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tomandlu

Are We Thicker Than The '30S?

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I wondered the other day whether the current crisis indicates that IQs have fallen since the '30s.

  • They didn't have the example of GD1 to warn them (okay, South Sea Bubble, etc.)
  • Shares, unlike property, represented proper investment (okay, misallocated)
  • Shares, unlike property, are fairly abstract and perhaps people can be forgiven more for not understanding the weakness of the system

Basically, how on earth did we fail to learn the fairly simple lessons of GD1? Too much cheap credit creates false growth by both creating and supporting both malinvestment and bubbles.

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I wondered the other day whether the current crisis indicates that IQs have fallen since the '30s.

  • They didn't have the example of GD1 to warn them (okay, South Sea Bubble, etc.)
  • Shares, unlike property, represented proper investment (okay, misallocated)
  • Shares, unlike property, are fairly abstract and perhaps people can be forgiven more for not understanding the weakness of the system

Basically, how on earth did we fail to learn the fairly simple lessons of GD1? Too much cheap credit creates false growth by both creating and supporting both malinvestment and bubbles.

Reading "the great crash of 1929" by Galbraith is very illuminating - they DID have - previous bubbles to compare against, and, for example, the New York Times (I think) was notoriously bearish about the New York Stock Exchange bubble quite early on, for all the reasons HPC has been about our own asset bubble, and was triumphalist when it popped.

Economists has an idea about speculative bubbles even before this - France had an international bond investment bubble in about the 17th or 18th century or so, which the finance minister resgned over in protest to the king allowing it to happen, IIRC from the "Extraordinary Popular Delusions" book

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Basically, how on earth did we fail to learn the fairly simple lessons of GD1? Too much cheap credit creates false growth by both creating and supporting both malinvestment and bubbles.

It was different this time because the quants created algorithms that eliminated risk. It reminds me of the similiar example that Ferguson gave in the Ascent of Money where he pointed out the whizzy algorithms which busted Long Term Capital Management were running off a grand total of 4 years data :ph34r:

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Basically, how on earth did we fail to learn the fairly simple lessons of GD1? Too much cheap credit creates false growth by both creating and supporting both malinvestment and bubbles.

because everybody who had experience of the hardship is dead or out of the decision making process, hubris only really needs the pain to be forgotten

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As things stand the people who bought in lets say 2005 arent looking so thick as theyve the lowest ever interest rates and high inflation helping them out, and an asset that they need to survive. Should this (interest rates/inflation) change in the future then maybe you have a point to argue.

The thick ones are the banks who lent money that in normal circumstances could never be paid, but they got money off the taxpayer so maybe they arent thick either.

My conclusion is the thick ones are the taxpayers who voted LIBLABCON and expected a change.

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Bernanke did learn what he thought the lessons were. The lack of money supply.

Yeah, Bernanke's some self-appointed expert on the Great Depression. I have my doubts he knows jack about anything because if he did, he'd realise the current crisis is one of solvency not liquidity. By propping up the banks with bail outs all that's happened is a long drawn out death deflation spiral. If the banks had gone to the wall in 2008, the necessary process of 'creative destruction' would've happened.

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Not 'thicker' just as 'greedy'.

Exactly. In response to the OP, you have to remember a) who created the mess and b ) who is suffering from it.

a) The bankers

b ) Not the bankers

What's not to like from pillaging the wealth of a nation if you're a banker and the above pretext is correct?

Edited by General Congreve

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What I find interesting about this question is lss that the mistakes of GD1 have been repeated (most people have very little idea of economic history, especially politicians and bankers), but that the remedies of GD1 are not being used. In particular, the politicians of the day were clever and brave enough to split the banks into retail and trading arms, and yet our politicians haven't had the balls to do this even though it's bloody obvious this worked last time and will work this time too.

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As things stand the people who bought in lets say 2005 arent looking so thick as theyve the lowest ever interest rates and high inflation helping them out, and an asset that they need to survive. Should this (interest rates/inflation) change in the future then maybe you have a point to argue.

I know and have heard of quite a few people in a lot of trouble who speculated around then

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I've wondered if there was any correlation between average IQ per country and high house prices per country.

Average IQ

UK 102 (property owning obsessed)

Germany 109.3 (more renters)

Note the Spanish, Greeks, Irish & French are well down the list

Holland 109.4

Germany 109.3

Poland 108.3

Sweden 105.8

Yugoslavia 105.7

Italy 103.8

Austria 103.5

Switzerland 102.8

Portugal 102.6

Great Britain 102

Norway 101.8

Denmark 100.7

Hungary 100.5

Czechoslovakia 100.4

Spain 100.3

Belgium 99.7

Greece 99.4

Ireland 99.2

Finland 98.1

Bulgaria 96.3

France 96.1

http://www.iqcomparisonsite.com/NationalIQs.aspx

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I've wondered if there was any correlation between average IQ per country and high house prices per country.

Average IQ

UK 102 (property owning obsessed)

Germany 109.3 (more renters)

Note the Spanish, Greeks, Irish & French are well down the list

Holland 109.4

Germany 109.3

Poland 108.3

Sweden 105.8

Yugoslavia 105.7

Italy 103.8

Austria 103.5

Switzerland 102.8

Portugal 102.6

Great Britain 102

Norway 101.8

Denmark 100.7

Hungary 100.5

Czechoslovakia 100.4

Spain 100.3

Belgium 99.7

Greece 99.4

Ireland 99.2

Finland 98.1

Bulgaria 96.3

France 96.1

http://www.iqcompari...ationalIQs.aspx

i wonder if this reflects the disconnection between risk and reward - essentially, smart thinking goes unrewarded in socialist france so people don't develop their brains, it does in germany and holland so they do

am confused that czechoslovakia is included - how old is this list anyway? (edit - 1980 to 1986, may have changed a lot since then??)

Edited by Si1

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i wonder if this reflects the disconnection between risk and reward - essentially, smart thinking goes unrewarded in socialist france so people don't develop their brains, it does in germany and holland so they do

am confused that czechoslovakia is included - how old is this list anyway? (edit - 1980 to 1986, may have changed a lot since then??)

There are lots of different versions about - but I liked the one I posted best because the thickos had higher house prices :lol:

There is one here that includes more countries and has a © Nov 2010 on the page

Rank Country I.Q. (σ = 15)

1 Cambodia 156

2 Slovenia 156

3 Korea_South 152

4 Russia 152

5 Serbia 151

6 Germany 150

7 Switzerland 150

8 Denmark 148

9 Belgium 147

10 Malta 147

11 Canada 146.2

12 Poland 146.2

13 Austria 146.2

14 Portugal 145

15 Cyprus 144.5

16 Iceland 144.5

17 China 144

18 Bulgaria 144

19 United_Kingdom 143

20 India 143

21.5 Norway 142

21.5 Spain 142

23 Czech_Republic 141

24 Australia 141

25 Iran 141

26 Finland 140

27 Sweden 140

28 France 140

29 Brazil 140

30 Mexico 140

31 Luxembourg 139

32 United_States 138

33 Greece 137

34 Italy 137

35 Thailand 137

36 Yugoslavia 137

37 Netherlands 135

38 Israel 135

39 Hong_Kong 134

40 Bosnia_and_Herzegovina 132

41 New_Zealand 132

42 Japan 131

43 Argentina 131

44 Philippines 130

45 Turkey 130

46 Chile 129

47 South_Africa 129

48 Lithuania 128

49 Singapore 119.5

http://www.iq-tests-for-the-high-range.com/statistics/iq_by_country.html

Edited by Redhat Sly

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I wondered the other day whether the current crisis indicates that IQs have fallen since the '30s.

  • They didn't have the example of GD1 to warn them (okay, South Sea Bubble, etc.)

  • Shares, unlike property, represented proper investment (okay, misallocated)

  • Shares, unlike property, are fairly abstract and perhaps people can be forgiven more for not understanding the weakness of the system

Basically, how on earth did we fail to learn the fairly simple lessons of GD1? Too much cheap credit creates false growth by both creating and supporting both malinvestment and bubbles.

Whilst a percentage of the population may lean from past experiences the masses are in general easily conned. Just look at the numbers that get taken in my pyramid schemes (not to mention internet scams)

tim

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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