: post #13
tedunangst wrote: post #7

"They note that the finance sector today produces a greater percentage of GDP than at any time in history." This is not an effective argument. The computer software industry is also producing a larger than ever percentage of GDP. In other news, the building wooden ships sector is not responsible for much of the GDP in recent years. Is that a problem?

It's a problem because unlike other activities finance produces benefits to society only when it well, finances people doing things other than finance. Other activities are valuable in themselves.

You do realize companies that provide those valuable goods can grow faster, hire more people, and grow our economy's GDP much quicker, with more capital, correct?

Re: Friends don't let friends get into finance

#42

Post by rbarooah »

med555i wrote: post #41
rbarooah wrote: post #13

Earlier quoted context omitted.

It's a problem because unlike other activities finance produces benefits to society only when it well, finances people doing things other than finance. Other activities are valuable in themselves.

You do realize companies that provide those valuable goods can grow faster, hire more people, and grow our economy's GDP much quicker, with more capital, correct?

No. Not correct at all. There is no evidence whatever showing that the current size of the financial industry caused faster growth, more hiring or GDP growth other than the financial industry itself.

Re: Friends don't let friends get into finance

#43

Post by med555i »

rbarooah wrote: post #42
med555i wrote: post #41

Earlier quoted context omitted.

You do realize companies that provide those valuable goods can grow faster, hire more people, and grow our economy's GDP much quicker, with more capital, correct?

No. Not correct at all. There is no evidence whatever showing that the current size of the financial industry caused faster growth, more hiring or GDP growth other than the financial industry itself.

That is a complete straw man. Please stop using straw man arguments.

Re: Friends don't let friends get into finance

#44

Post by rbarooah »

med555 wrote: post #38
rbarooah wrote: post #15

Earlier quoted context omitted.

Will the government bail out the photo sharing sites when they fail?

Photo sharing sites doesn't cripple the entire economy when they fail.

So you agree that the financial industry gets to take risks at other people's expense?

This makes your other points about the benefits of the financial industry and your defense of them 'not stealing' seem incoherent at best.

Re: Friends don't let friends get into finance

#45

Post by rbarooah »

med555 wrote: post #32
rbarooah wrote: post #27

Earlier quoted context omitted.

The growth has been primarily in the financial industry. Oh - I get it now - the finance industry has provided support for itself to grow.

"The growth has been primarily in the financial industry." Completely false and absurd. Supply follows demand. GDP has grown throughout every industry that hasn't seen a decrease in its demand (e.g. railroads, newspapers, etc.). That includes technology, consumer goods, and technology. The economy doesn't exist in a vacuum. The finance industry provides capital to all industries.

If the financial industry hadn't been bailed out, it would have contacted. In its case, supply hasn't followed demand. Supply is artificially high, because demand has been produced by force.

Re: Friends don't let friends get into finance

#46

Post by rbarooah »

med555 wrote: post #35
rbarooah wrote: post #31

Earlier quoted context omitted.

The evidence is that the finance industry has grown faster than all of the other sectors, proving my point. I'd highly recommend that you rely your points on empirical evidence than empty claims.

What does that even mean? Economic growth has grown consistently. Technology now makes up a large portion of our GDP when it hasn't in the past. Why attack the finance industry when you could also attack the technology industry? There's more demand. Therefore, there's a larger supply. Simple, basic, very elementary economics.

The financial industry makes up a much larger portion of GDP growth. Artificial growth that would have contracted if it hadn't been bailed out. Demand for the financial industry has been produced by force, not through the marketplace, unlike other industries.

Your simple, basic, elementary economics don't apply when an industry is being protected by the government.

Re: Friends don't let friends get into finance

#47

Post by rbarooah »

med555i wrote: post #43
rbarooah wrote: post #42

Earlier quoted context omitted.

No. Not correct at all. There is no evidence whatever showing that the current size of the financial industry caused faster growth, more hiring or GDP growth other than the financial industry itself.

That is a complete straw man. Please stop using straw man arguments.

How is it a straw man? You claimed something, and I said there was no evidence for it. I guess you just don't have any evidence.

Re: Friends don't let friends get into finance

#48

Post by rbarooah »

med555 wrote: post #37
richcollins wrote: post #23

Earlier quoted context omitted.

It's easy to fix the problem. Stop the government from stealing money and giving it to the banks.

Please explain how the government is "stealing money" for the banks. That is completely absurd. Monetary policy keeps the system in check to stabilize the economy.

How does a massive bail out 'keep the system in check'?

Re: Friends don't let friends get into finance

#49

Post by robak »

med555 wrote: post #24
rriepe wrote: post #12

Earlier quoted context omitted.

They follow up with why it's noteworthy in the very next paragraph: "Historians will tell you that empires collapse when they become too dependent on finance, but I’m not so pessimistic."

...and economists will tell you something completely different. His points are awful and rely on no empirical evidence.

Economists who do tell that too much finance ALWAYS led to social and economic collapse: Jensen, Faber, Rogers, Schiff... and read some history too before you accuse someone of not relying on empirical evidence.

FIRE - Finance, Insurance, Real-Estate Economy - based on fake (paper) money, fake (virtual) instruments and debt won't hold for too much longer against a real economy based on production (China). Just wait for the day when Chinese tie their Yuan to gold/silver/oil/whatever. FIRE economies repeated through-out the History. They always failed. You can't build on paper foundation (read: on promises). You need to have REAL assets to back up your economy.

Re: Friends don't let friends get into finance

#50

Post by robak »

med555 wrote: post #36
fabjan wrote: post #26

Earlier quoted context omitted.

The difference being historians have facts to go by, and economists have dreams.

Wait, what? Maybe the Austrian School goes by theory if that, but every other school of economics goes by facts -- including the Chicago School, Monetarists, Keynesians, New Classical, etc. Economists' whole basis for their arguments is through empirical data and mathematical facts. Saying economists just relies on dreams is absolutely absurd and shows complete ignorance of the field.

Oh really? What about latest Bernanke dream that you can solve problem of too much debt by getting more into debt? Isn't he dreaming?
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