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A.steve

Spain's "new Deal" For Today's Depression...

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http://uk.reuters.com/article/worldNews/id...0090527?sp=true

Plan E (Spanish Plan for Economic Stimulus and Employment) is part of Spain's equivalent to the "New Deal" U.S. President Franklin D. Roosevelt devised in response to The Great Depression, a plan partly drawn up by Keynes himself.

An interesting article, I think, but most interesting is the quote above... I'd never realised that Keynes drew up the "New deal".

What exactly was the new deal, and what were its consequences? Is it possible that the worst effects of the depression were caused by the New Deal, rather than mitigated by it? Is that a barmy question?

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http://uk.reuters.com/article/worldNews/id...0090527?sp=true

An interesting article, I think, but most interesting is the quote above... I'd never realised that Keynes drew up the "New deal".

What exactly was the new deal, and what were its consequences? Is it possible that the worst effects of the depression were caused by the New Deal, rather than mitigated by it? Is that a barmy question?

The new deal was where the state started to take over things.

First the central banks impoverished everyone.

Then they were offered the chance to sign away their rights in exchange for benefits from the state.

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It's all cobblers. Spain is going to go back to where it was before the invention of easy credit and EU largesse - a sleepy backwater based on agriculture and fishing. Although at least this time they'll have a democracy.

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what governments deny is that all the credit binge WAS the keynesian fiscal boost...its been going on for 10 years....its finally fizzled out.

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The new deal was where the state started to take over things.

First the central banks impoverished everyone.

Then they were offered the chance to sign away their rights in exchange for benefits from the state.

that is also my understanding of it.

I have heard the term 'New Deal' mentioned already by O'Bombya iirc. :ph34r:

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that is also my understanding of it.

I have heard the term 'New Deal' mentioned already by O'Bombya iirc. :ph34r:

This will be the bit where they start to re-introduce slavery by their usual frog boiling methodology.

1 month of free working as a teenager will become a decade in the military/community service, by and by.

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Spain is going to go back to where it was before the invention of easy credit and EU largesse - a sleepy backwater based on agriculture and fishing. Although at least this time they'll have a democracy.

Hopefully :ph34r:

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It's all cobblers. Spain is going to go back to where it was before the invention of easy credit and EU largesse - a sleepy backwater based on agriculture and fishing. Although at least this time they'll have a democracy.

Wow is it because they are socialists or because they are lazy?

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what governments deny is that all the credit binge WAS the keynesian fiscal boost...its been going on for 10 years....its finally fizzled out.

You mean dressed up as Keynesian, I doubt very much Keynes would approve of what's been going on in his name.

Keynes advocated saving in booms so you can spend in the Brownturns.

Unfortunately some idiot decided to declare and end to boom / bust so he couldn't possible save as it would be an admission that his economic policy hadn't ended boom / bust.

Spending every penny you've got and then borrowing to spend even more is not Keynesian.

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The new deal was where the state started to take over things.

First the central banks impoverished everyone.

Then they were offered the chance to sign away their rights in exchange for benefits from the state.

:) Line one I already knew; line 2 I consider rather a subjective opinion - and I'm reluctant to agree unless you are to provide extremely compelling evidence (and I'm a very tough customer when it comes to evidence) and line 3 is interesting...

I would like to know specifically, and explicitly, what was the "New Deal". It seems to be mentioned fairly frequently by political types - so, I presume, there must be a good book that gives an explanation without being emotive.

My personal perspective (subject to adjustment as I consider evidence) is that Roosevelt was, on balance, a president who did what was necessary. Conversely - I'm extremely wary about Keynes... every detail I discover about him makes me trust his judgement (or honesty) less. I'd like to know what, exactly, was Keynes' plan - and how closely did it pan out to the promises it made?

I'm wary of myself here, too... perhaps I think Roosevelt decent merely because he had no substance... perhaps I've been conditioned against Keynes by conservative propaganda... Whatever the reason for my initial predisposition, it seems a relevant time to ask what really happened... given the prominent and credible calls for something similar today. Was the new deal really equivalent to pointlessly moving statues back-and-forth so as not to leave people without something to do? If so, it would seem to stand to reason that this caused the hardship - rather than mitigated it. If the work people do is pointless, their sum total quality of life will diminish - obviously. Conversely, if the projects were productive, I can see great benefit to society in engaging a slack labour force - and this would undoubtedly be the right strategy to assist economic recovery. Was Keynes honest?

Thanks - I guess I should have Wiki'd before commenting... :)

I'm intrigued by the section you point me at... I have to admit, I'm torn... I know I don't trust the monetarists - I can see the gaping mathematical flaws in their approach... but is the enemy of the enemy my friend?

Edited by A.steve

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:) Line one I already knew; line 2 I consider rather a subjective opinion - and I'm reluctant to agree unless you are to provide extremely compelling evidence (and I'm a very tough customer when it comes to evidence) and line 3 is interesting...

I don't think there is any doubt that the fed caused the depression (I think Hayek or Friedman got a nobel prize for proving it to be so)- the subjective bit might be to say that they did it deliberately.

I think they did, but I am extremely cynical.

I would like to know specifically, and explicitly, what was the "New Deal". It seems to be mentioned fairly frequently by political types - so, I presume, there must be a good book that gives an explanation without being emotive.

Exactly what I said it was. before the new deal, the citizens of the US had unlimited freedom to contract, of movement etc etc - the New deal was a system of benefits in exchange for responsibilities. If you signed up to it, then you were bound to it, If you didn't you could carry on starving to death, go jobless and so on.

Most of it was declared unconstitutional by the supreme court at first, but we know how politics works....

My personal perspective (subject to adjustment as I consider evidence) is that Roosevelt was, on balance, a president who did what was necessary. Conversely - I'm extremely wary about Keynes... every detail I discover about him makes me trust his judgement (or honesty) less. I'd like to know what, exactly, was Keynes' plan - and how closely did it pan out to the promises it made?

I'm wary of myself here, too... perhaps I think Roosevelt decent merely because he had no substance... perhaps I've been conditioned against Keynes by conservative propaganda... Whatever the reason for my initial predisposition, it seems a relevant time to ask what really happened... given the prominent and credible calls for something similar today. Was the new deal really equivalent to pointlessly moving statues back-and-forth so as not to leave people without something to do? If so, it would seem to stand to reason that this caused the hardship - rather than mitigated it. If the work people do is pointless, their sum total quality of life will diminish - obviously. Conversely, if the projects were productive, I can see great benefit to society in engaging a slack labour force - and this would undoubtedly be the right strategy to assist economic recovery. Was Keynes honest?

The point of it was to start he frog boiling process of big state capture of everything in the US for the international bankers who had managed to start to take the place over in 1913. They wanted the US to be like the rest of the west - in their pockets.

FDR was a power mad loonie, like they all are. He once tried to prosecute a farmer for growing food for himself. :lol:

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I don't think there is any doubt that the fed caused the depression (I think Hayek or Friedman got a nobel prize for proving it to be so)- the subjective bit might be to say that they did it deliberately.

I think they did, but I am extremely cynical.

I suspect I demand a higher standard of evidence as "proof" - though I accept that one or other of those characters likely produced a credible thesis that the Fed caused the depression... my guess is that Friedman was more likely responsible... and I don't find him credible on account of monetarism. From what I understand of Hayek, his views seem a little more reasonable - even if his choice of terminology is similarly confrontational.

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I suspect I demand a higher standard of evidence as "proof" - though I accept that one or other of those characters likely produced a credible thesis that the Fed caused the depression... my guess is that Friedman was more likely responsible... and I don't find him credible on account of monetarism. From what I understand of Hayek, his views seem a little more reasonable - even if his choice of terminology is similarly confrontational.

http://www.amazon.com/Americas-Great-Depre...d/dp/0945466056

Have a shufti, see what you think.

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The new deal was where the state started to take over things.

First the central banks impoverished everyone.

Then they were offered the chance to sign away their rights in exchange for benefits from the state.

What they did was took over factories/business and told everyone to produce and the government would buy.

Instead of pushing money supply into private business they took over the business first.

They killed the business,then dug up the corpse for themselves.Biggest theft of private capital/assets in history,,,well er up until now.

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I've taken several shuftis at material from the Mises institute, and I distrust their intellectual basis. I recognise their perspective as both syntactically elegant and, at one level - at least, fairly compelling. To my mind, however, they miss the point... I get the feeling that they've found a philosophically valid way to count angels on pinheads - without addressing what matters to me about the world.

EDIT: Note the bit about gold flooding into the US...not dissimilar to what happened recently with the dollar.

EDIT2: Great series of vids...

I liked the first video, but found nothing new in the second... given that I've previously been involved 'to the death' in discussions about money creation... I hope you understand what I mean.

I recognise why you might think a similarity between gold flooding into the US during the great depression and dollars today... but there are differences too. One key difference is that, during the great depression, it was a physical asset and not a fiat that was flooding into the US. This is significant, in my opinion, since it is impossible to have a negative mass of gold in the same way as it is possible to have a negative amount of fiat... and because, irrespective of will, it is impossible to create gold on demand. This is a key reason I value the abandonment of the gold standard... I don't care one iota about gold - I want money to buy a house... and I've my services to offer in return. It seems preposterous to me that men with vaults of gold, who have neither valuable services nor houses to offer, should be in a position to prevent the (indirect) exchanges necessary for me to achieve my ambition through productive work and fair reward.

In contrast to Friedman, I don't agree that the Fed 'decided to lock up the gold' rather than establish new banks - though I can see how it would be credible to present such a view as propaganda. I think the problem was the gold standard itself - coupled with public ignorance. The average person in the 1920s would have trusted gold - money they could hold bury and run across international borders with to evade taxation... but they could also trust fiat - unless they intended to break the law, perhaps. In this context, it is easy to see how confusion could arise and panics arise with respect to the relative values of gold and the dollar. It was plausible that even a single wealthy man could withdraw all the gold - bury it - then accuse banks of fraud and watch the economy collapse - the original economic terrorism. The risks the banks were running were real - and, hence, in order to retain trust (the cornerstone of fiat) the Fed had to act responsibly in the context of defaults. The Fed were reducing the risks inherent within the monetary framework of the day - the gold was an incidental prop used for the purposes of accounting.

I think we need to be very careful about perspective - and communicating perspectives - when we try to analyse the behaviour of central banks. While I recognise remits, such as the MoA for the BoE, I think it vital that we delve deeper... and ask what is the ultimate purpose of banking and, with that, central banking in a Western secular society... because money certainly is intimately linked with freedom, rights and obligations; with human relations and control over destiny. These are the aspects of money that I consider fundamental - not any commodity price or modern statistical data. What matters is this: the graph of influence that, coupled with ownership of assets, the monetary system imposes on the public. What is crucial to the success or otherwise of our society is trust... those without assets need to trust that assets can be earned and that they are as free as those who arrived on the scene beforehand and who hoarded whatever was obvious. We need to trust that those who are insolvent will be prevented from rolling the die over-and-over-and-over again until they can claim to have won. Now as then, the issue is not the size of bank balance sheets, but rather the systemic effects on the relative financial positions of individuals. Where trust is lost entirely, that's when we see wars - whether empire wide, national, gorilla or terrorist... when people lose faith in democracy and rule of law, they will turn to any alternative they can find... likely with catastrophic consequences for everyone - and a real loss of wealth - not just smaller numbers on balance sheets and bank statements. Today we shouldn't be focused exclusively on gilt markets or commercial paper or asset backed paper or fractional reserve - per se... we should be asking if the right people run our corporations and if they are held to account by our financial system. We need to be critically aware that all civil matters are settled in terms of currency - and take that into account in our thinking. We should be asking if those who offer labour are able to negotiate a rate in a fair and equitable manner with their employer. We should be asking if legislature is clear and enforced - so as not to disadvantage the honest entrepreneur pitted against a dishonest spiv. We should be asking if we can have confidence that government will continue and we should be asking if we can trust it to act in the interests of the electorate.

In this context, I think we have to re-evaluate the role of a central bank. I see the necessary role as being akin to that of an honest judge presiding over disputes. The judge should not even be thinking about the proportion of cases with a guilty verdict (perhaps worrying if there are enough prison cells...) If the judge is to retain credibility, the judge must act impartially - as, without this, the entire justice system will fail as it will be perceived as a sham. This perception is the business of central banks - they are obligated ethically to do everything they can to promote trust... and we should judge them by the extent to which their activities are equitable and mandated by the electorate... since we're yet to improve on democracy as a strategy to establish a viable society.

Edited by A.steve

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I've taken several shuftis at material from the Mises institute, and I distrust their intellectual basis. I recognise their perspective as both syntactically elegant and, at one level - at least, fairly compelling. To my mind, however, they miss the point... I get the feeling that they've found a philosophically valid way to count angels on pinheads - without addressing what matters to me about the world.

I agree with that anaylsis, but don't think it's a valid reason for dismissing the case for the fed causing the depression.

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It's all cobblers. Spain is going to go back to where it was before the invention of easy credit and EU largesse - a sleepy backwater based on agriculture and fishing. Although at least this time they'll have a democracy.

Yoy bet they have one.

But for how long?

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I agree with that anaylsis, but don't think it's a valid reason for dismissing the case for the fed causing the depression.

:) I only addressed your justification for why the Fed did cause the great depression. It is an undisputed fact that the Fed was involved with the great depression - the question that remains, however, is deeply political: was it to blame? Was the Fed the villain? Was the Fed exploited by other malevolent players? So far, I've seen no credible evidence to support a thesis that the Fed was to blame for the great depression - any further than if the Fed had not existed, the 1920s might have been entirely different. I am, for example, distrustful of Bernanke's apparent certainty that the Fed can control the economy as if it were a benevolent dictator - a 'father figure'... an indirect controller of a command economy. Perhaps I malign the man - but I don't trust him, and that's the limit of my concrete information.

Clearly its nature is different - and that is why I was surprised to observe the similarity and will have to think whether this is relevant. The same effect could of course have different causes. One key difference was the cause in the 1930's Friedman seemed to indicate was because there was a balance of payments surplus - which isn't true today.

:) I simply see more differences than similarities. Given the distinction between monetary exchanges as asset and fiat, perhaps we should look deeper at the figures today. What really matters - balance of payments or balance of trade? How do the non-domiciled rich affect the figures, for example? Is it really relevant in a global economy to ask where assets are taxed - except from the perspective of national politics and establishing a just taxation system, of course.

Or to put this another way - those who are winners must 'trade' such that others can earn the money and attain assets. Balance is required. Both between individuals, between other entities like banks, or indeed countries. And if the other side of the bargain does not have anything of worth - they must not be allowed to get into hock... a physical reset via distribution of assets is of necessity required. Such as regional support from South Eastern taxpayers to the rest of the country. etc etc

EDIT : Sorry forgot the main bit. Did the Fed cause the Depression? I would say they didn't cause it as such but they didn't take the steps they could have to mitigate the shrinkage of the money supply and the effects of this. Friedman said, all they needed to do was create money and buy securities from the Government. Sound familiar?

They may find at the end of all this that the monetarists and the Austrians were only partially right...but that in the end if you have over capacity, you have over capacity (yes, I'm looking at you China).

I'm philosophically opposed to the idea that "winners must trade" - and think this a dangerous political idea. The value of money is, to a large extent, dependent upon those with money not being coerced to buy assets (or make loans) that are not in their best interests. This idea strikes me as being a bale-out for those who've over-paid for assets in speculation and now expect to socialise their loss. I'm also opposed to redistributive politics... though I'm critically aware that this makes me sound like a city banker, I assure you I am not. I don't want to live in Northern cities primarily because they are the subject of redistributive wealth in the context of social projects, redistributive grants - and the like. In my opinion, these are counter-productive to their stated objectives... i.e. to improve the quality of life in areas with less economic activity. The converse arises in practice, because, where redistributive policies are in place, these policies deny control... for example, basing a large public sector organisation in a sleepy Welsh town might appear to give an economic boost - but, in fact, it raises the costs of being based in Wales for any private enterprise... with higher house prices; higher wage demands - etc. - and, with a redistributive tax system, it also introduces the fear of an even greater squeeze in future if an enterprise is successful. These systemic effects, while principally an issue of perception, have very real (and rather adverse) consequences.

Yes, I was also interested by the somewhat universal idea that all that central banks need to do to avert a depression is buy government debt. Very familiar. What I don't see justified, however, is why we should want to avert a depression - except, of course, that the word itself sounds scary. I'm extremely aware that, in monetary matters, we're not dealing with absolutes - but rather with relatives (nod to Injin's recent thread) in the sense that debt (fiat) necessarily involves two parties, whereas an absolute need only involve one. In this context, I note, there is no such concept as 'universally good' - and every monetary intervention advantages one demographic and disadvantages another. Lowering base rates - and its extension, QE to lower term rates of debt generally, certainly do benefit one demographic over others: these policies benefit debtors over savers. What we need to ask is if this policy is in the greater good - then we need to ask where this policy actually originates. (I'm not sure about the US, but in the UK - I note - the BoE is independent to meet Treasury targets, and little more.) I think the real question should be about control... are individuals able to predict the future value of money in order to make sensible decisions today? If not, how do we expect to do any better economically than a failed communist state?

Edited by A.steve

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those without assets need to trust that assets can be earned and that they are as free as those who arrived on the scene beforehand and who hoarded whatever was obvious.

That's precisely what we've lost, innit? What chance do you see of getting it back?

First in the tail end of boom and as it moves to bust, we're taxed at 44% (54% above £40k/year) on that which is earned. Now all that's rising, with 75% already in the pipeline for that £100k band. All of this at the same time as all our political parties are competing to reward hoarded assets with HPI, zero or low CGT, removal of IHT, and free cash for landowners.

And yet perversely this looks like an improvement. The logic of HPI was that a person in my position could pay top-rate tax for life without ever being rich enough to buy property - even one of HPC's favourite 2-bed slaveboxes. Even at 75% tax, the remaining 25% has become more valuable.

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:) I only addressed your justification for why the Fed did cause the great depression. It is an undisputed fact that the Fed was involved with the great depression - the question that remains, however, is deeply political: was it to blame? Was the Fed the villain? Was the Fed exploited by other malevolent players? So far, I've seen no credible evidence to support a thesis that the Fed was to blame for the great depression - any further than if the Fed had not existed, the 1920s might have been entirely different. I am, for example, distrustful of Bernanke's apparent certainty that the Fed can control the economy as if it were a benevolent dictator - a 'father figure'... an indirect controller of a command economy. Perhaps I malign the man - but I don't trust him, and that's the limit of my concrete information.

?

It's not a matter of dispute that the fed (and the US government's lunatic policies) caused the great depression.

The only issue is whether they did it deliberately.

If all the fish in the river die, you look to the water.

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It's not a matter of dispute that the fed (and the US government's lunatic policies) caused the great depression.

One or other or both? What about the idea that there were several US governments - to argue that they were no different at all is a stretch even for this cynic.

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those without assets need to trust that assets can be earned and that they are as free as those who arrived on the scene beforehand and who hoarded whatever was obvious.

That's precisely what we've lost, innit? What chance do you see of getting it back?

High.

Two things are sure - death and taxes. I'm looking at our population pyramid and putting my faith in the former.

Of course, justice delayed is justice denied... and therein lies a problem.

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One or other or both? What about the idea that there were several US governments - to argue that they were no different at all is a stretch even for this cynic.

It'a a fairly simple thing.

First the banks commited mass fraud by pretending to have gold that they didn't.

Then people found out, causing runs on banks.

Then the government stepped in on the side of the bankers, banning gold, fixing prices etc and making fiat money king.

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'scuse me if this appears more than once - server not responding :(

The converse arises in practice, because, where redistributive policies are in place, these policies deny control... for example, basing a large public sector organisation in a sleepy Welsh town might appear to give an economic boost - but, in fact, it raises the costs of being based in Wales for any private enterprise... with higher house prices; higher wage demands - etc. - and, with a redistributive tax system, it also introduces the fear of an even greater squeeze in future if an enterprise is successful. These systemic effects, while principally an issue of perception, have very real (and rather adverse) consequences.

Why should that be any different in a sleepy welsh town to London?

In either case, it creates a new class of Haves, leaving the HaveNots to struggle. A cluster of prosperity in businesses supplying the BigOrg and servicing the new Haves. In other words, economic activity. The biggest difference between your welsh town and London is that the latter already has the overwhelmingly biggest and most powerful public sector spending, and orbit of economic activity around it.

It's not a fundamental difference. Rather it's the difference between giving a pound to someone with 10p in his pocket, vs giving it to someone already carrying £100.

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